deal architect

Vertical Software: One Industry which has bucked the trend

Readers know I have been hounding software vendors on why they are not investing in vertical functionality. After two decades of cloud computing we have very few choices in books of record for industry after industry – utility billing,  retail merchandising, insurance claims processing, electronic medical records. I could go on and on.

One industry has, on the other hand, seen lots of investment from literally hundreds of vendors. It is the professional services sector in the form of PSA functionality. I reached out to Dave Hofferberth of Service Performance Insight to get nuggets on why this market has bucked the trend. I call him the “Godfather of PSA” – the image below is from a pioneering white paper he wrote on the market as far back as 1999 

Describe the evolution of PSA over the last two decades.

I have seen wave after wave of vendors address this market. In the first wave there were pioneers like Niku, Evolve and Changepoint. Today the names are  OpenAir (part of NetSuite), FinancialForce, Kimble and broader vendors like Deltek, Microsoft and Workday, just to name a few.

The vendors 20 years ago had a concept, but not too many buyers. In theory, PSA made sense. In reality, most professional services providers work their employees hard, so concepts like billable utilization were not something a tool needed to track, as they just worked their employees 60 hours each week. However, as organizations expanded and resources became more scarce, PS executives realized they needed a tool to manage the delivery of services so they could track all of the time and costs against tasks, or at least projects to more accurately calculate revenues and margins. PSA has become a necessary solution, just like CRM and financials. Nowadays, organizations in other industries also use PSA to manage the services component of their product-based business. Many of the PSA vendors took a break a little over a decade ago to concentrate on project portfolio management. PPM was to be the next wave, but most of the vendors realized that PSA was where they should be. There are plenty of good PPM vendors, and that market is strong as well, but PSA is a market unto itself, with different needs.

Describe your personal journey and how you came to be so closely aligned with PSA

At Aberdeen Research, I carved out a niche for myself in the PSA market because I was the analyst who brought PSA out to the market, the vendors knew for the market to thrive, it needed a lot of thought leadership, which Aberdeen could provide. Other analyst firms, Gartner, Forrester, Meta, Giga, AMR and others, continued to change the name from PSA to something else. Unfortunately, those analyst firms didn't give the time and effort to the market the way I did. In the end, I just concentrated on PSA, where other analysts might have had many other markets or technologies to work on, with PSA just being one of them. I would love to say how when I joined Oracle, professional services was Oracle’s fourth largest market, but I had nothing to do with it. It's just the company sold a lot to those organizations. Unfortunately, it was not an area they concentrated on, preferring to go head to head with SAP in all of the manufacturing, retail, and financial services markets.

But as you say you have helped hundreds of vendors look at the PSA market.  Do vendors not have the competitive intelligence to see this market is somewhat crowded compared to other verticals? Is there safety in numbers?

The world is moving to a services-based economy, and there are so many companies that do not fully utilize business solutions to run professional services. I estimate that less than 15% of PSOs use a PSA solution. Our survey shows something like 60%, however, many organizations surveyed I have worked with over the past 20 years, and are focused on improvement. All of the PSA players I know are growing in excess of 20% annually, so it is obviously a good market for them. That is why the ERP players got in a few years ago. to sell a complete suite of solutions, including PSA, to their installed base and future customers.

Why does the professional services sector get the vertical investment when other much larger industries do not?

I am not sure why other industries don't get the software investment. All I know is that I have tried to demonstrate the financial value of PSA over the past 20 years, and it hasn't been too difficult , as you can imagine increasing billable utilization by 5% annually yields an additional 100 billable hours per consultant. It's pretty easy math. I think for the other markets and submarkets to get funding, they must do similar things to justify the value of their investment. I have long considered moving some of my research into other markets, however, the professional services market keeps me plenty busy.

BTW, I am headed up to Detroit to spend a day with Plex - a vendor which is bucking the trend by continuing to invest in another vertical - the manufacturing one. 

 

Applications at Oracle Open World: a conversation with Steve Miranda

Oracle OpenWorld kicks off this morning. I am not going this year but I checked in last week with Steve Miranda, Executive Vice President, Oracle Applications Product Development about what we can expect to hear about applications.

I did not go this year because applications often get very little play in a conference where infrastructure and database dominate. After talking to him, I think I should have gone.

Steve:  There will be three main themes. The first, we're going to try to showcase and highlight just a ton of customer success in our cloud. In every keynote, apps keynote/general session--mine, Chris Leone, Rondy Ngs, Rick Jewell, Rob Tarkoff--we have at least two customers on stage with us, live customers, talking about their business benefits.

When we say customers, I've tried the best we could to actually mix it up with big customers, small customers, global customers, domestic, etc., different industries. Frankly, this time, we've got a lot of name brand customers. On stage with me will be Cummins talking about their HR cloud implementation and the business benefits they have achieved. We have Juniper Networks using our marketing and configure-price-quote talking about their benefits and transformations there. I have Federal Express on stage with me talking about their financials conversion to cloud and, now that they've done some acquisitions, talking about expanding that to their newly acquired product and really moving to a single instance cloud financials. Hopefully, the biggest part that you'll get is name brand, very successful customers running all parts of the suite in the cloud.

What we're going to make a particular point to emphasize is the readiness for really the vast majority of our installed base in a couple different dimensions. Number one is, we're at the stage now where, with few exceptions, but just about anybody you are, were we have a customer who has gone live from the cloud, so that's whether you're global or domestic, whether you're HR, CRM, or ERP, whether you're a back office Siebel, PeopleSoft, or E-Business Suite, whether you're a telco, a bank, or a manufacturer. Then you put that matrix together so it's almost impossible to have everything but, just about every matrix, we have a referenceable customer who has already done it, part one.

Part two, over the summer, as you know, we introduced our Soar program together with Oracle Consulting, which is an automated set of utilities, which help customers take the risk and cost away from the conversion and the move to our cloud.

Then the final part. This has been a long effort of not just introducing financials, but then adding supply chain, adding manufacturing, adding globalization, adding HR, payroll, adding globalizations, etc. But, at this stage, again, for the vast, vast, vast majority of our customers, we think that the completeness of our suite is there.

Part one is going to be all about customer success and how we think more customers are taking advantage of the success. Part two is going to be about brand-new products that further expand the suite. We're introducing a new public sector product around permitting and licensing to supplement public sector, state and local, in their traditional finance area. We also introduced a brand new customer data platform in CRM, so a centralized customer data store and repository to sit right in the middle of our CX product suite.

Then, of course, we've expanded our higher education offering. Earlier in the year, we did an acquisition of a company called Vocado, which is a student financial aid system. Added that to brand new offerings we have in our student system that we've built organically here, which tightly integrates with financials and other parts.

Then in financials, we added another product called Subscription Management. More and more customers are offering services, so we added subscription management for the billing, collections, AR part, which is supports organizations across industries.

The third area we're focused on is the technology innovation and that's all going to spiral around machine learning. Machine learning, you'll see it take part in three different flavors.

The first is kind is brand new apps, if you will, or mini-apps or features. Next best offer, we have customers live on, next best action and service, things you would expect, but also things we've talked about in the past: auditing capability in finance, payment optimization for payments, suppliers, kind of a cash management, machine learning application, and then HR candidate matching, so better candidate matching, candidate sorting for candidate ranking, not candidate selection because the potential with bias there, but using machine learning towards that as well. That's one area, again, across all three pillars.

The second area that you're going to see improvements in is what I'll call our traditional HCM UI. Using machine learning to improve defaulting of parameters, to improve general usability and predictiveness of how the UI works. Think of it as your phone. You do text messaging, and it uses machine learning to do autocorrect and suggest next words. That machine learning gets better and better over time.

Probably the final part, and this is where you're going to see most of the demonstrations, is we've added a number of bots that take advantage of our bot platform, machine learning, which are front-end agnostic.

The key here is not just the voice to text, the bot capability to process transactions, but it's the machine learning to allow you to have some intelligence with the transactions. In other words, when you're submitting the expense reports, you can take a picture and send it. Of course, there is character recognition, the machine learning on the character recognition but, also, it's things like policy enforcement or policy suggestions, so not just a bot that processes a transaction, but actually gives you suggestions either on the approval side, what you should approve or not approve, warning signs to say, "Hey, you're submitting this expense report, but it's out of policy." A little bit more using configuration and algorithms of the machine learning to do more than just process a transaction but, actually, give input to the end user.

In summary, it’s all about customer success, new traditional apps coming out, and then machine learning across the board and across channels via bots.

Let me pause there until I get into some commentary to see if that makes sense, but that's the 9 minutes and 42 seconds version of OpenWorld.

Steve, that's excellent. A couple of questions. You mentioned a few verticals. Is there another forum where utilities and telecoms, all the other industries that you guys have strength in, not necessarily in apps, is that going to be covered at Oracle OpenWorld, or is that a different event?

Steve: No, we have different sections within OpenWorld that focus on the GBU apps. Like you said, it's more of a broader look than just ERP apps because that wouldn't be enough to cover a vertical.

Steve, one final comment. You have so much in the apps area. You should think about an apps focused event. You have so much that is not known to the world.

Steve: Historically, we've had HCM World, Modern CX, the Supply Chain Summit here, and Modern Finance In 2019, we will be bringing finance, HR, and supply chain management together under one roof in Las Vegas at the Mandalay Bay on March 19-21 in a conference called Limitless, Presented by Oracle. At the same time and in the same place we will co-locate our Modern CX conference. We are making things very easy and very convenient for our applications customers and prospects.

Great. Send me that information closer to the time.

Steve: Hey, Vinnie. One more thing, if I may. You have been covering us for a long, long time, on this path to the cloud. I think what gets lost in the individual conferences and what we're extremely proud of is this has not been an overnight journey, but the maturity and the time cycle and the readiness of the solution is all now there, I just hope it doesn't get lost because of one conference. This is not an overnight thing.

As much as people get hung up on things Oracle did, said in the past, we've been at this for a long time. Hopefully, that credibility gets recognized because it certainly seems to be coming through with our customers and we're quite happy with it.

Steve, I'm extremely pleased to see you say application customers are going to be on stage. With Oracle, often the messages come through in different ways. I'm glad you're bringing varied customers on stage. It makes your point "Look. We're not Johnny Come Lately. We've been at this for a long time, and we have broad coverage."

You can watch here Steve’s keynote today at 9 am and Larry Ellison’s at 145 pm and his second one on Wednesday 2 pm, all times Pacific.

The 90s called–they want their ERP back

Eric Kimberling shared with me his post Top ERP Systems for 2019. His top 5 are Microsoft Dynamics 365, SAP S/4HANA, NetSuite, Workday and Salesforce (more its partners like FinancialForce).

The post made me wonder what my application analyst colleagues at Gartner in the 90s would say about the state of ERP today. These were studs like Erik Keller, Chris Jones, Art Mesher, Bruce Bond and others. You can credit us or blame us for a large percent of ERP decisions in the runup to Y2K. Without sounding too boastful, we helped tens of thousands of enterprises with their ERP selections, many of which are still running.

In turn, we were also demanding on vendors. Yes we argued architecture – thin v fat client, 2 v 3 tier deployments, but we also demanded functional depth. We challenged their claim of “best practices” and reengineering platforms.  We saw vendors were not doing enough on the shop floor, in logistics, customer facing areas and created new categories of markets like MES, SCM and CRM. We pointed out that ERP vendors had little in way of books of record for insurance, oil and gas, retail, utilities and many other sectors. As a result, vendors like SAP introduced their Industry Solutions, most after the Y2K deadline had passed.

We also pointed out that the payback from ERP was showing low because customers were implementing financials, hr and other back office modules but not operational or customer facing ones. Many were so guided by SIs, especially those with accounting heritages who had never set foot in a factory or warehouse or R&D lab.

Since then, there has been plenty of moronic talk about how manufacturing is dead and supply chains were optimized long ago. The US is still the second largest manufacturer in the world and the modern shop floor is dotted with wearables, 3D printers and robots. Supply chains are being redefined with modern distribution centers and last mile delivery options. Utilities are into net metering and predictive maintenance. Insurance companies are being challenged to rethink business models. Banking is being reshaped by a swarm of fintech vendors. Every process in every industry is being reimagined with automation – drones, AI, autonomous vehicles, kiosks, RPA. There is no industry whose books of records have not been reshaped. It’s time for ERP vendors to wake up from their Rip Van Winkle 20-year slumber and show they have customer citations with these modern capabilities.

Looking at Eric’s list I get deja vu. Most on his list are fine in the back office but not do not have robust capabilities (as yet) in operational areas. They certainly do not have industry functionality (most do around services and PSA, but not in other big chunks of the economy) . Those are the areas that need modernization. Instead we risk making the same mistakes we did in the 90s, helped by a younger generation of the same SIs.

Don’t get me wrong – I was trained as a CPA. I understand the need for robust financials and analytics

But let’s call them that – accounting and hcm in the cloud. Let’s not call them ERP. And like my colleagues did in the 90s let’s push vendors to deliver contemporary and deep functionality, not just talk “cloud” architectures.

And let’s challenge SIs when they talk digital transformation around these narrow footprints. That is today’s codeword for reengineering. The biggest bang comes from smart products, omni-channel commerce and related logistics, modern shop floors not just from modernizing the back office as we did the last time.

Inforum–peeling an onion

I wrote last week that I was looking forward to getting an update on Infor’s verticals – hospitality, healthcare, manufacturing, logistics, retail and others. At Inforum in Washington this week, I only got a detailed briefing about the Retail vertical.

So, in the couple of days I spent at Inforum this week I kept thinking this is just a financial and HR vendor which has contemporary technology. And at every corner, I would pick up a nuance.

Like Coleman, introduced last year as its digital assistant is now also an entry into RPA world. 

Its CRM group does not get the visibility of Salesforce or Microsoft or ServiceNow but in a breakout I learned about their CPQ, next-best offer and other capabilities.

The Retail group opened my eyes to how Infor is learning to cross-sell across its many, often confusing, units. Over 50% of its GT Nexus network revenues now come from retailers. They also leverage Predictix, its demand forecasting engine. Similarly many leverage its horizontal financials and hcm capabilities. Pilot Flying J presented to analysts how it is using Infor products to run its chain of truck stops.

Koch Industries (an investor and customer) shared their asset management story. Infor has long had some large, complex customers for its EAM like JPL and CERN. Add Koch portfolio credentials and you are talking some heavy iron.

Talking of HCM, while Infor does not get as much attention in the HCM space behind the Big 3 cloud players – Workday, SAP SuccessFactors and Oracle, it has a sizable presence in its Lawson and other customer bases. And its Talent Sciences group allows Infor to hold its own against all the data science and machine learning that is increasingly reshaping the world of Talent analytics

While they may not have much to show in terms of what I call “books of record” like retail merchandising and hospitality reservations, Infor does have plenty of industry level features.

Ashley Hart, the new CMO shared with analysts the running start she has made – moving advertising dollars from hub to private airports, sponsoring key tennis and golf stars, improving digital presence and measurement and new commercials. I think it is smart that Infor is targeting the executive buyer.

I think as big a challenge for her will be to help customers and prospects navigate the Infor maze. I tried to find the TV commercial launched this week to share with a colleague. I Googled for it, I searched YouTube, I looked at several places on the Infor site. I finally asked their chat group and they could not find it online either. They told me they would try and email me a link. (update - Sharon Sulc of Infor provided me the video below)

I bent the ears of several Infor execs this week about developing more industry capabilities. Honestly, before they add even more capabilities, I think they would do better to organize and share what they already have.

I look forward to peeling this onion some more.

 

 

Oracle’s streak of missed opportunities

No, this does not have much to do with Oracle’s recent quarter. Nor is it about intrigue and gossip so many analysts use to compare Oracle to the Trumpian White House. It has more to do with two decades of enterprise tech I have researched as I write SAP Nation 3.0. It is striking how many times I have seen opportunities Oracle could have taken advantage of.

As I wrote in Who will claim the Enterprise “Western Frontier” most enterprise vendors, not just Oracle, missed out on several trillion dollar markets that have emerged since 2000 and have made Google, Foxconn, GE, Amazon and others sizable technology players.

But even within its peer group, Oracle has missed out on several opportunities.  It took way too long to deliver Fusion. Even then, it could have stalled growth at Workday, Salesforce, Adobe and other cloud vendors. It could have delivered a knockout punch to SAP starting around 2010 with its early start with Fusion and its many cloud acquisitions. It could have taken several of its vertical industry capabilities to the cloud and gone after SAP in those markets. It did not and SAP with S/4 and its own cloud acquisitions has weathered the storm.

With its IaaS, Oracle could have navigated around Amazon, Microsoft Azure, Google and mopped up the hosting market around its EBS, PeopleSoft. J.D. Edwards and Siebel customer bases. Not particularly exciting, but a relatively captive 25,000 + customers is nothing to sneeze about.

While it finally has rolled out its SOAR cloud migration offering, Oracle could have done that years ago and would have been well on its way to migrating the 4 customer bases above to the cloud.

It has chosen to go after third party maintenance vendors like Rimini via the legal route, when it could have listened to its customers who wanted support for customizations and more responsive ticket support even more than cost savings. Oracle likes to emphasize the trust and security angles but that is only one criterion in a multi-dimensional decision. It also uses the security angle  in its IaaS  pitch, but often loses on capex scale and continuous improvement track record. Its autonomous database pitch has been diffused because it is only available on its IaaS (it says it needs that to be able to deliver to the high availability SLA) and not (yet) to its much bigger on-prem database market.

With more of a focus on customer value from its technology, I am convinced Oracle could easily be twice its size. Instead it has way too many customers who are wary about its commercial practices and only grudgingly bring it into new opportunities.

I could go on.

Actually looking at two decades of Oracle’s meandering I am tempted to write Oracle Nation. Maybe some day I will write that. For now SAP’s continuing turnaround makes for a much more compelling story.

Implementation Groundhog Day

I was recently introduced to Bonnie Tinder, founder of Raven Intel. Her startup is on a mission to “quantify the quality” of HCM implementation projects, especially the role of the SI partner. As her site says “We’re amplifying the voice of the past customer so the future customer can find the perfect partner.” It is a noble mission and she has a white paper out in time for HR Tech this week which summarizes findings from the initial 100 projects her team has analyzed using net promoter scoring and other techniques. 

In talking to her, though I felt like “déjà vu all over again”.  At the start of my career at PwC I remember a firm-wide event where the tagline was “Selling is only the beginning”. We had had a few major disasters and the leadership was trying to push a quality drive in the rank and file. In the mid 90s when I analyzed ERP integrators at Gartner I co-authored a report on SIs which started with a quote from a US District Court case “A Michelangelo should not charge Sistine Chapel rates......for painting a farmer's barn".  Our study like Bonnie’s focus had surveyed countless customers and we had also scored SIs on a number of ERP project dimensions. In 2000, a few of us set up a digital marketplace for customers to more objectively procure SI services for SAP, Peoplesoft, ecommerce and other projects. We had planning tools for customers, proposal engines for vendors and we had looked at the whole supply chain of such projects. Our timing was poor with the tech market meltdown and the startup failed a couple of years later. In the next few years, I was enamored with the CMM Level 5 and Six Sigma focus at Indian firms and took a number of CIOs on due diligence trips there and to E. Europe. By 2010 I slowed that down as I saw the rigor failing and the firms getting greedy. In 2014, I wrote SAP Nation because I saw an out-of-control SI and outsourcing ecosystem. Now as I write the next volume of SAP Nation I am seeing folks like Jarret Pazahanick talk about the “Wild West” of implementation consultants around the more contemporary crop of cloud solutions.

Like I said déjà vu all over again.

Some things never seem to change. Buyers don’t seem to have the muscle memory of the last major project failure. Vendors continue to treat SIs more as a sales channel than a delivery arm. So, you have Salesforce flagrantly bragging how many $ partners make for every $ of software, when customers want to see that tightly managed. As I wrote in “Fool me twice, shame on me” I worry that SAP did not learn from the last wave of massive project failures which hurt its brand, not that of SIs. SIs continue to brag about RPA and other automation, but show little movement to more machine, less human in their delivery. We have done hundreds of thousands of ERP, CRM type projects in the last few decades. It’s not rocket science. There should be predictability and there should be significant economies of repetition.

And yet in other ways things are changing. The upgrade and application management onus has moved from SI to the SaaS vendor. The hosting has moved to the IaaS vendor. We should expect Six Sigma and CMM 5 productivity from these vendors. The buy versus build pendulum is swinging as software vendors neglect vertical markets. That brings different expectations of SIs.

What has not changed is that customers are still expected to absorb all the risk. As Brad Keywell put so well in this profile I did of him “Most troubling, the customer is left taking all of the risk, outlaying all of the money, and then holding the bag if the implementation is a failure – the legacy risk-reward model is out of whack. Legacy software vendors ask for money but then avoid accountability for outcomes.”

In the last two decades most CIOs have expanded their stable of service providers – contract manufacturers, 3PLs, digital agencies, design thinking firms, service arms of industrial asset vendors. Many look at me and shake their heads when I tell them they still have to keep an eye on their HCM and CRM and ERP implementers.

Why are we still fighting that battle decades later, they ask? Welcome to Groundhog Day.

Nothing “permanent” about Oracle-Rimini

I cannot believe I am writing about another legal matter this week. I wrote earlier this week about litigation cases involving Oracle, SAP and Workday.

Judge Larry Hicks of the US District Court in the District of Nevada has had a distinguished career after his appointment there by President Bush in 2001. He has been on senior status since the end of 2012. The means he could have retired but continues to serve the public. You have to admire that.

I wonder though if he has enjoyed presiding over the Oracle-Rimini saga which has been going on since January 2010. It’s been like a tennis match with volleys back and forth. Indeed, a sentence in his latest judgment brings that out nicely (italics mine)

In its decision, the Ninth Circuit affirmed in-part, reversed in-part, vacated in-part, and remanded in-part the jury’s verdict and the court’s various orders in this action.

I had to smile when I saw the latest injunction is titled “permanent”.  I did find Oracle’s reaction a bit strong given that they have not been able to put this to bed yet.

Rimini Street’s business has been built entirely on unlawful conduct, and Rimini’s executives have repeatedly lied to cover up their company’s illegal acts. Rimini, which admits that it is the subject of an ongoing federal criminal investigation, has proven itself to be disreputable, and it seems very clear that it will not stop its unlawful conduct until a Court orders it to stop.

Rimini for its part, blandly said it will appeal.

I realize this is all legal jargon and jockeying and I am no lawyer.

But…..Oracle could have solved this years ago by offering a similar service. Most Rimini customers I talk to were not just attracted by the lower price (they had to balance the viability risk that came with a small vendor being sued). They did like the fact that Rimini supports their customizations. They love the fact that their ticket volumes have GONE UP. Yes, they got tired of raising tickets with Oracle (or SAP) because they tell me they rarely got resolved so they quit raising them. They like the dedicated rep model they get with Rimini. Oracle usually tells them the quality of their product is more secure, more trusted etc. It was a quality of service, as much as product and an economic decision for many customers.

Oracle has also sent mixed messages to its customer base. It keeps telling them to move to the cloud (indeed the litigation I wrote about earlier in week suggests it coerces them to do so). But if they want to stay with the legacy products, why resent them looking around for support?

Here’s what baffles me. The reality is most Rimini customers continue to buy new stuff from Oracle (and SAP). They continue as YOUR customers, Oracle. I like the fact that you are challenging the Pentagon not to sole source cloud infrastructure, but in turn should you not respect incumbent customers balancing their portfolio if they so choose?

I apologize for putting my usual customer advocate hat. Let’s go back to our regularly scheduled programming and enjoy the tennis match!

‘Tis the season for software lawsuits

Oracle, SAP and Workday have all been hit with lawsuits in the last few weeks for very different reasons as I describe below.

But first a preface – lawsuits draw a lot of attention but it’s usually wrong to extrapolate too much from them. Couple of perspectives on that:

- A vendor once asked their attorneys to brief me on the first day of their trial on an IP related lawsuit. My reaction was – wow, they must feel really confident to brief me months or years before a likely court decision. My second reaction was in fairness I should allow the other party to also brief me. Then I thought about it – the jury would not read or be allowed to what I wrote before it made its decision. And in good faith I could not pretend to tell my readers and consulting clients how exactly this jury may lean. Especially a jury of lay people listening to a complex IP case.  So I ended up not writing anything about the case that day or much even later.

- I have been “close to the action” on several cases as an expert witness and they are rarely open and shut cases. The attorneys are incredibly smart, but often don’t work full-time on software industry cases. So, there is sometimes a learning curve.  They are masters at simplifying complex topics to make them understandable to juries. They have to however, keep a safe distance from the expert, so the judge is sure you are truly independent. So, even though you are being paid by  “the same side” you are guessing why they take certain positions or ask certain questions. You usually have copious amounts of evidentiary data to work your way through, but cannot use that for any of your future writing or consulting.

Long and short – whatever you read in the public domain in an article or a post about any software litigation, the actual, gory details are likely quite different.

Having said that, it is interesting that at least 3 very different enterprise software related cases are currently in the news. My commentary is below with no inside knowledge in any of the cases.

Investor v Tech Vendor

City Of Sunrise Firefighters’ Pension Fund has a filed a suit against Oracle. It says “Oracle drove sales of cloud products using threats and extortive tactics. The use of such tactics concealed the lack of real demand for Oracle’s cloud services, making the growth unsustainable (and ultimately driving away customers).”

Audits are an unfortunate but common occurrence in the enterprise software world. Oracle has a poor reputation when it comes to this, but many of its peers are as guilty. While a small fraction of customers cheat and others involuntarily fall out of compliance, it is also a common way for sales fields to make their quarterly or annual numbers. Having said that, many customers have learned to “punish’ such vendors by freezing them out of future business many times what they end up paying as a result of what they consider unfair audits. Also it is starting to show up in a slow number of cloud software implementations as I wrote here – many coerced sales just end up as shelfware.

The filing says “These tactics alienated and angered the Company’s customers, which in some cases have not only refused to purchase Oracle’s cloud offerings but have also looked to terminate their existing business relationships.”. One of the best things that could come out of this lawsuit would be if they could “name names” and show what I have been saying that customers do punish vendors for such behavior. That could force a rethink at many vendors that such short term revenues come at a very hefty price.

Tech Vendor v Tech Vendor

Teradata is accusing SAP of theft and anti-competitive strategy: “SAP could not have so quickly developed and marketed HANA in the first place without its theft of Teradata’s trade secrets. Now, using the fruits of that theft and its position in ERP Applications, SAP is attempting to foreclose Teradata from supplying EDAW solutions to many of the largest corporations in the world.”

I am not sure what to make of this. Usually, you hear murmurs in the industry about some impending action but this appears to come out of left field.

I have not been a big fan of SAP’s HANA strategy in my books and blogs. I think the database has distracted it from application leadership. But did they steal in-memory and columnar database IP from Teradata?

I want to see how Teradata attorneys can succinctly explain arcane optimization algorithms to a jury. Also how they refute SAP’s considerable prior art when it comes to analytics – their three tier architecture in R/3 which allowed it to support multiple databases and understand how users access certain fields more than others , Business Warehouse going back to 1997, its Business Objects acquisition in 2007 and its Sybase acquisition in 2010 and many other elements. In The New Polymath, in 2010 I had written about work at the Hasso Plattner Institute in Pottsdam which I believe was the genesis for what became HANA.  Not saying one side has more merit than the other, but it will mean looking at a lot of documentation to say who developed what and when before the other did.

Customer v Tech Vendor

Sacramento City Unified School District has filed a suit against Workday and Sierra-Cedar for a payroll and finance implementation gone awry.

Project overruns and failures are not unusual around ERP software. In SAP Nation, I had a chapter which cataloged year by year of major project failures in the previous 15 years. And I knew many more where the customer settled botched projects in private. What is different here is so far Workday and its partners have largely kept their noses clean, The amounts involved are fairly manageable at around $ 5 million. Of course for a school district, that is a lot of money but I am used to seeing many 9 figure failures.

Complex as each of those 3 cases are likely to be, they will be child’s play compared to the EU v Google antitrust investigation which has gone on for almost a decade and will likely morph some more.

Like I said earlier though, don’t expect simple summaries from me or others on how and why they get settled. The devil is in the mounds of detail and often that is precluded from being publicly shared.

The Long Game

Have you been watching the FIFA World Cup? I have been watching highlights. And peeks at an occasional game on Fox Sports Go. It’s humbling to think I will likely watch less than 1% of the 96 Group Stage games and maybe just a bit more of the games in the elimination rounds. Then I got a demo from Remiqz, which has analytics on soccer players – down to individual touches, strength of opponent and other metrics, and it was even more humbling. In the game today against Iran, the Spanish team had 720 passes. Impressive but well short of the record 993 passes Barcelona had in a Champions League game. Their database has analysis on thousands such games.

We live in a world of instant analysis which is summarization of staggering amount of little touch points.  I was thinking about that when I read two stories this morning in our industry – one about SAP, the other about Oracle.

Teradata has filed a legal complaint against SAP claiming it “stole Teradata’s trade secrets (accumulated by Teradata over the course of four decades in the EDAW space), and used them to quickly develop and introduce a competing (though inferior) product: SAP HANA.” and “Upon release of its new product, SAP promptly terminated the parties’ joint venture, and it is now attempting to coerce its customers into using HANA only, to the exclusion of Teradata, by forcing its customers to adopt HANA in exchange for upgrading their ERP Applications. “

The period covered in the complaint goes back a decade. Having being involved in a few software cases as an expert witness, I started thinking how attorneys are likely to strategize.

Will SAP argue Oracle and Microsoft have long used proprietary databases in their application stacks and SAP decided with S/4HANA it was more efficient to do same? Will Teradata cite Indirect Access examples where SAP threatened customers who wanted to move transaction data out of ECC to analyze or for third party apps to access?  Will SAP argue that with Business Objects, Sybase, TREX, MaxDB and other products it had plenty of its own analytical IP and talent?

Then I stopped. In a jury trial, appeals to lay person emotion often factor more than technical arguments. But the discovery process will involve looking at lots of data going back at least a decade or more. They cannot do instant analysis, they have to watch “lots and lots of tape”

I thought of that again when I saw “Oracle ORCL, +0.07%  reported revenue and earnings beats Tuesday afternoon, but Wall Street’s enthusiasm for the numbers was fleeting. Oracle stopped breaking out its cloud business in its official earnings numbers, as it had previously, which led many to question whether the company was hiding something after slowing cloud growth had hurt the stock in previous quarters.”

JP Morgan had downgraded Oracle stock a few days prior based on “a survey of 154 chief information officers (which) revealed Oracle received the most indications for "spending contraction" this year. “

154 customers surveyed? Oracle has 430,000. I was also struck by a comment that “CIOs have clarified that they are migrating Oracle databases to Microsoft SQL Server, Amazon databases and PostgreSQL” What about moves to HANA? SAP claims 23,000 HANA customers. Does the JP Morgan database have SAP customers?

Reality is all of us sample and want instant analysis. It is useful periodically to step back and consider the volume of little touch points. Another reason I write a book every year or so. It forces me to go back and look at lots of historical tape. Mercifully, not every team has 993 passes each game.

“SAP is at its best when it is hungriest”–a conversation with Nick Tzitzon

You have read analysis from me and others about SapphireNow. I wanted to get a post-conference perspective from a SAP executive and I caught up with Nick Tzitzon, Executive Vice President, Marketing and Communications

Overall Vibe

It can be tempting to look at so many different things and slice and dice the success of an event like Sapphire. I think we have to constantly come back to what should be the only true measure, and that's what did our customers who actually participated in the event say about what they experienced?

On this measure I feel like SAP can be really proud of this Sapphire. Our customers said generally very positive things about the presentation we put forward. In past years, I felt like they knew we had the right pieces but they weren’t always seeing the full picture. This year, I honestly felt like the light bulb went off and customers saw from SAP not just a completeness of vision, but a completeness of solution. And those that really wanted a confidence inspiring plan to cement their belief in SAP for the next decade, I think those customers came away believing that we delivered it.  In many people's view, this was the strongest Sapphire we've put forward ... if not all time, certainly in the last several years.

We're getting close to 400,000 customers now ... the temptation can be to think of our customers as one audience. But in reality, they're coming at this from so many different perspectives. You have the customers that have been relying on SAP ERP for decades who, in many cases are the largest, most sophisticated companies in the world. You would have a hard time, hopefully, coming out of Sapphire not believing that SAP is prepared to deliver you a complete solution tailored to your industry. Alternatively, if you came to Sapphire because you are running one of our LoB solutions, say SAP Ariba or SAP Fieldglass, and you are looking for more of an introduction to the broader universe of what SAP can offer, I also feel very good about the presentation that we put forward.

International attendance at Sapphire is always an interesting thing. SAP is the most global company in the space. That makes our customer base particularly interesting. We always struggle in a North America event with certain constituencies. They don't like the big show stopping approach in some cases as it doesn’t keep with their cultural norms. I think we've done a better job in the last few years being able to tailor the experience to those customers in a way that makes them feel more comfortable. But that's also the benefit of SAP doing events around the world. Increasingly, we take advantage of the fact that we can deliver a Sapphire-like experience on nearly every continent, so every customer or prospect can experience the vision and the strategy of the company in a way that relates to them. If it's not in their natural language, at the very least in a style that's more accessible to them. SuccessConnect in Berlin this week is a great example of this approach.

I think people really liked having a second major keynote theater. So we have the main stage for the big keynotes and then we have a 500 seat theater where you can go for additional content that's much more focused on specific topics.

We face this pressure when you do an event like Sapphire. Are we focused on just the three-and-a-half days where people are physically in Orlando? Or are we focused on an experience that lets people participate in Sapphire off site, at their leisure, in their location? And increasingly, if you look at the facts, we have big numbers in terms of who shows up. We have huge numbers in terms of who participates virtually. So it's important that people be able to feel the excitement of Sapphire sitting in their office, sitting at their desk, sitting in their living room.

His favorite moments from the event

You always have to feel proud when the founder of your company takes the stage (watch Hasso’s keynote here ) . We shouldn't miss any opportunity to acknowledge that Hasso is a titan in this industry….one of the founding fathers of this industry. When he gets up there and he does what he does, there's an amount of gravitas that I think is hard to find in many other tech conferences, if any other conference.  If I'm reliving Hasso keynotes from years past, I don't think he gets the credit he deserves for the in-memory revolution. I can remember having so many conversations with analysts and others who would say, "HANA, HANA, HANA. Customers have heard enough of that." It turns out they hadn’t and Hasso has been proven right again and again. How do you build a business that's capable of operating as an intelligent enterprise if you don't have an architecture that can help you manage data without indexes and aggregates? Data from any source? Structured and unstructured? Transactions and analytics on a single platform? Everyone loves the data sound bites – new oil, new gold, new oxygen. Pick your favorite. But only one person was making this intellectual argument before it was fashionable.

Then there was the big announcement – introducing C/4HANA.  The presentation Alex Atzberger (starting 19:30 here) delivered was confidence inspiring. I think if you were watching that ... and the bar was set  “Do I believe SAP has a credible argument that would force me to rethink how I rely on technology to transform my customer experience?” I think Alex not only cleared that bar, but I think he cleared it by a wide margin. And I think there's a lot of interest, a lot of excitement around C/4HANA in the marketplace right now.

For people who really know SAP, who really watch SAP, there's the question, "Okay, are they singing from the same sheet of music if you go off and talk to a development leader who is driving the agenda at an acquired company like a Concur or an Ariba, versus what you would get from SAP’s development team?” Seeing Bernd Leukert and Rob Enslin (starting 38:15 here ) together in one conversation with a lot of passion, share the same vision for how we're integrating the portfolio of assets that SAP has assembled and create true end-to-end process capabilities regardless of the app you're using - that's a huge headline for us.  At the end of the day, if you're a customer and you’re thinking, "When I bought SAP 20 years ago, they gave me every functionality I wanted in one box. And I'm not necessarily saying I want it all in one box, I just want to believe that they have a vision to be able to cover all of the capabilities that my company needs." Rob and Bernd gave them that confidence.

SAP's increased openness

Kudos to Nicola Leske and her team who obviously focused on you as their customer. So in that way, we do look at you as a customer. But second, I think SAP, and I give credit to Bill McDermott and the executive board for this, has undergone a sea change in terms of how SAP views the analyst community more broadly. We view the analyst community as a gateway to our customers because customers are trying to sort through so much. Increasingly they look to you and to your peers to help distill it all down. If we don't help you have a complete and well-rounded view of SAP, not only from our perspective, but from the perspective of our reference customers, we're letting all of our customers down by extension. So that's an intentional part of our strategy, and I'm glad you feel it. I’d also say the same thing about Geoff Scott and the user group. It shouldn’t go unmentioned that they are the co-host of SAPPHIRE. We embrace anyone who gets the company closer to its users.

Bill always says that SAP is at its best when SAP is at its hungriest. The company culture right now, and I think you felt it at Sapphire and in the lead-up, we are very motivated because we feel so strongly about the story we have to tell. We're very much in a “don't take anything for granted” phase. I love that scene from the movie Any Given Sunday with Al Pacino. The locker room scene where he says, "You go the extra mile for that inch, to gain every inch. It’s the difference between winning and losing." We're in a mode now where SAP is going to go the extra mile for every inch. And there should not be any situation where you're asking us to help you cover SAP where we're not able to come through.

His session with Jon Bon Jovi and Bill McDermott

I thought Jon Bon Jovi was remarkably candid. I thought Bill was too, but I know Bill and I know he is usually candid. I thought Jon’s admission about facing down dark times was profound. Just imagine if one of the most successful touring rock stars of all time who can walk into a stadium of 90,000 people and get roaring applause without even singing a note. If he can feel the dark pressure of negativity in his own life, I think those of us who are working away every day trying to make these businesses run well, which at many times is not a necessarily popular thing to be doing, it’s ok for us to be honest about our own challenges. I just thought it was refreshingly human in terms of the context.

Some of the human dimensions of technology in the enterprise, I think those are underplayed. I think these are inherently human conversations. Change management is a human conversation. Introducing new concepts and new ideas and asking people to have an open mind and try new things, these are human conversations.

We do sort of the instant pulse checks on audience sentiment. The reactions to that conversation were overwhelmingly positive. And if you think about the benefits of an event like Sapphire where you bring so many people together, I think the burden on any vendor is, what can you give attendees that is a unique experience that they're not likely to be able to recreate anywhere else? If I were an attendee, I would want that standard to be met. And I don't think you could have watched what Jon and Bill talked about and not feel like you were participating in something that was pretty unique

The fact that we balanced it, by the way, with what Adaire Fox-Martin did with Adidas (here) and Jennifer Morgan did with Costco (here) earlier on that morning, I thought was really important. Because I think if we hadn't done that, I do think it would have been a missed opportunity. I thought those conversations were outstanding.

Partner feedback

I believe that they see our definition of the Intelligent Enterprise as a new frontier where they're going to have a lot of unique opportunities to help our customers extract value. I also think, to the point of your recent blog post, they recognize that there's a new bar, there's a new standard. Speed, efficiency, automating what can be automated, and ultimately delivering value in new ways….that's the pressure we all feel. If I were a partner of SAP and I sat through Sapphire, I would see a new wave of opportunity. I would want my SAP practice to be excited and motivated to focus on Intelligent Enterprise. But we also have to be really clear about what customer expectations are in this new world. I think we've made a lot of progress in the last several years. I think we're going to make even more progress in the next several.

Concert Night

I'm the oldest young man you'll ever meet. I find the concerts too loud in general, so I just stuff earplugs in. So I'm perhaps a lousy person to ask. But the people who I surveyed thought Justin Timberlake put on a fantastic show. My daughters were extremely jealous that we had him there, and that they didn't get to participate. I told them they should buy some software

 

 

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