deal architect

Time for a pivot in enterprise software

On Saturday, I watched the Berkshire Hathaway annual shareholder meeting. Warren Buffett was less than optimistic: “During the last six months or so, the “incredible period” for the US economy has been coming to an end”

Earlier in the week, in a welcome letter to analysts for the Zoho event in Austin,  Vijay Sundaram , Chief Strategy Officer pointed out

‘The SaaS model, as validated during the pandemic, will stay and thrive. But many providers won't. We believe that the next 10 years will be influenced by the recessionary conditions that have begun. Venture capital will now chase AI—the new shiny object—leaving less capital on the table for SaaS. Valuations will drop for the vast majority of companies that remain unprofitable and cannot feed the growth-at-any-cost monster. The industry will restructure as value shifts back to customers.’

It's hard to argue with either, but I am sure Buffett will find diamonds in the rough even in a challenging economy, and Zoho is doing well with its very different business model especially in emerging economies that are growing even as Western economies are slowing down. As Peter Maier of SAP, who I am moderating in a session at Sapphire next week, would say as his recent book does – it’s time for Business as Unusual.

In the doom and gloom in tech these days – valuations are down significantly; layoffs are up significantly,  there are at least four market segments which still show strong growth potential.

Vertical “edge” applications

A whole bunch of vertical edge applications became viable/necessary as a result of “shocks’ from COVID, Ukraine crisis, massive digital transformations and impact on every sector. They include servitization driven CPQ (to handle product, various services, spare parts, financing etc.) in industrials, smart insurance using new risk analytics, telemedicine in healthcare, curbside pickup and smarter ecommerce returns processing in retail, EV charging management and billing in auto etc. We are tracking over a hundred “edge” application areas. Most of them we could not have imagined 4-5 years ago – industries have been reshaped so rapidly in recent years by those shocks.

Emerging economies

On the recent trip to India I spent time in 7 states across the country. I saw a very different energy and pace. They are in a hurry to make up for lost time during COVID and to match China’s speed. We have long talked about “two-tier” ERP opportunities around subs of multinationals around the world. That opportunity is still wide open. The bigger opportunity now, though, is with fast growing, midsized local enterprises in not just BRICS countries, but also Indonesia, Nigeria, Chile and many others. However, they need different functionality, go to market and price points than selling in the West.

Generative AI

We are still in the first innings of what machines can dream up based on massive data we can train them on. And most vendors are still focused on the plumbing – should we use tools from Microsoft, Google, IBM and others or cobble together our LLMs using open source components. The winners. to me, will come from those who focus on differentiated use cases and gather mountains of relevant data.  All the more reason to invest in industries and geographies which differentiate you.  

Low code custom development

The vertical and geographical solutions I describe above are needed today. Many buyers are not willing to wait years. Others are tired of the cost and pace at which enterprise solutions are delivered.  They have started to arm their domain experts with low code solutions to at least get version 1 of the functionality in place. Too many software vendors think the low code tools are their differentiator. This is a bigger opportunity for service providers – again, those with deep industry and geography credentials.

Each of these markets will require new investments, not spray painting of existing solutions. Does not mean existing ERP, CRM and other markets will go away. But repaving older cow paths does not generate adequate ROI, especially when so many analog processes are screaming for digital innovation.  

Time for a pivot. Time to think Business as Unusual. New frontiers await.

The Analyst Cam: Rimini Street Database Support Survey

As we have moved to virtual vendor briefings, I have increasingly been excerpting short segments (with permission from vendors), as part of my Analyst Cam series.

Dan Ashton, Senior Director, Product Marketing covers multiple databases at Rimini Street - Oracle, SAP, IBM DB2, Microsoft SQL Server.

He presented to me results of a recent survey across 18 countries. It is focused primarily on Oracle databases, but there are plenty of nuggets that likely apply to those from the other large vendors.

Some of the interesting points that I picked up in the session:

• There is significantly more dissatisfaction about the value from databases than the last time Rimini ran such a survey in 2017. Not surprising especially given IT cost pressures during the pandemic.
• Beyond the fees they pay vendors, customers feel they are on a treadmill - "the constant pressure to upgrade in order to remain fully supported not only disrupts business, but wastes funds and resources"
• The different types of support available from publishers may actually be confusing customers. Some support levels don't include critical fixes and certifications.  As a result, some customers may have a false sense of security they are covered by the maintenance they are paying for but actually be exposing themselves to risks.
• Customers have tens, if not hundreds, of database instances. While trying to manage the sprawl, they are still looking at a growing number of open source and cloud options to lower their exposure and cost of those from the larger vendors. The survey shows MySQL, PostgreSQL and MongoDB as getting the most looks.

Dan makes a crisp presentation with lots of specific survey data in about 13 minutes. You can also get the fuller report by registering here

Infor’s Retail Initiative

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

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

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

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

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

So what did I miss, SAP?

Ray Wang tweeted this morning at the incredible brainpower at an SAP blogger session in conjunction with Salesforce’s Dreamforce event this week.

I did not feel much envy for not being part of the group.

SAP is one of the vendors I asked earlier this summer to take me off their marketing and events list. I love the people there like Mike Prosceno and Stacey Fish, but SAP has for a while now over promised and under delivered.

I am hoping I hear from Ray and others I should have been there today. And for a few more events in the future. Then maybe I will go back to SAP and humbly asked to be invited again.

In the meantime, the extra day allowed me to stay up late and watch a superb show where Tony Robbins, filling in for Piers Morgan, interviewed Mark Cuban, Steve Wynn and Boone Pickens Jr. I got to watch some NFL games. Today, I dug into FastCompany’s October Design Issue. My version of porn.

I now have New Florence backlogged with innovation posts through October 20. I also am leaving town not feeling guilty about enough time with my beagle who enjoyed having me around today. And I should get to spend time with that brainpower later in week. I hope a few of them tell me I should have been at the SAP event. 

"Off-sourcing"

Ingres to partner with Satyam...read Tom Berquist (Ingres's CFO)'s perspective. Satyam has one of the stronger package implementation practices  in the Indian firms, so not sure how this custom development oriented alliance will play out. Besides, Indian firms are learning how to become channel leaders rather than followers, so not sure how much this will help Ingres short term.

But Tom is right to point out it is two industry trends converging.   Now that is John Naisbitt and Patricia Aburdene would likely call a "mega trend mash-up"

Another 97.5% business

Dennis Howlett showcases Severn Delta which has moved aggressively to open source applications.

Another example of a 97.5% business. The cost of "branded software" to get the additional comfort is often exorbitant.

Martyn has earned the right to be a New Florence tour guide.

Look - still the Software 500!

Software Magazine has released its annual listing of the biggest 500 software (and services companies who write tons of code) vendors.

Several comments:

- Larry Ellison will likely talk about industry consolidation next week at Oracle OpenWorld. Well, the magazine still lists 500 companies as it did last year, and the year before. And it does not begin to list the various Office 2.0, SaaS, Open Source and other companies which have been spawned in the last couple of years.

- The fastest growing segments - security - 40% growth, HR 39%, Healthcare 23%, content management 22%.

- The bigger vendors - IBM, Oracle etc are reporting single digit growth in spite of their acquisition sprees. They are actually losing overall industry market share.

Lots of interesting small to mid-sized companies doing well in various sectors and geographies. Highly recommend getting yourself a copy...

Tastes Great. Less Filling.

Think Open Source is only about a different way of selling incumbent software functionality?

InfoWorld has a special section on innovations coming out of Open Source community including

New Life into Java
Linux on newer devices
Impact on multi-media
"Wide Open", yet secure
Community Scripting and languages
Impact on enterprise messaging

The Bionic Enterprise Software 2.0

"Gentlemen, we can rebuild him. We have the technology. We have the capability to build the world's first bionic man. Steve Austin will be that man. Better than he was before. Better, stronger, faster." -The Six Million Dollar Man.

Bionic Man did not just get a nose job. He was rewired with nuclear powered limbs and implants and much more.

This weekend, several of the Enterprise Irregulars had a vigorous discussion going around Enterprise 2.0 - the impact Web 2.0, social networking, SaaS etc. are having on the enterprise.  And I kept coming back to the point that any definition of Enterprise 2.0  (or whatever we or Forrester ends up calling it) has to be fundamentally rewired. It cannot just reflect the exciting new user centric innovations but also what is happening in the middle and the back in terms of service delivery, third party maintenance, IP licensing and a whole series of other innovations we have been seeing over the last few years.

I proposed the following as additional considerations as our group (and the software industry in general) seeks to define Enterprise 2.0. While by no means comprehensive, it is my attempt  to get a broader discussion going.

a) supports choice of customer deployment of functionality as a service, and in installed mode

b) is architected and priced/sold as a series of services

c) sells maintenance broken in to support and upgrade charges and allows an ecosystem of partners, not just the publisher, to alternatively provide support.

d) largely automates bug fixes/upgrades which require little customer (or service partner) intervention

e) provides process management, configuration, conversion, integration, testing, systems management, end user training tools to minimize implementation and support labor

f) provides customers with a wide range of service partners which are audited, graded and certified each year based on product training completion, customer feedback,

g) commits to transparency to customers around product quality, customer service ticket resolution, outages (where provided in SaaS mode) etc.

h) provides a mechanism for certification of integration of third party software products, and re-certification as releases change

i) actively encourages a on-line developer/integrator community and pushes for an "open source" licensing of community intellectual property

j) Commits to sharing with each customer a "sticker" showing standard list of various components/services and various discounts and taxes

k) shares with customer base on a regular basis summary results of various implementation and support metrics from its service partner ecosystem

Most industries are seeing innovation in many facets from business models to channels. So is enterprise software.  And even within technology specific innovation, Web 2.0 is only one facet. Enterprise software is adopting telemetry, predictive analytics and so much more. 

As we innovate enterprise software, we will fix way more than the nose.

Clarification: Most of the practices I suggest above are already in use by one or more enterprise software vendor. On c)  SAP offers third party maintenance through its TomorrowNow unit to Oracle apps customers. On g) salesforce.com provides metrics on its on-line performance. And customers like these innovations - so my suggestion we generalize them across the industry.

Hurricane Enterprise

Several Irregulars contributed to a rejoinder to Guy Smith's post last week around Open Source  on sandhill.com. Mine below was more of a rejoinder to the Irregulars who were pretty mean to Guy. Guy is a a good Melbourne boy - he can tell them to go chunder -)

"Living in Florida, we are acutely aware of hurricanes. While we give them single names like Katrina and Andrew, they are really armadas of smaller destruction elements that attack with wind, flood, lighting and so on. Hurricanes move in highly unpredictable ways depending on their steering winds and pressure systems and the competing elements within them.

In spite of supercomputers, daring measurement flights in to the eye, satellites, dopplers we are still learning to predict where they will make landfall and at what speed. Today, the National Weather Center can predict a cone of likely hurricane track over the next 48 hours with a potential error of 320 miles. Does not sound too inaccurate, right" Well, each mile of coastline evacuated costs $1 million in lost wages, closed businesses and in the expense of emergency personnel and shelter openings

In the software business, we have Hurricane Enterprise coming. As Forrester recently wrote, it has 4 "horsemen" - Open Source, SaaS, SOA and Offshore Development. Reading Guy's comments and those of my Irregular colleagues I think we are similarly trying to predict the course of this storm. What we do not know is whether it will be a category 1 or 3. Or where it will land. And which of the elements will cause what damage.

The important thing to remember is the conditions are ripe. As Marten Mickos, CEO of MySQL recently said "Oracle created the market [for open source databases] by having a highly priced product..." As did IBM, as did Microsoft, as did SAP in other elements of the stack.

The hurricane is the response to the vacuum. It is the effect, not the cause. And it is a combination of many small sub-systems. Open Source is just one of the elements. The others are just as deadly."