Thoughts On Oracle's Next Acqusition

(Image courtesy of SAP)

So, first of all, let me qualify this. It's not inside information, it's not a potential target we've heard to date, but an idea I've had for some time.

There's an acquisition target that Oracle could make the best use of in Germany. In fact, it's even based in Waldorf, but its not SAP. I know many of you haven't been out to SAP's headquarters, but if you ever go out there, you'll find the massive and elegant SAP complex. They've also built out some beautiful new star buildings which house the growing number of people in Waldorf.

But smack in the middle of the campus, is a car dealer. If memory serves me right, it's a Peugot or Citroen dealer. For those of you curious, you can see the white 2-story building amidst the apartments in the bottom left hand corner and just across from the main executive building. (just click on the pix to blow up)

Now, what could be better than Larry going over there and buying out the dealer. Imagine having SAP fly you out there for a key meeting with execs and and then walking across the street to see a demo at the Oracle Customer Briefing and Visitor Center? It'd be like walking by the local auto mile/parkway and doing some comparative shopping.

With such a very accretive and visible acquisition target, let's see if Charles and Safra pull the trigger on this one!

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2007 by R Wang. All rights reserved

Event Report: Sterling Commerce Connection, Denver, CO

(Image courtesy of Sterling Commerce)

Sterling Commerce Pushes Closer to the Perfect Order
Sterling treated customers and prospects to a packed agenda of product announcements, customer case studies, and educational sessions at this year's customer conference. Here are a few quick observations from the event:

• Transformation from infrastructure supplier to solution provider near complete. Prior to the acquisition of Yantra in 2004, Sterling Commerce was known for its integration, data sync, and EDI capabilities for the supply chain. Through the successful integrations of additional specialist vendors such as Nistevo (2006) and Comergent (2007), Sterling Commerce continues to show progress in not only integrating but also extending its application capabilities in selling and fulfillment.
• New products focus on addressing the perfect order. Attendees continued to express their interest and desire to achieve the perfect order. Multi-channel capabilities and advanced order process functionality topped many conversations. Sterling's unveiled and showcased its new capabilities in inventory replenishment and new merchandising and marketing capabilities.
  
• Post merger integration with Comergent remains on track. Despite the departure of CTO, Bill York, key former Comergent executives such as Jean Kovacs and Andy Nicholas remain with significant management roles. Conversations with product team members and customers suggest that overall delivery on the integrated multi-channel selling and fulfillment appears to be ahead of schedule.
  
• Customers continue to displace existing systems. Conversations with over 23 customers indicate that many continue to choose a Sterling solution over their existing ERP or CRM provider. Of the 23 customers, 7 had Oracle, 11 had SAP, 2 had i2, and 2 had Click Commerce.

The bottom line:
As customers make the shift from functional centric to business process centric software, processes that support the perfect order (i.e. opportunity to order capture, order capture to order fulfillment, order fulfillment to order completion, and order completion to order settlement) will elevate in importance. Solutions that support the end to end order process across multiple channels will truly bring differentiation and strategic advantage to an enterprise. Sterling's focus in this area and continued execution along the late Sam Starr's strategy will bring this vendor closer to delivering the perfect order.

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2007 by R Wang. All rights reserved

Trip Report: Reflections on ERP Software in Shanghai

(Copyrighted 2007. Photo by R Wang. All rights reserved)

WILL CHINA BECOME THE NEXT INDIA FOR ENTERPRISE APPS?
Miss the energy and excitement during the dot com boom? Well it's alive and well in Shanghai! While consumer and internet software remains hot and starting to mature, enterprise software in particular emerges as virgin territory in a rapidly growing market. (I and am still in awe of what I heard, saw, and felt.) Rapid fire growth in key industries such as manufacturing, financial services, telecommunications, utilities, government and of course high tech drive the charge towards the adoption of packaged applications. China demonstrates significant potential for the following reasons:

• Strong infrastructure. The Chinese government provides significant software infrastructure. Specifically, power, internet connectivity, and telecom networks exhibit stronger reliability in uptime than India and some parts of North America and EMEA.
  
• Rich talent pool. With considerably more universities and training facilities, the pool for Chinese software talent runs deep and wide. Like India, the expat community remains vibrant with 1000's returning from abroad on a monthly basis.
• Labor advantage. When the US was pushing offshore development just 10 years ago, Indian vendors now turn to China for advantages in labor arbitrage. Rising costs in India make China attractive though rates are rising.
  

HOMEGROWN VENDORS FOCUS ON THE CHINA SMB MARKET
During my time in Shanghai (July 27th to August 3rd), I had opportunities to speak with many customers, partners, and executives at the Big 4 major Chinese ERP vendors: Yongyou (Ufida), Kingdee, Digital China, and Newgrand. What makes this market unique is that the local vendors build their own ERP systems for the SMB market and then many of them resell software for the western vendors such as SAP, Oracle, Infor, Micrsoft, Lawson, QAD, Epicor, and IFS in enterprise install bases.

Homegrown vendors demonstrate a tendency to:

1. Provide mostly SMB tailored offerings
2. Focused first on accounting and "multi-book" accounting capabilities
   
3. Deliver truly localized and customized extensions on their own offering or on a competitors
4. Exhibit a strong determination to build out their capabilities into the "m" part of SMB
5. Demonstrate true co-opetition as they partner, resell, and compete with competitors to deliver solutions
6. Compete with local system integrators that believe they are also software providers as they deploy localized versions of Western applications
   
7. Lack strong marketing capabilities for the Western multi-national
   

VENDOR COMPETITION AMONG GLOBAL ERP VENDORS SEGMENTED BY VERTICALS
This market remains extremely hot for enterprise applications. Market share numbers are quite murky, but the competition among Western vendors runs fierce by industry verticals. For example customers will see the following vendors by industry:

• Public sector: SAP, Oracle, and Microsoft
• Fashion: Lawson, Microsoft
• High tech: Oracle, Microsoft, SAP
• Utilities: Oracle, SAP, IFS
• Manufacturing: Oracle, SAP, Infor, Micrsoft, Lawson, QAD, Epicor, CDC - Ross, and IFS
• Telecommunications: Oracle, SAP
• Gaming: Infor, Epicor
  

BOTTOM LINE FOR USERS
Enterprises face the challenge of selecting software that must meet rapidly changing requirements of a growing marketplace.

• Local prospects and customers must think long term. Rapidly growing Chinese prospects and customers must move beyond the short term selection criteria of low cost, localization, and language support. As these SMB's become the next large enterprise, support for SOA standards, industry functionality, interoperability, and long term application platforms must play a significant part of the vendor selection process. Homegrown vendors may achieve the size and scale to compete with Tier 1 vendors. However, in this rapidly consolidating market, a Tier 1 will more than likely acquire a homegrown vendor in order to gain market share, acquire additional local know-how, and cement a presence in this growing market.
• Multi-nationals will require local system integrators for delivery. Most multi-nations conducting business in China will look to their existing Tier 1 vendors to provide significant localization as well as alternative deployment options such as SaaS and hosting. Buying a solution in this market requires careful consideration of both the vendor and the related partner system integrator capability. For example, stakeholder centric applications that impact employees, partners, customers, and suppliers will require the expertise of local SI's who will be able to provide the needed customizations and extensions.
  

BOTTOM LINE FOR SOFTWARE VENDORS

• Challengers must act quickly. New vendors must quickly add significant business or risk being shut out by established western and homegrown vendors. Vendors such as Oracle, Infor, QAD, and Lawson will be positioned to succeed because of the strong networks and relationships that have been built over time. Challengers must quickly win the hearts and minds of home grown partners and vendors as this market will most likely begin consolidation over the next 12 to 36 months.
  

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2007 by R Wang. All rights reserved

Companies get smarter...what's the future role of analysts?

Ray Wang and I have talked about this a few times, and I think it is an interesting trend for analysts and vendors to think about, so thought I'd write a short entry here.

I've noticed a new trend over the last year as I work with SSPA members on technology acquisition issues: some of these companies are hella smart! One company asked for input selecting a Web self-service platform. I went to the meeting, and attending were internal experts on support technology. Specifically around natural language searching, one of the most innovative areas of self-service, they had a guy who had tested every system out there, and with his engineering background, he had an in-depth understanding of how each worked and what their strengths/weaknesses were. And the key here: he wasn't from IT. He was part of the support organization.

Another company is evaluating vendors for a cross-enterprise Web collaboration platform. They had a team dedicated to this topic, and had incredible knowledge about the vendors and their technology. And had contacted references listed on the vendor websites for information!

As an aside--I survey members to find out what technology they use and how satisfied they are with it. Many members have asked that I publish this in the member directory so they can easily contact other members to ask about their experiences with a software program. Damn, with the incredibly low satisfaction scores on most of the surveys, can you imagine how those reference calls will go?

In both cases (and there are many other examples), these internal employees know more than about 90% of the analysts covering this space. There is far too much "rah rah" coverage on cool features and the latest press releases, and not enough coverage on what actually works and how to get the most value from your purchase. (And yes, from that last line, it is clear I was a Giga analyst!)

Our SSPA Benchmark data clearly documents the rise of technical complexity, and I think larger companies are now identifying which technologies are the most critical to their success, and business units--not IT--are recruiting experts on those topics.

My take away from this:
Research firms need to stop focusing on 10 year projections and creating trends in marketing-speak and focus instead on value. If not, you won't be relevant much longer.

For vendors, I think you need to realize that future prospects may be much better informed about your technology than many of your sales people. Marketing needs to focus less on mushy things like "improving the customer experience," and more on hard-core ROI statistics (which even wildly successful companies still struggle to give me).

And bottom line, any vendor or analyst firm with obvious contempt, or at least condescension, toward customers will soon find that the customer has gone away.

And that's my view from the front lines of the front office!

Event Report: Oracle Open World APAC - Shanghai, China

(Copyrighted 2007. Photo by R Wang. All rights reserved)

ORACLE OPEN WORLD SHANGHAI DEMONSTRATES THE POWER OF THE ORACLE BRAND
As some of you know, I recently came back from Oracle's Open World Shanghai (July 30th to August 2nd). With 8,000 people at Oracle Open World, and about 1000 there for apps, you could really see the momentum taking off. Of the 60 partners, it was great to have been able to talk to about 25 partners in my broken Chinese.

Here are a few quick observations from the event:

• Oracle's presence in China for 18 years gives them a significant advantage. Initially based on the database successes, Oracle builds on solid networks and relationships required for sales success in China. During that time, Oracle has grown to more than 1500 employees, across 13 branch offices, and 16 representative offices throughout China. Customer counts number over 7,000 and the Oracle Technology Network (OTN) in China exceeds 245,000 members. In addition, Oracle works closely with over 800 partners.
  
• Attendees very interested in Fusion Middleware and applications. Conversations with attendees revealed significant interest among partners to gain certification for apps implementation. Customers expressed bullishness on Oracle's future as well as its acquisition strategy.
• Guo Wei, President of Digital China gave the most inspiring presentation. Despite the fact it was delivered in Mandarin and this poor analyst forgot to get the translator headset, Mr. Wei proved to be a visionary. His descriptions of the very fragmented Chinese customer and market showed a deep knowledge of where the future Chinese enterprise apps market. More importantly, he went into detail on the role of the software industry in promoting and reinforcing sustainable development and supporting China's future growth path.
  
• The Oracle brand remains larger than life. Throughout Asia, the media blesses the tech gods and assign a rock star status to the companies that symbolize progress and technological prowess. Respect for Oracle's brand remains high in China, allowing Oracle to attract top university graduates, key partners, and receive significant media coverage.
  

CONVERSATIONS WITH KEY EXECUTIVES SHOW EXTENSIVE COMMITMENT TO PARTNERS IN APAC
Necessity drives innovation in APAC. Oracle's partnership strategies provide the right balance of synergies in product development, go-to-market strategies, and ecosystem support needed to win. Conversations with Mark Gibbs, SVP for APAC app sales; and Bronwyn Hastings, APAC VP Channels and Alliance highlighted the following:

• Clear solution strategies forge tighter partnerships. Oracle's extensive whitespace maps for solutions and industries across geographies tremendously help partners identify opportunities for investment. They also provide insight as to what areas Oracle is willing to cooperate on versus acquire and build.
• Partners demonstrate significant partnership maturity. Partners compete directly and work cooperatively in delivering customer solutions. Many of Oracle's largest partners build their own packaged application software for the SMB market but resell Oracle and competitor software for the enterprise market. Partners like NeuSoft, Digital China, and Hand devote significant resources to Oracle. In fact, one Certified Advantage Partner, Hand focuses 700 people on 300 customers for Oracle EBS implementations.
  
• Technology focused partners provide future base of apps partners . Due to Oracle's heritage, most partners deliver on database and tools capabilities. However, this base will work to Oracle's advantage as the same skill sets for DB and Middleware translate well to enterprise applications. By harnessing this network, Oracle retains a significant advantage among competitors.
  

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2007 by R Wang. All rights reserved