Sunday, May 27, 2007

Apps Strategy: Now's the Time to Design a 5-Year Packaged App Strategy

What do ERP fatigue, instance consolidation, upgrades, SaaS, third party-maintenance, and BPO have in common? They are all stop-gap measures in addressing the key issue of having a long-term apps strategy.

Some key areas to consider include:
  • Most packaged apps were bought in the mid to late 1990's
  • Software lifecycle is about 7 to 10 years and we are entering a new upgrade replacement cycle
  • Large demand for small projects skirt the real issue of a need for a packaged application strategy
  • Architectural renewal via SOA and adoption of Web 2.0 functionality driving interest
As we move into one of the biggest upgrade cycles in a decade, enterprises should take the time to design a top-down view of their apps strategy before committing project budgets. A high-level view of the key components of this strategy include:

  • Long term vendor strategy and management
  • Packaged applications internal inventory
  • Maintenance and support schedules
  • Upgrade strategy
  • Instance consolidation strategy
  • Deployment option analysis (SaaS, Hosting, BPO, or On-premise)
  • Change management readiness
  • Business process maturity
  • Custom development requirements
  • Hardware/data center migration plan

(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

Wednesday, May 16, 2007

News Analysis: Oracle Acquires Agile

Based on their Red Pepper IPO, it was only a matter of time that Oracle CEO Chuck Phillips and Agile CEO Jay Fulcher would tie the knot. The $495 M cash deal for Agile adds leading PLM capabilities to Oracle's application arsenal and brings to Oracle over 1,250 top PLM customers and over 10,000 visualization customers globally. In fact, over 60% of Agile's customers chose this best of breed vendor to work with their SAP and Infor ERP systems. With Oracle's efficient pre and post merger integration teams, expect the acquisition to close quickly with minimal disruption by July.

Oracle customers should evaluate Agile in PLM short lists for advanced PLM capabilities. Meanwhile, existing Agile customers should push to make sure that Fusion Middleware does not become a prerequisite for future installations. In addition, customers should quickly lock-in their long-term maintenance agreements to avoid the higher Oracle 22% maintenance fees.

(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

Wednesday, May 9, 2007

IPO Watch: Deltek Files S-1

After much anticipation since New Mountain funds took the company private with a 75% stake in 2002, Herndon based Deltek Systems filed its S-1 on May 8th 2007. As a Project Based Solution (PBS) vendor, nothing could be more fitting than coming out with the NASDAQ symbol "PROJ". While private, Deltek remained active and acquired Wind 2 in 2005 and Welcom in 2006 leading to a doubling of its size and customer base. The results of this acquisition and maintenance strategy speak for themselves -- software license growth up 215.7%, maintenance increases of 89.1%, and overall revenues up 153.33% since 2002 (see Figure 1.) Key to Deltek's future will be the expansion into new vertical areas beyond its strengths in public sector, A/E/C, non-profit, and research. Deltek's key competitors include industry stalwart Primavera, .NET competitor Epicor, and Microsoft with its Project and Solomon offerings.

Figure 1. Deltek Consolidated Financials as Filed in S-1






(in thousands, except per share data)

Statement of Operations Data:


Software license fees

$ 23,742

$ 36,636

$ 34,934

$ 45,923

$ 74,958

Consulting services






Maintenance and support services






Other revenues






Total revenues






As the Project Based Solutions (PBS) space heats up, expect rapid consolidation in the next 3 years among vendors such as Agresso, Artemis Software, Augeo Software, BST Global, CA (Computer Associates)Niku, Computer Methods International Corp. (CMiC), Deltek, Dexter & Cheney, Epicor Software, IFS, Lawson, Maconomy, Maxwell Systems, Mercury Software, Meridian Systems, Microsoft Dynamics, Oracle, OpenAir, Pacific Edge, Planisware, PlanView, Primavera Systems, ProSight, Sage Software, SAP, Softrax, Tenrox, and Viewpoint Software (formerly BidTek). According to Forrester Research, the PBS market is expected to grow to $6.5B by 2010.

(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

Friday, May 4, 2007

Event Report: i2 Planet 2007, Orlando, FL

Given the recent consolidation in the industry and increasing dominance of both Oracle and SAP, I couldn't help but wonder if supply chain had gone the way of CRM or if it was a specialized field that would continue to stand out like business intelligence. In fact, I normally don't specialize in supply chain but was at this year's i2 Planet mostly to get caught up to speed on i2's order management cycle capabilities and Agile Business Process Platform (ABPP). Here are a few quick observations from the event:
  • Lots of interest and enthusiasm for the new generation supply chain. Customers expect demand-supply synchronization and related real-time demand management integration to provide faster time to results and greater flexibility. More importantly, customers expect demand shaping to drive visibility across the value chain. You could see the eyes light up and the energy levels go up especially in the TMS (Freight Matrix), POS Demand Sensing, and demand shaping sessions.
  • Supply chain continues to be a proactive discipline. More than ensuring that the right product reaches the right customer at the right time, users expect to drill into the root-cause and rapidly apply corrective actions. New generation supply chains deliver on the convergence of visibility, planning, collaboration, control, and analysis. Customers continued to express the need to be vigilant.
  • i2 has developed significant expertise in the front end sub processes. By besting SAP at Lenovo, i2 proved not only the strength of its order fulfillment to order completion, but also its ability to move into opportunity to order capture via not only its configurator but also its multi-channel capabilities. Believe it or not, the complete order management cycle on the Lenovo site runs on i2.
  • ABPP provides the technology foundation for i2's future. After some extensive discussions with both Sanjiv and Pallab it became clear that i2 has a clear understanding of its role in the future of solution centric software ecosystems. I believe i2 intends to emerge in the next 3 to 5 years as a complete supply chain solutions provider with a platform that will support a wide range of deployment options, solution options, partner extensions, and professional services. This will not be an easy task to deliver, but the intention is to provide customers and partners with flexibility via the toolkit (e.g. MDM and business content library).
  • Many SAP customers continue to choose i2 while Oracle customers remain hesitant. From talking to customers and system integrators, i2 continues to hold its ground and gain some momentum in the SAP install base. Key factors include user reluctance to upgrade to NetWeaver and i2's continued lead over SAP in advanced capabilities. Penetration and growth in SAP accounts parallels the experience of BI vendors Cognos and BO who have entrenched themselves with business users in "SAP only" environments. However, i2 needs to figure out how to win over Oracle customers. To date, I see Oracle customers more likely to explore hot acquisitions such as G-Log and Retek while holding on to their latest release of JD Edwards or Oracle EBS.
  • i2 remains a thought leader in the industry. I often joke if i2 stopped building software it would be the supply chain consultant of choice like an Ann Grackin at ChainLink or AMR Research. The conversations I had with all levels within the company showcase their bench strength and passion. Discussions in the breakout sessions and throughout the event showed that a good majority of the best of the best were i2 customers.
Despite the current industry consolidation and shift to the next generation of software, I believe i2 can pursue a strategy similar to Amdocs and succeed in not only a horizontal capability but several industries with end to end solutions and services. The push to solutions selling and services revenue on a flexible platform is the first step. The real story is how much investment in R&D and innovation capabilities will i2's board allow in a post- Mike McGrath era.

(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