Monday, November 19, 2007

News Analysis: Too Early to Call the Death of Third Party Maintenance

Problems at Tomorrow Now unfairly cloud the market
Recent announcements about a management change of control at Tomorrow Now and letters to clients indicating a change in service agreements (we've been told that both sides could have a 60 day window to cancel contracts in the new agreeemnts) could be perceived as a death knoll for 3rd party maintenance. However, the trends for third party maintenance look good because:
  • Value for maintenance fees still too low. Despite efforts by the major vendors to improve customer satisfaction, response times, and upgrade benefits, most customers continue to believe that they are not receiving the 2x to 2.5x they are paying in license fees over a 10 year period.
  • Customers seek options. Third party maintenance, which halves the cost of maintenance, frees up money for new projects and other key IT initiatives. Customers who may have gone to Tomorrow Now look to alternatives. Rimini Street founded by Seth Ravin , a TomorrowNow cofounder, is one vendor who has grown its base to 50 customers and a beneficiary of this trend.
  • Third party provider market may emerge from China. Chinese IT vendors, not beholden to SAP or Oracle the way the Indian SI's are, have an opportunity to provide this capability and provide some relief to the market. As the Chinese players like Augmentum, Achievo, Neusoft, Worksoft build their outsourcing capabilities, they will be best positioned to provide 3rd party maintenance. For them to succeed, they must do this before they become enticed by Oracle and SAP.
The bottom line for end users
Despite competitive and market pressures from Oracle and SAP, this issue remains a huge pain point for customers. Vendors for too long have milked the maintenance revenue to juice quarterly profits at the expense of customers. Expect new IT players to emerge and take this space and free companies from the shackles of vendor imposed policies while delivering on the true promise of "perpetual" licenses.

(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

Monday, November 12, 2007

News Analysis: IBM Offers to Pick Up Cognos for $4.9B

IBM announced its 23rd acquisition in its information on demand strategy by offering $58 per share (9% premium), or $4.9B for Cognos, the Ottawa, Canada, based BI stalwart with 4000 employees and 25,000 customers worldwide. The deal is expected to close in the first quarter of next year. A quick assessment of the deal:
  • Keeps IBM in the high margin information management services. The most valuable and complicated engagements involve information areas such as BI and performance management. Having Cognos in its arsenal of products and a loyal customer base gives IBM a key tool for future services and software growth. This acquisition is seen as foundational for the Armonk, NY headquartered vendor's information on demand strategy, combining information integration, data management and business consulting services.
  • Builds on existing relationships. The close partnership between IBM and Cognos dates back as early as 1992 and at least 8 integrated offerings that support many joint customers. Hence this takeover is seen as friendly and endorsed by the Cognos board. As evidence of this comfortable acquisition, Cognos' CEO will lead the information management software division.
The bottom line for vendors
The BI space officially is no longer led by Best of Breeds. With Hyperion tied up with Oracle, Business Objects with SAP, and now Cognos with IBM, each of the Big 3 has made its move in the Business Intelligence space. This leaves SAS, headed by Dr. James Goodnight, as the last independent BI vendor. M&A talks seem unlikely, as SAS remains a privately held company, however, Dr. Goodnight has not yet identified a successor.

The bottom line for users
Customers stand to benefit from integrated BI solutions as the Big 4 effectively remove the Best of Breed vendors in BI from the market. This signals the move to incorporate these capabilities into the middleware platforms and create more lock in around the Big 4 offerings. However, customers need to keep in mind the trade off between sole sourcing with one vendor and the risk to innovation.

(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

Sunday, November 11, 2007

Event Report: Oracle Open World

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

Despite the stormy night before, Oracle kicked-off Open World to a classic San Francisco weekend, with blue skies, 70 degree weather, and the buzz and excitement one can only expect with 50,000 people packed around Moscone.

Tonight focused on celebrating 30 years of Oracle history and innovation. Attendees were treated to a history of Oracle from the early days of database to tools/middleware, and apps.

Some quick observations about attendees from conversations on the ground:
  • Feeling the effect of the Oracle surround strategy. Oracle customers and partners by acquisition was a common theme among attendees. Over the course of the past 4 years, even customers in pharma, oil and gas, and retail find Oracle to be present in their environments via database and edge applications that surround the core SAP instance.
  • Seeking information about future roadmap. Most attendees came to have indepth discussions at sessions with key executives and product management staff. Sessions at OAUG were quite lively with in depth discussions among audience members
  • Sensing that Fusion Middleware and AIA will play a big role in future solutions. As each Apps Unlimited product consumes more Fusion Middleware, attendees sought to bolster skill sets and general information. The customer base remains open to packaged SOA-based integration and seems willing to pay for this.
The bottom line for users
Customers continue to find value in Open World, despite the size. As Oracle continues to pre package integrations among its acquired products via AIA, expect customers to choose this more cost effective option over expensive integration work conducted by SI's. Customers and partners should bolster Fusion Middleware skill sets as this will be the core requirement to utilize future Oracle acquisitions.

(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

Monday, November 5, 2007

News Analysis: Dun and Bradstreet Acquires Purisma

On November 5th, Short Hills, NJ-based Dun and Bradstreet revealed its $48M acquisition of Purisma, Inc, a, Redwood City, CA provider of customer hub solutions. Until now, the majority of DandB’s expertise had been applied to the company’s flagship hosted services and data products, not its on-site Integration Manager or customer hub solution. The acquisition and integration of Purisma will bring a solutions focused approach to the on-site customer hub solution and could augment strong B2B capabilities, improve internationalization, deliver hierarchy management, and support data stewardship processes.

DandB’s acquisition of Purisma represents a significant step in the trusted data provider’s transformation into a customer hub and potential master data management (MDM) solution provider. As a premier B2B data and hosted services vendor, DandB can now deliver on a hybrid customer hub offering with on-site data augmented by sophisticated hosted services. DandB also provides B2C capabilities through a recent partnership to OEM Acxiom’s Abilitec solutions. The acquisition of Purisma is strategic because this:
  • Provides DandB customers with advanced customer hub tools. DandB’s on-site customer hub solution, Integration Manager, comes with implementation services and automatic monthly refreshes of DandB data made possible through DandB’s DUNSRight Quality Assurance Process. Customer’s light on IT resources benefit by matching their own B2B data against DandB’s gold standard. Today, DandB’s offering suits companies that wanted to compare their data to DandB data rather than create or manage new “best source of truth” information. However, the acquisition and integration of Purisma’s rapid deployment solutions change the game, allowing the ability to add vertical industry versions, support data model extensibility, administer data stewardship, and leverage hierarchies to create new “best source of truth” information.
  • Validates Purisma’s innovative technology while removing viability concerns. As a core technology within a $1.4B leading provider of business insight, Purisma now has the visibility and funds to expand on key innovations such as team based data governance, multi-dimensional data hierarchies, what-if analyses, and simplified DandB data integration from Purisma Data Hub Version 3.0 and high availability and enhanced DandB corporate family tree management in Version 3.5. Purisma can also augment previous deficiencies with DandB’s strengths in data cleansing, integration and synchronization, and security and privacy.
  • Opens the door to bring other master data solutions into the DandB universe. Innovations from Purisma allows DandB to solve multi-entity data management and enter the software appliance market. Customers and prospects should expect future developments to include expansion into other data entities such as product, suppliers, locations, and financial accounts. Purisma’s head start in software appliances such as myData for DandB appliance builds preconfigured software applications which are purpose specific, configure to order, auto updating, require no installation, and deliver a managed service through subscription based pricing.
The bottom line for users

Customers and prospects stand to benefit from this complementary acquisition once DandB fully integrates the Purisma capabilities.
  • Existing DandB customers should consider the Purisma solution. Those with heterogeneous data requirements and hierarchy management needs benefit most from Purisma’s solution focused approach. Customers should discuss with DandB post merger integration plans, product roadmap milestones, and future partnerships. Explore how the solution may evolve into an MDM offering.
  • Existing Purisma customers should discuss enterprise contracts with DandB. Purisma’s pricing model differs from DandB’s approach. With almost a 70% overlap in customer bases, most Purisma customers have a relationship with DandB and should explore options to continue with Purisma’s user based pricing approach or identify a fair conversion credit to DandB’s pricing models. There may be some bundled opportunties.
  • Prospects now have a strong alternative for CDI. Customers with DandB data now have the option to sole source a CDI solution. Over time expect DandB to address other data entities such as product, location, employee, or financial accounts. However, those looking for immediate solutions should consider other vendors such as IBM, Initiate, Oracle, and Siperian for now.
The bottom line for vendors

Companies increasingly rank MDM as a high priority technology initiative for 2008. CDI technologies represent a key subset of MDM. As MDM technologies continue to be consolidated into middleware stacks or complimentary solutions, the market can expect:
  • Trusted data providers to partner or acquire MDM capabilities. DandB has made a serious commitment here that the other trusted data sources have not made. Anticipate that vendors such as Harte Hanks, InfoUSA, Experian, and other trusted data sources will create partnerships with pure play vendors such as Siperian, Initiate, and VisonWare. Expect a rush to explore those partnership opportunities which may lead to MandA discussions.
  • Large vendors to hasten consolidation among “MDM” components. While trusted data source vendors will remain nervous, other well funded players will certainly enter the market. Consolidation is occurring now between the corners of competitors building master hub solutions. These include the trusted data sources, BI/Action Frameworks, Enterprise Apps, and data management players. From an information supply chain perspective, vendors will want to know where to partner, acquire, or build for the end game.
  • MDM vendors to enter more scenarios of coopetition. Don't expect any material impact on the market right away, but its reasonable to expect DandB to target the install base for Purisma solutions over time. Yet, despite this, expect partnerships with DandB to continue among the main MDM players IBM, Initiate, Oracle, SAP, Siperian, and VisionWare. Can vendors afford not to partner with DandB and go with a company like Austin Tetra? Probably not.
(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

Thursday, November 1, 2007

News Analysis: Deltek IPO's at $18/share

Kudos to the Deltek team for their recent IPO. This public offering showcases how taking a company private can provide opportunities to regroup, reorganize, and recharge. What this means for Deltek:
  • New market growth opportunities. The $10M in proceeds from the IPO give Deltek the cash to build off of its base in the UK for International expansion. In addition, the vendor's strength in government contracting, professional services, and construction lends well to related industries such as IT services, architecture, accounting, and transportation services. Deltek can also take the opportunity to expand its partner network.
  • Visibility into the growing project based solutions market. Forrester estimates this market to be $6.5B by 2010. As work shifts from product to service orientation, solutions in this Project Based Solutions space gain prominence in the enterprise. Think of a Best Buy who's no longer selling a home theater system but the installation, delivery, and extended warranty. Expect the marketing to crank up from stalwarts such as Epicor, Oracle, Primavera, and SAP.
  • Debt repayment. As part of the repayment terms, the company will apply $42.9M to repay about a quarter of their debt and another $3.9M to selling shareholders who've exercised options. This should free the firm up for better growth prospects.
The bottom line for end users
Keep an eye on this space if your business revolves around projects. Vendor consolidation is sure to occur, but Deltek will be a major player in this space. Deltek's offerings cover both the .NET world and the J2EE world so platforms should not be an issue. Expect both Oracle and SAP to amp up the messaging if the Best of Breeds do really well.

(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