Tuesday, December 2, 2008

Move your butt over to the new site!!!

Just a friendly reminder that the we've transition over to the new blog. Here are a few helpful links:

Cheers and see you on the other side!

Copyright © 2008 R Wang. All rights reserved.

Monday, November 24, 2008


Hello! Starting in December 2008, A Software Insiders Point of View will be moving to a new home. As we are in beta, look forward to new ways of sharing and reaching out. Look forward to your suggestions!

Here's the new blog link:



Monday, November 17, 2008

Monday’s Musings: The Three Pillars of Software Maintenance And Support Policies

After more than 350 conservations with customers about the maintenance and support issue in the past 4 months, it’s becoming quite clear users expect from their software vendors. While those issues can be broken into tens of categories, three themes have emerged that include:

  • Choice. Customers want to choose between tiered plans. The best plans allow customers to select the option best for them. Choice means the availaiblity of a basic plan or the full range of services expected in a comprehensive “insurance policy”.
  • Value. Users expect plans to show ROI or meet service level agreements (SLA’s). These SLA’s should reflect outcomes not just process. If a user contacts a help desk 5 times a year and pays $500,000 in maintenance, at $100,000 a call, they better be getting platinum response levels of 1 hour or less and a resolution in 24 to 48 hours.
  • Predictability. Maintenance and support remain one of the biggest budget items in the ownership of packaged apps. Changes in price, policies, or service levels should be communicated with at least 4 quarters notice. The best vendors provide guidelines that give customers predictability 2 to 3 years in advance.

The bottom line- can vendors deliver on such promises?

Let’s see which vendors can deliver on all 3 pillars. Recent financial analyst reports from investment houses (i.e. Merrill Lynch’s Kash Rangan w.r.t. Oracle and Merrill Lynch’s Raimo Lenschow w.r.t SAP) indicate a sharpening downward trend in revenue estimates, not only for Q4 2008, but also for FY 2009 and FY 2010. Software vendors under pressure to make margins will be forced to choose whether they are willing to take short term pain in stock valuations for long term gain in improving the vendor-client commitment or make their numbers by disenfranchising customers during a time of crisis by violating any one of the three tenants of maintenance pricing. Because many software vendors have blown through their Q1 2009 pipe in Q4 2008, new deals are scarce and maintenance revenues are the easiest targets for “guaranteed” revenue and price increases.

Your POV.

Are you being hammered in your existing maintenance arrangements? Do you feel locked in or do you feel your vendor is willing to work with you on deals? Feel free to share with me your experience. You can post here or send me a private email to rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Wednesday, November 12, 2008

Event Report: Dreamforce 2008 - Love is In the Clouds

Entrance to the DreamForce Expo Floor at Moscone Center, SF, CA

(Photo: Main show floor for Dreamforce 2008 at Moscone Center, San Francisco, CA. Copyright © 2008 R Wang. All rights reserved.)

Over 9,000 attendees made it to the annual San Francisco pilgrimage to hear the high priest of SaaS kickoff the event. This year’s theme focused on the future of Cloud Computing, a focus on success, and how much Salesforce loves its customers. Key product, technology, and partnership announcements from the November 3 to 5 event include:

  • Force.com expands usage to new product and services. Force.com sites allows customers to publish Force.com data and apps to any site, basically supporting customer built web apps. SFDC will take care of domain, URL, RSS management, etc when customers run their Web apps on Force.com. Other expansions include Force.com for Amazon and Force.com for Facebook. On the Amazon front, SFDC also will support applications being built using Amazon web services, in effect creating a mega cloud. Facebook support allows developers to tap into the Facebook Platform and Facebook Connect.

    POV: Movement to expand the platform into new B2C facing markets give SFDC credibility in new social media markets as well as taking the Cloud wars to the consumer. Consider this a continuation in the battle for domiance of IDE’s in the cloud.

  • CODA showcases its financial package on APEX for the North American market. While Coda2Go was launched at Dreamforce Europe in London last May, attendees at Dreamforce 2008 in SanFrancisco had a chance to see first hand how the 30 year old vendor had completed its rewrite. With enterprise financials built on this new platform, Salesforce.com customers now have more choice in financial solutions within the ecosystem.POV: Like many mid-market vendors, CODA had the opportunity to bet on the next platform and chose a SaaS approach over an on-premise middleware platform. Most mid-market vendors bet on a Microsoft VS.NET “Rainbow” Stack, IBM Websphere, or Progress Software. These middleware platforms allow companies to spend 10 to 15% of budget on tools and technology instead of a staggering 33% that many would spend if they built their own middleware. CODA’s decision is market leading for the industry and is reflective of its groundbreaking historical bets on HP3000 in the 70’s, VAX (DEC) in the 80’s, and AS/400’s (IBM) in the 90’s.
  • Glovia, a Fujitsu Company, builds order management on Force.com. Customers seeking lead to billing solutions in order management can now turn to the Glovia solution for order management, inventory, fulfillment, and billing. Glovia takes the order from Salesforce.com and brings it into the order maangement system giving it visiblity from prospect to invoice. Enterprises can also check status via the web or on a mobile device via Salesforce mobile.POV: Salesforce.com’s ecosystem strategy allows other vendors to build key back office end to end processes. As more companies add to the ecosystem, SalesForce will continue to gain market relevance against enterprise vendors struggling to move to a true multi-tenant onDemand delivery model.

The bottom line - SaaS platforms continue to morph into cloud computing

Recent decisions by CODA, Glovia, and a host of software vendors show that the transition from on-premise middleware platforms to cloud-based platforms has begun. Application development and delivery professionals seeking new delivery models can benefit from these new platforms. Force.com is gaining momentum and given its history will emerge as one of the top 3 platforms for both customers and software vendors. The real question out there - what will vendor lock-in look like in the world of cloud computing? Will it be like the mainframe lock-ins 40 years prior?

Your POV.

Are you considering a SaaS deployment? Will you move to the cloud? Are you a software vendor looking at ditching your on-premise middleware platform? Feel free to share with me your thoughts. You can post here or send me a private email to rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Sunday, November 9, 2008

Monday’s Musings: The Role of User Groups - Check and Balance

Conversations and polling at recent user group meetings confirm a common sentiment that user groups should play a role as client advocates with the vendors. Information dissemination, benchmarking, product issues, training, and maintenance fee reductions rise to the top of the list in this 235 person on-going survey. While not explicit in all charters, here’s a full list of expectations user group members seek from their user group:

  • 85% - Communicate vendor news and updates.
  • 73% - Benchmark performance.
  • 72% - Address product issues, bugs, enhancement requests.
  • 68% - Deliver training and educational sessions
  • 65% - Fight for maintenance fee reductions.
  • 63% - Influence product road maps.
  • 59% - Share product and technical knowledge.
  • 51% - Facilitate peer networking opportunities like user group meetings
  • 40% - Provide recruiting opportunities.
  • 35% - Liase with software vendor executives
  • 32% - Negotiate license discounts

The bottom line - Get involved and make a difference.

Companies join user groups for both professional and social reasons. User groups command true power in influence a vendor’s direction while bringing common issues for discussion and sharing. Recent actions by SUGEN - the SAP User Group Executive Network in making some progress on the topic of maintenance fees and improving the vendor-client commitment show how publicity and impact can shape influence. The key is for user groups to leverage the power of the users and clients to publicly and privately create checks in the balance of power with the vendors. Go make a difference and contribute your time to your user group today!

Your POV.

Do you feel your user group has given you value? What are you looking from your user group? Feel free to share with me your experience. You can post here or send me a private email to rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Wednesday, November 5, 2008

Wednesday’s Whispers: The Word On the Street


Congratulations to all! Thanks for your emails and alerts. If you’ve got a change or know of a promotion, keep dropping me a line!

Bruce Cameron is now President of CDC Software. The former executive vice president of worldwide sales and marketing was promoted from within. He now reports to Peter Yip, CEO of parent company CDC Corp.

Jocelyn Eisenberg has started her own analyst relations firm at Eisenberg Analyst Relations Services.

Garland Hall has been appointed SVP of Product Support at Deltek. Garland joins Deltek as of October 6th and brings experiences from EnterpriseDB, Composite Software, and webMethods. As a direct report to Kevin Parker, Garland will manage the global customer support operations.

Klaus Kreplin, the head of SAP’s NetWeaver Product and Technology Unit retired from SAP in October.

Allen Lovett joins Compiere as EVP of Field Operations. Allen will drive go-to-market stratgy for global expansion in sales and professional services. Lovett comes from senior experiences at Sawis Communications, Oracle, Siebel Systems, and Upshot.

John Papandrea joins SAP as a SVP of the Healthcare IBU from Deloitte.

Hannah Smalltree became Editorial Director, Enterprise Applications Media Group at TechTarget in July 2008.

Sergio Segal became a consultant in Competitive Intelligence at SuccessFactors in June 2008.

Borys Stokalski, VP at Infovide-Matrix has become President, Mazovian Chapter at PTI (Polish Information Processing Society) in October.

Michael Van der Breggen has been promoted from Operations Director to Vice President at Atos Origin. He will lead the company’s ERP services in North America as of October 29th.

Ben Wan became Board of Advisor at Motally in August 2008.



Got a scoop or something to share? Please post or send on to rwang0@gmail.com and we’ll keep your anonymity.

  1. Heatlhcare Information Systems are still all the buzz. The VC’s I’m talking to hint that a big name like a McKesson, Cerner, Epic, or Medi-tech may make the move or be the target. One could even expect the acquirer to be a Big 4 vendor.
  2. SaaS Integration vendors may be the next big area for M&A. As customers struggle for seamless hybrid integration, vendors are looking for the best integration tools.

Copyright © 2008 R Wang. All rights reserved.

Tuesday, November 4, 2008

Tuesday’s Tip: Vendor Selection - Deciphering Vendor Provided Customer References

As competition intensifies for new license deals and users are under pressure to be cautious with new spending, all parties should expect increasing pressure for quality customer references. Customers seeking references should focus on the following areas of relevance:

  • Industry - expect to get down to the micro vertical level

  • Market size - focus on number of employees and revenues
  • Geographical - address local as well as global requirements
  • Role - consider individuals in similar roles or account for different roles for a different perspective

Its customary for the vendor to provide their reference lists. Keep in mind, many of these references are receiving monetary and non-monetary favors for their time. For vendor supplied references, customers should ask seven key questions to gauge the motive and incentives of these references:

  1. Did your organization conduct an open vendor selection process?
  2. If you were not representing this vendor, which product would your organization have purchased?
  3. Is your organization part of a vendor specific reference program?
  4. Are you earning points or credits for other vendor related services such as training, conference passes, professional services, etc.?
  5. Does your organization receive prioritized functionality requests?
  6. Who is your executive sponsor? Is that person available to regular customers?
  7. Have you received travel compensation for today’s activities?

The bottom line.

As an industry analyst, we often encounter vendor references that are genuine. However, from time to time, we have had to deal with vendor provided customer references who have vested and biased interests. In one MDM related example, 3 out of 5 of the vendor’s references did not conduct an open vendor selection process. 2 out of 5 vendors told us that the product was working well even though we had received inquiries to the contrary from other parts of their organization. It pays to do your due diligence. Make sure you understand what incentives and motivations are driving the reference to spend time talking with you.

Your POV.

Have you had a great vendor reference only to find out that the reference had stretched the truth? Feel free to share with me your experience. You can post here or send me a private email to rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Monday, November 3, 2008

BLOG UPDATE: Change your links to blog.softwareinsider.org

Hello! Starting in January 2009, A Software Insiders Point of View will be moving to a new home. As we are in beta, look forward to new ways of sharing and reaching out. Look forward to your suggestions!

Here's the new blog link:



Sunday, November 2, 2008

Event Report: IBM Unveils the Information Agenda at IOD 2008

(Photo: The show floor from IBM IOD 2008 at the Mandalay Bay Convention Center
Copyright © 2008 R Wang. All rights reserved.)

IBM’s third annual Information On Demand event emerges as part of the “Must Attend” list of Enterprise Software pow wows. More than 7000 attendees were treated to 600 technical skill building sessions and 120 business leadership sessions. This year’s theme focused on the need to create an Information Agenda to sustain a competitive advantage and achieve business optimization. Some interesting perspectives from the event:

  • Business optimization growth is twice as fast than business automation growth. IBM makes the case that workforce productivity, customer profitability, financial risk insight, and other optimization applications gain more traction than automation apps like ERP, HR, Financials, and CRM.
    POV: The era of automation emphasis is coming to an end. After years of depositing data into systems, enterprises seek value from all the information in their ERP, CRM, or HR system. Users expect more than automation from systems and want actionable insight designed for roles that are proactively delivered.
  • IBM is positioned for business optimization via its acquisitions in Information On Demand. The thesis - IBM is delivering information assets via DB2, FileNet, and Informix. Business value in this trusted information can be unlocked via InfoSphere and then realize optimized business performance via business intelligence (i.e. Cognos)
    : Delivering an Information Agenda requires a tightly integrated stack. This requires significant integration of canonical data models, business processes, meta data, and semantic information. While IBM has made progress in bringing together its acquisitions, at this point in time no vendor has truly delivered on this from a software basis. Considerable amounts of professional services help is still required for success.

Customers See Value In an Information Agenda, now that they know what to call it

As I was there to give talks on integrated data management strategies - Track 2787: The ROI of Instance Consolidation and Track 2792: The Business Value of Integrated Data Management, it was refreshing to find an information focused audience. Here are some interesting conversation snippets and observations:

  • Customers desperately seeking access to “real-time” and “near-time” data from legacy apps.
  • Everyone wants more device delivery choices.
  • The stack war will be Blue vs Red in the next 3 to 5 years.
  • Operational business intelligence critical for actionable insight.
  • BI is not a luxury during a downturn but a necessity for success.
  • Data archiving plays an interesting role in data optimization and meeting compliance requirements
  • MDM continues to gain traction as deal volumes have picked up in Q3 and Q4. This could be the “last big spend” before 2009 as a VP of Apps at a large CPG firm expressed.

Your POV

Have you created your own information agenda? Does this term resonate with you? Has your organization shifted from treating data as a commodity to valuing information as an asset? Post a comment or privately reach out to me at rwang0@gmail.com .

(Photo: View from Mix @ THE Hotel during the IBM Cognos reception - IOD 2008
Copyright © 2008 R Wang. All rights reserved.)

Copyright © 2008 R Wang. All rights reserved.

Tuesday, October 28, 2008

Tuesday’s Tip: SaaS - Integration Advice

Continued interest in software as a service (SaaS) stems from the pay as you go pricing, constant stream of innovation, rapid deployment options, and the ability to do an end run around IT. As the number of options proliferate, enterprises will increasingly lean on SaaS as the mission critical system. Thus, end users need an enterprise apps strategy for SaaS that addresses the "I" word - Integration. The requirements and leadership for integration will lead to the pragmatic realization that SaaS can no longer be ignored by the IT department. As organizations brace for the proliferation of SaaS procurements integration should focus on:

  • Data mapping - as data moves from one system to another, data must be transformed accurately. More importanlty, service and related metadata are cataloged into a repository for discovery by management tools and development tools.
  • Business process orchestration - granularity of web services must be harmonized so that the overall process flow is seamless among various systems. Integration services actively manage service access, execution and quality of service.
  • Quality of service - Like SOA, QoS metrics ensure that the information flow was delivered to the right system at the right time for the right person. Characteristics such as security, transactions, performance, style of service interaction, etc. are explicitly identified and specified for each service

A few key solutions providers to watch out for in the SaaS integration space include:

  • Blue Wolf Group - a system integrator with an Integration as a Service (IaaS) offering
  • Boomi - a SaaS integration layer services company
  • Cast Iron Systems - a software based integration appliance (i.e. hardware)
  • Informatica - a data integration provider with a multi-tenant, cross-enterprise data integration on-demand service
  • Magic Software - a business and process integration provider
  • Pervasive- a data integration provider with an Integration as a Service (IaaS) offering
  • Snap Logic - an open source data integration tool provider

The bottom line.

The successful adoption of SaaS solutions will transform usage from purpose built point solutions to integration into mission critical processes. The result - SaaS integration will emerge as a key discipline in the overall enterprise app strategies of enterprises who seek to manage a portfolio of provisioned services.

Your POV.

Have you completed a successful SaaS to on-premise integration? How'd it go? Was it easier/harder than your on-premise integrations? Feel free to share with me your view points. You can post here or sending me a private email to rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Monday, October 27, 2008

Monday’s Musings: Consider Consortium Buying as a Win-Win Strategy

Falling revenues, crumbling custom systems, and declining budgets often bring municipalities, state authorities, and related agencies together to gain efficiencies in vendor selection, purchasing power, implementation, maintenance, and support costs. End users in the private sector seeking long term efficiencies may want to take a page from the public sector and consider shared services consortium buying. Here are three reasons enterprises in similar industries or within large corporate entities may consider shared services consortia:

  • Vendor leverage. Industry specific consortia can provide a check and balance with the vendor in pushing for functionality requests and prioritization of bugs and enhancements. Many consortia offer more than one solution to keep this check and balance alive.
  • Purchasing power. Properly designed consortia deliver buying power that reduces the incremental unit cost per user. Areas for improvement include license fees, hosting costs, and support resources.
  • Staff retention and recruitment. Consolidating a critical mass of IT talent allows for shared knowledge, improved collaboration, and increased training opportunities. Improved margins allow for investment in staff development and investment in the latest technologies and releases.

The bottom line.

Operational efficiency lessons learned from the public sector are applicable to private enterprises . Natural places for consortia development include primary nodes of networked enterprises. For example, a high tech manufacturer could standardize on 2 vendors and negotiate a license that would allow its suppliers and channels to incrementally add on. In some cases, industry trade groups such as as Blue Cross and Blue Shield in the health insurer space could provide such services. Depending on the legal structure of some user groups, such services could also be delivered. Consider software vendors such as CGI, Lawson, and Oracle for their expertise in arranging such agreements.

Your POV.

Got a consortia experience to share? Have any other tips for the economic down turn? Post a comment or drop me a line at rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Wednesday, October 22, 2008

Event Report: Siperian Masters 2008 - Customers Confirm Multi-Entity MDM Trends

Registration Area for the Siperian Masters 2008 held at the Bridgwater Marriott

(Photo: Siperian Masters'08 registration area. Copyright © 2008 R Wang. All rights reserved.)

About 200 attendees were present as Ramon Chen, VP of Marketing, kicked off the event to the theme of adventurers and pioneers in MDM at the Bridgewater Marriott (New Jersey). CEO, Peter Caswell, led the keynote session with a view on where Siperian has been, where Siperian is going, and then introduced the Ravi Jagannathan VP of Product Management and Manish Sood, Senior Director of Product Management. They presented Siperian's road map well into 2012. Key announcements include:

  • Ongoing expansion of the partner ecosystem and alliances.
  • Announcement of semantic masters for unstructured data.
  • Focus on easier to maintain GUI
  • Continued availability of modular deployment options and other cost effective implementations
  • New state management and work flow integration tie backs to the Lombardi BPM tools
  • Visually appealing data governance dashboards.

In addition, a few key trends emerged from conversations with customers and partners:

  • Most customers who had MDM projects also were embarked on SOA projects
  • Pharma customers successfully proved ROI and justification despite being in SAP and Oracle "only" environments
  • Availability of system integrator resources has improved.
  • MDM projects need to be more pervasive and address innovation in order to gain long term political support.
  • Many customers have reached what Forrester Research considers a Level 3 and 4 MDM maturity.
  • Prospects continue to see Siperian as short listed vendors
  • Many seek more innovation from their MDM systems and are beginning to branch out of their single data entity focus.

The bottom line

Siperian customers seem to be well ahead of the pioneering stage with MDM. Customers we spoke to remain satisfied with their decisions and have been successful in proving existing value. Many customers have transcended past level 3 on the MDM maturity model.

Your POV

Do these trends jive with what you are seeing in MDM and CDI? Looking forward to hearing your thoughts. Post a comment or privately reach out to me at rwang0@gmail.com Check it out on the Forrester Blogs.

Ramon Chen doling out the 2008 Siperian Masters Awards

(Ramon Chen presenting the 2008 Siperian Masters Awards.Copyright © 2008 R Wang. All rights reserved.)

Copyright © 2008 R Wang. All rights reserved.

Tuesday, October 21, 2008

Tuesday’s Tip: Master Data Management - Focus on the End in Mind

Begin with the end in mind” is based on the principle that all things are created twice. There’s a mental or first creation, and a physical or second creation to all things.”

~ “The Seven Habits of Highly Effective People” by Stephen R. Covey

This Coveyism rings quite true especially with MDM deployments. Those seeking to innovate with MDM as opposed to just finish the job will find themselves asking key questions such as:

  • For whom will this data be for? How will they use this information to take action?
  • What’s the outcome? What are we trying to achieve?
  • What will this information look like for another user?
  • When does this question need to be answered by?
  • How does this align with our business drivers?
  • Where can we find the most accurate source?
  • Why is this data important?

This “end in mind” reasoning then leads to the First and Second approach as Covey puts it:

  • Mental creation. When beginning the design of an MDM project, focus on the result provides a design point to work backwards from and design role based scenarios. With those scenarios in hand, business process can be mapped back to the corresponding data.
  • Physcial creation. With a solid blueprint in hand, the implementation teams can now test the scenarios. Assumptions about data integration, process integration, and strength of executive sponsorship will all be put to the test.

The bottom line.

The planning phase is a critical component of MDM. Successful projects often start with a detailed design process that asks the key questions with both a proactive data management focus and role based actionable insight approach. Successful project teams tailor design to how people are using the information. Build this Coveyism as a principle in your design phase and avoid the hassles of a failed MDM project.

Your POV.

I’d love to hear your lessons learned. Feel free to share with me your MDM implementation story. You can post here or sending me a private email to rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Monday, October 20, 2008

Monday’s Musings: Expect More Acquisitions By the Big 4 in 2009

Continued economic slow down, credit crisis, and diminished IPO market create the perfect storm for the Big 4 or as fellow blogger Josh Greenbaum likes to call it, MISO (ie. Microsoft, IBM, SAP, and Oracle). Here are four trends at work that shape the thinking on why 2009 will be another year of continued consolidation:

  • Most privately held vendor exit strategies focus on acquisition not IPO. Many firms with IPO plans have been told by their boards to refocus on revenue growth and partnerships. The intention - use partnership success to both drive revenue growth and attract acquisition by a larger vendor. Many see acquisition by the Big 4 as the best exit strategy at this point in time.
  • Strategic acquisitions target vendors with strong recurring revenue streams. Chatter from BBQ’s and luncheons highlight vendors with large maintenance revenues as an area for potential targets. Nurting a profitable and recurring revenue stream will allow many vendors to share overall development and support costs as they weather the next storm. The hunt is on for vendors who fit this bill as private equity and vendors chase after these assets. Case in point - the intention to acquire Epicor by Elliot Associates.
  • Economic conditions lowers publicly traded vendor valuations. For companies with a prescribed target list, its never been cheaper to acquire a competitor. Most P/E ratio have become quite attractive and fall below the standard 2X to 3X revenue price target.
  • Pressure remains to grow new markets. the larger vendors express tremendous interest in acquiring new distribution channels, micro industry verticals, and new geographical coverage. One great example is the movement in the Microsoft Dynamics partner base. The rumors of M&A run fierce as the partners consolidate to gain scale for regional and global delivery. The fight for Axon by HCL and Infosys also highlights the consolidation happening around SAP system integrators as they transition into solution providers.

The bottom line.

Despite the gloomy economic outlook, end users should assume that the biggest vendors will continue their torrid pace of acquisitions. As these acquisitions factor into long term apps strategies and planning for 2009 purchases, users must assume that truly specialized solutions with significant industry footprint will be acquired. One proactive approach is to suggest acquisitions and tie-ups to key vendors during discussions with their senior management on financial viability as well as long term roadmap and strategy.

Your POV.

Who do you think will be acquired by whom next? Look forward to your thoughts. Post a comment or drop me a line at rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Sunday, October 19, 2008

BLOG UPDATE: Change your links to blog.softwareinsider.org

Hello! Starting in January 2009, A Software Insiders Point of View will be moving to a new home. As we are in beta, look forward to new ways of sharing and reaching out. Look forward to your suggestions!

Here's the new blog link:



Friday, October 17, 2008

Event Report: Inforum 2008 Highlights Transition from Acquirer to Builder

Infor's Jim Schaper Conducting the Las Vegas Philharmonic

(Photo: Jim Schaper Conducting the LV Philharmonic. Copyright © 2008 R Wang. All rights reserved.)

Inforum’s attendees were treated to a wonderful pre-keynote string quartet and a booming opening inspirational from both the Las Vegas Philharmonic Orchestra and the rock band Innovation. As the orchestra took a bow, Infor’s CEO Jim Schaper, emerged from the conductor’s stand to the surprise of over 5000 attendees. The ever personable and charismatic CEO discussed how Infor would help customers compete in an emerging world of business networks that required innovation to be able to respond to change. He also spoke of the $325M being invested back into the product in the next 4 years.

Key innovation announcements from the event include:

  • SaaS offerings. Infor announced several SaaS options into the marketplace for users of Infor ERP SyteLine, Infor EAM (Enterprise Asset Management), and Expense Management.
    : Keep in mind, these are true multi-tenant SaaS options, not hosted On Demand plays like other competitors. Discussions with attendees showed a mixed reaction to SaaS offerings, but in general there was receptivness to a new lower overall cost model. Most attendees believed this showed Infor’s investment into new technology.
  • Expanded relationship with Microsoft SQL Server. The announcement of a single Infor point of contact for sales, maintenance, and support provides a cost competitive option for customers seeking to take advantage of significant performance and feature improvements in Microsoft SQL Server.
    POV: Over 50% of Infor’s customers have deployed solutions on Microsoft SQL Server across 20 solutions. This move delivers a win-win for customers in price and support. In the future, new features in SQL server could provide customers with stronge BI capabilities.
  • Role based launch pad. Infor MyDay is a web 2.0 user interface that’s role based to 150 personas that Infor has defined for its clients. Infor’s MyDay product represents the leading edge thinking in user experience where tasks, alerts, and performance indicators are pushed to users based on their roles. This first release involves 16 roles across four ERP products.
    POV: This builds off of Infor’s announcement last year where there was a push towards portals. The key differentiator is the move towards persona based development which gives Infor a unique design approach on par with the Microsoft Dynamics approach. Infor joins Lawson, IFS, and Epicor as early adopters towards more Web 2.0 centric approaches.
  • ERP LX enhancements for the i-Series base. New enhancements delivery improved regulatory compliance and usability. In addition, there are added globalization capabilities that support multiple languages in a single data basis and a key GMP (Bood Manufacturing Practice) requirement for the US Food and Drug Administration and the European Food Safety Authorit.
    : The i-Series base has been neglected a bit for some time. These improvements were well received by the ERP LX customers on site. After speaking with about 23 customers on older versions of BPCS, there was now a good incentive to upgrade to ERP LX.

The bottom line

As one of the few enterprise apps vendors over $1B in revenues, Infor is set to be one of the survivors in the next economic cycle and a significant alternative for Oracle and SAP customers looking for purpose built solutions and divisional standalone applications. In addition, Inforum as an event is well on its way of must attend events during the year and highlights the key trends in the SMB market.

Your POV

Do you own an Infor product? Are you expanding the usage of Infor products? Do you see these as more value oriented alternatives to the Big 2? Do you have issues with Infor. Looking forward to hearing your thoughts. Post a comment or privately reach out to me at rwang0@gmail.com

Copyright © 2008 R Wang. All rights reserved.

Tuesday, October 14, 2008

Tuesday's Tips: Software Licensing and Pricing - Q4 Bodes Well For Discounts

In both the enterprise and SMB space, recent market conditions point to a lack of available financing for enterprise software purchases. This trend will continue as the credit markets tighten. The result - vendors will be more inclined to discount. Enterprises engaged in contact negotiation with software vendors should take this opportunity to seek additional discounts as the scarcity of new deals will put customers in the driver seat. Keep in mind a few tips:

  • Push for deeper discounting. Now's the time to buy more licenses should you need them and if you have the cash to spare. Vendors remain anxious for new deals and new deals are far and few between. Apply lessons learned from the last economic downturn. Discounting will include non license areas such as implementation, training, and support. Push for maintenance fee decreases where possible.
  • Don't hesitate to wait till January 2009. Customers are now in the driver seat. Taking the time to push purchases off till January 2009 buys time for the implementation markets to slow down and provide enterprises with the best deal.
  • Expect vendors to raise revenue recognition rules as a barrier. Vendors often use revenue recognition issues raised by AICPA Statement of Position (SOP) 97-2 as an excuse to limit certain levels of discounting. In many cases, vendors may be bound on how the recognize the licensing, selling, leasing, and/or marketing of that software. Vendor specific objective evidence known as VSOE requires a company to demonstrate fair value, especially when deliverables like license, support, upgrades, and maintenance are bundled. One approach - have the vendor demonstrate the range of discounts as they apply to their VSOE rules. Often times, the sales person is confused about how these rev recognition rules impact and hides behind these rulings. Breaking down the revenue recognition components often identifies hidden opportunties. Keep im mind there are some limits.
  • Understand how non-monetary concessions have value. Once you reach the point of a price floor, consider asking for the right level of product development and executive sponsors. Other options include more favorable changes in software licensing clauses such as a set rate of maintenance for the life of the contract. Consider being a reference account should the vendor agree on functionality enhancement delivery deadlines or SLA's during implementation or upgrade. Opportunities to establish industry standards with peers may also prove beneficial.
  • Seek escrow accounts for vendors that may pose financial viability issues. One way to protect your software investment is to seek a deposit of the software source code into a third party escrow account. This is one way to ensure the maintenance of software, and if the vendor goes bankrup or fails to maintain and update the software as promised, you own the code. You can also set up other conditions like change of control or certain thresholds of financial performance.

The bottom line.

The next 6 to 12 months will provide a unique opportunity to negotiate for new deals. Expect continued discounts until the credit markets stabilize. Keep in mind that the above advice should be approved by and in partnership with your own legal counsel and vendor management professionals.

Your POV.

I'm curious as to how you did on your last deal. Share with me your story and concession by posting here or sending me a private email to rwang0@gmail.com. If I use it in my next research report, I’ll send you a copy of one of our Long Term Packaged Apps Strategy reports. Look forward to hearing your thoughts!

Copyright © 2008 R Wang. All rights reserved.

Monday, October 13, 2008

Monday's Musings: 5 Steps to Restoring Trust in the Vendor - Customer Relationship

Software vendors face significant decisions in the next 6 to 12 months on how to respond to the economic downturn. Anxious shareholders and slipping quarterly forecasts may lead vendors to ignore their implied vendor customer contracts. This "implied contract" is the inherent trust a customer has with their vendor to do the right thing. It's a trust that the customer placed with the vendor when they moved from custom apps to packaged software. This is important for two main reasons:

  • Crisis of confidence among consumer industries will spread to B2B. Why is this important? According to the latest BBB/Gallup Trust in Business Index Survey, almost half (47%) of those surveyed say that "they have some, very little or no trust at all with the companies they do business with in everyday life." Moreover the trust in businesses, for 13 of 15 industries measured, has fallen 14% during the last 7-month period. The survey and index, commissioned by the BBB and conducted by Gallup, measures consumer trust in businesses they regularly deal with. Growing lack of trust with every day businesses will eventually spill over to other business relationships such as technology vendors.
  • Vendors who squeeze customers during the down turn will breed mistrust. As economic conditions worsen, software vendors often find themselves faced with margin pressures that eventually lead to cuts (in order of priority) in marketing, back office, customer service, sales, and R&D. Efficiency efforts often result in short term gains as management finds ways to be more efficient and improve their processes. Unfortunately, some vendors will go too far, leading to poor customer service, aggressive sales forces, and stagnating product lines. This often results in angry but locked in customers who will defect at the first opportunity during the next economic recovery. But the underlying issue here is trust. Does the customer currently trust their software vendor to do the right thing?

Software Vendors Can Take Proactive Measures To Improve Trust During Economic Uncertainty

So the real question - Will software vendors take a longer term view to find ways to both reduce expenses and improve how they treat their customers while delivering new innovation. At first, this may sound like a paradox, but unlike industries such as financial services and retail, high tech companies have not run out of cash. In fact, lessons learned from previous boom and bust cycles have taught them to hoard cash for rainy days or acquisitions. Most software vendors who survived the last economic rout socked away healthy levels of cash on hand. The real issue - convincing nervous shareholders that they need to reinvest a greater percentage of revenue back into areas such as service and R&D during the downturn so that they are able to capitalize during the next economic boom cycle.

5 Stakeholder Focused Strategies Can Be Funded Through Maintenance and Support Fees

Where would the money come from? Maintenance and support fees represent the most logical source. Recent conversations with insiders estimate the profitability of maintenance and support fees at up to 85% of the fees for products in the third year or greater in maturity. Further, most support organizations privately admit that not enough of the fees actually go back into the support organization, let alone new product development. Vendors could quickly earn customer trust by providing transparency as to where those monies are being allocated. Five steps that would improve ownership experiences and improve trust include:

  1. Lowering the overall cost of ownership. Customers seek rapid implementation methodologies, richer admin tools, and lower cost access to skilled resources. Cost of maintenance for established products should drop over time, not increase because customers also gain greater proficiency and can leverage self service help tools. Customers seek a reduction in the complexity, cost, and time required to upgrade products. The outcome - efficiency efforts will leave money on the table for innovatioin and new projects.
  2. Delivering hybrid deployment options. With SaaS adoption doubling every year and potentially increasing during the down turn, today's products and solutions should support multiple deployment options. Customers may choose hybrid options that require seamless integration among on-premise, hosting, and SaaS models. The outcome - choice will keep customers from feeling locked in.
  3. Increasing the pace of innovation. By reinvesting more maintenance dollars into the product, vendors can better meet industry specific and customer specific enhancement requests. Inclusion of customers in the design process of future releases, improves the relationship and provides a tangible value to the maintenance dollar. The outcome - rapid delivery of such requirements will build long term trust of how the customer's maintenance monies are deployed.
  4. Supporting greater heterogeneity. Vendors need to deliver on the promise of SOA and web services. Customer have sought improved integration from this next generation of architecture. The intent is to connect legacy systems and support best of breed vendors. The outcome -Any action to improve the capability to integrate with other systems will improve value.
  5. Orchestrating value in partner ecosystems. The larger vendors have the opportunity to show how their ecosystem partners can also provide a complete solution that support regulatory compliance and operational efficiency business drivers. Smaller vendors can identify synergies with partners to build ad hoc and eventually mutual partnerships. The outcome - customers will see the value in how ecosystems can bring new solutions to life.

The bottom line.

The most valuable commodity in this economy and in business relationships is trust. The current downturn in the economy has been exacerbated by a deterioration in trust and a lack of any one party to improve trust and accountability. Software vendors have this opportunity to take their position of strength and demonstrate how they can provide customers value during a down turn. In doing so, they will help their customers succeed and earn customer loyalty and good will when the economy picks up.

Your POV.

If your a vendor, what's missing? Will you be able to convince your board and management? For customers, what else are you looking for from your vendor. What will breed greater trust? Post a comment or drop me a line at rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.