Trip Report: Dubai Day 1 - Go East... or is that West my friend?

(Copyrighted 2008. Photo by R Wang. All rights reserved)

Much has been said about Dubai. Some have called it the Singapore of the Middle East, others liken it to Hong Kong in the 1980's. Whatever the analogy, this bustling and booming middle east powerhouse, is one of seven emirates in the United Arab Emirates (UAE). Much of Dubai's success is credited to Sheikh Mohammed bin Rashid al Maktoum, often affectionately known as the "CEO" of Dubai Inc. He also serves as the Vice-President and Prime Minister of the UAE. Faced with depleting oil reserves, the Sheikh embarked on a mission to transform the emirate into a world port, financial center, trade center, and tourism destination. The success in diversification has led to tremendous growth. In fact, Dubai's economy was $17B in 2000 and $35B in 2005. And unlike other governments in the region, oil only contributes less than 6% of the nation's GDP.

With this boom, Dubai has attracted western investors for capital and convinced both individuals and corporations to start new ventures . In fact Dubai's growth has probably surpassed China's this year. The result - expatriates have come to this tax-free haven to offer services in a host of industries from real estate and construction, hospitality, and high tech. Consequently, expatriates from the east (i.e Indian, Pakistan, and the Philippines) provide the low cost labor that fuels the building and services boom while those from the region and west (i.e. Iran, Lebanon, and Europe) play white collar roles.

• Construction and real estate booms rival those of Shanghai. Real estate and construction activities abound. No matter what direction you look, you'll see a new high rise or construction project. Almost 24 percent (i.e. 30,000 of 125,000) of the world's construction cranes operate in Dubai. Projects such as the Palm Jumerirah and the World highlight how manmade islands and a flair for design can successfuly come together. The world's tallest skyscraper, Burj Dubai has already surpassed Taipei 101. The actual height has not been disclosed. Meanwhile, continual construction of beach side destinations include the world's only 7 star resort, Burj Aj- Arab.

• Burgeoning high tech economy resides in special zones. Technology also is doing quite well. Special business districts dot the city and cover areas such as Media and Internet. Launched in 2000, Dubai Internet City (DIC), comprises of 600 companies focused on high-tech. Industry stalwarts Cisco, Dell, HP, IBM, Microsoft, Oracle, SAP, Siemens, and Sony Ericsson have substantial presence in Dubai. This has led to an exciting market for technology professionals and in fact quite a battle for greenfield accounts, especially in the enterprise software market.

The bottom line
Tremendous growth in the region brings large green field opportunities for enterprise software. Almost every new project, venture, and local office is either updating, replacing, or considering new systems to meet exponential growth. (edited thanks to anonymous...Expect this market to remain recession proof and emerge as a beacon in a world slowly sliding into recession) Expect this market to remain less susceptible to recession this economic cycle and potentially emerge as a beacon in a world slowly sliding into recession.


(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 2008 by R Wang. All rights reserved

Event Report: Sun Labs Open House Showcases Growing Strength In Enterprise Class Tools

Lab days are always a great opportunity to see what's new and what's possible. Sun's event is always no exception and one of the highlights during the year. With 40+ top Sun researchers, fellows, and distinguished engineers in the labs, attendees could feel the passion for innovation in both their infomal one on one demos and formal and talks. A few projects really caught on with trends in virtual worlds and platform/software as a service include:

• Project Wonderland brings "Second Life" -like tools to the Enterprise. Built on Project Darkstar, a software infrastructure that supports massive scaling for virtual worlds, social networking, and gaming, Project Wonderland, delivers a toolkit for those looking to build 3D virtual worlds. On site, the demos highlighted how unified communications and virtual worlds can come together to deliver colalborative work environments.
  

During the informal demo, someone from the off-line world could dial in and be represented as an orb that would be escorted to different meeting environments and passed on from room to room as needed. Virtual white boards could be used side to side with other applications that could be shared in a collaborative fashion. Sun internally uses these worlds and dubs it as MPK20, referring to the numbering systems at the Menlo Park campus.

• Project Caroline provides a scalable platform as a service This project highlights how a GNU General Public License version 2 platform as a service offering can be used to rapidly deploy dynamically scalable Internet based services. Using Java and Perl, a series of enterprise class applications and web services could be hosted and delivered via this platform. The project currently uses a PostgreSQL dB. Though no comment was made about a productized version, insiders noted that MySQL will be supported in future developments and this could lead to productization. T

A host of other projects of interest that have potential to touch on the enterprise software world include:

• Project Sun SPOT - showcased at last year's event, this experimental platform showcases how Java can be embedded with robotics, wireless sensor, and swarm intelligence technologies. Like many of Sun's new offerings, this one is available as Open Source on Java.net. and has a lot of great promise work automation and artificial intelligence applications.
• Project Fortress - this project debuted two years ago as a new programming language for high performance computing (HPC). Released March 31, 2008 as Project Fortress Version 1.0, the first specification of the language is now synched with an implementation. This new programming language shows a lot of promise as software increasingly will rely on HPC and more complex modes of virtualization and Project Fortress could provide a viable option for the Open Source world. Key features include static checking; library based defined languages; implicit paralleism; and flexible, space-ware mathematical syntax.
  

The bottom line.
Despite repeated reports of the "Sun" setting at this venerable Silicon Valley icon, innovation is alive and well . Software continues to be one of 4 key focus areas. These latest innovations provide insight to what may be possible in a world where Open Source emerges an alternative platform. With the acquisition of BEA by Oracle, Sun could emerge as a strong independent platform for other system integrators, ISV's, and independent minded developers to extend and build solutions on top of. Of course, this would be dependent on Sun's commitment to building tools and a strong ecosystem to provide other innovators and customers who want an independent choice.

(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 2008 by R Wang. All rights reserved

News Analysis: Rimini Street Says "No" to Tomorrow Now

Recent press releases from Rimini Street indicate that the third party maintenance provider will not pursue an acquisition of Tomorrow Now from SAP. A few reasons why an acquisition of Tomorrow Now might not make sense:

• Why buy when they are coming for free? Many global and big named customers already have made the decision to migrate to Rimini Street. Money spent on an acquisition could be used to improve existing service offerings instead.
• Top talent has moved on to SAP. Many of the best account managers and support engineers have transitioned over to SAP's Active Global Support (AGS) organization and no longer work within the TomorrowNow unit. Existing customers have expressed some frustration with the "skeleton" crew.
  
• Tomorrow Now currently a money losing operation. With SAP losing and estimated $35M a year at the Tomorrow Now operations, only a provider with enough scale could stem the losses. In addition, the pending litigation from Oracle continues to put a damper on any potential acquisition.
  

The bottom line.
With Erwin Gunst at the helm as COO and his board mandate to cut costs and increase margins, its inevitable that a deal to unload Tomorrow Now will become a near term reality. However, the new buyer will have to stem the tide of customer defections to Rimini Street as well as find a way to keep Oracle off its backs. Despite such set backs, expect the pressure for third party maintenance options to increase as the recent maintenance price increases by SAP for new customers will only add to the mounting pressure for new options.


(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 2008 by R Wang. All rights reserved

Implementation Basics: Remember Lessons Learned from Y2K and Go Back to OP = Q+R+S+T

Yep, it's true, sometimes we all need a flashback refresher. These past few weeks I've been with clients who are looking to either quickly implement a new ERP system or rapidly complete an upgrade. As many of you know, that's not that easy. But what's been so unsettling is how little we have learned from the Y2K experience. Let me share with you a few universe truths that keep coming up:

• Governance must not be all talk, no action. Proper executive sponsorship continues to evade upgrades, re implementations, and even new project selection . Executive sponsorship remains a key component of success and companies can't afford to lose business and IT collaboration.
  
• Program management remains a necessity, not a luxury. Change management, issue resolution, milestone tracking and communication strategies were the critical success factors for successful implementations. With almost 4/5 CRM projects and 1/2 of ERP projects failing, the key factor was strong program management. It starts with the internal organization. Whether or not you go with PMBOK best practices or seek PMI certification, don't skimp on this!
• Future state has to be determined before you start, not on the fly. Implementations which have not gone through the rigors of defining a future vision upfront often fail. With proper governance, program management, and a detailed design, terprises must invest the resources for business process redesign, reduction of duplicate data models and architectures, and design and testing by use case scenarios. This blue print should define a framework for the future state. Enterprises should also carefully evaluate where heavy configurations are required and what customizations should be minimized.

• Finally, the law of physics apply when talking about the outcome of a project or (OP).

OP = Q + R + S + T

Outcome of project = Quality + Resources + Scope + Time

1. Outcome of the project refers to the overall success and result
2. Quality refers to how well the project is delivered to specifications and requirements
3. Resources refers to the money, labor, and effort deployed on the project
4. Scope refers to the project objective and expectations planned
5. Time refers to the duration required to achieve the desired outcome

The bottom line.
Successful project outcomes require a level of upfront planning and organization. The interlay of people, process, technology, and solution ecosystem ring true and enterprise who fail to learn from the lessons of Y2K will continue to make the same mistakes leading to negative outcomes of project. By keeping in mind 3 critical success factors and OP = Q+R+S+T, enterprise will reduce the risk of failure.

(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 2008 by R Wang. All rights reserved

Event Report: Lawson Cues Up New Offerings with Flair

(Courtesy of Lawson Software Inc.)

Lawson CUE 2008 attendees once again were treated to one of the best key note presentations in the enterprise software industry. Amidst CEO Harry Debes "Dean Martin Show" themed key note and SVP Dean Hager's "The Office" parody on Day 2, the team strongly articulated Lawson's progress, current successes, and future direction. Key announcements include:

• General availability of Lawson Talent Management. As a part of Lawson's Strategic Human Capital Management System, Talent Management delivers capabilities in talent acquisition, performance management, succession management, learning and development, and compensation management. The solution can be delivered as a SaaS model or directly integrated within the Lawson Core HR application. Facebook integration, Smart Client capability, and an International roll out strategy help move Lawson from a North American offering to one with Web 2.0 relevance and international reach.

• Lawson Smart Office information workplace offering. Smart Office is a Rich Internet user experience for S3 and M3 customers that is a part of Lawson's User Productivity Platform (UPP). Key features include dynamic personalization, collaboration and workflow, interoperability with Microsoft Office, and integrated Business Intelligence. The offering brings together tools such as Microsoft Word, Excel, Outlook, Powerpoint, and Groove within the Lawson environment. Capabilities in rich personalization include personalized field labels, bookmarks, conditional styling, tab order configuration, personal alerts, and configuration of fields and columns. (More screen shots courtesy of Lawson). Collaboration and workflow deliver "Visio based" approaches to managing business processes. Built on Windows Presentation Foundation, Lawson's Smart Office interface runs rings around current offerings from larger ERP vendors such as Oracle and SAP and is in the same League as IFS' Project Aurora and Epicor's ICE 2.0 interfaces.

(Courtesy of Lawson Software Inc.)

• Lawson M3 Trace Engine 3.0 designed for food safety for food and beverage enterprises. Meeting current and future compliance requirements for EU and US food safety regulations, M3 Trace Engine simplifies the process of tracking ingredients and finished products. This latest release brings key functionality to the US market. With growing concerns about overall food safety, enterprises need to share trace data such as product origin and transport data, provide evidence about product trace lines, and recreate history in the event of food safety incidents.

• Acquisition of Freeborders for key PLM capabilities for the fashion industry. Lawson acquired the PLM division of San Francisco based Freeborders. With very short product life cycle times for product concept to retail store shelf placement, PLM will provide fashion manufactures with quicker sourcing capabilities and lead time reduction. Lawson will add 79 global customers and the product will be sold as a stand alone product.
  

The bottom line

Feedback from customers at CUE, one on one's with key executives, and discussions with partners demonstrate that the senior management team has managed to turnaround the company while also digesting an acquisition. New offerings with a strong industry focus and future product strategy bode well for the 4000+ customers and potential prospects in key industries such as health care, public sector, food and beverage, fashion, equipment service management and rental, and distribution. Expect Lawson to continue to expand its international presence while remaining focused on its core markets.

(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 2008 by R Wang. All rights reserved

Event Report: Microsoft Convergence 2008 - Microsoft Ends Project Green, Renews Enterprise Focus

(Copyrighted 2008. Photo by R Wang. All rights reserved)

New Management Shows Long Term Commitment to Business Solutions Group

Recent Microsoft Business Solutions departures have brought into question whether the Redmond , WA giant is serious about the business applications market. Estimates of year over year growth from 2006 to 2007 have fallen from double digits to the high single digits, and this has raised doubts about Microsoft’s commitment to this $1B + business. (See Josh Greenbaum's latest) Yet, after a string of high level departures including Jeff Raikes, Doug Bergum, Satya Nadella, Tammi Reller, and James Utzschneider, it appears the new management team may be here for the long haul.

The good news - meetings in Orlando with partners, customers, and Steve Ballmer’s key note have helped mitigate many doubts while highlighting a renewed corporate wide commitment that goes beyond the appointment of inside veterans such as Kirill Tatarinov and Chris Caren, and a new business solutions head, Stephen Elop. The message from Convergence was loud and clear – Microsoft is committed to the enterprise apps space, SMB and the large enterprise.

Revised ERP Product Roadmap and Strategy Arises From the Ashes of Project Green
Project Green, Microsoft’s attempt to build a new ERP replacing all code lines, failed because partners strongly expressed as desire to keep building in their code bases, the initiative would hinder development of application breadth and depth, and Microsoft did not want to incur channel disruption across all product lines. On a technical level, existing products lacked the architectural foundations for convergence. With the death of Project Green, the Dynamics ERP team enters a new era. Early evidence shows increased collaboration among the system, platform, and tools teams; streamlined ERP product teams headed by Microsoft veteran Hal Howard; and a continued focus on long term product roadmaps crafted by Microsoft Distinguished Engineer Mike Ehrenberg. What has become quite clear:

• Lessons learned from Project Green demonstrated in current releases. Despite the death of a converged product, customers already benefit from a new role-based personas focus leading to industry leading user experience. Though each Microsoft Dynamics product will retain their existing programming languages, increased platform adoption of SQL Server and VS.NET technologies allow each product line to adopt SOA, process-centric, and model driven design in an evolutionary approach. Teams will increase sharing of design specs, though not code, within the product families.
  

• Shared investment will drive evolutionary convergence. Today all product lines share one user experience design team which implements UI with shared controls from one set of code that fits to each product’s architecture. Over time users can expect more Dynamics Attached Services, SQL Server Reporting Services (SSRS) report design/execution, unified communication (UC) integration components, and common analyst designer for Windows Workflow Foundation (WF).
  
  
• SQL Server will play a critical role in future product direction. Cooperative development between the NAV/AX and SQL teams leads to new features optimized for SQL Server 2008 such as proprietary reporting to SQL Sever Reporting Services (SSRS). With Microsoft Dynamics AX 2009, preliminary performance benchmarks show the best scale on SQL Server 2008, though the product will still support Oracle databases. In addition, BI will be delivered out of the box for Dynamics AX. Via SQL Attached Services (SQLAS)
  
  
• Future roadmap will optimize on Microsoft VS.NET middleware. Existing ERP applications all now use SharePoint as the portal and will leverage the capabilities of unified communications (UC) over the next 2 releases. Microsoft Dynamics SL has already been rewritten in Visual Basic .NET. Microsoft Dynamics AX, Dynamics GP and Dynamics NAV incorporate Windows Workflow Foundation (WF). Microsoft Dynamics GP has supported Visual Studio developers with their Visual Studio Toolkit which exposes, Dynamics GP objects, classes, events and forms to the VS.Net developer. Recent releases of Microsoft Dynamics NAV now incorporate more VS.NET features at run time. Microsoft Dynamics AX 2009 as well as Dynamics GP already leverage web services from Windows Communication Foundation (WCF). Complex roadmap dependencies on underlying Microsoft platform and Office releases, however, impact the extent to which Microsoft can update its Dynamics products, potentially resulting in delays of future releases.
  
  
• Software plus Services initiative signal potential “SaaS-like” solutions. Future roadmaps indicate a movement towards new deployment options that include hostability, attached services, and finished services. With the changes in the 2006 Service Provider Licensing Agreement (SPLA), partners can deploy hosted solutions that will reduce total cost of ownership (TCO) and improve deployment options. Attached services like payment services and fraud prevention technology for credit card payment processing from PayPal and Chase Paymentech Solutions will extend functionality with relevant business services and integrate with on-premise ERP applications. Finished services intend to deliver new functional or vertical solutions in the cloud hosted in Microsoft data centers.
  
  
• Industry Builders Initiative replaced with two new programs with more rigorous certification. Microsoft confirmed that Industry Builder, an independent software vendor (ISV) and system integrator initiative designed to deliver core vertical expertise, would be replaced with two new solutions, Microsoft Dynamics Industry Solutions (MDIS) and Certified for Microsoft Dynamics (CfMD).[i] This decision reflects an internal decision to hold off vertical expansion until the horizontal platform has been significantly revamped to support a broader range of vertical requirements. MDIS requires deeper partner synchronization to product roadmap, code quality assurance, translation, localization, documentation, and testing processes. MDIS will offer industry solutions OEM’d by Microsoft, sold on the price list, and synchronized with the Dynamics product development organization. CfMD provides validation and marketing benefits to existing veritical ISV solutions. Solutions must be tested and provide 10 customer references to qualify.
  
  

  ---

  [i] Industries include apparel and textiles, automotive, construction, consumer driven planning, CPG distributors, CPG manufacturers, field services, food and beverage distributors, food and beverage manufacturers, industrial distributors, industrial equipment manufacturing, manufacturing, oil and gas – energy financial management, process manufacturing – process industries, professional services, retail chain manager, and supply chain execution.

The bottom line
It appears that Microsoft has made a renewed commitment to the Dynamics product line. Future innovations will come from both the Microsoft Business Solutions division and the system, platform, tools, teams. End users can expect to stay within their product family and not to be forced down a path of artificial convergence. Despite the death of Project Green, customers will benefit from an evolutionary approach, albeit this will take much longer than originally expected.

[i] Industries include apparel and textiles, automotive, construction, consumer driven planning, CPG distributors, CPG manufacturers, field services, food and beverage distributors, food and beverage manufacturers, industrial distributors, industrial equipment manufacturing, manufacturing, oil and gas – energy financial management, process manufacturing – process industries, professional services, retail chain manager, and supply chain execution.

(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 2008 by R Wang. All rights reserved

Customer Experience Management: The Experience is in the details...

I am not sure where you stand in the debate over Customer Experience Management -- or if you even stand somewhere. However, most people relegate it to management-consulting-fad category and would prefer that it goes away as quickly as Knowledge Management, Process Management, and Order Management... wait, none of those are going anywhere anytime soon, are they? Well, hate to say that neither is Experience Management.

However, we need to make more sense of it. Let's see if I remember how the typical vendor pitch goes... if you work with us we will redo all your processes, change your organizations into a customer-centric organization, and make your clients for life -- greatly enhancing your wallet-share, yada-yada-yada. Although some of the concepts are certain, most of the pitch sounds impossible to accomplish (and usually it is).

We are starting to see some successes in this arena though. No, it was not the "forklift" approach to process change, or the "complete redesign of the experience around the customer" that won. It was the detailed, meticulous approach to taking care of customers.

Yep, there may not be a need to change ALL your processes after all, or deploying costly and complex systems. You may just be able to do it by focusing on what you need to do, how you need to do it, and what you need to do it. If then, and only then, you notice you are missing some DETAILS, then - by golly - fix that. Chances are your business has survived quite some time by now... so you may know what you are doing. That does not mean you cannot improve it.

And, that is where the detail part comes in. Focus on the details, let the processes fix themselves (as a former mentor of mined used to say "if you take care of the minutes, the hours take care of themselves"). Don't spend your energy trying to come up with the ultimate experience - you will never be able to do it. Even if you do succeed, it will be outdated by the time you release it. No, you are better than that... You will focus on making sure your emails get answered within 12 hours (as Bank of America does), knowing that then your customers will come back to use that channel. You will make sure that you communicate with the client clearly in all your interactions (as ATT Wireless agents are trained to do) and that you manage expectations throughout the entire process ("I will place you on hold for no more than 2 minutes while I research the best plan for you", as opposed to "please hold"). You, in essence, will treat the customer the way they expect to be treated. And the hours will take care of themselves...

(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 2008 by Esteban Kolsky/ RWang. All rights reserved

Introducing: Esteban Kolsky on All Things Customer Service

Former research director at Gartner Research, Esteban Kolsky brings his 2 decades of expertise on e-business, customer relationship management (CRM), customer service, and e-service to the Software Insiders Point of View. Recent research focused on trend setting topics such as Enterprise Feedback Management, Customer Service models and eService Suites.

In a previous life, Esteban founded a company that invented a technical architecture to provide point-of-need customer service. Other professional experiences includes serving as the:

• CTO of Tiedosta
• Director of CRM at Intraware
• Senior Manager at BDO Seidman

Look to more interesting customer experience insights to come as Esteban covers the world from his vantage point and joins former Forrester Research Director and current Head of Research at SSPA, John Ragsdale in pontificating on their views of service and CRM in their free moments.

(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 2008 by R Wang. All rights reserved

Trends: VC Funding Models Favor Even Simpler Sales Cycles

I've been meeting a number of VC firms this past month to see if anything new had emerged in terms of enterprise software and tech service provider trends. Standard topics ranged from Web 2.0, future of SaaS, would Larry continue to be the exit strategy, and whether or not IBM would publicly come out and enter the enterprise apps space to the depreciating dollar, state of the economy and the downfall of Billary. But a few things kept sticking out in conversations on what type of software and service companies were receiving funding. Here are some must have characteristics that bubbled out:

• Payable with a credit card and not require board approval. VC's like sales models that have a fairly regular and low barrier to entry. Some examples include subscription pricing because it targets operational expense instead of capital expense (i.e. no need to go to the board).
  

As one VC put it, "If they can't buy it on their AMEX and run it through as an expense, it's not worth investing"

• Easy to consume and work like what's on the web. These new offerings, service or products, must follow more consumer user experience models. Because most of the power in the cloud beats what an enterprise has, users are now more accustomed to paradigms on the web and not the legacy apps they replace. More importantly, they must mitigate IT dependencies in not only decision making, but also support.

A serial entrepreneur stated, "We stopped pitching to the IT user 24 months ago. They remain irrelevant because we target the decision makers who want something working now and have the budget and authority to create change. They then go back and tell IT to go figure it out"

• Drive a sense of community and free user generated content. Content remains king but not if you have to pay for it. The drive towards UGC continues and the more successful offerings have a community component. This also applies to ancillary technology services and related knowledge based companies where the users and their communities create a self service ecosystem.

An Entrepreneur In Residence (EIR) confided with me and said, "These social networks create so much user generated content that we then monetize. Why pay or invest in content when the knowledge is in the community? We just need to put the tools in there and make it easy"

The bottom line.
While we may be in the midst of an economic slowdown and even headed towards a recession, VC's continue to have faith in models that put more power to an individual user or a small team of users. Lower price points, captivating and easy to use functionality, and thriving ecosystems remain the critical success factors in receiving funding. The era of funding on-premise start ups and large consulting firms may be over. This could explain the great interest in SaaS and of course the tremendous explosion of growth in the upcoming SaaS Con event.


(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 2008 by R Wang. All rights reserved

Software Licensing and Pricing: Push for value from maintenance agreements, not discounts

I would like to provide an alternative view to Ray's most recent post, Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness. As head of research for the SSPA, whose members rely on maintenance revenues for their livelihood, I'm not ready to say maintenance contracts are overpriced. In fact, the SSPA view of this is the continued push back on maintenance pricing is having some major impacts on how (and how well) products are being supported.

According to our benchmark database, 81% of maintenance contracts for hardware and software are renewed annually, but over 1/3 require concesssions or discounts to renew. Enterprise hardware companies discount an average of 15% on renewals; for enterprise software companies the average is 9%.

What do you get for your maintenance? Bug fixes, new releases of software, access to community features to share best practices, and of course access to technical support. If the vendor did a good job of fulfilling these deliverables all year long, why are you balking at the maintenance renewal?

And, things are getting trickier for support organizations, whose push into proactive service means that more technical issues are identified and fixed remotely, before the customer is ever impacted. As Chip Gliedman always says, you don't call your doctor and thank them when you haven't been sick in a year. Similarly, support managers tell me that they are increasingly charged with "What have you done for me lately?" upon renewal, because so many problems were intercepted and eliminated that customers rarely interacted with support. In other words, when innovative support teams do a great job, they are invisible. And under appreciated.

If a contract is up for renewal, before you trot out your handbook on 'Negotiating with Terrorists,' be sure to get an account review for the past year and understand how many service issues may have been proactively resolved with little or no involvement from your staff. Review what support and maintenance options you were entitled to under last year's agreement and determine if the vendor delivered on these commitments. If they fell short (no timely releases, missed SLAs, etc.), give 'em hell.

This may be a radical suggestion, but instead of asking the vendor to continue giving you good service for less money, the renewal discussion should be "How can your support team help me get better value and more quickly achieve my business goals for your product over the next year?" If the vendor has not embraced this view of Value-Added Support and can't articulate how they are going to partner with you to help better leverage their products, then you are dealing with a support group in continual 'breakfix' mode that is unlikely to meet your needs for a strategic implementation. And that is a maintenenace contract worthy of hard negotiation.

If the vendor, and their support organization, has a shared interest in helping you succeed with their products, and you are getting as much (or more) value from your purchase as anticipated, then the maintenance agreement is a good investment.

Just my 2 cents. Thanks for reading!

(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 2008 by John Ragsdale and R Wang. All rights reserved

Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

Recent maintenance fee increases by several large vendors lack any logical rationale other than pure greed. Customers and prospects should demand lower maintenance fees in their contracts because:

• Maintenance fees represent the biggest cost items in the software ownership lifeycle. Every percent reduction in a $1M deal equates to an annual savings of $10,000. Controlling the base line costs and future increases results in long term cost savings. Keep in mind most deals focus on the net license cost.
  
• Maintenance and support remains highly profitable. Support and maintenance profit margins often hover between 60 to 85% after the third year of a product’s introduction. If a vendor invests 50% of that revenue into R&D, then the customer benefits. However, if the vendor pockets the profits, then the customer loses.
  

The bottom line
The lack of third party maintenance offerings and the anti-competitive behavior among the large software vendors has led to a de facto increase in maintenance fees without any subsequent value to the enterprise. On top of this, vendors come back and charge for new modules and functionality paid for from the maintenance and support profits. Market place consolidation has ultimately resulted in a less competitive market for consumers. Customers should revolt en masse by protesting any maintenance fee increases that do not come with additional value. Expect a potential class action lawsuit some time in the future where customers will claim collusion among vendors in charging exorbitant maintenance fees while keeping third party maintenance providers from delivering cost effective alternatives.

(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 2008 by R Wang. All rights reserved

Trends: I would blog more often if I wasn't rewriting off-shored code

Back in December I was invited to visit a Silicon Valley start-up to review their software architecture and website design. I'll just refer to them as Startup. We spent two days walking through their prototype reviewing usability and performance.

One of the more interesting aspects of their software was that Startup had used off-shore staff augementation to develop the initial prototype. I recognize off-shoring software development is an emerging trend, and wanted to learn more about their experiences for better or worse. I've successfully coordinated virtual teams in the U.S. and was looking forward to an opportunity to see if the same strategies could be successfully applied to off-shore projects.

Startup had used the prototyping process to test out three different development teams, two in India and one in Russia. Having divergent teams work on the prototype was evident in the end result, functionality was duplicated and the architecture was inconsistent. For example, three different search mechanisms had been implemented.

Performance was poor. One page used AJAX for a partial page refresh of 500K worth of data.

Of course, these are the same types of results I would expect if you put three on-shore teams from different companies together on a project with little cross-team communication. Startup had been successful in finding which of the three companies they thought would be best suited for on going work.

Now we embarked on the rigorous process of revamping the prototype for usability and a scalable architecture. We agreed that I would provide architectural guidance, a member of Startup would do database design, and Team Off-Shore would do the grunt work of wiring things up. This sounded great to me, since I prefer the architectural work to writing lots of boring if-then clauses.

However, there are some big caveats to working with any remote team.

1) Experience Matters

Everyone has to make sure they check-in working and complete code. When this doesn't happen in an office, it's fairly easy to go over to the junior programmer desk, kick their chair and say, "You forgot to check-in the database change scripts!".

When the person you are coordinating with has a 12-hour time difference, and they are asleep, it means the rest of the team needs to reverse engineer and rewrite the missing database scripts. This pretty-much blows the cost savings of the off-shoring. The larger the timezone difference, the harder to recover from this type of error without duplicating hours or days worth of effort.

2) Design for Success

Developers work best when then understand the product vision or corporate mission. Specifications have to be very detailed. Its far easier to cooridinate enhancements on an existing well-defined product than on something which is literally in Startup-mode.

Startups by their nature need to be flexible and able to create features very quickly. Having a centralized team for this is faster, and improves the creative exchange. If we fail to communicate anything about design changes to the off-shore team at the end-of the day, they could be going in the wrong direction for a day before we woke up to communicate with them in the morning.

3) Communication

Teams still need to discuss things. Here again, the time barrier is a huge inconvenience. The U.S. team winds up calling India late at night. 8:30 AM in India = 8PM Pacific time = 11PM Eastern time. Having 3 coordinating calls a week to discuss progress, is a lot of overhead when they all happen fairly late in the evening.

While I am still a fan of virtual teams, I have learned that experience, design, and communication escalate non-linearly as the time differences between locations grows. This means managers need to put in even more effort before projects start to mitigate these risks.

Now, I have to go see if my database scripts have turned up yet...

Please post your comments on strategies for managing remote teams.

(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 2008 by R Wang & Michael Byrne. All rights reserved

Software Licensing and Pricing: What are Floating Licenses?

The question of floating licenses has come up quite frequently in the past 3 months. Floating licenses and concurrent user licenses are the same thing. However, the term floating license is more prevalent in developer environments and in the context of server software. The term has been popularized by Macrovision, a software company that provides software publishers with OEM license management products. Users pay for a total number of access not unique licenses per client. Here's why its a benefit to users over named user licensing:

• Delivers cost savings. Users buy what they need to run at maximum capacity instead of an individual license per user which wastes capacity - which leads to the capture of true capacity. Enterprises end up buying less licenses and dealing with less shelfware.
  
• Works best in 24/7 environments. Traditionally, concurrent user licenses have been popular in manufacturing and call centers.Global development organizations, call centers, enterprises with 2 or more shifts, and international enterprises can take advantage of a set number of licenses throughout various time zones and work shifts.
  
• Addresses licensing compliance. A set number of users have access to the system at any point in time. No requirements exist for licensing by an individual user - thus no wasted usage. Often, the process includes automatic license sharing where a license server will allocate a license until the total limit is reached. When a user leaves, a new slot is opened. Some systems have mechanisms to flex up and buy additional licenses on the spot when capacity is reached.

The bottom line for users.
In general, there are minimal drawbacks to users for floating licenses or concurrent users. Vendors who have moved to named user licensing just wanted to charge more. Typical conversion credits should be anywhere from 1 concurrent user license to 2.5 to 4 named user licenses. In the SMB space, Microsoft, Epicor, and Agresso have led the way by maintaining concurrent user licenses, providing SMB's with a cost advantage that many enterprises no longer enjoy.

(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 2008 by R Wang. All rights reserved

News Analysis: IBM Lotus and SAP - The Duet Sequel?

Before 7000 customers and partners at LotusSphere, IBM and SAP revealed "Project Atlantic", the code name for SAP Business Suite and IBM Lotus Notes integration. The initial release is planned to ship in the fourth quarter of 2008 and will be sold by both companies. Some quick thoughts:

• Collaboration environments just the start of things to come for SAP. Access to new collaboration platforms tied to SAP's business processes will potentially provide users with more relevant and just-in-time information. Future releases plan to include support for reporting and analytics, SAP work flows, and the role based nature of Lotus Notes. One could expect some additional collaboration capabilities that match to the new Domino server.
• "Atlantic" represents the next logical step for SAP to support other user experience platforms. IBM and SAP have had a long history of partnerships. Partnership with IBM extends SAP's agnostic information management ecosystem. Previous partnerships with Adobe (i.e. Flex and Interactive Forms) and Microsoft via Duet (i.e. Microsoft Office integration) follow a concerted mission to be omnipresent in the enterprise information workplace. By being present and "seamless", SAP can increase its penetration with information workers. The result - each partner can benefit from the increased adoption and usage. The addition of IBM's Lotus Notes completes the enterprise on-premise arena.

The bottom line
This latest move emphasizes the growing coopetition among the Big 4 software vendors to expand their ecosystems and increase the usage among existing install bases. With agnostic access of information being a key driver to creating relevant role based information, one should expect new partnerships with Web 2.0 user experiences such as Google in the near future. The real question - " Will Oracle follow suit with announcements from Microsoft or IBM? or Has SAP developed a lead?"


(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 2008 by R Wang. All rights reserved

News Analysis: SalesForce.com Refines SaaS Pricing and Software Development Tools

Salesforce.com announced a new pay-per-login utility pricing model for the Force.com Platform and the new Development-as-a-Service (DaaS) offering. Some quick thoughts:

• Pricing by login entices casual users. Salesforce.com offers a lower cost alternative to companies that access applications in "the cloud". This new $5 per login pricing allows a users 5 logins per month at list prices. Promotional ricing is at $.99 per login until 2008. Traditional unlimited access pricing will be offered at $50 per user per month.
  
• New pricing model increases pressure on competitors to improve ease of doing business. The SaaS pioneer once again changes the way enterprises access tools and applications. DaaS breaks down the cost barriers to innovation and provides a potentially effective forum for developers, companies, and customers.
• DaaS is to Middleware as SaaS is to applications. With a set of API's and development tools designed for cloud computing, the tools provide users with access to the "stack" of database, logic, and user interface. Developers have full access to a wealth of tools including a new metadata API layer, Code Share, integrated development environment (IDE), and the SandBox.

The bottom line
Vendors too often focus on making their lives easier instead of their customers. Salesforce.com once again proves how software vendors can build customer centric offerings.

(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 2008 by R Wang. All rights reserved

News Analysis: Oracle BEA Amicably Agree On a $8.5B Deal

Oracle raises the ante $1.8B more from the $6.7B initial offer for BEA. It appears a combination of activist shareholder sentiment and cooler heads at both Oracle and BEA led to this amicable resolution. This is an update to the original post on October 12, 2007. The deal remains strategic for Oracle for the following reasons:

• Oracle seeks to dominate middleware. Middleware platforms provide the nexus for software ecosystems. Each vendor's last mile solutions depend on a strong middleware tool and a community of individuals and solutions providers who build and extend the platform for vendors. Whoever owns the future platform, an applistructure on middleware or a SaaS platform like SalesForce will emerge as winners in the post internet era. Acquisition also marginalizes SAP NetWeaver's role as a standalone middleware solution and puts Oracle in direct competition with IBM.
• BEA's customer base remains attractive to Oracle's vertical ambitions. BEA brings high end custom dev clients to the table. With a blue chip base of the best internal IT shops, those in telecom, financial services, and public sector, Oracle or any acquirer could cement its leadership in middleware over IBM, MSFT, and SAP. These custom development shops represent the best and brightest user base and the most lucrative.
• Leverage development in China. From development teams to business alliances, the BEA team has made significant inroads in the China market. Oracle sees this as a great opportunity to bolster its China investment strategy and build lower cost development capacity just like the work it did in India.
• Oracle should expect a fight for BEA but the competition seems to be off guard. Oracle's potential acquisition takes away the last remaining independent major middleware platform provider leaving future competitors without a large install base and a third party supplier. Other vendors like SAP, IBM, and HP need BEA more than Oracle does. SAP's NetWeaver is among the weakest of the 5 major middleware platforms, despite one of the strongest ecosystems. IBM will be threatened by an Oracle dominance in middleware and continued challenge of commoditizing vertical service offerings into software solutions. HP could use this as an entry point to gain traction in the market. SI's who've built a long term strategy around BEA as an independent platform may seek to counter with an acquisition of BEA.
  

The bottom line
Oracle's long term M&A strategy centers on gaining the biggest install base around not only mission critical applications, but also middleware. At the end of the day, its also about selling more database and gaining the largest share of the IT wallet. We expect accelerated consolidation along key battle grounds of middleware platforms such as MDM, BI, Portals, BPM, and other Information Management tools. Don't expect the competitors of Oracle to sit still!

In a normal market, Oracle would expect a fight for BEA but the competition seems to be off guard. Oracle's potential acquisition takes away the last remaining independent major middleware platform provider leaving future competitors without a large install base and a third party supplier. Other vendors like SAP, IBM, and HP need BEA more than Oracle does. SAP's NetWeaver is among the weakest of the 5 major middleware platforms, despite one of the strongest ecosystems. IBM will be threatened by an Oracle dominance in middleware and continued challenge of commoditizing vertical service offerings into software solutions. HP could use this as an entry point to gain traction in the market. SI's who've built a long term strategy around BEA as an independent platform may seek to counter with an acquisition of BEA.

For BEA customers:

• Seek clarification from Oracle about BEA's future roadmap. As Oracle meets with key customers, now's the time to seek clarity of what BEA's role will be in a world of 2 middleware platforms.
• Lock in maintenance agreements now. Call up your sales rep right away if you are paying less than 22% maintenance. You'll want to sign a long term agreement and lock in your current contract conditions, should they be more favorable than Oracle's.
• Expect Oracle to acquire more vendors with BEA backbones. The acquisition opens the door for Oracle to integrate companies with solutions built on BEA. Many of these vendors play in mission critical business apps that service the high end of finance, telecom, insurance, public sector, utility, and
  

For Oracle customers:

• Understand how the BEA product will weave its way into Oracle's Middleware Strategy. Seek clarification on the attributes within BEA that could become common across Oracle applications. PeopleSoft customers may want to find out if they can remain on BEA for middleware or if BEA will only be applied to future acquired verticals. The BEA platform reaches out to more non-Oracle shops and provides a truly open platform for integration with less lock in at the meta data and process levels. As Oracle makes more acquisition of mission critical vertical apps vendors, expect the BEA angle to play a critical role in creating a smoother transition.
• Consider consolidating middleware strategies. Customer with both BEA and Oracle may want to consider a long term consolidation strategy. Long term costs could be lowered through the reduction of redundant 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 2008 by R Wang. All rights reserved

Trends: Enterprise Apps in 2008

ENTERPRISE APPS BUDGETS REMAIN RECESSION PROOF
A potential global financial crisis precipitated by the mortgage melt down, globalization pressures, ongoing middle east conflict, and tumultuous political conditions raise concerns about the world economy. Despite such market pessimism, most end users expect 2008 enterprise software budgets to continue to increase in high single to low double digit rates Some key factors behind this growth include:

• Increasing dependence of business strategy on technology. Gone are the days where a business leader could develop a new service or product offering without incurring IT interdependencies. With time to market concerns, requests for agility, and globalization pressures, business leaders expect rapid deployment and responsiveness from future systems. The result - a push to upgrade applications, seek alternative deployment options like SaaS and hosting, and shift last mile solutions to best of breed industry specific providers.
• Continued shift to business process focus. As enterprises move away from functional fiefdoms in geographic silos, new business models require process focused support across distributed environments. Current systems no longer meet these requirements and lack the ability to capture business intelligence by process let alone "play well" with other systems.
  
• Decreased competitive differentiation in the ownership of enterprise apps. Now that everyone has industry best practices via their ERP system, best practices no longer provide significnt competitive advantage. In fact, most enterprises show negative ROI in their apps deployments. Market pressures push leading enterprises to seek vertically oriented and last-mile solutions that support open standards and work in the spirit of SOA.
  

2008 End User Trends
As tectonic shifts continue to impact the software industry, expect the following 10 trends:

• Vendor consolidation will continue. Nothing remains more certain than the increasing pace of acquisitions. While there may not be the same flurry of mega deals in terms of size, expect the Big 4 vendors (i.e. Microsoft, IBM, Oracle, and SAP) to bulk up on areas where they are weak and continue to dominate commoditized infrastructure areas such as middleware, hosting services, office productivity, and content and information management. Expect most other acquisitions to be focused on value added solutions that extend vertical footprints. Weak markets will lead to a drop in valuations among competitors leaving vendors without a good cash flow (e.g. maintenance streams) to acquire competitors on the cheap.
• Buying decisions will continue shift from IT led to business led. While IT teams will still lead most vendor selection efforts, expect business users to play a prominent role in collaborating on requirements and expectations. A growing number business users will eventually lead these initiatives with heavy IT support in validating dependencies and overall constraints.
  
• Business drivers for new investment will align with efficiency and compliance drivers. During economic upturns, the business driver for projects tend to focus on top line growth and strategic investments. Given the pending downturn and increasing regulatory pressure, expect projects to focus on operational efficiency and compliance. Expect commoditized processes to be BPO'd, varying instances to be consolidated, and standardization on middleware platforms such as BEA Weblogic, IBM WebSphere, Microsoft .NET, Oracle Fusion Middleware, and SAP NetWeaver. Expect CFO's to invest in compliance, analytics, and master data management. Expect collaboration projects among stakeholders such as suppliers, customers, and partners to fall under the efficiency camp.
  
• Partner ecosystems will allow best of breed solutions to reemerge. As enterprises march towards vendor standardization for commoditized technologies, expect business uses to seek best of breed or custom solutions for vertical expertise, mission critical business apps, and other last mile solutions. Standardization onto middleware platforms, and SOA based integrations will allow best of breed capabilities to thrive. Users should not expect one vendor to deliver all last mile solutions. Instead expect to focus on the quality of partner solutions and the level of certification rigor.
• Deployment options will expand. Expect vendors to adopt variants of Multi-tenant SaaS, multi-instance software virtualization, and onDemand hosting. Rapid deployment, subscription pricing, and total cost parity will drive vendors to roll out new products architected and priced to compete with SaaS. Hybrid deployments will become more common as new entrants, traditional vendors, and system integrators introduce new software solutions for SaaS and SaaS-like models.
  
• Master data management will shift from a luxury to a necessity. Business drivers such as compliance and efficiency require consistent and accurate master data around financial accounts, customers, suppliers, partners, products, locations, and employees. Process improvements and SOA initiatives will not succeed without a master data management strategy.
• User experience will matter even more. Requirements continue to emphasize ease of use, intuitive experiences, streamlined flow, and easy access to information. Expect better role based paradigms to emerge from traditional vendors as they compete with SaaS and SaaS like upstarts.
  
• Custom apps and app development will reemerge as a key skill set. Powerful new platforms (e.g. middleware tool sets, SaaS development environments, and applistructures) will allow end users to build last mile solutions on top of existing middleware platforms that are supported with each upgrade. SOA architectures will provide the reusable web service components. BPM tools will deliver the both process flexibility and agility necessary to support future requirements.
  
• Software pricing models will bifurcate by market segment. SMB users will continue to seek user based pricing models such as concurrent user and SaaS. Enterprises will seek user based models but be forced by vendors to look at metric based on enterprise agreements in the spirit of "value based" pricing. The real question - value for whom?
• Third party maintenance will gain traction and force vendors to improve value. The notion of a perpetual license remains an oxymoron. Most software buyers an no longer buy software and not expect to pay a continued annuity stream to the vendor. Despite competitive pressures from the largest vendors to stymie third party maintenance vendors, expect growing interest among the largest users to seek alternatives or more value from existing maintenance.

The bottom line for end users.
TRENDS HIGHLIGHT THE NEED FOR A LONG TERM APPS STRATEGY
Apps strategists, CIO's, architects, and IT directors will want to respond to these emerging trends by building a long term apps strategy centered around:

• Aligning project requests to compliance and efficiency drivers.
• Organizing a sustainable governance structure for a 5 to 10 year period
  
• Ensuring a flexible future state business process model
  
• Delivering technology and solutions that meet business drivers and business process flexibility
• Identifying white spaces in the overall technology solution footprint and supplier road map.
  

(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 2008 by R Wang. All rights reserved

Trends: The Rise and Emergence of Appliances

2008 Trends Heralds A World Beyond SaaS

As the year begins to wrap up, I am already beginning to read the first rounds of predictions for technology trends for next year. Flowing from analysts, reporters, and industry pundits, among the first I caught yesterday listed in the top 10 industry trends for 2008 was increased adoption of functions (in this case security) delivered via the software as a service model. SaaS, as more commonly and easily referred to, has been red hot for a number of years and now is commonly believed to be the delivery model of choice for small and medium sized enterprises. I certainly don’t dispute the value of its ease of use and deployment benefits, nor the lower upfront licensing threshold that makes SaaS an attractive solution. However, SaaS is not the industry’s panacea for medium enterprises software adoption needs, principally because it is not a good solution to address certain functions. A case in point is in the management space. There are numerous management functions you simply cannot do over a WAN. The protocols are just not supported. Coupled with real issues around network latency and security, makes doing general purpose system management through a traditional SaaS model just not a good idea.

For Some Scenarios, Appliances Deliver The Same Benefits as SaaS Without the Long Term Costs

So how do you still get the ease of use and simplicity of deployment that SaaS delivers but for a function like systems management? You pull out a page from our short technology historical past—and I would argue our historical future too: you look to the appliance form factor. In full disclosure, my view is colored; I now work for a company, KACE, which delivers its product via an appliance. That said, I was also on the front lines of delivering early CRM and ERP applications via a SaaS model and have had ample time and experience to compare the two.

There’s a lot of truth in the statement: the biggest skeptic is the biggest convert. Indeed, I have found my religion in the appliance. It offers the ease of use and simplicity of deployment that SaaS does (slap it in the rack and turn it on), but operates within an organization’s network allowing you do everything needed to manage your IT environment securely and at blistering speed. And from the cost angle, more and more reports are being published about the real costs of subscription based pricing which while attractive up front, oftentimes proves more costly in the longer term.

Today's Perimeter Based Appliances Expand Beyond Yesterday's Purpose Built Approaches

My conversion to the appliance has been gradual. Like many in the industry and especially those coming primarily from enterprise software, my recollection of appliances dates back to the late 90’s when big enterprise players like IBM, Oracle, HP, and others were pre-installing their software on Dell or their own hardware and shipping a so called “appliance.” These “appliances” were really just pre-installed and configured servers and that was the limit of their value; it saved a sys admin a day of work getting a new server up and running. But today’s appliances are much, much more. For starters they really shouldn’t be called simply “appliances.” They are “purpose built appliances:” built from the ground up with a specific function and way of operating in mind and optimized for such. They take the black box approach to solving a problem where everything that is needed (database, OS, reporting software, etc) is built into the application, as well as all hardware required, and optimized for its specific function. The result: an all in one approach which in most cases simply needs to be plugged in.

Perimeter-based appliances have seen widespread adoption already. These are appliances that generally sit at the edge of a network and don’t require a lot of administrative interaction. Firewalls are great examples of such. There is, however, a whole new generation of appliances that could be classified as server application appliances. These have become core to the data center and are being used by administrators on a daily basis. Companies like IronPort (now Cisco), KACE, and Cast Iron are all great examples of such and have rapidly carved out a place for themselves within their respective functions of security, systems management, and EAI. This new generation of appliances is also finding a sweet spot among the customers whom they serve. While the companies mentioned above may have started out targeting different customer segments and sizes (and some still do), they have seen strong adoption by medium-sized enterprises. The reasons for this are the same reasons SaaS has succeeded; they offer a model of simplicity that is easy to deploy, comprehensive in nature, and cost effective. For the medium enterprise which is oftentimes resource constrained and lacks the expertise and know how to take on complicated software deployments, the simplicity of the appliance approach is ideal.

The bottom line for users

CUSTOMER TESTIMONY IN SYSTEMS MANAGEMENT APPLIANCES PROVIDES A POSITIVE PROOF POINT

My own conversion to the appliance was made complete when we held our user conference last month and I had the opportunity to speak with numerous customers about how they are using their systems management appliances. It literally blew me away. The customers love the appliance model! Mostly medium-sized companies ranging from schools districts, state and local entities, to financial service providers and manufacturing concerns, I heard the same statements repeated again and again:

• “I love the appliance form factor.”
• “I love the simplicity.”
• “I love the design of the system.”
• “I love the comprehensive nature of your offering.”

With more than 15 years of software industry experience under my belt, I can count on one hand how many times I have heard the word “love” to describe products I’ve worked on. In two days, I heard it, at least, two dozen times. When you hear a chord that resonates, you just know it works. I walked away from the user conference knowing the appliance model is here to stay and more than likely, poised to take off.

If you want to learn more about server application appliances and how they compare to SaaS, check out this white paper. It requires a registration, but is a good 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 Wynn White / R Wang/ Software Insiders Point of View. All rights reserved

Introducing: Wynn White - The World of IT Appliances

There's a hot market out there in the world of appliances. And because of that, we bring you the latest insights from Wynn White, a Silicon Valley veteran who has served senior roles at Oracle, Oblix, BEA, and now KACE. For those of you who do not know, KACE is a leading provider of systems management appliances where Wynn is now the VP of marketing. We've asked Wynn to take a holistic view on the appliance market, so please welcome him to the list of software insiders!

You can view his bio here.

(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

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