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:

http://blog.softwareinsider.org

Cheers!

Event Report: Inforum 2008 Highlights Transition from Acquirer to Builder

(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.
  POV: 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.
  POV: 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'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'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.

Initial News Analysis: Oracle Buys Primavera

Oracle’s announced the acquisition of Primavera, a leading project based solution (PBS) provider. This latest acquisition signals continued consolidation in the project based solution market which is a 6.6B market based on recent market forecasts. Oracle’s move addresses a significant need as project professionals remain challenged by existing business solutions that force-fit production and manufacturing applications to meet the needs of knowledge-based information workers. The new global business unit is in line with Oracle’s industry strategy and will be headed by Primavera’s current CEO, Joel Koppelman.

As enterprises continue the shift to a service-based and project-based world, project-based solutions (PBS) are the only applications category that enterprises can rely on to deliver process automation, process improvement, and innovation for this new world of work. PBS transcends traditional functional boundaries of project management, ERP, CRM, and supply chain management (SCM) to include requests from areas like project accounting, change management, time/expense, and analytics that surround the work being accomplished.

The bottom line.

Oracle’s acquisition signals its intent to prioritize project based businesses such as architecture, engineering and construction, government contracting aerospace and defense, professional services, oil and gas, and utilities. Expect more consolidation in this industry as project focused businesses gain the attention of apps vendors and the users who already benefit from this project focused world.

For deeper analysis check it out on the Forrester blog.

Copyright © 2008 R Wang. All rights reserved.

News Analysis: IBM Storms Into Cloud Computing With an ISV Friendly Pricing Model

The War for Mind Share In the Skies

The recent announcement of IBM’s Cloud Computing initiatives represents the latest front in the marketing and delivery battle for customers, partners, and ISV’s. IBM has pulled together a mix of existing technologies and new developments into a four pronged attack that focuses on:

• Cloud service delivery to end customers - leveraging existing Lotus Collaboration technologies (e.g. Sametime Unyte) and the newly announced Bluehouse, a web-delivered social networking and collaboration cloud service.
• Customer integration of cloud services - delivering system integrator led practices around salesforce.com and Succeess Factors through IBM’s Global Business Services (GBS).
• ISV enablement of cloud services - providing ISV’s with tools to design, build, deliver, and market cloud services.
• Customer enablement of cloud services - helping customers deploy their own clouds through a suite of enabling technologies known as “Blue Cloud”.

Pricing Model Favorable to Broader ISV Adoption

With vendors looking to attract the greatest number of ISV’s into their cloud, OEM pricing often becomes an issue for PaaS adoption by ISV’s. Typical barriers to entry stem from a disconnect on how middleware is paid for and how SaaS models generate revenue, prohibitive upfront costs, and the lack of scaled pricing. IBM’s SaaS pricing pilot launched in July makes a pont to address key barriers wth low up front cost, fixed predictable annual costs, and a one year cancellation option.

The bottom line.

SaaS platform wars continue to intensify. Oracle’s announcement last week at Oracle Open World and this week’s announcement by IBM stresses the importance of this emerging battleground. As the enterprise vendors join Amazon, AppNexus, GoGrid, and Google, expect the convergence of Web 2.0 and Enterprise 2.0 to hasten.

Your POV.

So now your turn. Do you think the enterprise vendors will transition to the new world or will today’s cloud vendors become tomorrow’s enterprise veterans. Post a comment or drop me a line at rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.

Tuesday’s Tip: Packaged Apps Strategy - Building Blocks for a Recession Proof Apps Strategy

The tightening credit crisis continues to impact IT budgets and 2009 planning assumptions. Ongoing conversations with clients confirm that most enterprises anticipate some retrenchment of budgets. As business and IT teams seek to reduce the cost of existing systems, several key enterprise packaged app strategies rise in importance:

• Software contract reviews - leading clients invest time in reviewing existing contracts for new opportunities to reduce costs, anticipate business model flexibility, and contain overall vendor lock-in.
• Vendor rationalization without lock-in risk - now may be the right time to identify vendors core to the overall business strategy and build stronger long term partnerships. On the other hand, vendors who have tried to raise prices or failed to deliver as a technology partner should be weaned off approve vendor lists, especially if you risk vendor lock in.
• Shared services deployment - enterprises with multiple divisions and business units are looking at shared services to drive further efficiency by eliminating duplicate software, infrastructure, and staffing.
• Project portfolio analysis - clients are looking to “stop feeding the beast” and reduce the overall spend for legacy systems while freeing up the remaining budget for new innovation. Leading clients deploy application scoring and ranking methodologies.

The bottom line.

As you begin the planning of your recession proof packaged apps strategy, leverage a long term apps strategy frameworks to assess people management and organizational alignment, business process definition and optimization planning, technology strategy planning, and solution centric ecosystem maturity. Keep in context the 4 major business drivers from efficiency, regulatory compliance, growth, and strategy.

Your POV.

Got a strategy, lessons learned, or success story to share? Post here or send a private email to rwang0@gmail.com. If I use it, 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’s Musings: Adoption of SaaS Models May Accelerate with Economic Downturn

All signs lead to an impending slow down in economic spending. Whether this will adversely impact IT budgets is not the issue, but how much will the carnage be is the concern being debated. Regardless, overall funding for new investments appears to be bleak which is why innovative business leaders seeking to fund innovation without significant capital outlays will most likely gravitate to alternative deployment options such as Software as a Service (SaaS) or other OnDemand models because of:

• Subscription billing - why worry about the cumbersome capital expenditure budgeting process when you can sneak this in with operational expenses?
• Rapid deployment - avoid the headaches of complicated deployments, the expense of system integration, and the cost of maintaining a data center.
• Affordable constant innovation - avoid the cost and disruption of upgrades while receiving more frequent delivery of new features and innovation.
• Purpose built functionality - most SaaS offerings are designed for a specific industry, role, or market segment. The result - strong capability in micro-verticals and other purpose built scenarios.

The hallmarks of SaaS are hard to ignore, especially during the advent of an economic slow down. Based on some of the growth rates in the previous quarter, vendors like Amitive, Concur, Intuit, NetSuite, Plexus, SalesForce.com, SuccessFactors, Taleo, and Zoho may have the leg up.

Your POV

Look forward to hearing your comments about how on-premise vendors will fare compared to the SaaS vendors. If you’ve got an idea or suggestion to share, please comment or send a private email to rwang0@gmail.com. Look forward to hearing your thoughts!

Copyright © 2008 R Wang. All rights reserved.

Event Report: Initiate Exchange - Customers Confirm Latest Customer Hub/MDM Trends

Quick thoughts from Scottsdale. Initiate as many you know is one of the leaders in the customer hubs/MDM market. At their annual conference, Initiate Exchange, a few key trends emerged from conversations with customers and partners:

• Rapid deployment still key to securing buy-in a the business level. The registry style approach lends itself to demonstrating quick value. This has led project sponsors to secure more funding for longer term MDM projects. Conversations with Initiate customers confirm that implementation times are quicker because of the types and complexity of the initial deployments.
• Exchanges move beyond the healthcare arena. Commercial customers are learning from the trend of collaborative Healthcare networks. These networks typically share patient and provider data within and across their networks in order to support accurate information across the ecosystem. Retailers and manufacturers are starting to see the value in this area.
• Scarce skill sets abound in kicking off MDM projects. Customers confirm that staffing of technical resources has improved significantly. But both system integrators and customers admit that scarce skill exist for project kick off activities such as setting the stage from change management, building the infrastructure for data governance, and creating and staffing effective program management. This is a trend not just for attendees but across the inudstry.
• Version 8.5 generates a lot of interest. Customers who stopped by the demo kiosk expressed positive comments about the new collaborative data stewardship capabilities, streamlined user experience, and the Initiate Inspector Inbox. Those with Group 1 looked forward to using the geo codes in the new adapters.

The bottom line

Initiate customers remain quite satisfied with their choice and the level of investment in R&D by the management team. A growing list of partners continue to bolster Initiate’s mindshare in industries outside of their core pharma, healthcare, and public sector.

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.

Copyright © 2008 R Wang. All rights reserved.

Wednesday’s Whispers

PEOPLE WHISPERS: MOVES, PROMOTIONS, AND MILESTONES

Congratulations to all! If you’ve got a change or know of a promotion, drop me a line!

David Corrigan is now a VP of Product Management at Camilion Solutions. David was the public face for MDM at IBM and the acquired entity DWL.

Ira Hall is now Acting Director of Global Revenue at Silicon Graphics. He joins from PWC where he served as a Director and Advisory Services Partner.

Charlene Li is now a Thought Leader and Founder at Altimeter Group as of July 2008. She joins from Forrester Research where she was a VP and Principal Analyst; and co-author of Groundswell.

Jeff McKee is now a Sr. Director, Microsoft OEM Division Product Management. He previously led various roles within the Microsoft Dynamics AX team including Director, Microsoft Dynamics ERP Industry Product Management.

Robert McNeill is the Founder at ThoughtBright. He joins from Service-now.com where he was the VP of Strategy and Marketing.

Mark Szeleyny is now Director of Product Marketing at ON24. He joins from Jigsaw where he served similar roles in growing that startup.

Eric Verniaut is now at Lawson as the company’s Executive VP of Lawson Professional Services. He joins from T-Systems North America where he serve as the CEO and Chairman - Americas Regions.

CORPORATE WHISPERS

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

1. Project Based Solutions - The word on the street is that there will be some more acquisitions in the project based solutions space. This market is going through consolidation and the acquisition of OpenAir by NetSuite was just the beginning.
2. Heatlhcare Information Systems are 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.

(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

Tuesday’s Tip: Software Licensing and Pricing - Stop paying for shelfware

First of all, some of you may be wondering what shelf-ware is so a quick definition. It’s software you buy and don’t use. So if you bought 1000 licenses of Vendor X’s latest ERP software and use 905 licenses, you now have 95 licenses not being utilized. That’s 95 licenses of shelfware you pay maintenance on whether or not you use the software or not.

To avoid paying for shelfware you have to do a few things:

1. Conduct an internal software audit. Figure out how much software you have and are using.
2. Look at your contract to see if you can reduce shelfware. Vendors are smarter than clients in most cases. You might just find a clause that says any return of software subjects you to repricing of the contract. There are a number of similar clauses like this.
3. Determine future demand. Find out if you will use the software in the next 3 months. If you have a demand, then it doesn’t make sense to return.
4. Consider price protection. Arranging for future discounted prices helps with reducing shelfware and paying maintenance on software not deployed. These clauses are a good way forward

Your POV

I’m in the process of updating the Enterprise Software Licensee Bill of Rights. If you’ve got an idea or suggestion to share, please comment or send a private email to rwang0@gmail.com. If I use it, I’ll send you the updated version. Look forward to hearing your thoughts!

(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

Monday’s Musings: Will Tech Vendors Without Credit Lines Survive The Financial Crisis?

Let’s hope the government finds the most equitable and expeditious solution to the current financial crisis. Without access to credit lines, enterprises lack the financial means to respond to the current economic downturn by transitioning their legacy systems and transforming their business processes. Tech vendors who lack vendor led financing options will be the most vulnerable to this credit crunch. These vendors may find themselves unable to close deals with clients shut out from the credit markets.

Vendor led financing initiatives may prove to be the lubricant that keeps tech spending moving forward. Tech vendors such as Sun, Intel, HP, Microsoft, IBM, and Oracle are best positioned to whether the financial crisis because they have their own financing arms - an important resource which will provide them with such capabilities to extend not only to their customers, but also to their key partners.

Your POV.

Look forward to hearing your views. Where do you think the current crisis will take us?

Related posts: See Infor’s Move with IBM

(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

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:

http://blog.softwareinsider.org

Cheers!

News Analysis: Oracle SaaS Platform Offering Adds Choice to Emerging PaaS Platform Wars

Emerging SaaS platform wars akin to on-premise middleware wars
With consolidation in the middleware market fairly under way, adoption of SaaS platforms (i.e. PaaS) by solution partners represents the next land grab in the enterprise software space. Current key players include industry leaders and specialists such as Salesforce.com, NetSuite, IBM, Microsoft, Oracle, and Magic Software (UniPaas). Today's announcement by Oracle indicates that:

• R&D investment in the on-premise stack is very applicable to the cloud. As Oracle continues to strengthen it's "Red Stack" initiatives, it's looking at how to effectively win in multiple deployment options from hosted, single tenancy, multi-instance, and multi-tenancy. The platform offering currently includes Oracle database, Oracle Fusion Middleware, Oracle Enterprise Manager, and Oracle VM along with security and other high availability support. The existing partnership with Amazon WebServices show cases this commitment to work with other cloud providers.
  
• Oracle seeks to become the PaaS vendor of choice. Oracle's foray into SaaS platforms and cloud computing gains momentum as 250 ISV's have chosen the Oracle SaaS platform for delivery and development. ISV's include Adaptive Planning, Ariba, Asknet Inc., Blackboard, Callidus Software, CashEdge, Click Commerce, Inc., Docupace Technologies, dthree inc., EnterConnect, eXpresso Corp., frevvo, InfoNow, Intacct Corp., MAXIMUS, Inc., OpSource, Perot Systems, Sabrix, SuccessFactors, Teranode Corp., Where 2 Get It, Wireless Matrix, Workstream Inc., Xactly Corp, Zogix. The list of ISV's is impressive given the size of the vendors, industries, and geographies.

The bottom line...
SaaS platform wars will intensify as Oracle enters a parallell market where BEA, Microsoft VS.NET, and WebSphere traditionally played in the on-premise world. This move can be seen as Oracle's ambition to be the software deployment and development platform of choice for the cloud based computing world. In effect, Oracle now places itself in direct competition with SalesForce.com, NetSuite, and Google for mindshare and technology partnerships. ISV's looking for a PaaS partner now gain another option.

Your turn.
What are your thoughts on Oracle in the Cloud Computing space? Do you see Oracle as an effective provider of solutions for your ISV? Do you believe you can partner with Oracle? Does Oracle provide you with the right tools? Look forward to hearing from you! Feel free to post your comments here or send me a private email at rwang0@gmail.com.

(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

Trip Report: 2008 Oracle Open World Day 1

View from the Moscone North to South Above Ground Crosswalk Looking into Moscone West
(Copyrighted 2008. Photo by R Wang. All rights reserved)

In the world of enterprise software, Oracle's Open World is one of the grand slam must attend events of the year. Day 1 starts with the Oracle Users Forum, a collection of 420 affiliated user group communities participating in special interest group sessions, and the Oracle Partner Network Forum at the Hilton including the Titan Partner awards. Conversations with partners and customers at these user group sessions reveal an emerging and evolving perception of Oracle and its long term strategy that include conversation themes such as:

• What's in the Fusion Apps and when are they coming out? I was stopped a number of times by clients who wanted to know if we had seen the Fusion apps. Sworn to secrecy, I can say I've seen it. We saw real live code at the Oracle Apps Analyst day a few weeks back. The user experience is first rate and I can't comment anymore unless I plan to give up my first born. However, if they deliver, this may be game changing.
  
• Should I go with the "Red Stack"? The stack wars represent a consolidated vendor reality. For years, we've used the term "Red Stack" (i.e. Oracle), "Blue Stack" (i.e. IBM), "Rainbow Stack" (i.e. Microsoft), and "Open Stack" (i.e. LAMP) to describe how consolidation is impacting database, middleware, and applications. Increasingly, partner and customers see themselves choosing among stacks. Notably, we see a lot of discussion from the services based businesses about how they are facing a decision that may require a bet on either the "Red Stack" or the"Blue Stack". Others are looking at coexistence with the "Rainbow Stack" in the Oracle enviornments. I spoke with one Federal agency customer who talked about how legacy system replacement was big and how the were looking to see what Oracle could offer in iGovernment. In general, these discussion occur in the large context of an apps strategy and a solutions strategy. Our standard advice, just don't get locked in to a vendor and find yourself with no leverage to switch.
  
• Custom versus packaged apps, does this even matter? With a lot of the tools in Fusion Middleware and other application stacks improving, many customers expressed a viewpoint that packaged apps were just a starting point. One customer from a large multinational hardware provider pointed out how they are extending a lot of their packaged apps using Fusion Middleware to meet new business models. Another customer in the retail sector talked about how deal management and demand planning was back in vogue as the focus shifted to operations from financial engineering. This customer was looking for the capabilities to configure using JDeveloper over some of their other customization efforts.
• Can I trust Oracle as a partner? Oracle is prioritizing efforts to partner with apps and solution providers. For years, Oracle apps partners have often talked about how it was hard to talk about whitespaces in roadmaps, gain commitment from senior executives, and seek joint go-to-market strategies. Conversations from the Partner floor seem to signal a shift in attitude and some optimism in colalborative relationships. More importantly, there was much chatter about new marketing development funds and a renewed focus on partner enablement.
  
• What's Oracle doing about "Green"? There's a surprising amount of interest in Oracle's Green Room Sessions. Being in San Francisco, it's not surprising to find a lot of interest in the Green Marketplace. A few people kept asking me if I knew what was going on with environmental stewardship, sustainability, and green activities. Not being the green analyst I'm making a point to drop by to the Novellus Theatre on Thursday to check out a few of these sessions.
  
• Have you tried Oracle Mix? Hands down this beats the old clunky Oracle Connect! A lot of "early adopter type" attendees have taken advantage of Oracle's new social networking framework at Open World. It's an enterprise version of facebook meets ning! Check it out..(https://mix.oracle.com) or check me out at https://mix.oracle.com/user_profiles/21960-r-ray-wang . drop me a message or add me to your network. Better yet, send me a linked-in request.
  
  
  
  
  
• Are you checking out tonight's keynote? You bet! In the midst of this year's best reality show (i.e. the US Presidential Election), how can you turn down the all time best political power couple and strategists - James Carville (D) and Mary Matalin (R)? See you there!
  

Next stop: Forrester's Business and Technology Leadership Forum (JW Marriott, Orlando)
I'm off to Orlando and then back to San Francisco again for the rest of OOW. But come hear the future as we keynote what life will be like in 2020 across the Business Process and Apps Professional, Information and Knowledge Management Professional, and CIO roles in the Business Applications 2020: A Three Role Perspective 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

Trip Report: Fall Event Tour Summary

For those of you on the road this fall, may be we can find a place to meet up!

September
09/08 to 09/12 SAP's Tech Ed, The Venetian, Las Vegas, NV - Not Attending
09/10 to 09/11 Intuit's Enterprise Solutions Users Conference, Hyatt Regency, Dallas, TX - Not Attending
09/21 to 09/26 Oracle Open World, Moscone Center, San Francisco, CA - Attending
09/23 to 09/24 Forrester's Business Technology Leadership Forum, JW Marriott, Orlando, FL- Attending
09/29 to 10/01 Initiate's Exchange, Westin Kierland Resort, Scottsdale, AZ - Attending

October
10/01 to 10/03 iGate User Event, Ritz Carlton, Orlando, FL - Not Attending
10/05 to 10/08 IFS Customer Summit, Westin Chicago Northwest, Chicago, IL -Not Attending
10/12 to 10/16 Terradata Partners User Group Conference and Expo, Mandalay Bay, Las Vegas, NV - Not Attending
10/14 to 10/14 Microsoft Dynamics AX 2009 Launch, New York, NY - Attending
10/14 to 10/17 Consona Connect User Conference, MGM Grand, Las Vegas, NV - Attending
10/14 to 10/16 Infor's Inforum 2008, The Venetian and Sands Expo, Las Vegas, NV - Attending
10/19 to 10/22 Epicor's Perspectives 2008, Caesar's Palace, Las Vegas, NV - Not Attending
10/26 to 10/31 IBM's Information On Demand, The Mandalay Bay, Las Vegas, NV - Attending

November
11/02 to 11/05 SalesForce.com's DreamForce'08, Moscone Center, San Francisco, CA - Attending
11/10 to 11/11 UK and Ireland SAP User Group, London West Novotel, United Kingdom, - Attending
11/16 to 11/18 HCL Global Meet, The Disney Yacht and Beach Club Resort, Orlando, FL - TBD
11/17 to 11/20 Sage Summit, Mile High Convention Center, Denver, CO - TBD
11/18 to 11/20 Open Text Content World, JW Marriott, Orlando FL - TBD




(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

Food for Thought: Is There a Correlation with Good To Great Companies and the Primary ERP System of Record?

From time to time, this question comes up as to what ERP systems are used in the 12 companies listed in Jim Collins, "Good to Great" book. Here's the "official" system of record as gleaned from public sources including press releases, SEC filings, and media quotes. If you work for any of these companies, please let me know if I've got any of these wrong as things may have changed...

* Abbott Laboratories - SAP - Primary. BPCS (Infor) and JD Edwards (Oracle) run at the plant level
* Circuit City - PeopleSoft (Oracle) - Primary. Retek (Oracle) at the retail level.
* Fannie Mae - Custom ERP systems
* Gillette – Oracle (At the time of the book), P&G acquired Gillette and runs SAP
* Kimberly-Clark - SAP - Primary
* Kroger - Custom ERP systems. Retek (Oracle) at the retail level.
* Nucor - Custom ERP systems. IFS and Microsoft Great Plains at some plants
* Philip Morris - SAP - Primary
* Pitney Bowes - Oracle - Primary
* Walgreens - Custom ERP systems
* Wells Fargo - PeopleSoft (Oracle) - Primary

The bottom line.
The final score here is 4 for Custom ERP systems, 4 for SAP, 2 for Oracle, and 2 for PeopleSoft. With such a small sample size and Oracle buying up PeopleSoft, it looks like a 3-way tie for SAP, Oracle, and a custom ERP system. If there's any lesson learned here, technology serves a role as an accelerator and not a change agent. One might want to place bigger bets on people, especially Level 5 leaders, strong management, and self-discipline.

Your turn.
As far as one can tell, there rarely is a correlation with the ERP system and how well a company does, but I'll let you be the judge. Do you think the ERP System of record makes a difference in how a company runs? Share your thoughts here or send me a private email at rwang0@gmail.com.

(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: What Customers Want From Maintenance And Support

One of the hottest topics this year has been maintenance and support. With many vendors contemplating another price hike, customers increasingly ask where's all that money going. The dirty secret - many vendors typically take up to 85% of the fees as profit, leaving a paltry 15% for reinvestment in support, maintenance, and upgrades. What's worse, some vendors have not only under invested in the core technology, but they have also failed to deliver basic enhancement requests that a majority of customers have asked for. Below's a top 10 wish list that customers are asking for from their vendors (in classic Letterman style):

10. Web based self service driven user support communities
9. Knowledgeable and culturally appropriate support professionals
8. Fixed pricing with no CPI or other inflationary price increases
7. Transparency into functionality and enhancement and prioritization
6. Time and materials billing for products outside of vendor stated support policies
5. 24/7 follow the sun support
4. Service level agreements for response times and quality of resolution
3. Transparency in how much of the maintenance and support dollar is reinvested versus how much is going to profit
2. Choice in support options and packages (i.e. tiered maintenance options)
1. Option for third party maintenance

Bottom line
Some major ERP vendors, especially those in the more competitive midmarket, have seen the light and are beginning to take steps towards delivering on the above wish list. It goes to prove that competition keeps everyone honest. However, those customers who are "locked in" to a vendor, need to organize and band together to create the right leverage with vendors who are hell bent on milking their customers for all their worth in the maintenance dollars. Start the movement with your user groups or other industry trade groups. If you fail to organize, well, you'll know it when you find yourself locked in.

Your turn.
Are you finding that your long term costs to keep the lights on continue to grow? Would you rather spend 80% of your budget on innovation and new projects instead of commoditized back office processes? Would you like to organize with other customers to affect change. Look forward to hearing from you! Feel free to post your comments here or send me a private email at rwang0@gmail.com.

(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

The Big Picture: Dichotomy In Revenue Growth for Q2 CY Quarterly Revenues

As many main app vendors continue to lower guidance on earnings, this calendar year Q2 public company quarterly earnings analysis shows that larger vendors and specialty vendors such as SAP, Oracle, Lawson, and Deltek gain ground in license revenue growth while growth for the mid-market players now comes from maintenance and services. SaaS vendors all appear to be growing subscription revenue at breakneck paces with Concur (76%), SFDC (50%), SAP (45%), and NetSuite (43%), leading the charge in year over year quarterly revenue growth.

As mentioned in past conversations, the leading indicator for long term growth is new software license sales which drive recurring revenue for vendors with perpetual license models. The trailing number is maintenance revenues which track retention. In the SaaS world this would be subscription revenue. Renewals represent retention.

Here's the break down of year over year quarterly new license sales numbers/recurring revenues:

Enterprise Software Vendors with Perpetual License Revenues (YoY)

• CDC Software - License down 20% to $14.8M / Maintenance up 26% to $26.8M / Services up 12% to $27M
  
• Deltek - License up 18% to $22.1M / Maintenance up 11.3% to $28.3M / Services up 12.9% to $22.3M
  
• Epicor Software - License down 3% to$24.3M /Maintenance up 23% to $48.7M / Services up 21% to $41M
• IFS - License down 27% to SKr 111M ($17.2M) /Maintenance flat at SKr 165M ($25.7M) / Services revenue up 9.5% to SKr 324M ($94.2M)
  
• Lawson Software - License up 3% to $41.7M/ Maintenance up 14.4% to $88.9M / Services up 8% to $102.4M
  
• Oracle (Apps) - License up 36% to $989M / Maintenance up 17.7% to $1.044B / Services up 16.8% to $957M
  
• QAD - License down 23 % to $11.4M / Maintenance up 8% to $34.5M / Services up 34% to $23.6M
  
• SAP - License up 25% to 898€ / Maintenance up 22% to $1.151B / Services up 21% to 2.06B€

Enterprise Software Vendors with Subscription Revenues (YoY)

• Concur - Subscriptions up 76% to $53M
• NetSuite - Up 43% to $36.6M
• Oracle (On Demand) - Subscriptions up 28.5% to $194M
  
• Right Now - Subscriptions up 25% to $24.5M
• SAP - Subscriptions up 45% to $64M
  
• SalesForce.com - Subscriptions up 50% to $240M
  

The bottom line
Growth for most vendors continues to be driven by maintenance and services revenues. The impact on customers will be a continued squeeze to increase maintenance fees and an increase in the number of service offerings delivered by the vendor. Users should begin their long term account planning and right set expectations. One place to start is to align your business drivers with a long term apps strategy.

Your turn.
Are you seeing a push by your vendor's sales person to up the size of the maintenance contract? Are you seeing more value added offerings in services? Is it getting more difficult to reduce the overall cost of operating your apps? Look forward to hearing from you! Feel free to post your comments here or send me an email at rwang0@gmail.com .

(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

Food for Thought: In a World Of Partner Solutions Does the ISV or SI Partner Designation Matter?

Old World Definition Of Software Partners Still Prevalent
From a vendor's point of view, partners can play a critical role in expediting time to market, improving sales reach, or delivering a complimentary solution to a customer. There traditionally have been 5 defined categories:

• ISV - Independent Software Vendors specialize in delivery software. They typically partner to complement a solution offering or create an integrated solution offering for a target market.
• SI - System Integrators focus on bringing various technology components including software to ensure a complete solution. They bring a solution offering to life and may also provide additional business transformation services.
• VAR - Value added resellers build on top of existing solutions and to resell the "value add" on top of an existing product. VARs partner by expanding a solution offering for a geography, market segment, industry, or role.
  
• OEM -Original Equipment Manufacturers develop components for use by another company in their product. In this context, the vendor provides their solution as an OEM to be embedded by a partner.
• Technology Partner - Technology partners supply solutions in other areas such as hardware, networking, tools, and related components.

Next Generation Partner Solutions Blur the Lines
Recent discussions with over 150 customers and partners of software vendors and their partners at Microsoft, IBM, Oracle, SAP, Lawson, SalesForce.com, and NetSuite highlight two trends:

• ISV's continue to provide system integration via new services. The hunt for quarter to quarter growth has many of the ISV's bulking up their pro services offerings. While many of these vendors continue to build additional partnerships to expand their reach, there remains considerable investment in internal professional services teams and other value added consulting offerings. Some examples include additional "value added" support services or business value services offerings.
  
• System integrators break ISV dependencies by delivering solutions via SaaS or PaaS. Previously, the large consulting firms have invested in solution platforms for custom delivery to clients such as a specific utility billing platform, tax collection system, or telecom call center solution. By moving to a one to many multi-tenant deployment option, system integrators break their dependency on a vendor and can now mitigate the cost of supporting clients should they choose a multi-tenant approach. This means they can deliver one to many support and get into the solutions game without worrying about excessive costs to support various client templates and deployment intricacies
  

The bottom line.
In the world of partners and partner solutions, customers remain confused at all these designations. At the end of the day, they just want to know the solution is offered in a consistent fashion, certified, supported, and part of a socialized ecosystem.

Your turn.
You've heard my view. As I write this, I'm in the midst of my next report on solution centric ecosystems. Do you agree or disagree that these designation no longer have the same meaning? Is there value in having a uniform way of evaluating these new partner solutions sans the old world monikers? Would a maturity model help? Looking forward to your comments!

(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. All NDA's have been honored.)
Copyrighted 2008 by R Wang. All rights reserved.