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

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

IBM announced its 23rd acquisition in its information on demand strategy by offering $58 per share (9% premium), or $4.9B for Cognos, the Ottawa, Canada, based BI stalwart with 4000 employees and 25,000 customers worldwide. The deal is expected to close in the first quarter of next year. A quick assessment of the deal:

• Keeps IBM in the high margin information management services. The most valuable and complicated engagements involve information areas such as BI and performance management. Having Cognos in its arsenal of products and a loyal customer base gives IBM a key tool for future services and software growth. This acquisition is seen as foundational for the Armonk, NY headquartered vendor's information on demand strategy, combining information integration, data management and business consulting services.
• Builds on existing relationships. The close partnership between IBM and Cognos dates back as early as 1992 and at least 8 integrated offerings that support many joint customers. Hence this takeover is seen as friendly and endorsed by the Cognos board. As evidence of this comfortable acquisition, Cognos' CEO will lead the information management software division.

The bottom line for vendors
SAS REMAINS THE LAST BI MAN STANDING
The BI space officially is no longer led by Best of Breeds. With Hyperion tied up with Oracle, Business Objects with SAP, and now Cognos with IBM, each of the Big 3 has made its move in the Business Intelligence space. This leaves SAS, headed by Dr. James Goodnight, as the last independent BI vendor. M&A talks seem unlikely, as SAS remains a privately held company, however, Dr. Goodnight has not yet identified a successor.

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

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2007 by R Wang. All rights reserved

Event Report: Oracle Open World

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

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

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

Some quick observations about attendees from conversations on the ground:

• Feeling the effect of the Oracle surround strategy. Oracle customers and partners by acquisition was a common theme among attendees. Over the course of the past 4 years, even customers in pharma, oil and gas, and retail find Oracle to be present in their environments via database and edge applications that surround the core SAP instance.
• Seeking information about future roadmap. Most attendees came to have indepth discussions at sessions with key executives and product management staff. Sessions at OAUG were quite lively with in depth discussions among audience members
• Sensing that Fusion Middleware and AIA will play a big role in future solutions. As each Apps Unlimited product consumes more Fusion Middleware, attendees sought to bolster skill sets and general information. The customer base remains open to packaged SOA-based integration and seems willing to pay for this.

The bottom line for users
Customers continue to find value in Open World, despite the size. As Oracle continues to pre package integrations among its acquired products via AIA, expect customers to choose this more cost effective option over expensive integration work conducted by SI's. Customers and partners should bolster Fusion Middleware skill sets as this will be the core requirement to utilize future Oracle acquisitions.

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2007 by R Wang. All rights reserved

News Analysis: Dun and Bradstreet Acquires Purisma

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

MERGER ALIGNS COMPLEMENTARY OFFERINGS INTO A UNIFIED CUSTOMER HUB SOLUTION
DandB’s acquisition of Purisma represents a significant step in the trusted data provider’s transformation into a customer hub and potential master data management (MDM) solution provider. As a premier B2B data and hosted services vendor, DandB can now deliver on a hybrid customer hub offering with on-site data augmented by sophisticated hosted services. DandB also provides B2C capabilities through a recent partnership to OEM Acxiom’s Abilitec solutions. The acquisition of Purisma is strategic because this:

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

The bottom line for users
CONSIDER DandB AS A CDI PROVIDER UPON MERGER INTEGRATION
Customers and prospects stand to benefit from this complementary acquisition once DandB fully integrates the Purisma capabilities.

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

The bottom line for vendors
ACQUISITION CREATES A GAME CHANGER FOR THE MDM WORLD
Companies increasingly rank MDM as a high priority technology initiative for 2008. CDI technologies represent a key subset of MDM. As MDM technologies continue to be consolidated into middleware stacks or complimentary solutions, the market can expect:

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

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2007 by R Wang. All rights reserved

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

Kudos to the Deltek team for their recent IPO. This public offering showcases how taking a company private can provide opportunities to regroup, reorganize, and recharge. What this means for Deltek:

• New market growth opportunities. The $10M in proceeds from the IPO give Deltek the cash to build off of its base in the UK for International expansion. In addition, the vendor's strength in government contracting, professional services, and construction lends well to related industries such as IT services, architecture, accounting, and transportation services. Deltek can also take the opportunity to expand its partner network.
  
• Visibility into the growing project based solutions market. Forrester estimates this market to be $6.5B by 2010. As work shifts from product to service orientation, solutions in this Project Based Solutions space gain prominence in the enterprise. Think of a Best Buy who's no longer selling a home theater system but the installation, delivery, and extended warranty. Expect the marketing to crank up from stalwarts such as Epicor, Oracle, Primavera, and SAP.
  
• Debt repayment. As part of the repayment terms, the company will apply $42.9M to repay about a quarter of their debt and another $3.9M to selling shareholders who've exercised options. This should free the firm up for better growth prospects.
  

The bottom line for end users
Keep an eye on this space if your business revolves around projects. Vendor consolidation is sure to occur, but Deltek will be a major player in this space. Deltek's offerings cover both the .NET world and the J2EE world so platforms should not be an issue. Expect both Oracle and SAP to amp up the messaging if the Best of Breeds do really well.

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2007 by R Wang. All rights reserved

Buzzword Watch: Tired of Hearing Canonical and Not Knowing What It Means In the World of SOA?

So, it's one of those things that drives you nuts when everyone is talking about a buzzword, and you haven't found the definition. Canonical in the context of SOA keeps popping up in the many briefings and product marketing conversations I've had these past 12 months, so I thought I'd share with you the definition as its being used.

Attempting to find a good definition...
So, I started with a good old Wikipedia try some months back and got this definition:

"Some circles in the field of computer science have borrowed this usage from mathematicians. It has come to mean "the usual or standard state or manner of something"; for example, "the canonical way to organize a file system is as a hierarchy, with extensions to make it a directed graph". XML Signature defines canonicalization as the process of converting XML content to a canonical form, to take into account changes that can invalidate a signature over that data (from JWSDP 1.6).

For an illuminating story about the word's use among computer scientists, see the Jargon File's entry for the word[1].

Some people have been known to use the noun canonicality; others use canonicity. In fields other than computer science, canonicity is this word's canonical form."

...led me to put it in the perspective of SOA
As you can imagine, the definition was utterly useless and left me still clueless. So here's what I'm starting to understand after talking to my Enterprise Architect gurus that "canonical" is often used in the context of SOA to:

• Describe data models. Most of the gurus I talked to mentioned that this would be the superset of all data required to for a specific purpose, yet not reflect all the data. It may not be complete, but it would serve as the single model.
• Explain how applications talk to each other. Often used in discussing messaging for SOA, it's about what metadata objects such as data types, values, and semantics are communicated to both the sending and receiving applications. The end result must be some agreement what is the right data, what does it mean to each party, and how the data will be used and shared.
• Keep BPEL clean. In order to build a clean service repository, there exists an integration layer that transforms/mediates a variety of messages to a common format through common codes or an ESB. This layer sits between the service repository and the integration processes. Typical hub and spoke integration requires messages to be translated to an independent format and then into the required format. This allows you to add new applications by adding a translation layer making this more effective and reusable than point to point integration. It's common in most EAI approaches.

The bottom line
Often found in conversations about SOA, "canonical" refers to a design philosophy and approach that maps between the various data, messaging, and semantic frameworks used by multiple applications and systems. It's about an approach that allow for reuse of items, such as business processes, among different systems.

(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: Oracle Launches Hostile Bid for BEA

Oracle added fuel to fire in the rapidly consolidating enterprise software market today with a $6.7B unsolicited bid for BEA. Here are a few quick thoughts:

• 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.
• BEA customer base 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.
• Oracle should expect a fight for BEA. Other vendors like SAP, IBM, and HP need BEA more than Oracle does. SAP's NetWeaver is among the weakest of middleware platforms, despite one of the strongest ecosystems. IBM will be threatened by an Oracle dominance in middleware. 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 assist BEA. 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.
  
• Will Fusion Apps Still be Built on Fusion Middleware or BEA? Recent rumblings about a delay in Fusion apps delivery and the future of leadership in delivering Fusion apps, add speculation to whether or not Fusion Middleware will still be the basis of Fusion apps. (See the latest from Vinnie Mirchandani). 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.
  

The bottom line
Oracle's long term M&A strategy centers on gaining the biggest install base around not only business applications, but also middleware. At the end of the day, its still about selling more database and gaining the largest share of the IT wallet. With so much liquidity in the market, expect continued and 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 or BEA to sit still!

Next up: How will Oracle deal with all the redundant technology?

(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: SAP Initiates Friendly Take Over of Business Objects

SAP Faces the Realities of A Consolidating Market and Ecosystem
In a not so surprise move to insiders, Goldman's efforts to tie up SAP and Business Objects proved fruitful as the two companies officially announced a friendly take over offer. (Press Release). In the press release, 2 key things were made clear:

• Organic strategy not enough to meet stated targets to grow the market. Despite great success with organic growth, Oracle's acquisition strategy is making a dent. CEO of SAP, Henning Kagermann's quote from the press release says it all. ""The acquisition of Business Objects is in keeping with SAP’s stated strategy to double our addressable market by 2010 as announced in 2005,” said Kagermann. “SAP will accelerate its growth in the Business User segment, while complementing the company’s successful organic growth strategy."" What kind of acquisitions will SAP make to meet this self imposed target?
  
• SAP evaluated Business Objects for more than just BI. After Oracle's takeover of Hyperion, SAP evaluated the impact to its overall solution centric ecosystem. Business Objects strong partner ecosystem played a key role in choosing Business Objects. It seems likely that Business Objects users may be forced onto NetWeaver in the long run.

The bottom line for end users
In general, hang tight and if you have the budget, negotiate longer maintenance contracts and buy new modules for significant discounts. In the history of post merger announcements, sales reps typically will be offering sweetheart deals to close out the quarter and status as an independent company. There are many win-win scenarios out there! If you are leaning towards SAP, find your SAP rep and put in the motion for a master agreement prior to merger for completion after the merger.

A quick analysis for end user scenarios:

• SAP users who chose BOBJ. Basically SAP just validated your strategy of going with BOBJ over BW. You'll want to see if you can avoid being tied to NetWeaver in the future as existing SAP users often find NetWeaver connection charges to be the highest cost of ownership.
  
• SAP users who don't have BOBJ. Here's your chance to buy BOBJ once its fully certified on NetWeaver. BOBJ built a great product, and XI on NetWeaver may prove to be quite solid and a significant improvement to BW. There is a reason why so many self-proclaimed "SAP Only" shops run BOBJ.
  

Key questions all users should ask:

• Will Business Objects users be forced on to NetWeaver in the long run?
• Can users ensure that they do not have to use NetWeaver?
• Will key management change and who will replace them?
• What impact will this have on post XI releases?
• Does being a "separate company" in the SAP group work like the way Tomorrow Now works?
• How will SAP continue to support non-SAP users?
• How will SAP and BOBJ address MDM?
  

The bottom line for vendors and BI competitors.
BI remains one of the hottest areas of growth as users struggle to get information out of existing legacy packaged apps. As we move to a full Y2K replacement cycle, smart companies begin the discussion with their BI strategy then with upgrade. Expect the following:

• BI market consolidation in full cycle. Oracle's acquisition of Hyperion signaled the beginning of market consolidation. Though glacial in speed, expect pressure to mount on the dwindling number of independent BI vendors. Cognos is the obvious next target with IBM, HP, and Oracle as potential suitors. Other vendors include IBI, Microstrategy, Actuate, and a very unlikely SAS.
  
• Expect a hostile counter offer. Valuations of $4.6B euros $6.8B may be less than other vendors had anticipated. Hyperion's deal at $3.3B seemed quite high and previous industry murmurings had BO and Cognos valued north of $7B. Deep pocket vendors such as IBM, Oracle, and HP could set a counter for the quite valuable BOBJ install base.
• Organic growth not enough for this market. After years of building a great organic strategy, even mighty SAP realizes that this industry requires strong acquisition skills for survival and growth of partner ecosystems. Acquisition analysis should follow white space mapping and charting of valuable competitor install bases. Each technology era and segment has had dominant acquires. Think of IBM, CA, Microsoft, Oracle, and Google. One may expect other vendors to reconsider their strategies.
  

(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

Trip Report: DownUnder

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

WHAT'S GOING ON DOWN UNDER FOR ENTERPRISE SOFTWARE?
Well, it's hard to beat the weather, scenery, and market in Australia and especially here in Sydney! Amidst this wonderful backdrop is an economic boom based on Financial Services, Public Sector, and Natural Resources, especially mining. In other economic news, real state pricing has hit a drop but not b/c of the US sub-prime scandal, but more along the retirement savings laws passed by the federal government which has moved a lot of money out of the real estate market. However, rents continue to rise while construction has halted.

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

On the technology front, there is a lot of activity supporting the 3 key industries. Enterprise apps remain hot as the country moves into the post-Y2K replacement cycle. In the context of globalization, as expected, China and India remain the talk of the country while the Aussie public sector heats up:

• China's economic influence runs deep for natural resources. China continues to be Australia's largest importer of natural resources such as copper, coal, bauxite, iron ore, and nickel to name a few. The market is such a buzz that there aren't enough truck drivers to haul loads to ports, even with salaries hitting A$ 80,000 a year and miners are clearing A$150,000 or more with bonus. (Side note: The guy that drives the train from Rio Tinto's mine to the port in West Australia makes A$150,000 per year!). From a tech perspective, apps spending is up in the mining and exploration sector to support China's large appetite for natural resources. This means heightened interest in software replacements, upgrades, and new purchases. ERP, supply chain and TMS support, and other mining specific applications are garnering significant interest.

• India's role continues in global delivery models for financial services. The continual labor arbitrage for services and back office functions drives the buzz with India. With most the Financial Services firms looking at these opportunities, the system integrators are playing out the global delivery models and many of the large multi-nationals are focused on business process outsourcing opportunities (BPO). From many conversations its clear that large scale ERP replacements are also on the way for Australian based financial service companies.
  

• Consortia and shared services provide opportunities for the public sector. On the public sector side, IT spending for new projects continue with shared services organizations continuing to lead the way. These public service consortia have been among the early adopters of BPO. Agencies such as water, building departments, land administration among others have done a great job, especially in the rural states like Western Australia.
  

BOTTOM LINE FOR END USERS
End users should begin the process of mapping business initiatives to software spending requirements. Business and IT projects should focus on 4 key drivers: growth, efficiency, regulatory compliance and strategy. One suggestion is to conduct a self-assessment of long term apps strategy readiness and to be focused on building a 5 -year apps strategy that includes organizational change, process optimization, technology readiness, and solutions centric ecosystem maturity.

BOTTOM LINE FOR TECHNOLOGY VENDORS
For system integrators this means a ripe market where implementation services, apps replacement and upgrades, and outsourcing provide significant opportunities as customers look at their technology requirements in the context of business initiatives


(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: PWC's Non-Compete Ends with IBM

PwC EMERGES FROM THE IBM NON-COMPETE
In 2002, PwC sold its consulting arm to IBM for $3.5B. That transaction began a 5 year non-compete which ends on October 1, 2007. The non-compete prevented PwC from participating in IT consulting and systems integration. However, PwC could partake in other areas of business consulting such as management issues and IT advice, but not implementation. PwC now joins its former Big 4 brethren, Deloitte and Ernst and Young in being able to vigorously attack the consulting market however they want. Key points include:

• Continued focus on trusted advisory roles in business. During the non-compete, PwC and others in this space built up significant businesses in post merger integration, valuation and corporate finance, Sarbanes-Oxley and regulatory compliance, performance improvement, etc. With IT decisions moving to the business side, PwC's long-lasting CEO and CFO relationships will transcend well into the new IT environment.
  
• Expanding in IT strategy but not implementation. Expect PwC to play a 3rd party objective role in the board room on a range of issues from business to IT. With the system integration market commoditized by global SI's such as IBM, Accenture, Wipro, Infosys, TCS, etc., this industry observer would expect the operations to remain business focused and not a full range IT services supplier. Projects will focus around vendor selection, IT strategy, and independent validation and verification. This way they can play "auditor" to their former cousins who make their money on systems integration work and delivering vendor services.
  
• Advisory and consulting work brings in higher margins than audit work. Audit work still pays the bills and holds the relationships, but margins are much higher on the advisory side. General Big 4 billing rates average in the $250 to $300/ hour rate. Working on a project with 12 to 15 people over 2 months quickly overtakes the annual audit fee at most companies.
• Many alumni seek to come back. Despite the hot hiring market for resources, PwC has an advantage. Many IBM'ers are looking to head back to PwC given their experience with IBM. Along with other Big 4 alumni scattered during the last set of M&A, there's a longing to work at a private company and not at a company that talks a big game about strategy but ends up becoming a slave to the quarter to quarter Wall Street mentality. One classic post from the IBM-PwC Consulting merger days can be found at: http://www.ibmemployee.com/Highlights040724.shtml

The bottom line
Targeting the IT consulting strategy and high-end services market will allow PwC to enter the sweet spot of the market - highest value and highest margin work. Also, it seems that given a saturated system integrator market and high failure rate, PwC would probably not enter the pure systems integration market. However, it may decide to go down the higher end of the systems integration side of the house working on projects such as BI, master data management, business process management. And even if they do, the high end services side, coupled with the relationships should put competitors such as IBM and Accenture on alert as they ramp up in the next 12 to 18 months.

(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

Event Report: SAP Business by Design (Formerly Code Named A1S)

SAP this morning launched its new hosted offering SAP Business by Design. Some quick observations on the positive side of the spectrum:

• SAP Business by Design runs NetWeaver. UI still runs on services and the product can access all the services in the overall SAP Enterprise Service Repository. Customers and prospects should expect SAP to fill in gaps and last-mile solutions via composites from partners. Though SAP will have to grow this new ecosystem, they've proven they can do that very well.
  
• T-Rex and Max DB reduce dependence on Microsoft and Oracle. Finally, SAP stops funding Microsoft and Oracle with database cash. MaxDB is now the underlying database and T-Rex, the in-memory database (debuted in BIA), is put to use throughout the suite.

However SAP will have many areas of improvement in future releases to come. Here are some areas based on conversations with SMB prospects:

• SAP gets the midmarket but the product still remains complex. The vendor currently leads in the mid-market by revenue ($2.563B in 2006). SAP has spent a considerable amount of research to understand this market and its requirements from a marketing perspective. Yet simplicity and ease of use still remains elusive to the vendor. Key features like easy access to reporting features, quick portal construction, and easy integration to Office could remain significant areas for improvement.
  
• SAP fails to deliver a true SaaS offering. SAP delivers an on Demand solution. Without true SaaS in a multi-tenant design, customers may pay more in the long run but retain some flexibility. SAP had a top secret project (originally code-named A1N) headed by Shai to build multi-tenant and for whatever reason abandoned the project in January of 2007. However, customers may trust the fact that SAP is delivering onDemand and will expect the reliability of a trusted utility.
  
• Focus on usability still falls short of industry efforts from Microsoft and Epicor. The vendor talks about breakthrough user experience. The reality: the current approach in the Business by Design product takes its WebDynpro UI to a new level of configuration and manipulation. Drag and drop features showcase better usability but the net result is still a distinct SAP experience, though it is much better than anything currently offered. In context of the market though, it falls short of the ground breaking work Microsoft Business Solutions has accomplished around roles and usability and the ease of use in process flexibility from Epicor. A move to adopt AJAX would certainly help a ton. (Editor's note: we're all tired of hitting F5)
  
• Early adopters are no different from other early "hosted" SMB adopters. SAP's beta customers share similar requirements of all rapidly growing SMBs. They are growing, need rapid deployment, and impressed by the ability to deploy quickly without being saddled by IT infrastructure costs. Spending operational expense instead of capital expense remains a big driver as well and at $149 per month per user, this is a good deal compared to the full SAP ECC 6.0 offering. Nothing was special about the customer references, in fact, many of them may have received discounts or paid minimal licensing.
  

The bottom line
SAP demonstrates a good understanding of its requirements for the SMB market and a "hosted" offering. SAP should be commended for delivering a significant improvement in comparison to existing SAP products. Company's who trust SAP to deliver core ERP may consider this solution. However, the lack of Web 2.0 features that include user experience, mash-up support, interoperability, and true multi-tenant solution may turn many prospects away. Also, the lack of an easy Microsoft Office integration may keep prospects and existing customers from turning to the numerous SMB competitors who offer .NET based offerings with Office integration. The jury is still out on whether Shai's original strategy would have been better or whether or not Zencke's offering may at least meet SAP's stated growth goals for the mid-market.

(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

Event Report: SalesForce.com DreamForce 2007

(Image courtesy of SalesForce.com)

At this year's Dreamforce, Salesforce.com made 4 key announcements:

• The Force.com platform - platform as a service for companies to deploy their own apps
  
• Visualforce - a page based model design tool to deliver any User Interface-as-a-Service
• An AppsExchange milestone- the vendor delivered its 700th live application
• Salesforce Ideas- an online innovation community and support group

Of those announcements, The Force.com had the most impact as it now opened up the platform to not only its own partners, but also any customer who was looking for a SaaS platform to build on. Like the original AppsExchange announcement which targeted partners, the opening up of the platform to customers was equally innovative because it put key SaaS development tools in the hands of innovative customers to build their own "last-mile" solutions. The net:net - the reduction of complicated software development platforms.

The bottom line
SalesForce.com remains innovative in bringing a true solutions centric ecosystem to the end user. Customers today face so much frustration in waiting for a vendor to deliver key functionality. Opening up to partners via AppsExchange was innovative. Sharing the code with customers to develop is brilliant and put SalesForce.com one step ahead of any competitor in giving control back to the customer.

(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

Apps Strategy: SaaS Pricing Models Challenge the Status Quo

A dichotomy of software licensing and pricing philosophies has emerged. On one hand, software titans such as Oracle and SAP continue to shift the pendulum towards usage based metrics for its largest customers. These options represent metrics such as revenue and industry specific models that seek to extract a “fair value” for their contribution to an organization’s success. On the other hand, Microsoft and a host of vendors like Epicor and Sage serving the SMB market continue the push for usage based models including concurrent user which seek to limit ownership costs to the user level. SMB’s find favor with this model because it creates an apparent aura of predictability and “fixed nature” to license costs. As SaaS options gain in popularity and familiarity, I predict the pendulum will shift again (for large enterprises) because:

• Simplicity of SaaS model puts the focus back on user based pricing. Cost per user per month highlights the elegance of simplicity. Business leaders easily understand pricing by users and not by revenue or their business success. Why should you pay a software vendor more for your success?
  
• Inclusion of maintenance, support, and upgrades raises the bar. Unlike traditional models which tack on 15 to 25% in annual maintenance costs and may or may not include the apps and technical foundation upgrade, SaaS pricing eliminates this level of complexity. Users neither worry about the cost of upgrade nor worry about the testing and certification costs.
• Current systems nearing the end of their life-cycle provide enterprises a fresh start. Many ERP systems installed pre-Y2K are now coming up on replacement. Enterprises emerge from harsh lessons, as they have paid for maintenance of unused licenses (i.e., shelfware), suffered undefined maintenance fee increases, and lost functionality credit for future releases. As companies begin their vendor selection processes, they do not want to repeat the same mistakes. SaaS pricing simplicity allows them to limit their risk while gaining the benefits of rapid deployment.

The bottom line

Though the simplicity and elegance of the model may not apply to all scenarios, prospects and customers should consider how to apply SaaS pricing models to traditional licensing and pricing contracts. Armed with this metric, a lot can be gained from limiting the cost of IT to the number of users. And thanks to SaaS, the only thing that matters is cost/user/defined time period.

(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