A Software Insiders Point of View

News Analysis: SAP Moves All Customers Onto More Expensive Enterprise Support

2008-07-16T01:00:00.019-07:00

Margin Pressures Drive Maintenance Fee Increases
Announced at the 2008 Field Kick Off Meeting (FKOM), the elimination of the Standard and Premium support offerings was originally developed just for new customers. However, today's announcement that existing customers will be "transitioned" to Enterprise Support as of January 1, 2009 will come as an unpleasant surprise to SAP's 17,000 customers on basic support. This move may stem from a variety of factors including:

Increasing complexity of the SAP user landscape. SAP often cites the movement towards SOA environments and the growing complexity of IT landscapes as the main drivers for a more comprehensive, differentiated, and streamlined support offering. In fact, SAP customers would concur that their environments have become more complex to manage and own. Many of SAP's largest customers have decided to skip the upgrade to ERP 6.0 and wait for SAP's next major release.
Failure of Business ByDesign launch. Inability to scale BBD in a cost effective manner and delays in moving BBD onto the new NetWeaver 7.1 platform have led to a major loss in potential revenue growth. Most notably, SAP will not reach the 1000 customer target by 2008 as promised in its Q4 2007 earnings call.
Margin pressure exerted by Oracle. During the 2007 Q4 earnings call, Oracle’s CEO, Larry Ellison, stated an overall goal of reaching 50 percent margin and 20 percent earnings annual growth. The effect - SAP has had to react with an equivalent profit margin growth strategy. Combined with the recent $83M payout to i2 and the pending TomorrowNow legal issues, SAP has been left little choice but to respond with a maintenance fee increase to achieve double digit earnings growth.

Compared to the Rest of the Software Industry, Enterprise Support Does Deliver Relatively More Value...
Despite the price hike, SAP should be given credit for holding maintenance fees at 17% for over a decade. Unlike the policies and practices of other vendors, SAP's increase does comes with additional benefits:

Free trial period and graduated increase. Customers will be moved to Enterprise Support as of July and not begin payments until January 1st 2009. Expect increases of about 8% a year until the 22% maintenance fee is reached. For most customers this will occur around the 2011 - 2012 period.
Upgrade commitment. SAP provides a technical upgrade commitment that every installed base customer can be upgraded to the next release. In addition, SAP commits to deliver all the tools required to manage a technical upgrade. However, customers must migrate to ERP 6.0 to take advantage of Enhancement Packages (EHPs).
End to end operations support. Enterprise Support comes with a central test plan for core business processes, a quality manager that will validate test execution and completeness, and a central transport mechanism and change control system. SAP also commits to 7 X 24 support advisory, 7 X 24 root cause analysis, and continuous quality checks via remote access and supportability.

... However, Most Customers Barely Use What They Have.
In conversations with over 100 SAP customers, most express minimal utilization of the existing Basic Support offerings. Basic Support typically includes problem resolution, quality management, SAP Solution Manager, SAP standards for solution operations, knowledge transfer, continuous improvement, and access to the SAP Service Marketplace. The average customer claims to connect with SAP less than 5 times a year. This is the software equivalent of getting an expensive but comprehensive insurance policy and never utilizing it.

The bottom line.
Maintenance fees continue to erode the value of a perpetual license. At 22% of net price, customers pay the equivalent of 2X their original license cost over a typical 10 year ownership lifecycle. Maintenance continues to be the most expensive cost component of enterprise software. Customers should take action by:

Considering third party maintenance options. Rimini Street's recent announcement to provide third party maintenance in 2009 is worth a look. JD Edwards and PeopleSoft customers who have considered this option already save up to half of their Oracle maintenance fees.
Galvanizing the SAP User Groups to take action. Now is the time that customers should leverage their independent users groups to organize a campaign against this maintenance fee increase. Groups such as ASUG, DSAG, SAP Users Group UK & Ireland need to step up to the plate and find a solution to this increase. This will be the real test of these users groups effectiveness. It will become painfully obvious which individuals in leadership positions have been under the influence of SAP and which individuals will be willing to back the end users.
Determining long term SAP containment strategy. Most SAP customers adopted a single vendor strategy. The initial benefits were driven by a fear for complicated integrations, desire for process standardization, and need to expedite deployments pre Y2K. This strategy has led to vendor lock-in and vulnerability. Long term apps strategy should consider how to contain future risk in a single sourced ERP scenario.

Your turn.
You've heard my view, but I'm looking to see how you feel about this latest increase by SAP as well as the Oracle price increases.

For more details on how SAP has raised maintenance fees see the Forrester Report from March 3, 2008 "SAP Raises Maintenance Fees for New Customers"

For some other interesting posts on this topic check out:

Dennis Howlett "SAP pulls the trigger on higher support costs" and SAP 'Mittelstand Customers Upset at SAP Maintenance Increases Computerworld Germany Link (for those of you who sprechen Deutch and Babelfish)
Frank Scavo "SAP Botching UP Support Transition"
The Register's "Comment on SAP forces customers onto premium support package"
Scott Wilson's CIO Web Log "SAP Jacks Support Costs"
NEW! - UK and Ireland SAP User's Group's Statement on SAP Support

(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.

Reality Check: Sales reps matter more than product

2008-07-14T14:16:00.002-07:00

I haven't posted for so long, butI felt like I had to give Mr. Analyst of the Year a break and actually write something.

Over the last year I have become increasingly aware of something and wanted to share it with a larger audience. When I have conversations with companies about a pending software purchase (usually CRM or eService), they tell me the core business problems they are trying to solve, then give me the list of vendors they are considering. And almost every time, I hear a little jingle from Sesame Street in my head:

One of these things is not like the other
One of these things just doesn't belong
Can you guess which thing is not like the other
By the time I finish this song?

Why? Because the obvious vendor(s) who are specialists in their problem are not on the list, and they are selecting from a group of vendors who all do something else. So I ask, "Um, why isn't Vendor X on the list?" And here is the universal reply. "Oh, we started with them, but their sales rep was an asshole."

I don't think developers and marketers at high tech companies have any idea how many deals they are losing based on the personality of the sales rep. What is really shocking is how many times the obvious 'best fit' vendor is dismissed from a deal because:

The sales rep was arrogant (I've heard this a dozen times about 1 vendor in particular)
The sales rep was late to multiple meetings and conference calls and the company felt the vendor didn't want the business
The sales rep didn't know bumpkis about the product functionality and tried to BS their way through--always a big turnoff

Maybe I'm a troublemaker (OK, I admit it, I am) but sometimes I contact the vendor who lost a particular deal and asked them about it. So far, not a single time has the 'win/loss' report had anything about the sales rep or the sales process. Usually it is a useless excuse like, "they weren't ready to make a decision," when that obviously wasn't the case. Or, "we couldn't meet their price," when I knew the discussions never even got that far.

This is all very frustrating for me, because I want to see companies buy the right product to fix the right problem, and when there is a mis-match from day 1, it isn't good for any of us. The customer ultimately doesn't receive the ROI they expect. The vendor never has a referenceable customer. And I have far fewer success stories to write about than I should.

There is so much pressure in my industry (service and support) on after call satisfaction surveys, I wonder why companies aren't doing a better job of understanding the impression their sales staff is making on customers? Why doesn't the VP of sales follow up with prospects after the initial sales visit and ask how it went? Why doesn't someone other than sales create the win/loss reports so at least companies know how much business they are losing because of sales rep hubris?

So all you Software Insiders who read this blog, ask yourself, "when was the last time I did a 'ride along' on a sales call?" Regardless of what your role is (engineering, support, marketing, etc.), maybe you should start making your presence known in more customer facing sales situations. From what I'm hearing, you may be shocked at what you see.

Thanks for reading!

John Ragsdale

Ragsdale's Eye On Service

News Analysis: Infor Teams Up with IBM Global Financing

2008-07-01T22:26:00.001-07:00

Vendor Financing Options Provide a Key Weapon in Battle for Tech Spending
On June 28th, 2008, Infor and IBM Global Financing (IGF) announced a worldwide customer financing program for Infor customers. With the worsening global crunch on credit, this program provides Infor's customers with:

Access to a line of credit for key tech investments. Similar to other IGF deals, the program includes more than just Infor's entire line of business software. Other eligible items include software, services, hardware, and maintenance.
Flexible payment options. Customers can spread traditional up-front payments over time. Flexible payment plans for loans or lease extend up to 60 months. Interest rates are country specific.

Key facts about the deal:

Geographies: All
Products: All products, No IBM hardware or software required
Length of program: Up to 5 years, typically 24 to 36 months
Interest rates: Country specific
Partner eligibility: Open to all partners
Program inclusion: software, services, hardware, and maintenance.

The bottom line.
Vendor-led financing options and payment alternatives provide users with opportunities to avoid up front payments and efficiently deploy capital. While financing options do not address the issues of recurring costs for support, upgrade, and hardware infrastructure, the bundling of professional services, hardware, and other related software offerings provide a compelling business case to choose one preferred IT vendor while deferring capital outlays. Financing will continue to prove to be the game changer in this consolidating and competitive software market.

For more details on how other vendors have accomplished financing options see the Forrester Report from August 29, 2006,"Assessing New Software Vendor Financing Options" .

Your turn.
You've heard my view, but I'm looking to see how you've used vendor financing and if you see this as a game changer or not. Looking forward to your reply.

(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: Multiple Factors Lead to Shifts in Oracle List Prices

2008-06-17T10:58:00.009-07:00

Dollar Based Pricing Drives the Bulk of Recent US Based "Price Increase"

On June 16, 2008, Oracle updated its localized price lists and software investment guide. Applications previously priced at $3995 per user rose 13.1% to $4595 per user in US dollar terms. Database pricing increased 18.75% from $40,000 per CPU to $47,500 per CPU. Other price increases approximate 15% on average. Despite Oracle’s role in vendor consolidation, increases during an impending economic downturn appear illogical. Recouping for dollar devaluation is the main rationale behind the recent price shifts for the following reasons:

Oracle offers one single global price list. Unlike many vendors who account for global currency fluctuations with country, region, and industry specific uplifts, Oracle maintains consistent pricing in dollars. The dramatic devaluation of the dollar has led to a de facto discount in the 30 to 35% range for multi-nationals who purchase in Pounds Sterling, Euros, and to a lesser extent, Yen. As a result price increases mainly impact the US while other Euro zone countries will not see a major increase in real dollar terms. A closer look at country specific pricing for Germany shows that the Euro price has not changed in constant Euro terms.
Management aims for 50 percent profit margins. During the 2007 Q4 earnings call, Oracle’s CEO, Larry Ellison, stated an overall goal of reaching 50 percent margin and 20 percent earnings annual growth. Given Oracle's global presence and geographical distribution, a large proportion of Oracle's sales and sales expenses are incurred outside of the US and the currency issue has hampered this margin objective and created pricing arbitrage. In the past, key recommendations to end users include purchasing in non-dollar currencies and take advantage of the currency arbitrage. Oracle’s pricing moves aim at mitigating this end user pricing strategy.

Other Price Shifts Reflect the Level of Market Competitiveness
Oracle typically provides pricing changes on a 9 to 12 month basis to account for iterative changes and acquisition activity. Despite dollar based pricing being the main rationale for this recent price shift, some changes reflects the level of competition Oracle faces in the market. For example:

Business intelligence (BI) minimum pricing cuts reflect a competitive market. Head to head competition with IBM, Information Builders, Microsoft, SAP and SAS leads to a change in pricing strategy. Financial BI analytics moved from $400,000 per customer to $5800 per application user with a 25 named user minimum purchase.. This change at list pricing reflects a minimum user drop from 79 users, effectively targeting the SMB market but raising the price for companies with more than 79 users.
App sever increases may reflect Oracle’s dominant market position. Acquisition of BEA puts Oracle in the dominant market position. The price for BEA WebLogic server is now $25,000 per CPU, a 47.1% increase from $17,000 per CPU. Currency fluctuations can not explain this level of price increase. One possibility could be an overall change in packaging that may include additional components.

The bottom line for end users
Contracts Must Take Into Account The Software Ownership Lifecycle

Software ownership spans across five phases of ownership: selection, implementation, utilization, maintenance, and retirement. List prices represent one part of the cost equation. Maintenance fees, upgrades, and staffing have longer term implication and should be factored in contract negotiations and vendor selection criteria. Though Oracle’s specific price changes impact US based or dollar based markets the most, Oracle clients should:

Never pay list price. Most initial offers for enterprise software carry a discount. While discounting percentages may vary due to revenue recognition rules, list prices rarely impact the final cost. Expect the software market to remain competitive in the US and license discounts will remain in the same ranges.
Focus on total contract value, not the discount percentage. Because of the dollar based price increase, discount targets should factor in the price changes. A 30.4% discount for 2008 would be required to achieve the same 20% discount in 2007 due to the list price increase.
Minimize maintenance fees. Maintenance represents the largest chunk of long term apps costs. Rates at 20 to 25% a year represent the equivalent of buying new software every 5 years and spending two times the original license cost over a period of 10 years. Euro zone customers who purchased software prior to 2006 should renegotiate rates to reflect the recent dollar devaluation.

The bottom line for vendors.
Like Big Oil and Petrodollars, Dollar Devaluation Creates a Silicon Dollar Effect.
Dollar devaluation not only impacts the price of oil, but now enterprise software. Expect other US based software vendors with a global presence and single global price list to make changes to the “Silicon Dollar’ equation and raise prices accordingly.

(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

Order Management Hubs: 20 Steps to a Perfect Order

2008-06-08T19:33:00.007-07:00

A Perfect Order still means many things to many people
Recent studies show that enterprises who deliver perfect orders have a direct correlation to positive customer satisfaction scores. Despite the stakes, success in consistently delivering a perfect order continues to elude many enterprises because existing systems lack the flexibility to move orders across the order management cycle.

Process views should trump functional fiefdoms
One source of confusion stems from the lack of clarity in what the components of a perfect order should entail. Confusion often stems from a functional perspective which may be predisposted from an ERP, CRM, eCommerce, or Supply chain heritage. Tossing out the three letter acronyms, order management hubs are about 4 key business processes:

Opportunity to order capture - all the stuff to capture information for the order and send it on to the next step
Order capture to order fulfillment - the guts and logistics of fulfilling an order from pick,pack, ship to TMS, WMS.
Order fulfillment to order completion - the processes that may occur before an order is satisified such as returns, after market service, installation scheduling, and warranty claims.
Order completion to order settlement - invoicing, AP/AR, financial stuff.

Moving from 10 steps to 20 steps towards a Perfect Order
The basic notion is a stakeholder gets an order and they have their expectations to have this filled every time, without question and with minimal effort. In previous discussions on Perfect Orders, 10 steps were identified. The definition has now been expanded to cover 20 key steps which include the delivery of an order:


1.		Through any channel at any time
2	.	Multiple types of stakeholders can
3	.	Engage in a consistent brand experience by
4	.	Selecting the right product or service with
5	.	The correct quantity and configuration that
6	.	Meets the acceptable levels of quality for
7	.	The stakeholder's entitled pricing policy
8	.	Supplied from the agreed upon sources
9	.	Delivered to or installed with the right customer within
10	.	An agreed upon period of time to
11	.	The correct locations in
12	.	The most appropriate packaging that
13	.	Includes the right documentation over
14	.	The right frequency with
15	.	An accurate invoice that can be
16	.	Collected and efficiently settled and/or
17	.	Returned via any channel for
18	.	Warranty claims against defects and/or
19	.	Scheduled for repair based on
20	.	Agreed upon service contracts

The bottom line for end users
Achieving a perfect order requires enterprises to revisit how existing order processes support multiple selling channels, multiple fulfillment scenarios, across functional areas. Ultimately, these business processes must be measured against metrics and key performance indicators (KPIs) such as:

Availability to promise visibility
Order status across all stages
Picking error rate
On-time delivery percentage
Cases shipped vs. ordered ratios
Type and percentage of unsellables
Days of supply
Order cycle time
Shelf level service ratios
Warehouse to store fill rate
Order accuracy percentages
Accurate and timely invoices percentages
Percentage of data synchronization
Stakeholder satisfaction
Lifetime monetary value of stakeholder.

(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 "Ray" Wang. All rights reserved

News Analysis: NetSuite's Acquisition of OpenAir Signals Importance of Services and Project Based Businesses

2008-06-02T08:01:00.005-07:00

Like the consolidation in the on-premise world, NetSuite's acquisition of Open Air marks the beginning of the a wave in consolidation for SaaS. NetSuite's decision to acquire OpenAir for $26M is significant for a few reasons:

NetSuite gains a toehold in the Services and Project Based world. The Project Based Solutions market is hot and OpenAir is one of the poster children for SaaS in PBS. In addition, NetSuite has needed critical capabilities in project management, scheduling, and related PBS skill sets. NetSuite adds a base of 40,000 active users and 300 new service customers.
OpenAir customers add end-to-end SaaS business suite functionality. Integration between the 2 products is planned for later in 2008. End users should expect Web services integration frameworks to allow OpenAir customers to complete end to end processes for Order to Cash, Schedule to payment, and Project Design to Completion. Services and project based companies now have a complete offering delivered on a true multi-tenant SaaS platform.

The bottom line for end users
Decision making should still be led by business drivers that may span across growth, regulatory, compliance, and strategic. Key advantages when considering a SaaS solution still include:

Faster deployment of critical business functionality. SaaS solutions often provide much needed "last-mile" solutions that meet pent up business user demand. More often than not, upgrades to solutions occur with more frequency than on premise offerings. Keep in mind, enterprises should coordinate with IT on long term integration requirements, canonical data model design, and deploy the appropriate ESB's or integration technologies.
CapEx reductions that free up much needed capital. Use operating expense instead of upfront capital and avoid the long buying cycle of board approval and IT infrastructure dependencies. Take the freed up capital and apply it towards more functionality.
Growing capabilities to extend solutions via partner networks and tool kits. Vendors continue to expand their Platform as a Service (PaaS) offerings to partners and customers who are looking to ultimately extend processes and apply metadata configurations to "customize" solutions. The toolkit and strength of partner ecosystems should be one of many factors in vendor selection.

The bottom line for vendors
The growing threat (see Workday Flextronics Win) of SaaS as a business and deployment model means that consolidation will accelerate as SaaS vendors aim to bulk up for scale in sales and marketing as well as partner mindshare. Should NetSuite successfully acquire and integrate OpenAir , customers will not only gain key capabilities, but SuiteFlex partners will also gain a new avenue to extend their offerings and last mile solutions on top of one of the industry's top Project Based Solutions, Open Air.

(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: Economic Stimulus Bill of 2008 May Mitigate Recessionary Effects in the SMB Software Market

2008-05-19T08:09:00.006-07:00

On February 13th, 2008, President Bush signed the Economic Stimulus Act of 2008 (H.R. 5140) and in it were 2 provisions that directly impact SMB's:

"Bonus deprecation". Enables companies with investments in tangible property, computer software, computer equipment, and even improvements to lease property to accelerate their depreciation from a normal 5 year scale to the first 50% being depreciated the first year. However, the asset must be put into use in 2008.
"179 deduction increase". The level of these 179 deductions used to be limited to a $500,000 annual purchase of productive capital with a $125,000 deduction limit. they've raised this now to a $800,000 annual qualifying equipment purchase (not including buildings, but including capital equipment like computer equipment and software) of up to $250,000.

The bottom line
SMB's such as sole proprietorships, partnerships, and corporations will truly benefit from this opportunity to both invest and deduct in computer software and hardware. In fact, several large software companies have already sent out targeted SMB campaigns reminding businesses of these incentives. The trick is to have the software deployed by 2008, so businesses will want to make sure they start their implementations early Q4 (October 2008). Vendors who haven't targeted companies yet with this campaign should jump into the act soon!

(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: Workday Wins Largest SaaS ERP Deal

2008-05-13T09:03:00.002-07:00

Announced today, Workday's big win at Flextronics further bolsters the thesis that SaaS is more than just CRM and SMB. The 200,000 seat implementation for Flextronics and the 26,000 employee deal at Chiquita demystify the notion that SaaS ERP can not be successful.
Key points why 40 clients have considered WorkDay include:

SaaS model - Quick deployment, no data center to manage, and subscription pricing drive the case for this deployment option.
Web 2.0 level usability - User experiences are clean, elegant, and allow for a high degree of user configurability at the metadata level.
Strong HCM focus - WorkDay expands where PeopleSoft left off. Signature features include pre-developed interfaces that link their HCM with a growing network of employee benefits providers and deep HCM expertise.

The bottom line
On the journey towards cloud computing, the interim steps will be hosting and SaaS. As virtualizaton improves, we may find ourselves strangely back full circle to fully distributed computing models like the main frames of yester-year.

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved

News Analysis: Rimini Street Offers Third Party Maintenance for SAP

2008-05-05T05:01:00.000-07:00

Adding to the company's support of PeopleSoft, JD Edwards, and Siebel third party, support, the move to support SAP comes at an optimum time for SAP users. Most users face SAP imposed deadlines for standard and extended maintenance support. To be specific, extended maintenance for R/3 4.6c users ends at the end of 2009. R/3 4.7 users face end of extended maintenance at for an additional 2% fee at the end of March 2010. Rimini street plans to deliver these services without offshoring.

The bottom line.
The SAP market sorely needs options for third party support. With customer specific maintenance contracts north of 22%, the market demands alternative support options. Should Rimini street support SAP customers to 2020 without required upgrades, provide application fixes for serious issues and tax and regulatory updates as needed, and support client customizations, interoperability, and performance at no additional fee, SAP customers will save up to half on maintenance fees. The end result - more money to invest in SAP upgrades and additional solutions.

(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: Recent New License Sales Remain Healthy

2008-04-30T16:42:00.005-07:00

Calendar Year 2008 Q1 numbers still show profitability for most vendors
Recession concerns for the enterprise software industry may prove to be a bit pre-mature. Recent earnings report over the past 2 months lean towards mild caution. While most vendors showed profitability, guidance numbers were down. The leading indicator is new software license sales for on-premise companies and recurring revenue for SaaS companies. Here's the break down of year over year quarterly new license sales numbers/recurring revenue include:

CDC Software - Down 15% to $12M
Epicor Software - Down 16% to$18.5M
JDA Software - Up 18.8% to $20M
Lawson Software - Up 21% to $32M
NetSuite - Up 47% to $34.1M
Oracle - Up 7% to $451M
QAD - Up 14% to $22.4M
Right Now - Up 27% to $24.4M
SAP - Up 11% to 622M€

The bottom line
Overall, the enterprise software market looks good for the next 2 quarters despite some cautionary guidance among the mega software vendors. Key drivers come from integration and upgrade projects for the core ERP and packaged apps landscape. Interestingly, the CRM market also shows continuous growth in new deployments as customers enter the next phase of CRM adoption.

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

2008-04-14T01:00:00.006-07:00

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

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

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

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

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

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved

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

2008-04-10T23:06:00.005-07:00

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

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

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

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

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

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

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

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved

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

2008-04-09T12:05:00.002-07:00

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

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

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

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved

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

2008-03-26T01:22:00.006-07:00

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

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

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

OP = Q + R + S + T

Outcome of project = Quality + Resources + Scope + Time

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

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

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved

Event Report: Lawson Cues Up New Offerings with Flair

2008-03-19T22:23:00.007-07:00

(Courtesy of Lawson Software Inc.)

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

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

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

(Courtesy of Lawson Software Inc.)

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

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

The bottom line

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

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

2008-03-11T03:02:00.023-07:00

New Management Shows Long Term Commitment to Business Solutions Group

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

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

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

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

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

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

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

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

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

2008-03-07T12:06:00.003-08:00

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

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

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

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

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

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by Esteban Kolsky/ RWang. All rights reserved

Introducing: Esteban Kolsky on All Things Customer Service

2008-03-05T21:10:00.001-08:00

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

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

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

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

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved