Infor came out with two significant announcements this morning. Based on a briefing that Infor gave me yesterday, they point to a major strategic shift in direction. Infor’s 70,000 customers should take note.

Two announcements
First, Infor announced something called Infor ION, which is a set of software services for application integration, document-based communication, and business process management, across Infor’s own applications and non-Infor systems. Infor ION subsumes (my word) Infor’s previous work on Open SOA, which was aimed at integrating Infor’s existing applications portfolio. Infor is promoting ION as an alternative to “high cost middleware implementations.” ION is currently in development, scheduled for release in Q4.

Second, Infor is moving all new product development to Microsoft’s technology stack. The elements of the stack include Windows Server, MS Single Sign-On, MS Reporting Services, SQL Server, Silverlight, and Sharepoint. Infor will continue to develop its applications that run on other platforms, such as its IBM Series i and mainframe applications. But all new development will be all Microsoft.

It also means that Infor will deliberately abandon development of its own technology and tools. For example, in the briefing Infor said it was walking away from its own workflow engine development, its own Clear UX user-interface (which it had acquired), and its own efforts to build portal technology using open-source.

A strategic shift for Infor
These two announcements, taken together, represent a major change in product direction for Infor. Here is my evaluation:

1. Infor is right to give up trying to be a tools developer. There are very few application software vendors that successfully develop proprietary tools or technologies. (The only successful vendor, to my knowledge, is SAP, with its ABAP language–but that’s only because ABAP dates from the early 1990s, when client/server development tools were not adequate for what SAP needed. Oracle is another, but Oracle is a technology/tools vendor first and an apps vendor second. Same with Microsoft.)There are major benefits for Infor in walking away from tools development. First, it frees up product development funds to focus on the thing that Infor customers really need: continued development, enhancement, and integration of Infor’s applications portfolio. Second, by using Microsoft standard technology, it should also allow Infor to get there quicker with its ION integration and business process management framework. Third, it allows Infor to more easily recruit and retain product development and implementation personnel, as they will be working with technologies that are broadly supported in the marketplace. Finally, it is more attractive for customers, who won’t need to have their IT personnel trained in another set of tools.
2. Alignment with Microsoft is the probably the best choice. It’s something of a surprise, as Infor has mostly been thought of as more IBM-centric than anything else. But Microsoft is a better choice than IBM for standardizing its technology. Our research at Computer Economics shows that nearly every data center has Microsoft Server in its OS mix. The same cannot be said for any other operating system. This is especially true in the small company and mid-market, where Microsoft Windows averages more than 70% of the data center processing workload. Coming to its installed based with new products based on the Microsoft stack is an easy sell–not so if the stack were IBM’s.Does this bring Infor into competition with Microsoft’s own Dynamics enterprise software business? No more so than for any of the many other Microsoft-based vendors, such as Epicor. Furthermore, there is a huge upside for Microsoft, as the partnership represents a potentially bigger footprint for Microsoft among Infor’s 70,000 customers.

I do have one area of question, and that is concerning leadership. It’s an open secret than Infor has lost several key executives recently, most notably Jeff Ralyea, formerly VP of product management and Bruce Gordon, formerly Infor’s CTO. These individuals were key architects of Infor’s Open SOA strategy, which is now incorporated in Infor ION.

Does Infor have the right team in place now to move forward? Infor assured me that it does. The product strategy is being headed up by Soma Somasundaram, Senior VP of Global Product Development, who has a long history with Infor, going back to when it was Agilisys. He will work closely with Jeff Abbot, who is now in charge of both product marketing and product management. In terms of developers, Infor assures me that the bench is deep, with resources worldwide.

As indicated earlier, ION is still in development with release planned for Q4. That will be a key milestone to evaluate the success of Infor’s new strategy. In the meantime, I believe the strategic direction is right. But execution is key.

If you are an Infor customer or Infor partner, please let me know your view on these announcements. Is Infor on the right track? Leave a comment on this post, or email me confidentially.

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Confusion Continues With Cloud Computing And SaaS Definitions

Coincidence or just brilliance must be in the air as two esteemed industry colleagues, Phil Wainewright and James Governor, have both decided to clarify definitions on SaaS and Cloud within a few days of each other.  In fact, this couldn’t be more timely as SaaS and Cloud enter into mainstream discussion with next gen CIO’s evaluating their apps strategies.  A few common misconceptions often include:

• “That hosting thing is like SaaS”
• “Cloud, SaaS, all the same, we don’t own anything”
• “OnDemand is Cloud Computing”
• “ASP, Hosting, SaaS seems all the same”
• “It all costs the same so what does it matter to me?”
• “Why should I care if its multi-tenant or not?
• “What’s this private cloud versus public cloud?”

Cloud Computing Represents The New Delivery Model For Internet Based IT services

Traditional and Cloud based delivery models share 4 key parts (see Figure 1):

1. Consumption – how users consume the apps and business processes
2. Creation – what’s required to build apps and business processes
3. Orchestration – how parts are integrated or pulled from an app server
4. Infrastructure – where the core guts such as servers, storage, and networks reside

As the über category, Cloud Computing comprises of

• Business Services and Software-as-a-Service (SaaS) – The traditional apps layer in the cloud includes software as a service apps, business services, and business processes on the server side.
• Development-as-a-Service (DaaS) – Development tools take shape in the cloud as shared community tools, web based dev tools, and mashup based services.
• Platform-as-a-Service (PaaS) – Middleware manifests in the cloud with app platforms, database, integration, and process orchestration.
• Infrastructure-as-a-Service (IaaS) – The physical world goes virtual with servers, networks, storage, and systems management in the cloud.

Figure 1.  Traditional Delivery Compared To Cloud Based Delivery

The Apps Layer In The Cloud Represents Many Flavors From Hosted To True SaaS

SaaS purists often challenge vendors on delivery models in the cloud at the apps layer (see Figure 2).  Often classified as OnDemand, there are 3 common approaches:

1. Single Instance – (a.k.a. “On Demand”). Think traditional apps deployed one cusotmer per app or per server. Many vendors provide hosting capabilities. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, customize, and in most cases choose when they want to change the code. All customers can use different versions of the software
2. Multi Instance – (a.k.a. “Server Virtualized”). Think “VMware” like. Apps deployed into a shared-web hosting environment. A single instance copy of the app is configured and deployed into a web directory for each customer. Vendor benefit from easier to manage multi-instance environments. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, customize, and in most cases choose when they want to change the code. All customers can use different versions of the software.
3. Multi-tenant – (a.k.a. “True SaaS”). Apps in a multi-tenant deployments provide a single operating environment shared by multiple customers. Config files are created and deployed each time a customer request services. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, configure but NOT customize the code. Customers usually receive upgrades at the same time. Everyone shares the same code.

See the full post at Software Insider.org

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

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Software as a service (SaaS) has made great strides in recent years, especially in small and midsize businesses (e.g. NetSuite) and for departmental applications, such as salesforce automation (e.g. Salesforce.com) and customer service (e.g. RightNow.com).

Now Workday is showing that SaaS also has a place in the core applications of large organizations. I first noted this trend about two years ago, when Workday announced its wins at Flextronics and Chiquita, both of which are still named accounts for Workday today.

So, I jumped at the chance to get a briefing on Workday’s latest release, Workday 10. This post will document a few of the key points I found of interest.

By way of background, Workday was co-founded in 2005 by Dave Duffield, founder of PeopleSoft, after Oracle acquired PeopleSoft. The firm’s original focus was on Human Capital Management (HCM), though it is now expanding its footprint. More on that at the end of this post.

• Scalability. Workday now claims 133 customers live on its system, up from the 40 I noted in May, 2008. It’s not a large number, but it includes several mega-customers, as noted earlier. Flextronics, for example, has already implemented for 16,000 users in the US and Canada and is now rolling it out to another 30,000 in Mexico, on the way to its eventual goal of 200,000 users live on the system. This shows the ability of SaaS and Workday in particular to scale to vary large numbers of users in a multi-tenant environment. Workday does run multiple instances of its system, but only for purposes of load-balancing–which makes sense in light of some massive customer counts. The backend of the system is Workday’s own proprietary object management server, which uses MySQL as a persistent data store, which would seem to be a very large implementation of that open source database management system.
• User-Friendliness. Workday’s user-interface is really, really slick. At one point, I had to stop the demo to verify that this is indeed a browser-based system. It is, based on Adobe Flex, with many features of its UI not seen often in on-premise systems.
• Protection of Customer Data. I noted that much of the information managed by Workday is extremely confidential, such as succession plans–especially for publicly held companies. Does Workday still get push-back on security and privacy concerns? The team indicated that those issues still need to be addressed in the sales cycle, although buyers are often coming to the table with a higher level of comfort with SaaS than they did in the past. Nevertheless, from a due diligence perspective, buyers still look for evidence that their information will be secure.
• Extensibility. I know from experience that large-scale HCM implementations can often required extensive customizations to accommodate customer-specific work rules, such as those resulting from union contract negotiations. Can Workday accommodate such changes in a multi-tenant system? The team assured me that it can. They claim the system has been designed with a rules framework, with predefined business processes that can be configured–not just at the customer level, but at the organization level within customer. This is another sign that Workday has large enterprises in its sights. They contrasted Workday’s approach to customizations with that used by PeopleSoft, which did not ensure that changes would carry forward to future versions of the software.

Lowering Total Cost of Ownership
Can Workday keep up with demand? It would appear so. Implementation is currently handled by a combination of Workday’s own professional services group along with major partners.

Workday watches implementation costs and schedules closely, shooting for implementation services not to exceed 50% of the three-year subscription costs of the system. This is a significant savings over traditional on-premise implementation costs, which can run multiples of the initial software license cost. I know it’s not apples-and-apples–but do the arithmetic and tell me this is not a major advantage for Workday.

I mentioned earlier that Workday thus far has been focused on HCM, with intentions of an expanded footprint. Consistent with this strategy, it is rolling out Financial Management this year with the goal of becoming a complete ERP suite alternative in 2011 and beyond. I noted that this was the same development path taken by Duffield at PeopleSoft. The Workday team agreed, indicating that — like PeopleSoft — it is starting with people at the center of the system, then rolling out to the other entities of the enterprise. Like PeopleSoft, its first foray beyond financials will be in procurement.

Gunning for SAP and Oracle?
Ultimately, Workday intends to offer full-ERP capabilities, though most likely for service-based businesses. This is a bit of a disappointment, as I would love to see a player with Workday’s resources tackle the manufacturing sector as well.

Nevertheless, Workday would appear to be a nascent threat to the traditional on-premise Tier I vendors, Oracle and SAP. They are no doubt already seeing Workday in some deals for HCM and will probably begin to see Workday encroaching on their turf in financials. Another SaaS player, NetSuite, already has been campaigning for a slice of SAP’s business for smaller units. In contrast, Workday has a real shot at displacing SAP and Oracle in larger units or even for corporate applications of HCM. How much longer will it be before Workday is competing head to head with SAP and Oracle for complete ERP replacement in large organizations with legacy versions of these Tier I systems?

Hopefully, not too long.

[Cross-posted from the Enterprise System Spectator.]

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1. SaaS – strategic or tactical?

Recent Software Insider data surveys of next gen IT leaders in Q3 2009 and Q1 2010 show a 10% increase among organizations considering a Two-Tier ERP apps strategy (see Figure 1).  Key drivers behind moving to a Two-Tier ERP approach stem from:

• Purpose built or industry requirements (89.61%). Next gen IT leaders remain frustrated by the lack of innovation and progress in completing out promised functional footprints.  As market competition intensifies, industry specific, purpose built solutions provide the competitive advantage needed for survival and success.
• Existing systems too expensive (70.13%). ROI calculations on existing ERP systems often show high cost factors.  The culprits – overruns in implementation, customization of reports, maintenance payments on shelfware, increasing costs to staff, and rigidity of system.
• Upgrade too expensive (45.45%). Many customers face upgrade costs equivalent to reimplementation.  Cost factors could equal up to 85% of the original implementation cost.
• Need to innovate (35.06%). Some organizations find that their vendors have not innovated fast enough. Social channels have not been accounted for.  User experiences seem dated.  Reporting and analytics require experts to deliver.  Paucity in mobile solutions hinder productivity.
• Regulatory compliance (24.68%). The need to meet industry specific regulatory compliance drive organizations to choose purpose built solutions.  Many choose SaaS to mitigate the costs of legislative and regulatory updates.
• Geographic requirements (19.48%). Country or region specific requirements may require two-tier strategies based on geography.  Some ERP systems lack the language or tax requirements and a separate instance will prove cheaper to run than customizing a monolithic large ERP solution.
• Existing systems too rigid (15.58%). Rigidity may lead to the inability to integrate and work with other systems, new channels, and emerging stakeholders.  Integration solutions can assist, but long term, next gen IT leaders will begin to surround legacy solutions with newer technologies.

Figure 1. Two Tier ERP Strategies Gain Favor In Next Gen IT Leader Apps Strategies

Figure 2.  Industry Requirements And Cost Drive Push To Two-Tier Apps Strategies

The Bottom Line – Users Should Consider Scenarios Based On Business Models And Geographic Needs

Detailed apps strategy conversations highlight 3 scenarios where Two-Tier ERP strategies make sense.  A number of vendors have proven to be strong partners in enabling Two-Tier ERP (see Figure 3).

1. Different business models. Organizations with very different lines of businesses often consider hub and spoke implementations.  The drive to standardize on a single ERP system makes little sense when one subsidiary delivers services and the other manufactures goods.  Several large multi-national conglomerates leverage more than two-tiers of ERP to handle a warranty business, financial services, and power generation manufacturing.
2. Country specific deployments. Deploying a full scale ERP solution makes little sense for new subsidiaries when options exist at lower operating costs and higher ROI.  One large Japanese manufacturer found cost savings with local based systems in North America and EMEA.
3. Phased modernization efforts. Organizations looking to upgrade and modernize their systems may keep some legacy systems in place as they upgrade to more modern systems.  One large entertainment concern has kept their financials systems and updated their retail systems with a more modern, web services based, SOA architected product.

Figure 3. Vendors To Watch In Two-Tier ERP Apps Strategies

Related Resources

20091203  Strategy: 5 Lessons Learned From A Decade Of Naught

20091222 Tuesday’s Tip: 10 Cloud And SaaS Apps Strategies For 2010

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091102 Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider

20091006 Tuesday’s Tip: Why Free Software Ain’t Really Free

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Recent Software Insider data surveys of next gen IT leaders in Q3 2009 and Q1 2010 show a 10% increase among organizations considering a Two-Tier ERP apps strategy (see Figure 1).  Key drivers behind moving to a Two-Tier ERP approach stem from:

• Purpose built or industry requirements (89.61%). Next gen IT leaders remain frustrated by the lack of innovation and progress in completing out promised functional footprints.  As market competition intensifies, industry specific, purpose built solutions provide the competitive advantage needed for survival and success.
• Existing systems too expensive (70.13%). ROI calculations on existing ERP systems often show high cost factors.  The culprits – overruns in implementation, customization of reports, maintenance payments on shelfware, increasing costs to staff, and rigidity of system.
• Upgrade too expensive (45.45%). Many customers face upgrade costs equivalent to reimplementation.  Cost factors could equal up to 85% of the original implementation cost.
• Need to innovate (35.06%). Some organizations find that their vendors have not innovated fast enough. Social channels have not been accounted for.  User experiences seem dated.  Reporting and analytics require experts to deliver.  Paucity in mobile solutions hinder productivity.
• Regulatory compliance (24.68%). The need to meet industry specific regulatory compliance drive organizations to choose purpose built solutions.  Many choose SaaS to mitigate the costs of legislative and regulatory updates.
• Geographic requirements (19.48%). Country or region specific requirements may require two-tier strategies based on geography.  Some ERP systems lack the language or tax requirements and a separate instance will prove cheaper to run than customizing a monolithic large ERP solution.
• Existing systems too rigid (15.58%). Rigidity may lead to the inability to integrate and work with other systems, new channels, and emerging stakeholders.  Integration solutions can assist, but long term, next gen IT leaders will begin to surround legacy solutions with newer technologies.

Figure 1. Two Tier ERP Strategies Gain Favor In Next Gen IT Leader Apps Strategies

Figure 2.  Industry Requirements And Cost Drive Push To Two-Tier Apps Strategies

Related Resources

20091203  Strategy: 5 Lessons Learned From A Decade Of Naught

20091222 Tuesday’s Tip: 10 Cloud And SaaS Apps Strategies For 2010

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091102 Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider

20091006 Tuesday’s Tip: Why Free Software Ain’t Really Free

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Apps Users Seek Third Party Maintenance For Cost, Value, and Service

Updated surveys from inquiries, client conversations, and user group meetings show a 113.8% increase in interest in third party maintenance (3PM) services from Q3 2009 to Q1 2010 (see Figure 1).  Key factors stem from (see Figure 2.):

• Continuing cost pressures. Budgets continue to be at flat or have been reduced.  Organizations must do more with less.  Add pressures to innovate, CIO’s must find fat without trimming bone.
• Gaining minimal value in maintenance services. Most felt they were paying too much for too little.  An 8 point jump reemphasized the issue with a lack of tiered offerings.
• Declining plans to upgrade. Worsening economic conditions from Q3 2009 to Q1 2010 led a 27 point increase in interest in 3PM.  Expect many respondents to change their point of view (POV) as economic conditions improve.
• Expecting better service. Service continues to play a key factor in decisions to go to 3PM.  Over 60% of respondents had experienced poor levels of service.
• Slowing pace of vendor innovation. Greater than half of respondents believe their vendor has been too slow to deliver new capabilities. These include SaaS deployment options or key functionality in areas such as strategic HCM and social CRM.
• Disliking the vendor. About 1/3 of the survey respondents have bad experiences with their vendor.  Many times it comes from sales person or support rep experiences.
• Delivering self support. Almost 30% of respondents already provide their own support.  These organizations have no need to pay maintenance when they are doing all the work.

Figure 1. Interest in 3PM grows 113.8% over 2 quarters.

Figure 2. Cost Pressures, Value, And Decision Not To Upgrade Drive Current Trends to 3PM

Limited Options Exist For Most Enterprise Apps Customers

Of the 101 respondents in Q1 2010 interested in 3PM, SAP (88.1%) and Oracle (76.2%) users expressed the greatest interest in seeking independent services (see Figure 3).  Over 80% of the users were from large companies greater than 1000 employees across the globe.  Most SAP users surveyed have mixed environments with Siebel, JD Edwards, and PeopleSoft joint installations.  Unfortunately, very few public options exist for sole SAP users (see Figure 4).  For example, SAP customers can only turn to Rimini Street.  Oracle customers on PeopleSoft, JD Edwards, and Siebel also have limited choices with Rimini Street, netCustomer, and Spinnaker among the options.  IBM, Infor, Lawson, Computer Associates, Epicor, Microsoft Dynamics, Oracle E-Business Suite and database customers have no options.  (Note: This data may not be completely statistically significant given the sample size of 240, but hopefully it provides some directional input.)

Figure 3. Oracle And SAP Users Drive Interest In 3PM

Figure 4. Very Few Public Options Exist For Customers

The Bottom Line For Users – Users And User Groups Must Band Together To Guarantee 3PM Rights. Don’t Take These For Granted!

Although the latest surveys show a 17 point increase in the belief that 3PM is a right, this right is under fire by big vendors such as Oracle who have taken legal actions against 3PM providers for improperly violating intellectual property rights.  If providers have violated such laws, Oracle rightfully should defend its positions and those providers be punished.  However, there’s a lot of money at stake.  For most vendors, maintenance represents 50% to 80% of their revenue stream.  Consequently, users and user groups have a responsibility to:

• Demand that their contracts include provisions that protect their right to 3PM
• Require vendors to work out rules on how 3PM providers can deliver services without violating software IP provisions
• Seek anti-trust class action with the US DOJ (i.e. Christine A. Varney) and the EU Compeition (i.e. Joaquín Almunia) against software vendors who hinder 3PM providers from providing services

Users and user groups must vigorously defend their positions in contracts and legal action or lose this right.  Failure will result in a continued software maintenance monopoly.  Success will ensure market competition and renewed innovation.  Attention: OAUG, Quest, and SUGEN leadership your members need your help!

Figure 5.  A Growing Body Of Users Believe 3PM Is A Right

The Bottom Line For Vendors – Proactively Address The Issue Or Expect A Groundswell Of Activism

SaaS, subscription pricing, 3PM, and the economy provide a confluence of forces that will continue to attack maintenance revenue streams.  Many legal cases have been fought over this issue including IBM vs Amdahl and Geac vs Grace Consulting.  SAP’s failed attempt to convince customers on the value of Enterprise Support led to a public relations disaster and a factor in the resignation of their CEO.  The result – many vendors considering price hikes held back.  In fact, some savvy software vendors retooled and restored the client -vendor relationship by:

• Offering more entry points and tiers to support options. The three pillars of software maintenance and support policies still apply.  However, several vendors are now offering more tiers of support as lower entry points.  Two vendors have finalized plans to offer just the bare bones legal and regulatory updates.  Other vendors have made it easier to come back with maintenance amnesty plans.
• Providing flexible maintenance policies. Vendors who change rigid policies have experienced success among customers.  Some Both Infor through Infor Flex and Micrsoft Dynamics allow like for like swap credits to migrate between existing products.
• Renegotiating existing terms. Some vendors are helping clients meet the realities of the current market conditions. Big on the list is helping clients address shelf ware without repricing of contracts.  For clients who paid full maintenance on software that’s at least 4 years old, some vendors are offering to reduce up to 20% of the overall licenses not in use.  This leads to lower maintenance revenue but engenders good will among key clients.  Further, several vendors have allowed clients to apply credit towards another module as an alternative.
• Delivering amnesty programs. Several vendors have allowed customers to return to maintenance programs after years of not paying.  Such programs play a key role in helping customers upgrade but should be used sparingly as customers may become accustomed to this practice.
• Creating better peer forums to share information. Almost every vendor surveyed has a program to improve the online support capabilities.  Applying Social CRM use cases,  user generated content in peer forums tops the list of initiatives.  Other plans focus on sharing data on benchmarks, operational metrics, and best practices.
• Assisting with vendor financing. Clients seek access to financing, especially many in the mid-market who’s credit lines have been zapped.  Microsoft has led the charge by providing 0% financing for its Microsoft Dynamics ERP and Microsoft Dynamics CRM Customers.  Other vendors such as IBM, Infor, Oracle, SAP, Sage also offer vendor led financing programs that include hardware, implementation, training, and other services.
• Lowering cost of usage and ownership. Though tops on the list as a conceptual practice, most vendors will need to roll out such initiatives over the next 24 months.  A few notable exceptions include Agresso with its VITA architecture which allows customers to rapidly make business and UI changes, Microsoft Dynamics customers who report back significantly lowered implementation and training costs compared to most vendors, and Epicor customers who report significant productivity gains with Service Connect.  SaaS customers already experience such gains.

Your POV

Take the new and improved survey on 3rd party maintenance and let us know if you need help with your enterprise apps strategy by:

• Conducting an ROI on 3rd party maintenance options
• Identifying cost reduction opportunities
• Renegotiating your software contracts
• Improving innovation via SaaS and other deployment options

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related resources and links

20091008 Deal Architect – Vinnie Mirchandani “Third Party Maintenance Is Really 4 Decades Old”

20071120 News Analysis: Too Early to Call the Death of Third Party Maintenance

20090210 Tuesday’s Tip: Software Licensing and Pricing – Do Not Give Away Your Third Party Maintenance And Access Rights

20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

20090622 News Analysis: Infor Flex Reflects Proactive Maintenance Policy

20090516 News Analysis: Rimini Street Launches Third Party Maintenance for SAP

20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings

20080909 Trends: What Customers Want From Maintenance And Support

20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

20090428 News Analysis: SAP and SUGEN Make Progress on Enterprise Support

20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models

20090330 Monday’s Musings: It’s The Relationship, Stupid! (Part 2) – Stop Slashing The Quality Of Support And Maintenance

20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession

20081012 Monday’s Musings: 5 Steps to Restoring Trust in the Vendor – Customer Relationship

20100114 News Analysis: SAP Revives Two Tier Maintenance Options

20091012 Research Report: Customer Bill of Rights – Software-as-a Service

20090912 News Analysis: Siemens Cancels SAP Maintenance Contract

20090910 Tuesday’s Tip: Note To Self – Start Renegotiating Your Q4 Software Maintenance Contracts Now!

20090602 Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

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New Changes Hint At Hasso’s Priorities

In a not surprising update, SAP makes changes to Executive Board and management.  Here are the changes:

• Gerhard Oswald becomes COO. Gerhard has experiences in support, consulting, education, custom development, and quality.Gerhard’s contract has been extended till December 31, 2011.

  Point of View (POV):  Gerhard’s been a long-timer at SAP with 30 years of experience.  He replaces Erwin Gunst who’s been out for almost a year with medical issues.  SAP needs a strong COO in place and Gerhard has the credibility and experience to execute.  Hasso’s putting a trusted lieutenant in charge.

• John Schwarz resigns. The former BOBJ leader leaves.  He was responsible for SAP BusinessObjects, Ecosystem and Corp Dev.

  POV: After being passed up for the CEO job, it was obvious that John would be leaving.  Expect many of the BOBJ members in product management,  product marketing, and development to be reshuffled as their support will be shifted.  Those who didn’t fight hard for embedding T-Rex (inMem) and pushing out “Timeless Software” may be most impacted.

• Peter Lorenz named as a corporate officer. Peter currently is the Executive Vice President for Small and Mid-size Enterprise (SME).  He reports to Jim Hagemann Snabe.

  POV: The corporate officer position serves as an extended board member role.  This hints at the importance of SME to SAP’s strategy.  SAP also needs to build bench strength in SME.

The Bottom Line – SAP’s Making Big Changes.

Hasso’s acting fast to make changes.  John Schwarz will be missed by many of the BOBJ team. Expect a ripple of changes as the management shake out finalizes over the next 8 to 12 weeks.   Look for new product road maps to arrive prior to Sapphire 2010.

Your POV

Are you an SAP customer?   How do you feel about the transition?  Would you like to learn more about:

• Building a next gen SAP roadmap?
• Improving your SAP apps strategy?
• Augmenting SAP with SaaS?
• Putting third party maintenance and optimization to work?

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related Links And Resources

Official SAP Press Release

Here’s a list of related reports.

20100114 News Analysis: SAP Revives Two-Tier Maintenance Options

20091211 Event Report: 2009 SAP Influencer Summit – SAP Must Put Strategy To Execution In Order To Prove Clarity Of Vision

20091125 Speaker Notes: Keynote – SAP UK & Ireland User Group Conference 2009

Here’s a list of related links of news during Léo’s tenure.  They will be added on an ongoing basis and updated as appropriate.

• 20100208 Computer Weekly – Warwick Ashford ” SAP admits enterprise support plan was a mistake”
• 20100208 DestinationCRM – Lauren McKay “After CEO Ouster, Plattner’s Plea: “Please Trust SAP. We Have Not Forgotten You.” “
• 20100208 SearchSAP.com/TechTarget – Courtney Bjorlin “SAP’s new CEOs need to show vision, clear product roadmap to customers, observers say “
• 20100208 Bloomberg – Ragnhild Kjetland “SAP Upheaval Pits Plattner Against Ellison in Market-Share Spat”
• 20100208 ReadWriteCloud – Alex Williams “Will SAP CEO Shakeup Lead to a Unified Cloud Computing Strategy?”
• 20100208 Wall Street Journal – Vanessa Furhmans ” SAP Chief Quits; Co-CEOs step in”
• 20100208 Associated Press – Matt Moore “Shares slip on CEO’s ouster; questions”
• 20100208 Computerworld UK – Elizabeth Heichler and Mike Simons “SAP CEO Leaves”
• 20100208 LeMag IT – Reynald Fléchaux “SAP : Apotheker évincé, Plattner place la jeune garde sous surveillance”
• 20100208 Wall Street Journal: All things digital – John Paczkowski “SAP Board to CEO: Auf Wiedersehen, Sweetheart”
• 20100208 IDG News Service -  Joab Jackson and Chris Kanaracus “SAP Hits Reset Button With CEO Change”
• 20100208 ComputerWeekly – Warwick Ashford “SAP moves to restore customer and employee trust”
• 20100208 Information Age – Pete Swabey “SAP CEO Steps Down”
• 20100207 Wall Street Journal – Archibald Preuschat “SAP Returns to Co-Ceo Leadership, Apotheker resigns”
• 20100207 Information Week – Doug Henschen “SAP CEO Apotheker Resigns; Co-CEO’s Named”
• 20100207 Managing Automation – David Brossell “SAP CEO Resigns Suddenly”
• 20100207 ZDNet Irregular Enterprise – Dennis Howlett “SAP: Apotheker gone, Co-CEO’s in place”

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

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Apotheker’s Contract Not Renewed.  SAP Puts Snabe and McDermott In Co-Ceo Roles.

Rumors began circulating early this weekend that Léo Apotehker’s contract would not be renewed.  The highest level sources had confirmed this early in the morning and the afternoon press release provided confirmation of the details.  A few key facts:

• SAP moves back to Co-CEO management structure. Bill McDermott, head of field organization and Jim Hagemann Snabe, head of product development become Co-CEO’s. Point of View (POV): For undisclosed reasons, Leo’s contract was not renewed. Both Bill and Jim have extensive experience at SAP and have been hard at work revitalizing the organization from both the sales and product sides.  Many observers may be surprised not to see former Business Objects CEO John Schwarz in the running.
  
  
• Executive Board elevates role of products and technology. Vishal Sika, chief technology officer (CTO) now appointed to the SAP Executive Board. POV: Vishal has the trust and ear of Hasso Platner and Jim Snabe.  The net result may be more unified road maps, better prioritization of R&D assets, and less issues with product development.

The Bottom Line – Timing Is Everything, But SAP’s Inflection Point Is Good News For Customers

Though a seasoned executive with over 20 years with SAP, Leo was in the wrong time wrong place.  He was responsible for doing a bang up job in sales when Henning Kagermann (i.e. the former CEO) was around.   In fact, he made Henning look good despite the difficulties in launching mySAP ERP 2007, SAP ByD, and a host of other failed projects.  Unfortunately, he entered a down market while in charge of a sinking ship.  Low morale among the Walldorf engineering team, the issue with Enterprise Support and maintenance, and uncontrollable poor quarterly performance proved to be factors beyond his control.  Customers over the past 2 to 3 years began to wonder how to tap SAP’s innovation.  A clear need emerged for having more technologists at the helm.

Putting McDermott as Co-CEO makes sense.  He is an excellent sales guys but the issues is not sales.  It’s products.  Snabe and Vishal will need strong product vision to right SAP and point it in a forward direction.   Engineering and products need more attention to bring out trapped innovation at SAP.

Your POV

Are you an SAP customer?   How do you feel about the transition?  Would you like to learn more about:

• Building a next gen SAP roadmap?
• Improving your SAP apps strategy?
• Augmenting SAP with SaaS?
• Putting third party maintenance and optimization to work?

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related Links And Resources

Here’s a list of resources.  They will be added on an ongoing basis and updated as appropriate.

Official SAP Press Release

20100207 ZDNet Irregular Enterprise – Dennis Howlett “SAP: Apotheker gone, Co-CEO’s in place”

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

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Oracle Rolls Out A New “Red Stack”
With EU approval out of the way, Oracle finalizes the Sun deal and resumes its quest for the largest share of the IT wallet. Oracle’s 60+ acquisitions follow a concerted strategy and Sun adds key areas such as servers and storage. The stack now comprises Vertical Apps, Horizontal Apps, Middleware, Database, Operating Systems, Virtual Machines, Servers and Storage (see Figure 1). Customers and prospects can expect more details on each of the integration points and how Oracle’s engineering teams will collaborate to bring interoperability to the stack.

Customers and Prospects Can Expect Oracle To Follow Its M&A Playbook

As with previous Oracle acquisitions, the Redwood Shores, CA vendor will increase the aggregate investments in R&D, support, and sales. Where possible, Oracle will create innovations among the stack but also significant barriers to entry. Back office functions and other inefficiencies will most likely lead to an elimination of positions. Oracle will reach out to customers with a 70 city tour to address concerns, consider feedback, and discuss future road maps. Investment in new SPARC chips represents one example of how Oracle will continue innovation post acquisition. Despite not buying any fabs, Oracle will continue the development of four new SPARC chips beyond the current US-T3. Key feature sets will include new processor cores, higher frequencies, smaller sizes (e.g. 40 nm to 28 nm). Expect more cores, higher frequencies, larger cahees, next gen memory, next gen IO, improved power management.

The Bottom Line For Customers – Organizations Gain Efficiencies But Must Balance Lost Of Leverage And Choice

Charles Phillips referenced the gold standard “IBM” experience of the 1960’s. As Oracle tries to recreate the vertical stack, the software vendor promises to keep building on open standards. Given the economies of scale achieved, Oracle can commit $4.3B towards building an integrated “Red Stack”. Should Oracle succeed, they will eliminate a lot of waste that IT leaders have faced with integration, security, and scalability. “One throat to choke” brings significant appeal given complexity in today’s technology. However, customers must carefully balance the risk with the lack of competition and the complexity of owning multiple, yet disparte technologies with the benefits of improved integration and cost effective innovation. Consequently, customers will want to preserve third party maintenance rights as industry consolidation continues and they will need to keep some choice and balance in the marketplace.

The Bottom Line For Vendors – The “Red Stack” Creates A Major Force In Competing For IT Wallets
Vendors competing or partnering with Oracle must take note to understand the new dynamics in the technology vendor “Stack Wars”. Oracle’s model to directly sell to its top customers, ask partners to specialize to create customer and Oracle value, and increase dominance in R&D investment, will force smaller competitors to rethink relationships and potentially create new alliances. Partners must carefully think about their long term competitive strategy or else maximize exit strategies in the short term. Those partners who spend time building and providing solutions on the Oracle “Red Stack” will profit the most. Those partners in the way of Oracle’s long term tech strategy will become major competitors.

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