Software Licensing & Master Service Agreements

ERP Implementation Strategies

Sam Conforti — Fri, 12 Mar 2010 07:32:44 -0600

Houston Neal, Director of Marketing at Software Advice, is conducting a survey on ERP implementation strategies. Specifically, which implementation strategy (big bang, phased rollout, or parallel adoption) has the best success rate.

You can find the survey in his article entitled ERP Implementation Strategies – A Guide to ERP Implementation Methodology.

Scoop on SAP CEO Resignation and Business ByDesign

Sam Conforti — Mon, 08 Mar 2010 10:03:33 -0600

As many of my readers know, I am a member of the business networking site LinkedIn. In my practice I have had numerous inquiries regarding SaaS agreements and many requests to draft such agreements from my clients. I found and joined a very good group on the LinkedIn networking site entitled Software as a Service (SaaS) Group. The group site itself has a lot of information and discussion groups and news items and I found it to be a good resource when I encountered some unusual issues. So one day I’m sitting in front of my computer when a LinkedIn notice pops into my inbox from Justin Pirie entitled “Your guide to the week’s events in SaaS for the Linkedin SaaS group by Justin Pirie.” He got my attention and so I checked it out and I am glad that I did. His site Paradigm Shift Actionable Insight for a cloudy world has a plethora of information. It is current, it is informative, it is hard hitting, and a must read. I like the sources he cites. It is a bit of a “No holds barred” approach.

As an ex-SAP employee sometimes it is hard to see the forest through the trees and I tend to tread lightly, especially since a significant part of my current practice involves SAP licensing and drafting of Master Service Agreements for the implementation of SAP software. However I also am aware that it is also important to be forthright and recognize the issues and Justin Pirie does that in his blog. With the current news regarding SAP and the upheaval that has ensued, I think Justin’s approach is the right one. He starts with a cite to Paul Hamerman’s article for Forrester entitled SAP Announces Changes at the Top; Hasso Steps Up. He follows up the hard-hitting truth of Hamerman’s article with more of the same with a quote from Jeff Kaplan of THINKstrategies and his February 8, 2010 article entitled SAP Needs Strong Leadership to Stop Sinking as follows:

“The significance of this event was clearly underlined by the role SAP’s Co-Founder and Chairman of the Supervisory Board, Hasso Plattner, played as the primary company spokesperson during a corporate conference call this morning.

During the call, Plattner made an emotional defense of the company’s strategies and tactics in response to rising criticism in the face of SAP’s financial struggles. Plattner used the occasion to dispute claims that SAP isn’t moving fast enough to respond to changes in the market by proclaiming that SAP is well on its way to becoming a “multiple product company”. He gave Apotheker credit for “turning around” BusinessByDesign and said the rollout of the v2.5 of the on-demand solution is “close”.

The reality is that BusinessByDesign has only had isolated success in a handful of deployments in the field, and its scalability from a technological and go-to-market point of view is yet to be proven.

The truth is that BusinessByDesign’s lack of success is a reflection of SAP’s lack of commitment to the solution and an overall SaaS strategy.

The company’s leadership has never fully acknowledged the fundamental changes disrupting the software industry as a result of rapidly changing customer preferences and competitive pressures. For example, various SAP leaders in the past have suggested that BusinessByDesign would primarily serve as an ‘on-ramp’ to its on-premise customers rather than a solid standalone solution. This half-hearted approach not only turned off prospective customers, it didn’t incent its own staff to make a concerted effort to develop and deliver a competitive solution. (Emphasis Ed.)”

Justin Pirie follows up this strong dose of truth with yet another quote from Vinnie Mirchandani’s article entitled Enterprise Software is Entirely Bereft of Soul:

“But the reality is the customer has been forgotten in enterprise software, not just at SAP. It’s about squeezing as much out of old technology as possible. As I wrote earlier in the week. “I wish the other bigger vendors had the cajones to acknowledge they similarly mostly live off profits from software 15- 20 years old, from consultants which implement that old software and provide services from data centers which were designed during the Cold War.”

Leo was expected to do more of the same in his new role as CEO. So, he did – unbelievably pushing maintenance price hikes in the middle of the deep recession. For all his talk about taking on the partners who have piled 5 to 10X costs on top of SAP’s own expensive solutions, he really could not – they were part of the “field” he created.

SAP needed someone to dismantle that “old field” as the market transitions away from the big, honking upfront license and implementation and operating cost model. It is screaming for soul and innovation. Instead they rewarded Leo. Surely, they did not expect him to choke his own baby?”

At this point, I’m not sure if another dose of reality is needed. Enjoy the articles and do stop by Justin Pirie’s blog.

Facebook Secures Patent

Sam Conforti — Mon, 01 Mar 2010 09:26:30 -0600

Facebook’s most popular feature, News Feed, has been patented thus locking in the Intellectual Property Rights. This popular feature shows a member’s activities, to those allowed to view it, across the site.

Kenneth Corbin reports in his Internetnews.com article entitled Facebook Lands Patent for News Feed that facebook described the feature in its patent application as follows:

“The method includes generating news items regarding activities associated with a user of a social network environment and attaching an informational link associated with at least one of the activities, to at least one of the news items, as well as limiting access to the news items to a predetermined set of viewers and assigning an order to the news items. The method may further include displaying the news items in the assigned order to at least one viewing user of the predetermined set of viewers and dynamically limiting the number of news items displayed.”

There have been numerous privacy concerns and protests from members regarding how much of one’s activities could be broadcast on the site. However, these privacy protests have waned as other social networking sites such as MySpace, Twitter, and LinkedIn have imitated the feature.

So what are the ramifications? With the granting of the patent, Facebook may now sue any social networking site that includes an algorithm-driven mechanism for sharing and distributing information.

In a related Reuters’ story Military Allows Twitter, Other Social Media:

The Pentagon announced on Friday it has authorized the use Twitter, Facebook and other so-called "Web 2.0" sites across the U.S. military, saying the benefits of social media outweighed security concerns.

The decision, which comes at a time of growing concern over cyber-security, applies only to the military's non-classified network.

"The purpose of the policy is to recognize that we need to take advantage of these Internet-based capabilities. These Web 2.0 tools need to be part of what we use," David Wennergren, a deputy assistant secretary of defense, told Reuters.

Defense Secretary Robert Gates, 66, has said that he wants to use social networking to help the Pentagon interact with U.S. military members, many of whom are in their early 20s.

But opponents have cited the risks of information leaks, of opening gateways to hackers, along with a potential overload of precious bandwidth on the Defense Department's network.

Training people so they know what can and cannot be disclosed on the Internet is a more effective policy than simply banning use of social media on work computers, he said.

"So part of this is about having a trained workforce that is savvy in how you operate in the information age."

Oracle Files Suit Against Low Cost Maintenance Provider Rimini Street

Sam Conforti — Mon, 08 Feb 2010 10:43:51 -0600

A short 11 months ago on March 15, 2009 I posted an article in this Blog entitled Oracle Maintenance Fees Under Attack. At the time we, as a nation, were (and arguably still are) in the worst recession since the Great Depression on the 1930’s. The installed customer base of many of the large ERP vendors, as well as, prospective customers were all searching for a way to cut costs. The larger ERP vendors, in particular Oracle, soon to be followed by SAP, had raised their annual maintenance fees to 22%. One solution highlighted in the March ’09 posting was to take advantage of the services being offered through the third party maintenance provider, Rimini Street. Claims of 70% savings on an overall maintenance bill and 50% savings on the annual maintenance expense were being made by Rimini Street’s CEO, Seth Ravin, see May 8, 2008 posting this Blog entitled SAP Sapphire 2008.

Now here’s where it gets a bit convoluted. Seth Ravin is co-founder of a company called TomorrowNow. TomorrowNow touted its ability as a third party maintenance provider and the savings it could provide to the Oracle installed base. SAP purchased TomorrowNow in January 2005 and Ravin used those profits to start Rimini Street in September of that same year. It is of particular interest and can shed some light on the attitudes and approaches of those involved in this mix if you read Richard Adhikari’s article entitled Rimini Street Adds SAP, Passes on TomorrowNow cited in my May ’08 Blog posting. In particular pay close attention to the following subsection entitled Who needs TomorrowNow? Here is a brief snip-it:

“While Rimini Street is gearing up to add new support offerings to the mix, one way it's not planning to expand its business is through acquiring TomorrowNow.

Rimini Street had at one time been widely viewed as a likely purchaser of the firm, a provider of third-party support for Oracle applications that had been co-founded by Ravin. He ultimately sold the firm to SAP in 2005.

Rimini Street executives shrugged off their decision.

‘We don't have to buy TomorrowNow because we're getting all their customers already and there's no sense in paying for it,’ Ravin said.”

Then in 2007 Oracle sues SAP, claiming that its new business unit TomorrowNow illegally obtained Oracle copyrighted maintenance materials by using customer log-in ID’s on its password protected web-site.

This all brings us to the latest in this soap-opera which comes to us from Reuters via Internetnews.com’s article entitled Oracle Sues Rimini Street:

Oracle has filed a suit against a little known rival that provides low-cost software maintenance services, in a case similar to one that Oracle is fighting against rival SAP AG.

The lawsuit, filed in U.S. district court in Nevada on Monday, alleges that privately held Rimini Street stole copyrighted material using the online access codes of Oracle (NASDAQ: ORCL) customers.

Rimini Street Chief Executive Seth Ravin denied the allegations, saying in an interview on Thursday that his company had done nothing wrong.

"We are going to fight this battle," he said. "The specific allegations we are going to be answering vigorously and aggressively when the time comes in court."

Las Vegas-based Rimini Street sells updates and bug-fixes to Oracle's software for about half of what Oracle charges its customers. Ravin said his company booked about $150 million in business last year.

The charges are similar to claims that Oracle made in a high-profile lawsuit against SAP's TomorrowNow business unit.

That case is due to go to trial in San Francisco federal court in November.

Maintenance service contracts worth billions

Maintenance services are one of Oracle's core profit generators. That business generated $11.8 billion in its most recent fiscal year, or about half Oracle's total revenue.

"We are committed to enforcing our intellectual property rights against those who steal or infringe" upon them, Oracle spokeswoman Deborah Hellinger said in a statement.

For additional information and more on this saga see also Paul McDougall’s article in InformationWeek entitled Oracle Sues Rimini Street For 'Massive Theft'

Public vs. Private Cloud Computing: A Decade Long Look

Sam Conforti — Fri, 22 Jan 2010 18:12:49 -0600

Rob Ederle in his article in Datamation.com entitled 2010: The Year and Decade of the Cloud has an interesting theory on the circuitous nature of the computing populace and the nature of the industries that feed into this arena. Enderle surmises that we have come, or will be coming, full circle in our approach to computing in this second decade of the 21^st century. He notes that we started this journey with huge centralized computing and dumb terminals, and now with the surge in growth of Smartphones and Smartbooks, we may be headed back to that original configuration, but this time in “The Cloud”. Enderle’s advice for companies to survive is to change their approach of how they view the market. Larger vendors ensconced in the large systems approach may have a leg-up on their competitors who were more user-focused; however, these larger vendors must accommodate these user’s demands or risk alienating them. Similarly, the more user-centric vendors must adopt the large centralized systems approach or be left behind. Enderle foresees the most likely way these vendors, large systems vendors and more user-centric vendors, will survive and evolve is through partnerships. He predicts Google as a likely survivor if this decade of cloud computing pans out the way he envisions it.

Ederle gives us a quick definition of what he calls Services-Based Computing, otherwise known as “The Cloud”. He takes a retro look back and states that is what IBM started. I’m not sure if I buy a direct correlation to what was the IBM leasing/services model and what the new cloud computing will become, but I at least understand where he is going with this perspective.

Ederle’s article makes an interesting observation and distinguishes between “Public” cloud computing and “Private” cloud computing. It is easy to guess, and Ederle’s article is quite clear, that the Public brand of cloud computing would be lower cost while the Private brand will be more concerned with security, but at a higher cost. As a neophyte when it comes to cloud computing (well I guess most of us are neophytes at this point in time), I am not sure I can make the distinction between Private cloud computing and a Managed Hosting arrangement, or is this a distinction without a difference? Further in his article there is a discussion how the enterprise vendor (i.e. the large centralized systems vendor) must meld its strategic efficiencies with the more user-centric vendors who have the knack for responding to the needs of the line managers who have become the new decision makers when it comes to technology spending.

Ederle’s solution, or at least his prediction, is that companies will need to form partnerships with each partner having the right mix of Public and Private components. He concludes his article by stating that the companies that exit the new decade of cloud computing will not resemble anything like they were when they entered this new decade.

Year In Review: Another Top Ten List

Sam Conforti — Fri, 08 Jan 2010 17:48:50 -0600

Did somebody famous ever say “We won’t know where we are going until we know where we’ve been”? I did a quick Google search and could not come up with this quote being attributed to any person. If somebody did say this, then I’m borrowing the line for this posting. If not, then feel free to use it (but mention my name please). As my regular readers can imagine, I’ve been gone for about 3 weeks simply due to a very busy fourth quarter/year-end close. While scanning the internet recently for interesting and important information to bring to your attention, I stumbled upon a very interesting and thought provoking article in Internetnews.com by Kenneth Corbin entitled The 10 Most Important Social and Digital Media Developments of 2009. As I have stated in the past, I am a bit of a History Buff (What’s a Buff? See definition 2; enthusiastic, yes; knowledgeable, maybe). So I like to know the background of why things are as they are; and so I think it is nice to know what has happened in the past relating to technology in order to get a better understanding of where we may end up in the technological future. Corbin’s article is a gem. It informed me more fully of things I might have heard but should know more about. It reminded me of things that happened and how society dealt with it. It made me laugh (e.g. someone threatened to kill their cat if Miley Cyrus did not reinstate her Twitter account – really). And it made me wonder about the future. Here is a brief synopsis of Corbin’s Top Ten List peppered with my editorial comments. I hope I can do it justice:

#10. Amazon.com’s Kindle will change the world: I read somewhere that the Invention that changed the world was the printing press. Well move over Gutenberg, the Kindle has arrived. In 2009 Amazon sold more digital books than printed editions. This e-reader will change the world. For an interesting take and a more in-depth analysis see Don Reisinger article entitled The Most Important Tech Product Is the Kindle, Not the iPhone.

#9. Craigslist Killer: Some med student solicited an escort off of Craigslist and murdered her. The story was sensationalized due to the use of this new technology. As Corbin correctly points out, this story would have not garnered the attention that it did if the escort was solicited from the many personal ads or from the too numerous to mention yellow page advertisements.

#8. Social Networking Sites Made Money: Facebook and Twitter, both a free service to their customer base of MILLIONS (yes I’m shouting MILLIONS) managed to figure out a way to make money. Facebook does it through advertising and the sale of virtual products; and Twitter did it by licensing the ability to add real-time content to Search Engines Google, Microsoft, and Yahoo.

#7. Social Media in the Government: Is this a good thing? I don’t know. The Obama Administration seems to think so. They’ve done weekly addresses to the nation on YouTube and hosted online town hall meetings. There are numerous government websites and blogs.

#6. The slow death of the Newspaper: Is this really happening? Are we really getting more (or most) of our news from the internet? What will the new business model turn out to be? Dare I say, do we need yet another industry bailed out?

#5. Miley Cyrus deletes Twitter account: I honestly do not understand this phenomenon. Apparently there are millions of fans of all sorts of celebrities and Star Athletes that are interested in knowing and these Celebs/Sport Stars are interested in tweeting what they may be doing most hours of the day. Is this the downfall of our society? Well, it is at least another reason for it. Oh how I long for much calmer days and “Home Tweet Home”.

#4. Social Web becomes target for hackers: Why do they do it? I don’t know. Some do it for the thrill of the “hack” and some are out to steal our identity. We put too much personal stuff on these social sites. Regulators and privacy advocates have fertile ground for their causes and activities.

#3. The Twitter revolution in Iran: In June of the last year as Iranian authorities were cracking down on protestors, these same protestors began to twitter their cause, and when the foreign correspondents were thrown out, became the only source of hard data on what was really happening in the country. Corbin reports that the US State Department convinced the people at Twitter to postpone a planned power outage for scheduled maintenance just so they would keep the twitter lines of communication open.

#2. The growing sense of urgency about information: It seems that everything is about immediacy. We’ve got to have it real-time.

And the #1 important issue that materialized last year relating to Social and Digital Media was VIDEO: The web is free and on-demand. How does one derive a business model out of that? TV Everywhere offers paying subscribers the option to watch content on the web. Hulu pulls content from sites, and its owner News Corp is thinking about making it a paid site. So is free TV over the air waves supported by its advertising (i.e. commercials) a thing of the past?

2010 Outlook: Increase in IT Budgets is Broad but Not Deep

Sam Conforti — Fri, 18 Dec 2009 09:58:05 -0600

In November of this year the staff at CIO Update conducted its annual fourth quarter survey of IT executives in an attempt to get some sense of the coming year’s economic activity. This year the survey included executives in 139 companies in the US and Canada. From the results it appears that the doldrums of 2009 may be replaced with cautious optimism for 2010 (VERY cautious optimism). The survey asked questions such as whether the surveyed companies had made any changes to their in IT Budgets during the last quarter, increases, decreases, or no change. Another question put a slightly different spin to the IT budget inquiry and asked were there any anticipated changes in the coming years IT Budgets. The article posted December 17, 2009 by the CIO Update staff entitled The IT Spending Recession is Over presents the answers to these survey questions in print and in pie chart form as well so the reader can try to put the responses into perspective. While 19% had increased their IT Budget spend for the last quarter as compared to only 11% last year, 29% answered that they continued to reduce their expenditures as compared to 35% from last year’s survey.

Two interesting observations by the CIO Update staff center around their section entitled “Signs of Hope” and also the breadth of the recovery. The CIO Update research has 20 years of data to lean upon, particularly in the response to “Expectations for Change in the IT Operational Budget” category. The results shows 52% of the IT executives expect an increase in their 2010 budgets. Historically, the CIO Update data indicates a recession when that expectation number drops below 50%. So it appears that the trend may indicate that we’ve turned the corner. However, the anticipated amount of those budget increases is not large and hovers around 2%.

A rosy economic picture for the 2010, I think not. However, it is not bleak either. From an amateur economist at best, your humble blogger’s opinion is that the capitalist business model is cyclical and that an economic recovery is inevitable. I think some intangibles would be the uncertainty of the current administration’s spending plans and the affect they will have on any recovery. And there always is the looming Federal Reserve and whether their policies will allow for further growth as the inflationary effects of their 2008 – 2009 monetary policy have as yet to be manifested. The issues not discussed in this CIO Update posting may be addressed in its complete version Outlook for IT Spending and Staffing in 2010. This full version of the report “provides 2010 forecasts for IT operational spending, IT capital spending, and IT hiring, both for the composite sample and by organization size”.

Is the worst behind us? That remains to be seen.

What's the Right Microsoft ERP Product for Your Business?

Sam Conforti — Tue, 01 Dec 2009 18:56:04 -0600

As some of my readers may recall I posted an article to this Blog on October 12, 2009 entitled Microsoft Buys Core Technology to Boost Its ERP Offering. The article mainly commented on Microsoft’s most recent purchasing strategy to boost its Dynamic ERP product offerings. After reading my article, Houston Neal, Website Content Manager for Software Advice for Manufacturing contacted me and asked me to read and comment on his article entitled Microsoft Dynamics for Manufacturing – Understanding the Difference Between GP, NAV, SL and AX. Neal’s take on the current situation is that although Microsoft has tried to establish itself as a player in the ERP market space, enterprises may still be confused as to what product(s) would be suitable to which industry.

I have read Neal’s article and was quite impressed. I’m a person that likes to understand the history behind the product and/or company. Neal does a nice job of detailing the 8 year evolution of Microsoft’s foray into the ERP industry. He starts off with a sort of Gantt Chart that breaks down the different target markets for each of the Microsoft Dynamic products. From the enterprise size, based on number of employees, it looks as though Microsoft has taken a comprehensive approach to the SME market space and taken aim on competing directly with SAP and Oracle in this space.

I particularly liked the section where Neal describes Microsoft’s initial purchases and the making of the Dynamics portfolio of products. First there was the Great Plains acquisition in 2001 which netted the Great Plains accounting application and the Solomon business management applications. Then there was the Navision purchase in 2002 which garnered not only the human resources and CRM applications, but also the Axapta product line from a recent acquisition by Navision.

So what is Microsoft to do with four different enterprise products (Great Plains, Solomon, Navision, Axapta) each written in a different language, running in different development environments, and using different databases? Neal takes us on a tour of the daunting task that Microsoft laid out for itself to convert all four products to a single code base, Project Green.

Neal includes an evolutionary chart of which Dynamic products have become the product of choice for which industry. He reminds us that over 9000 ISV’s are out there providing customization services and support for these products. He concludes his article by stating that growth in the Dynamic Product line appears evident.

Droid: Can Verizon Topple AT&T with the Newest Smartphone by Motorola

Sam Conforti — Tue, 10 Nov 2009 08:48:09 -0600

Well, by now you probably have seen the commercials. The first commercial began with a children’s lullaby playing in the background as a series of “i don’t” phrases appeared on a whiteboard. This was just enough to catch one’s curiosity when the final “i don’t” phrase dissolves into an eerie Sci-Fi fuzzy screen and a voice is heard announcing the coming of Droid. As a fighter pilot wannabe, the second commercial was much more to my liking. A squadron of what look to be 2^nd or 3^rd generation stealth fighter-bombers is flying in formation when the order is given to release the pods. A shower of what appears to be meteors fills the skies. Upon impact the locals gather around each crater and the pods begin to open when the background voice announces the arrival of Droid.

Last Friday Verizon’s iPhone killer went on sale. Motorola’s Droid has a mobile open source platform on the Verizon network. Michelle Megna reports for Internetnews.com on the impending battle between Apple, the maker of the iPhone, and the PC community in her article entitled “Droid First Step in iPhone Fade Away?”. Megna quotes Tim McLaughlin, CEO of Siteworx, a mobile app and Web development company,

"History shows that unlike Apple, PCs gathered the ecosystem of profitable companies, such as Dell and IBM, thanks to its open technology. Apple, however, only develops systems that benefit itself. It all comes down to economics, and the only company interested in making the iPhone ubiquitous is Apple. On the other hand, you have Google, Verizon, Motorola, all these big companies together, the cumulative market value is huge. You put all of those resources together, and even though it's less effective because it's not centralized like Apple, it will still have a huge impact"

Brad Reed and Matt Hamblen have done their due diligence research on the product and have come up with a nifty review in their article for Computerworld entitled “Four reasons to buy (and one reason to avoid) the Droid”. I’ll try to provide a brief summary of their five points:

1. Droid is the strongest device on the Verizon Network with the following three characteristics:

a. Mobile browsing capability

b. A very good voice recognition functionality

c. The largest 3G data coverage network of Verizon

2. The Google connection: The open platform will stimulate development of new apps and allow users to switch to new carriers while maintaining the same device.

3. Ability to run two applications simultaneously: iPhone can’t do it. Once Droid develops the appropriate security features, then Blackberry will need to pay attention as Droid could become the device of choice for the enterprise user.

4. Connection to the internet through Wi-Fi: Also use of the same processor as the iPhone will allow a fast and smooth browsing experience.

5. AND the one reason to avoid this device is the keyboard: Droid has the touchscreen capability, but in order to get that feel of hitting the keys, they have also developed a slide-out keyboard. This feature allows enough room for a larger display screen. Reed and Hamblen report that users do not get the same feel with this shallow keyboard.

SaaS for SME's: Financial Value, New Technology, and Improved Operations

Sam Conforti — Tue, 27 Oct 2009 09:13:55 -0600

I recently came across a White Paper from Saugatuck Technology, Inc. entitled “SaaS Realities: Business Benefits for Small and Mid-sized Enterprises”. In the spirit of full disclosure, this research paper was sponsored by SAP so there is a one page blurb from SAP at the end of this White Paper which reemphasizes the benefits of SaaS for SME’s and then touts its own SaaS offering Business ByDesign. I chose to post this review of the White Paper since the research is very current, describes the benefits succinctly yet thoroughly, and is also presented in an unbiased format.

The paper is written with the SME in mind, as one can discern from the title, however it begins with a very brief background to the pre-SaaS days. As a bit of a history buff myself, I always appreciate it when an adequate foundation is laid so we can see how things have progressed over time. The paper points out the initial two choices available to us:

· Purchase of software suite from an ERP Vendor: The enterprise’s IT department is then saddled with all the tasks from selection, installation, maintenance, all hardware, and networking; or

· Engage a VAR or Systems Integrator (“SI”) to install new software and integrate it with its existing legacy systems: Here selection and installation are handed over to the VAR or SI, leaving maintenance to the Enterprise’s IT department or perhaps outsourcing it.

The authors address the question of when is the optimal time to contemplate a switch in technology from the old approaches mentioned above to the latest alternative, SaaS:

· Establishing a new location

· Serving new markets

· Sudden sustainable growth

· Preparing for a recession

· A new sales channel

· A new supply channel

· New governance or reporting standards

· New performance goals

· Aggressive competition

· Increased customer expectations

The authors then go into a deeper discussion of SaaS. They begin, as most SaaS discussions begin, with the pricing model, per user / per month, and variations of this model. This is followed by a discussion of what an enterprise is really purchasing with SaaS (i.e. a business service). This business service includes:

“… the entire range of data center infrastructure services: networks, storage, operating systems, databases, application servers, Web servers, and of course, disaster recovery and backup services. Moreover, a full range of data center operational services – authentication, availability, identity management, production monitoring, patch management, activity monitoring, software upgrades and customization …”

The research paper then gets into the heart of the issue, mainly the Advantages of SaaS. There is a very well-written discussion including:

· Financial Value

· Time to Value: Quicker installation, quicker integration, quicker pay-back period.

· Affordability: No large up-front costs

· New technology

· Continuous innovation: Multi-tenancy allows for a continuous stream of enhancements

· Improved Operations

· Customization: Easily adaptable for SME’s

· Integration: Service Oriented Architectures (“SOA”) are standard for SaaS providers. Also, three additional means of achieving seamless integration with other enterprise applications on premise include: Web-based SaaS integrators, SaaS integration appliances, and SaaS system integrators.

· Fewer technical resources needed: Less strain on your IT department and small firms can take advantage of the latest technologies

· Focus: Allows firm to focus on its core competencies

The research paper concludes by recognizing that SaaS may not be the answer for your particular firm. For example:

· The application differentiates your firm from the rest of the market (i.e. the application is tied to your core competency); or

· An existing large investment in your existing IT; or

· Regulations may require that you keep and manage your data behind a firewall and your SaaS provider cannot accommodate this requirement.

Saugatuck Technology, the author of this White Paper, is a strategic advisor to senior executives, information technology vendors and investors, providing strategy consulting, subscription research and thought-leadership programs focused on emerging technologies, key business / IT challenges, and effective management strategies.

For further readings on this topic, see the following posts in this Blog:

SaaS Customer: A Checklist of What You Need to Know Before Selecting the Vendor

SaaS Contracting: Tips Leading to the Decision and What to Include in the Agreement

Also on the left hand sidebar insert “SaaS” into Keyword search and hit “go”. You will find numerous articles relating to SaaS.

Microsoft Buys Core Technology to Boost Its ERP Offering

Sam Conforti — Mon, 12 Oct 2009 09:07:18 -0600

First I would like to apologize to my readers for the delay in posting this article. My goal is to post something of interest every 1 to 2 weeks, more often if events warrant it. Unfortunately, my schedule went a little haywire during the closing of the 3^rd quarter and so it has been difficult to meet my self-imposed deadlines. I think I’ve turned the corner.

Barbara Darrow, Senior News Editor for SearchITChannel.com, reports in her article entitled “Microsoft rolls partner technology into Dynamics AX ERP” that Microsoft has embarked on a purchasing strategy to build up its core technology of its Dynamic ERP offerings. The series of purchases (provisos not disclosed) included the following:

· Fullscope Inc. – process manufacturing technology

· Computer Generated Solutions Inc. – professional services solution

· LS retail EHF – retail technology

· To-Increase Denmark A/S – retail technology

Axapta, now called Dynamics AX, is one of the Dynamics ERP lines from Microsoft that competes directly with SAP’s SME offerings. This mid market space, what Darrow identifies as the “white space”, is more often than not where VARs and ISVs do a lot of customization. This current round of technology purchases is seen as Microsoft’s attempt to add functionality while at the same time reducing the need for customization. It is probably safe to assume that SAP might not welcome this intrusion into the mid market, but the jury is still out on other VARs that perform application work in the space as to whether the additional functionality will be viewed as a help or a hindrance. Dan Fine, President of Fine Solutions, a Dynamics AX partner, stated:

"They've bought some key functionality for professional services and are putting it into the plumbing. That will let us extend our products more easily into various verticals"

He also remarked that time sheets and billing will be part of the offering.

India's Outsourcing Services on Path for Exponential Growth

Sam Conforti — Mon, 21 Sep 2009 16:01:31 -0600

Paul McDougall reports for Informationweek in their Global CIO Blog that the National Association of Software and Services Companies (“NASSCOM”) predicts the $58.8 billion in India’s outsourcing revenue for the fiscal year ending 2009 will grow to over $225 billion in the next decade. McDougall quote’s Som Mittal, the president of NASSCOM, an association that promotes Indian offshoring, in his article entitled Indian Outsourcing To Increase Fivefold:

“ … the potential for this industry is tremendous and the industry will not be demand constrained”

In order to achieve savings and to stay competitive in the global marketplace, more and more companies are outsourcing their business and technical functions. McDougall confirms in his article that the Obama campaign rhetoric of keeping the existing jobs in the US and preventing jobs from going overseas has not materialized. For further discussion on the Obama campaign rhetoric and the actual affects on outsourcing, see also the following postings in this Blog:

· No Slowdown in Offshoring for the Foreseeable Future; posted April 20, 2009

· Obama’s Tax On Outsourcing; posted June 1, 2009

The current trend has tech, financial services, and manufacturing as the core industries making up the bulk of the $58.8 billion in outsourcing revenue. However Mittal suggests that WIPRO, Infosys, and Tata, India’s outsourcing behemoths, foresee healthcare and transportation as the engines for further revenue growth.

With the coming growth an emphasis on infrastructure moves to the forefront. The traditional centers of Hyderabad and Delhi will need to be supplemented by the so-called second-tier centers like Kolkata in West Bengal in order to accommodate the growth.

Labor Day Weekend: 3 Short Stories

Sam Conforti — Mon, 07 Sep 2009 08:07:45 -0600

SAP takes majority position in SAF

Alex Goldman reports for Internetnews.com that ERP giant SAP has increased its stakeholding in SAF to a majority position. This retail software provider’s products have been embedded in SAP’s retail solution since 2002. SAF’s 2008 sales were slightly over $19 million.

Seibel Systems Founder Attacked By Charging Elephant

Internetnews.com’s Andy Patrizio reports that billionaire founder of Seibel Systems, while on safari in Tanzania, was a victim of an elephant attack. He and his guide were 200 yards away from an elephant herd when suddenly one broke from the herd and charged. Seibel suffered broken ribs and a gorged left leg and a crushed right leg. He spent 18 days in four separate hospitals in Nairobi before returning home. Wheelchair bound, reconstructive surgery and physical therapy are the next steps in his recovery.

BPM: Europe Exceeds US in its Adoption

Back in 1996 Michael Hammer wrote ‘Reengineering the Corporation’. Joerg Heistermann, IDS Scheer CEO of the Americas, stated, “Once BPM became the buzz in the boardrooms around the world, because of the Hammer book, the business changed and in the 1990s SAP began to roll. Many of our implementations complemented SAP.” The chemical companies, financial institutions, and auto makers of Germany were first adopters. "Culture might have an impact. In the U.S., the focus is on sales and marketing. In Europe, we are more technicians. We optimize the organization for what's coming." IDS Scheer’s “flagship software” is ARIS. See Alex Goldman’s article IDS Scheer: US Lags in BPM Implementations for more.

That is One Small Step for Bandwidth. One Giant Leap for ISP's.

Sam Conforti — Mon, 24 Aug 2009 08:47:02 -0600

Actually it is not that small of a step for bandwidth. NASA has come up with a device that transmits data at the rate of 100 megabytes per second. This compares to the 1 to 3 megabytes per second from a typical high-speed internet service provider.

I have got to hand it to Sean Michael Kerner for posting his article in Internetnews.com entitled From the Moon to the Earth at 100 Mbps. I was simply minding my own business, surfing the net for anything of interest, when I stumbled upon Kerner’s article. So my first thought was, ‘So NASA has come up with yet another innovation in order to justify its existence.’ I recalled the ever popular “Tang” and then there was Velcro, digital watches, and the ubiquitous handheld calculators. To be fair most, if not all, of the modern conveniences we enjoy today and cannot live without began or in some way had their impetus in the space program. And so I read on. This one will truly be revolutionary.

Kerner’s article linked to Jan Wittry’s article entitled The Ultimate Long Distance Communication. Wittry reports that NASA has launched the Lunar Reconnaissance Orbiter (“LRO”) to collect data about the moon to include massive amounts of images, and data about the moon’s geography, climate, and environment. This information will then be sent back to earth to help scientists create high-resolution 3-D maps of the moon’s surface. The transmission of this massive amount of data, in almost real time, is due to a NASA custom designed and handmade 13 inch device called a Traveling Wave Tube Amplifier.

I strongly suggest you read Wittry’s article and discover the various uses already contemplated for such technology (i.e. use in communication satellites for tracking oceanic flights, icebergs, volcanic eruptions, forest fires, and severe weather.) Kerner mentions the most obvious use in his article when he mentions the ability to “boost data delivery” for content delivery on the internet.

Microsoft and Nokia: An Alliance

Sam Conforti — Mon, 17 Aug 2009 09:44:22 -0600

Stuart J. Johnston reports in his article in Internetnews.com for August 12, 2009 entitled Microsoft, Nokia Team to Make Office Mobile that these mobile operating system competitors have signed an alliance whereby Microsoft’s Office Mobile applications will run on Nokia’s Symbian operating system. The Microsoft Office Mobile applications will be ported over to the Nokia Eseries Enterprise devices. The plan begins with porting Office Mobile to the Nokia devices, which then will lead to allowing access to Microsoft enterprise products such as SharePoint and Office Communicator. Next year Microsoft will bundle other apps onto the Symbian operating system such as Microsoft Word, Excel, and PowerPoint. As RIM’s Blackberry hold’s the lead in the enterprise market-space, the Microsoft/Nokia alliance could provide some significant inroads into that market. With Nokia’s market share for smartphones worldwide at 45%, it is easy to understand Microsoft’s willingness to join forces, at least in this arena.

For some more interesting reading which could help lay a foundation to understanding an alliance such as discussed above see the April 30, 2009 posting in this Blog entitled The Mobile Revolution Is Upon Us.

Talent Defections at Sun: Advantage IBM

Sam Conforti — Mon, 03 Aug 2009 05:44:00 -0600

This sort of activity is common in mergers and acquisitions. I wish I could say that I had experienced this only once, but the sad truth is I have been on the inside and watched this happen several times. And it always is the same. Something big happens, (e.g. a merger, an acquisition, a new “C”-Level Executive) and people leave. In my last corporate counsel position a new CEO was hired just two months after I had come onboard. The General Counsel who had hired me, an intelligent attorney with a superb management style, abruptly announced his untimely retirement just three months later. His replacement lasted a short 12 months. Within a year and a half the new CEO’s friend and confidant had assumed the General Counsel position and the department I had been a part of was completely eliminated.

So is it any surprise that Sun is experiencing a bit of a brain-drain after the acquisition by Oracle? Andy Patrizio reports for InternetNews in his article Defections Batter Sun Microsystems that some key Java-based developers are reading the writing on the wall and have decided to avoid the tap on the shoulder and request to come to some non-descript conference room. Patrizio reports that so far Java’s creator, James Gosling, has not jumped ship. Josh Farina, analyst with Technology Business Research, states:

"It'd be in their best interests to make offers to get people to stay on board … Oracle is really good at making companies run better, but ultimately it needs the talent to stay because … it's in the line employees who make it happen.”

And the affect is not solely on the software side of the business. To get a preview into this slippage in Sun’s sales see the posts in this Blog Oracle’s Purchase of Sun: A Game Changer and IBM and SAP vs. Oracle and Sun: Let the Speculation Begin. Scott Handy, vice president of marketing, strategy and sales support for IBM Power Systems, reports that customers are calling IBM requesting migration assistance. Sun’s customer base looked at Oracle’s track record and see price increases in the future. Handy states,

“They are all quite concerned. When Oracle bought Siebel and PeopleSoft, they increased the maintenance licenses by 25 percent per year. With BEA, licenses went up 45 percent. So they are looking at OPEX going up just to keep what they had".

IBM is geared up and ready for these migrations. In 2003 IBM acquired a company called Sector 7, a company specializing in migrations. IBM created a program entitled Migration Factory and to date have performed over 1800 migrations. Before the Sun acquisition the ratio was about 40% of the migrations were from Sun but now that percentage is starting to increase. For the first six months of this year IBM has migrated over 170 Sun customers and another 66 Sun storage customers.

It appears that IBM is doing what it has always done and that is using their hardware to get business in the door and then turn that into sales for long-term services and software.

A Comprehensive SaaS Security Solution by McAfee

Sam Conforti — Tue, 21 Jul 2009 07:33:46 -0600

Alex Goldman reports for Internetnews.com on McAfee’s recent announcement of its latest SaaS security software, Total Protection Service 5.0 in his article McAfee Embraces SaaS Security. McAfee’s senior vice president and general manager for SaaS, Marc Olesen, is quoted:

“The SaaS security market is growing a little over 30 percent per year, three or four times faster than the on premises security software market”.

McAfee feels that its competitive advantage for Total Protection Service 5.0 is the solution’s comprehensive feature covering DLP, compliance, vulnerability scanning, e-mail, network protection, and endpoint protection. Its competitors in this marketplace are Symantec and Trend Micro. Although SMB’s will find the product’s “Security Center” straightforward and easy to use, this solution is not meant for the SMB market alone. McAfee plans to market this solution to the large enterprise customers as well. One interesting feature of this new product is that vulnerability testing can be performed from outside the network at POP’s (public points of presence) at ISP’s. This is something that cannot be done with on-premise software. The product will be user based pricing, subject to the number of modules employed, with quantity discounting available. McAfee envisions that some enterprises may choose a mix of the protections their product provides alongside any competencies the enterprise may build on its own.

Licensee's Bill of Rights by Forrester's R. Ray Wang

Sam Conforti — Mon, 13 Jul 2009 10:22:24 -0600

So I’m sitting at my desk buried in work one day last week. As an aside, it appears that my writings on SaaS have sparked some interest and so I have been putting together some SaaS agreements for a couple of new clients. My email alert lets me know that an email has just arrived. It is an email from R. Ray Wang, Vice President of Forrester Research Inc. I have been reading a lot of Wang’s writings and research and have been quite impressed to say the least. I have even Blogged on some of his writings. He had a few kind words to say about my Blog and then he attached the latest update to the Enterprise Software Licensee’s Bill of Rights. I promised him that I would read this latest research work and mentioned in my email reply that it would probably be a treasure trove of vital and current information. Well I did read it and my comment hit that nail on the head. As a practitioner for over 20 years, with the last 10 years concentrated in this crazy world we call software licensing, this is a must read. As a Licensee, whether prospective or a veteran of ERP negotiations, perhaps a higher standard is in order, such as mandatory reading material. Here are some highlights from this latest work as detailed by R. Ray Wang:

Surveyed 71 vendors and 101 end users.
Built best practices from personal experience of 1000 contract strategy interactions.
Resulted in the inclusion of 11 new rights that support new deployment options, cost savings, client best practices, and vendor lock in avoidance.
Suggested seven simple steps to successfully negotiating enterprise software contract.

Of course reproduction of this research work is strictly prohibited. Regardless of the prohibition, space constraints in this Blog prevent me from adequately commenting on all the salient points. I do not think Wang or Forrester would mind if I whetted your appetite the best way I know how – with Wang’s own words in the Executive Summary.

For Business Process & Applications Professionals

Executive Summary

July 7, 2009

An Enterprise Software Licensee’s Bill Of Rights, V2

Forrester Redefines 47 Basic Rights That Licensees Should Expect From Vendors

This is the 10th document in the “Building A Long-Term Apps Strategy” series.

by R “Ray” Wang

with Paul D. Hamerman, Andrew Magarie, and Ralph Vitti

“Of all the assets that an enterprise acquires, enterprise software brings with it the most unusual, onerous, and restrictive set of constraints. In most cases, licensees may not resell, reuse, or share their license. Licensees often encounter numerous grievances across the software ownership life cycle from selection to implementation, utilization, maintenance, and retirement. Poor economic conditions have kept vendors from raising prices for now; however, rapid vendor consolidation has eliminated choice and customer leverage in the market. Upon economic recovery, enterprises can expect price increases in software categories where only a handful of solution providers compete. Fortunately, advances in new deployment options (e.g., software-as-a-service, platform-as-a-service, cloud computing, managed services, and virtualization) may slowly shift the pendulum in favor of the customer. Forrester’s updates to its 2006 Enterprise Software Licensee Bill Of Rights (LBoR) reflect these new best practices from more than 1,000 interactions. CIOs, business process and apps professionals, enterprise architects, and procurement experts should immediately review and incorporate these best practices into their vendor relationships, contract strategies, and packaged apps strategies.”

For information on hard-copy or electronic reprints, contact Client Support.

R. Ray Wang’s Blog is A Software Insider’s Point of View.

SAP to take on SaaS - The Future is Now

Sam Conforti — Mon, 29 Jun 2009 17:33:10 -0600

It appears the tide is turning for the ERP giant. Initially Business ByDesign, the SAP SaaS offering, was targeted to the SMB marketplace. John Wookey, SAP’s new chief of on-demand software applications for Large Enterprises (“LE”) and former head of application development for Oracle, announced at the OnDemand Europe Conference in Amsterdam that SAP will allow online integration with core on-premise or hosted ERP platforms. This is a major switch in their strategy. SAP is determined to avoid the problems of data sharing and integration with this type of approach. Mike Simmons reports for ComputerWorld in his article SAP in SaaS U-turn:

“Wookey will initially promote the LE on-demand offering entirely at SAP's established customer base. Until now the company had been reluctant to sell SaaS products to its installed base, for fear of cannibalizing license and maintenance revenues”

Mary Hayes Weier of InformationWeek reports on her interview with John Wookey in her article SAP unveils SaaS Strategy. SAP will provide “function-specific software applications, available by subscription, that plug into customers' on-site SAP Business Suite systems, and that SAP will host for customers using a multitenant architecture”.

Weier provides us with a good definition of Multitenancy and how SAP will provide it:

“Multitenancy -- in which groups of customers share the same instance of a software application, even though their data is kept separate -- helps software companies keep costs down for the hardware, software, and energy they use to host customers' applications. In turn, that allows them to offer competitive subscription prices. Wookey describes Frictionless' technology, which will be the foundation of SAP's on-demand platform, as "Java-based with a true multitenant architecture”

Development groups will bring on-demand applications to the market. SAP’s CRM already in the market, although not a multitenant architecture yet, will be a seamless upgrade soon. The other two on-demand products also in the market, e-sourcing and carbon emissions management are a result of earlier acquisitions. SAP’s acquisition of Sky Data will be able to provide a mobile component to their on-demand offerings.

Survey Says SAP Users at Sapphire Concerned about Performance

Sam Conforti — Mon, 15 Jun 2009 16:51:17 -0600

Alex Goldman writing for InternetNews.com in his article Does SAP's Performance Fall Short reports on a survey conducted at SAP’s annual conference for SAP Professionals, SAP Sapphire ’09, held in Orlando, Florida. The study on SAP’s performance was sponsored by Precise Software, a transaction performance management (TPM) provider and was conducted by Dimensional Research. Dimensional Research based its findings from 695 SAP Professionals. The respondents were attendees at SAP’s Sapphire conference and answered questions at the Precise Software booth. Some of the findings are as follows:

· 62% unhappy with the resolution of performance issues

· 8% reported daily problems

· 68% reported 1 to 5 incidents per month

As to the resolution and/or response times:

· 46% reported resolution in hours

· 22% reported resolution in minutes

· 30% reported resolution in days or weeks

· 2% reported resolution in seconds

Tracking of database transactions through the database and the application servers and into storage can be done for the SAP ERP software. Precise Software is now offering such tracking for SAP’s BI software as well. Zohar Gilad, executive vice president of Precise Software says:

“Traditionally in BI, companies take data from the production ERP system, extract it and scrub it, and load it into their data warehouse. This can disrupt the production system, companies can fail to move the data in time, and it's tough to access.”

Precise Software is not the only TPM vendor involved in resolving these issues. Attivio and Fiorano are two other TPM vendors using different methods. SAP is also looking for a way to improve its BI and announced it is offering a new search engine to do just that.

SAP had no comment regarding the survey stating that they did not know how the data was gathered nor had they seen the survey.