April 3rd, 2008
Making Things Safe for Business ByDesign II
Following yesterday’s post on the management changes at SAP and the pending departure of Peter Zencke, I got a call from SAP. Would I be available to discuss the issue with Peter ASAP? Here’s some highlights from the conversation:
As reported, Zencke is retiring from the board, and planning to focus on new opportunities, and his family, and the other things that someone who has been working, in his words, at 140% for years would be wont to do when he reaches a certain age.
Zencke also plans to be actively involved in day to day SAP business, particularly with regards to Business ByDesign, through 2009. When I asked him what percent of his time he would be spending on SAP business versus his private life, Peter said that SAP would not get less than 100 percent for the next year and a half.
Zencke told me that the current state of development of Business ByDesign is “complete enough” for general availability, but, as befitting a new product line, there are many new and different things planned for BBD that will keep development busy for some time to come. Among the plans for BBD are integration of Business Objects technology and functionality, and an extension of some of the BBD concepts to the larger, on-premise ERP suite. Both, Zencke felt, were tasks he was comfortable leaving in the hands of the existing development team. He also added that BBD just achieved a “breakthrough” level of performance, and stated he was very satisfied with BBD’s progress so far.
How would I change yesterday’s blog based on this conversation? I think that the additional color on how long Zencke plans to be actively involved in BBD — through the end of 2009 — would have caused me to temper my concerns about BBD’s prospects inside and outside SAP. It’s clear that SAP won’t be losing focus regarding BBD through the critical 20 months between now and Zencke’s departure, and that 20 months should be plenty long enough for the market to judge how well BBD is going to meet SAP’s ambitious goals.
The thing I wouldn’t change is that BBD will be very much under the microscope at next month’s Sapphire conference, despite some feelings inside SAP that Sapphire isn’t necessarily the right event for a further unveiling of the product’s capabilities and progress. I expect to see Zencke there, and the rest of his team, putting some proof points into the promises they have made about BBD and its market opportunity. Considering the importance of the product to SAP, and of SAP to the rest of the industry, noting the progress of BBD will be as good a reason to attend Sapphire as any. Even if it means yet another trip to Orlando.
April 2nd, 2008
SAP’s Succession Plans: Making Things Safe for Business ByDesign?
SAP executed the beginning of a well-orchestrated and otherwise somewhat boring (and boring is good) management transition with the much-expected elevation of co-CEO Leo Apotheker to the more important title of heir-apparent. In the process, Henning Kagermann assumed the title of retiree-in-waiting, and all was good with the world.
At least that’s what I thought until I got a call from a reporter, Renee Ferguson, who had the benefit of sitting in on a press conference where some rather significant information was discussed, to whit: Peter Zencke, a long-time board member, technology stalwart, and, most significantly, the father of SAP’s Business ByDesign mid-market, on-demand, SOA-based, model-driven, hoped-for volume market offering, is resigning at the end of the year.
This is more than just minor news, however minor SAP sought to play it. As someone who has watched SAP closely for 16-plus years, one of the constants about the company is that no idea — however meritorious — can go forward without executive sponsorship at the board level. This is of course true in many companies, but in SAP I have seen this scenario played out on numerous occasions, most recently in regards to Duet, which was one of Shai Agassi’s babies and which was left to drift around after his departure last spring, until finally everyone remembered what a good idea it was and some top level focus was brought back to bear on the opportunity.
Zencke’s departure doesn’t leave BBD completely adrift by any measure. Gerhard Oswald, another SAP old-timer and an executive board member (whose contract doesn’t expire for another 20 months) remains BBD’s board-level sponsor. And Hans-Peter Klaey is still in charge of the day-to-day tuning of the BBD machine, and has no plans to go anywhere any time soon.
But the problem with Zencke leaving at the end of the year is that it’s pretty clear that the fate of BBD will not be decided within the next eight months. There’s a lot on the table here: SAP has some aggressive plans for growth in revenue and customer count, and has placed a lot of the onus on BBD to make this happen. Meanwhile, BBD is experiencing some growing pains of its own: the problem of needing a sophisticated channel partner that can sell at the CEO level and be satisfied with a volume business (and volume margins) is turning out to be a harder nut to crack than anyone would have imagined. Then there’s the problem of having to figure out what to do with the larger companies that weren’t in the initial target market for BBD but who are clamoring for its ease of deployment and pricing model. And with that problem comes the issue of how do you deal with the possibility that BBD will cannibalize existing SAP Business Suite sales, thereby short-circuiting the SAP direct sales force and potentially lowering revenues per customer in the process.
In short, there’s a lot about BBD that remains unresolved, despite the enormous promise of the product. Having Zencke involved with BBD for another couple of years would, in my mind, help keep resources focused and board-level attention high. While Zencke’s departure doesn’t in any way doom BBD, the timing is, to be charitable, unfortunate. At a minimum, this makes next month’s Sapphire conference more than just a show-and-tell user conference. It’s going to be a great opportunity to prove that Zencke’s departure is as much of a non-event as it was positioned to be today. It’s something to look forward to.
March 25th, 2008
The Eternal Floppy Disk: The Icon that Never Dies
When was the last time you had a computer with a floppy disk drive? Five years? Six? If you’re a Mac user, it could be ten years or more. Safe to say the floppy disk has been a thing of the past for eons, at least in computing years. And, with its maximum storage capacity and reliability so very 20th century relative to the ubiquitous memory stick of today, there’s little to be nostalgic for when it comes to one of the PC’s less-than-enduring technologies.
So you may be surprised to know that there’s probably still a floppy disk inside your computer, one that you may use every day, even if, like most of us, you probably never realize you’re using it. Fact is, the floppy disk not only never really disappeared, it may be more ubiquitous today than it ever was — especially if you, like a few hundred million computers users worldwide, still live and work inside the Microsoft Office world.
The eternal floppy disk you could still be using every day is that floppy disk icon sitting somewhere in upper left hand corner of your Microsoft Word, Excel, or other desktop application. Look carefully and there it is: a floppy disk of the 3 ½ inch variety, first used in 1982 and probably not used by most of us this century in anything but this iconic, virtual form.
Its ubiquity and longevity extend well beyond the legacy of the Office applications that first used the floppy disk as the universal sign of “save.” Microsoft’s latest and coolest business application, Microsoft CRM Live, as on-line and 21st century as you’ll get from Microsoft, also uses a little floppy disk icon for saving your work, even though the actual physical location of that file could as likely be in Tutwila as it is in Timbuktu. It’s there in your Adobe reader and your Palm Desktop as well, not to mention in the Openoffice.org Word wannabe, at least according to Wikipedia.
To their credit, Google and Zoho, two of the other on-line Word wannabes, eschew the floppy disk save icon in favor of a Save button. A Save button? How ultra-modern, supercool can you get?
What does this say about the computing industry and its always hip and leading edge self-image? One thing for sure, the industry is a little more staid and a lot less transient than its own PR would have us believe. It also highlights how much we take the user interface for granted when we look at a computer screen: I pointed out the ubiquity of the floppy disk to a whole raft of Microsoft employees at a recent conference, and every one of them admitted they hadn’t realized they were accessing a twenty six-year old icon every time they tried to save a file.
So just remember that when you use that little floppy disk icon to save a file, you’re re-enacting a long-lost historical moment in the antediluvian culture of the personal computer. It’s kind of like dialing a phone number, or rolling down the window in your car, or going to the drive-in: somewhere, firmly lodged in our DNA, is a memory of real floppy disks, storing data, moving around the office via sneaker-net and, more often than we liked, getting folded, spindled, and mutilated in the process. The fact that so many of us still go through the virtual motions of saving to a floppy disk every day speaks volumes about how much that ritual embedded itself in our lives. And how much we’re not really paying attention to how far our desktop software has advanced, and how much it’s still mired in the deep, and forgettable, past.
March 14th, 2008
Microsoft’s Platform as a Service Plans: Putting the Pieces Together
Microsoft is getting into the platform as a service (PaaS) market, and doing so in a rather major, though stealthy way. It’s no secret that the company’s Software+Services strategy has a lot of PaaS capabilities, but putting together information from announcements and briefings at this week’s Dynamics Convergence conference, as well as a previous Office developer’s conference, reveals what looks like a very strong and impressive set of initiatives.
Microsoft is being a bit stealthy about pulling all its different offerings together into a concerted PaaS effort partly because the leading proponents inside the company are being a little conservative about how much they want to promote at this time. This conservatism is certainly in contrast to Salesforce.com’s almost excessive promotion of a PaaS capability that, in my mind, doesn’t even come close to what Microsoft is cooking up.
The other reason Microsoft is being a little stealthy about how it goes to market in PaaS is that there is still a fair amount of disconnect between the platform and Office sides and the Dynamics group: the former is pushing cloud formations of tools and generic “system services” like SQL Server, Sharepoint, Biztalk, Exchange, and the like, while the latter just announced the beginnings of a wave of applications-level services that will be hostable in the cloud and accessible through the same common development environments that underlie the rest of the Software+Services strategy. Though there is a common strategy, there seems to be no one to really stand up and articulate it: Stephen Elop, are you listening?
The services that are available in the cloud from the Dynamics side of the house are what are slated to make S+S an impressive PaaS offering, starting with hostable services from the major ERP offerings – AX and NAV in particular – as well as the CRM Live functionality that is slated to hit GA later this year.
Equally as interesting are the first of several new horizontal services that Dynamics is planning to offer in the cloud. The initial releases are a service that lets Dynamics customers automatically sell their excess inventory on Ebay, a payment processing service, and a search marketing service. But the plan for the next couple of years, which was shown to analysts under NDA, reveals a wide range of generic services that offer capabilities common to a broad range of industries and are well-positioned to leverage the existing services in NAV, AX, and CRM that will also be hostable in the cloud.
What this further refinement to Microsoft’s cloud computing strategy shows is a growing set of business processes that can be added to the more generic systems-level services that have been highlighted as part of the S+S campaign. This makes for a powerful five-prong thrust into cloud computing that I think will become a major contender in the next year or so. The five prongs are:
• Standard Microsoft develop and deploy tools that can target hybrid cloud and on-premise applications, well-known to millions of developers
• The Microsoft system software stack, available in the cloud or on-premise
• Office Business Applications (OBA), that can be deployed on premise or in the cloud, utilizing back-end services that are also available on-premise or in the cloud.
• Emerging Dynamics services, like Ebay and payment processing
• Existing AX and NAV services, now made hostable as well
This is in my mind a pretty comprehensive pallet for building applications that can exist in a hybrid on-premise and cloud model, and can be moved freely between the two deployment modes pretty much at will. It’s a far cry from the relatively limited capabilities of Salesforce.com’s Force.com today, and into the foreseeable future as well.
How extensive will this effort be? One of the more cautious members of the Dynamics team told me it will take a few years to get all of these moving parts to play nicely, but I think he’s being a little too conservative. From what I’ve heard about things like XRM, customer-built CRM-like applications that use Microsoft CRM as a development platform, as well as some of the functionality coming from the OBA and platform people, and the data center construction plans at Microsoft that are measured in kilowatts, Microsoft-in-the-cloud is already happening… well, this strategy is already happening, albeit without as focused a message as it probably deserves.
And wait until Yahoo gets added to the mix…..
March 13th, 2008
Microsoft Dynamics Revenues: Is More Really Less?
Back in the summer of 2006, Microsoft did something that I confess I became complacent about: The gang from Redmond stopped breaking out separate numbers for the Business Solutions group, which at the time was comprised of its flagship ERP products – Navision, Great Plains, and Axapta – plus the Solomon accounting package and a relatively new CRM product.
The reasons for going silent were not clear, nor were they particularly suspicious. But it turns out there may have been an ulterior motive after all: radio silence about earnings proved a convenient way to hide a serious fall-off in growth over the last 18 months.
At the time I last heard a real number about what is now called Dynamics, in July, 2006, the fiscal year had closed out at $919 million in revenues, a growth rate of 16 percent, a very nice showing for the second smallest business unit at Microsoft.
Later that year, in October 2006, I was given some more color for the new fiscal year from the then-manager of partner relations for Dynamics: the partner win rate was up 32 percent, and deal size was up 26 percent. As Dynamics is exclusively a partner-sold product line, this would seem to have been the definitive word on how the overall business was growing, and the impression was that business was accelerating.
And that basically ended the numbers game from Dynamics: from that point on, MBS/Dynamics’ revenues have been a cipher, with cryptic references to continued growth in billings, whatever they are, (in January 2007, Dynamics told me billings were up 19 percent), but not a real number with a dollar sign to be seen or heard anywhere.
Suddenly, a number with a dollar sign showed up at this week’s Dynamics user conference (For a summary of some of the announcements at the conference, see Ray Wang’s blog here). Kirill Tatarinov, the EVP in charge of Dynamics, reiterated in his keynote a number he had told analysts last October: Dynamics was now a $1 billion business. Billings, by the way, were up by 24 percent. (Ah, that mysterious billings number again.)
But instead of something to crow about, $1 billion – a growth rate of 8.8 percent – represents a pretty lousy number for a group that was growing in double digits only a year earlier. It’s even worse when you consider that during roughly the same period SAP grew 18 percent and Oracle grew 30 percent if you include its acquisitions, and an estimated 8.8 percent if you look at pure organic, non-acquisition-based growth. And don’t forget, that 8.8 percent growth includes what everyone at Dynamics calls the hockey puck growth curve for CRM, which, I was told, has been growing at 100 percent per year for the last two years. Which means if you want to understand how non-CRM growth is at Dynamics, it’s safe to either knock a few points off the overall number (7 percent? 6 percent?) or discount the heavy growth in CRM as a largely revenue neutral.
Even more importantly, the fall off in growth from 16 percent to less than 8 percent shows a Dynamics group that obviously hit a wall as fiscal 2006 came to a close, with its growth rate falling by half in a very precipitous manner. And it also highlights the fallacy of believing that a number called “billings” has anything to do with the real fiscal health of group.
While these numbers crave clarification, they may help explain in part the revolving door at virtually all echelons of the Dynamics group. Since the last full disclosure in July, 2006, Dynamics has had three different top managers, three marketing vice presidents, and seen the departure of a passel of mid-level managers (partner managers, marketing managers and the like), all of which more than gives the appearance of a lack of continuity in senior and middle management that cannot make things easy for anyone. I’m not implying these people were fired for some perceived malfeasance. Indeed, it may be more the case of insiders moving on the greener pastures, knowing what the full picture was really like.
The problems with growth may also explain the emphasis on the “commitment” to Dynamics that Steve Ballmer mentioned several times during his keynote, and that Tatarinov emphasized in an interview with a reporter during the conference. Commitment to a struggling business unit is always worth reiterating, otherwise it looks like things aren’t going as well as they may appear. And no one would want to be giving a false impression, would they?
March 5th, 2008
Making Web 2.0 Safe for the Enterprise: TOS à la PBWiki
Just in case you might be tempted to excuse Google for what some commentators just consider sloppy language (or over-reaching on my part) in its terms of service for its on-line apps, here’s an example of how to do right by accepted corporate standards for security and privacy: the terms of service for PB Wiki, an on-line wiki provider that apparently takes seriously what Google and its lawyers (or whoever wrote those sloppy, loophole-full TOS) seems to not give a hoot about.
What PBWiki does is very carefully define what happens to data that a company puts into a private wiki running on PBWiki, and the terms of service are rather unequivocal in that regard:
Company agrees that it will use Confidential Information solely for the purpose of providing the pbwiki Service with respect to the private wiki to which such Confidential Information relates. In addition, Company agrees that it will disclose Confidential Information only to (a) Company’s employees and contractors who have a need to know such Confidential Information for purposes of providing the pbwiki Service, (b) individuals who have the appropriate password for the relevant private wiki and (c) individuals to whom the Wiki Owner has authorized or directed Company to disclose Confidential Information.
Or, as PBWiki CEO David Weekly told me: “Your content is yours, we are not going to mess with it. We take confidentiality very seriously.”
Now, if you read the full TOS, the company does two things that at the outset may look like PBWiki is hedging on Weekly’s direct statement. The first is that the TOS starts first by defining what privacy and security guarantees are for a public wiki, which Weekly says really isn’t the main focus of the company anyway. In the User Submissions section, you’ll find the following language:
However, to enable Company to provide the pbwiki Service, you grant Company a worldwide and fully sub-licensable license to use, distribute, reproduce, modify, adapt, publish, translate, publicly perform, and publicly display your User Submissions (in whole or in part) in any format or medium now known or later developed.
Sounds like a wide open loophole, no? Well, yes and no, really. Yes insofar as if you’re using a public PBWiki service, the company can do anything it wants with your content. I really have no beef with that issue, it’s a free service and is not intended for enterprise use in any way.
But it’s really not a loophole that lets PBWiki pull a fast one on a user. Weekly explained that there’s another important reason why that loophole is there: to protect PBWiki from being sued for the secondary use of content that was posted on a free PBWiki service. If I take some content that someone else published on PBWiki and published it on my own, this clause effectively prevents the original content owner from suing PBWiki for copyright violation, as it is implied in the TOS that PBWiki can do anything it wants with the content, and therefore is not liable for uses that the original owner may not like. Fair enough.
The terms of service for private wikis also has some funny, lawyerly language, which goes like this:
In no event will the following information be considered Confidential Information under this Section 3: (a) any information that was publicly known prior to the time of disclosure to Company; (b) any information that becomes publicly known after disclosure to Company other than as a result of a breach of this Section 3 by Company; (c) any information that is already in the possession of Company at the time of disclosure to Company; or (d) any information that is independently developed by Company.
But this too has a reasonable explanation from Weekly. PBWiki wants to make sure that it doesn’t get sued for IP theft from a private wiki owner who thinks that something PBWiki is developing or selling violates the private owner’s IP rights. So Weekly’s lawyers put this clause in to make it clear that PBWiki is released from protecting the confidentiality of information it doesn’t consider confidential.
All in all, it’s a pretty decent TOS, and one that seems to serve the needs of enterprise users and PBWiki well. And, as Weekly puts it, it wasn’t that hard to do, once the decision had been made to actively protect enterprise wiki data. PBWiki wants to make money selling a superior wiki to companies like the Financial Times, Citi, AT&T and others, not sell advertising or services based on its customers’ content. “We don’t make money mining our users data,” Weekly points out.
Google, are you listening?
February 26th, 2008
SAP Takes A Swing at Oracle
SAP has been hinting and mentioning and otherwise suggesting that it is taking away customers from Oracle’s much vaunted Hyperion product line, and now it has issued a formal press release to that effect. While the press release talks about over 100 Oracle customers choosing SAP products over Hyperion, the backstory is perhaps even more interesting: SAP is starting to get aggressive about marketing against the ultimate marketing machine, Oracle, and that represents a significant shift in SAP’s position about how it positions itself in the market.
In my last conversation with Oracle about this subject, at the beginning of the month, they denied being aware of the loss of more than 100 Hyperion customers to SAP. And they added that they had seen a number of wins in the SAP customer base using Hyperion….Which makes this the kind of he said, she said argument that’s hard to resolve without a little more knowledge. SAP’s press release did mention seven companies by name, and SAP told me that they would have named more if they had permission from customers to do so. Having watched this story growing inside SAP for several months (it was first mentioned at the SAP Analyst Summit last December), and knowing how cautious (annoyingly so, at times) SAP is about this kind of competitive positioning, I’m going to give SAP the benefit of the doubt that they have done what they said. Does this represent a net gain of 100 customers over Oracle? That’s hard to know, for anyone, including SAP and Oracle. But the damage is there in the perception that the largely invulnerable Oracle has a chink in its armor.
As I said at the outset, what is even more important is that SAP is not only being aggressive but also boasting about it. And trying to hit Oracle where it hurts. After all, Hyperion is a major structural feature in the “surround SAP” strategy at Oracle, and to even hint — much less say outright — that the strategy isn’t hitting the mark is to play Oracle’s hardball game on its own turf. It’s supposed to hurt, and it probably does.
I’m expecting a retaliatory move from Oracle any moment, so don’t think this matter is settled. But it highlights not only what the stakes in the rivalry between these two sworn enemies are but also the value of analytics and performance management in the larger enterprise software marketplace. Both companies — as well as IBM and Microsoft — have made significant acquisitions and investments in analytics, performance management, business intelligence, and the like, and every one of these companies is now in the position of having to make good on their investments in a big big way. What’s interesting about SAP’s Hyperion wins is that they had nothing to do with Business Objects technology — all of them were recorded before the acquisition was complete. So the folks at SAP are promising an even stronger position vis-a-vis Oracle as the BO product line starts to make its way into the hands of SAP’s sales force.
How this will all end with respect to Oracle’s and SAP’s market position is anyone’s guess at this point. But I think it’s healthy to see a little balance restored in the marketplace of ideas: the onus is now on Oracle to prove that it’s gaining ground on SAP, and I can’t wait to see what they come up with. Not just because it provides fodder for this and many other blogs, but because it charges the companies’ respective customer bases with a little skepticism and some healthy doubt about how one-sided any part of the enterprise software market is at any given time. The rivalry between SAP and Oracle is complex, nuanced, and constantly evolving. Today we saw another example of how this statement becomes more true with every day.
February 25th, 2008
SAP and Microsoft: No Marriage Needed
The Sunday New York Times started a little blogo-versy going about whether Microsoft should have made an offer to buy SAP instead of Yahoo. It’s an interesting thought, if revisiting history is your idea of interesting. But if you’re living in the present, as many of my fellow bloggers (Vinnie Mirchandani here, Dan Farber here, have pointed out, it’s kind of a silly idea.
Of course, it’s also silly to give Micheal Cusumano as much credit for foresight and perspective as he is given by the Times. He holds a bully pulpit at MIT, and, as the Times’ writer Randall Stross accurately points out, has written “several books about the software industry”. But he’s hardly the oracle of enterprise software that Stross would have us believe he is. I’ve read two of his books, or at least tried to. And while one of them, “Platform Leadership”, is an important addition to understanding the role of ecosystems in the enterprise space, the other, “Japan’s Software Factories”, is a monument to misunderstanding the software market and what drives innovation, insofar as Cusumano postulates that Japanese savoir faire will create a global software industry that will dominate software the way Toyota and Honda dominate the automobile industry. The success of the book’s premise, published in 1991, speaks for itself.
I think Cusumano could have come up with a better idea, taken from Platform Leadership . If Microsoft + SAP is such a good idea (and I think it is, to a degree) then how about skipping the M&A chaos and go for a much closer platform partnership?
Here’s what could happen without the disruption, regulatory scrutiny, and massive executive bandwidth drain that an M&A would require. There would still be some swapping of assets, but no big, ugly, expensive merger:
SAP and Microsoft formally join forces in enterprise software, with SAP endorsing .NET and giving it a prominent position in NetWeaver (calling it .NETWeaver), and, of course, even further promoting SQL Server as an Oracle DBMS-killer in the SAP customer base. Microsoft in turn would take over SAP’s mid-market, on-premise ERP offerings — BusinessOne and All-in-One — while Business ByDesign, the new on-demand ERP system from SAP, would remain SAP’s and become a joint offering that leveraged Microsoft’s extensive channel, a lack of which is at present looking like a problem for SAP’s BBD plans. Meanwhile, SAP would infuse Microsoft with much-needed business process and vertical industry knowledge, and Microsoft would help SAP build the volume, SMB business it has promised to its shareholders.
Guess what that would do to the insomnia and Tums index over at Oracle? And IBM, while we’re at it? And Google too?
I put Google into the list because this fantasy doesn’t have to be taken off the table if Microsoft succeeds in buying Yahoo. Yahoo and SAP, as I wrote earlier, have eyed each other more than once, and the possibilities of a volume, low-end, marketplace and delivery channel for SAP business process knowledge and services could make Yahoo an even greater incentive for bringing SAP and Microsoft closer together.
Okay, so I admit this is farfetched, and just a little off the wall. But it’s so much less crazy than suggesting Microsoft revisit buying SAP, or that the Japanese can rule enterprise software development, for that matter, that I had to weigh in. Again. SAP and Microsoft would do well to get closer, I think they have more in common — in terms of culture, enemies and friends — than they sometimes realize. This could be the start of a beautiful friendship…….
February 18th, 2008
IDS Scheer: Jazzing up BPM
I spent a quick but very interesting day at the annual user conference for IDS Scheer, the progenitors of the Aris BPM solution. In case you hadn’t heard of it, Aris holds the singular distinction of being included in the partner roadmaps of rivals SAP, Oracle, and Microsoft, all without hell freezing over or any other such cataclysmic event taking place.
And what I learned at the conference, other than the fact that Aris is really trying hard to make the world of BPM safe for the process experts on whose shoulders everything rides, is the following:
Aris and the BPM concepts it’s based on have a lot of implications for pretty much every hot button in the enterprise market today: GRC, BI/analytics and performance management, upgrades, SOA. It boils down to the simple fact that all of the above don’t mean a hill of beans if the processes that are being measured, upgraded, tested or linked together in a service architecture don’t themselves make sense. All roads lead to BPM, and few understand that better than IDS Scheer.
Despite the point above, user organizations still have a long way to go in terms of realizing the benefits of leading with BPM. That’s because most process people have spent their careers learning the ropes of their jobs and the processes that govern them largely by rote. Rote is hard to translate into formal processes by people who didn’t formally learn them in the first place. That means there’s both a lot of challenges and a lot of growth potential in the cards for IDS Scheer.
Greatly helping the cause for IDS Scheer is its unparalleled position at the crossroads of the enterprise software market today. If you dig under the covers in SAP’s Business ByDesign, Oracle’s Fusion, and some of the BPM capabilities in Microsoft’s Biztalk server, you’ll find Aris. Even if you’d be hard-pressed to find any mention of Aris in most of these company’s marketing materials. Which means the industry’s top vendors are counting on IDS Scheer to help transition those rote learned business processes into something reusable a la BPM, preferably without admitting whose software is really in charge.
Founder August-Wilhelm Scheer plays a pretty mean baritone sax, and presents an extremely cogent argument about the relationship between jazz, software, and BPM. Scheer used the acronym APRIL to describe the relationship (which Tony Baer describes in detail here). Turns out that if you can play Nat Adderley and Duke Ellington with a pick-up quartet, you’re well on your way to becoming a BPM expert. That’s is no excuse for running around singing “It don’t mean a thing if it ain’t got that BPM��, but the sentiment is a valid one. And, listening to Scheer play jazz and talk about APRIL made for one of the more interesting luncheon presentations I’ve ever seen.
Okay, so the bar is pretty low for interesting luncheon presentations, but nonetheless….
February 15th, 2008
Dark Clouds and Silver Linings
Cloud computing is getting hot, as in hot promises, hot press releases, and some hot contentions about who’s platform is going to win the latest battleground in on-demand/SaaS. The answer my friend, is largely blowing in the wind. But not for long….
To be sure, there’s a never-ending set of promises and a growing set of expectations about how fast and how readily enterprise software – real enterprise software, not toys, relatively simple online shopping systems, and other consumer playgrounds – can be built to run in the cloud, and how fast some vendor’s cloud will start to show the critical mass that is needed to say that enterprise cloud computing has arrived. Problems are looming as the model confronts reality. But this market is clearly poised to take off: the question is more when than if.
Leading this clouded field is Salesforce.com, which wants to upset the world of software and services with its Force.com vision, based on an orthodox vision of cloud computing as a pure play, and predicated on the premise that being a disruptor of the common wisdom about application development and provisioning might be enough to keep its number one position alive.
Contending for the role of upsetting the upsetter is Microsoft, which is moving forward with a grander vision to make services ubiquitous wherever the customer wants them: in the cloud, on the desktop, in the server. Or on Yahoo, if they get their way in what looks like a classic takeover battle that I believe will resolve itself in Microsoft’s favor. Microsoft’s vision, along with the growing success of its CRM offering, which has a growing on-demand following, is clearly making Salesforce.com nervous. And defensive, which isn’t a position that I think Salesforce.com plays very well.
Meanwhile, there’s some interesting new contenders, in particular Workday, which has garnered headlines with a well-considered, albeit less-than-fully-baked, vision of offering on-demand integration through the acquisition of Cape Clear. The idea of ERP in the cloud, along with integration in the cloud, looks good on paper, but, at least for Workday, it’s going to take some time to really make this vision a reality.
What ties all these offerings together is the notion that customers don’t want to muck around with the management of complex software systems any more than the average driver wants to be a mechanic, or, for that matter, a civil engineer or urban planner. All great notions, which if realized, threaten to bring us back to the good old days of time-sharing, which depended on large, centralized blocks of computers doing the heavy lifting for users scattered far and wide. The line going around these days is that the world only needs five computers – again. As long as they are in the cloud.
Where do these visions come up short? Salesforce.com’s vision of disruption requires learning a new development language, Apex, which I’m assured is very easy and intuitive, just like all new development languages that, despite their ease of use and intuitive nature, fight an uphill battle for adoption by programmers who are just too enamored of the dev tools they know best to want to drop everything and learn something new.
And Salesforce.com’s vision requires a little patience: there’s just not a lot of critical mass in Salesforce.com’s infrastructure. As of last month, there was a total of 1.6 million lines of code written in Apex, which sounds rather miniscule by enterprise software standards, even if, as Salesforce.com contends, there’s a lot efficiency in the language. There are also a tiny amount of services available to be accessed, based on the company’s CRM core. It’s an infrastructure in waiting, more than anything else.
To be fair, that pretty much summarizes my other two examples. Microsoft’s status as a cloud player has been widely touted by the company, but there’s a huge amount of work — much of it in marketing and messaging – to be done before its offering could be said to compete directly with what Salesforce.com is up to. That’s how it is with clouds, more wispy and ephemeral than real sometimes.
But Microsoft is Microsoft, with millions of developers, and a very robust set of services, both at the system level – a la Sharepoint, Biztalk, Exchange, etc. – as well as at the business process level – as in CRM, much of the Dynamics family of enterprise apps, and all that fun capability lying around in Office – that, are now positioned in the cloud. With all this capability programmable in the cloud or on premise using Visual Studio, it’s a pretty robust offering.
This hybrid model that Microsoft is supporting – the whatever, wherever approach to the cloud vs. on premise debate – makes a tremendous amount of sense in my mind. Partly because choice is what it’s all about, and partly because orthodox approaches to on-demand are largely predicated on a false perception of a rational decision-making process when it comes to deployment options.
That so-called rational process is a cornerstone of many a disruptor’s strategy, Salesforce.com among them. But being right sometimes isn’t enough, sometimes being the easiest option – not even the cheapest, just the easiest – gets a lot of institutional inertia moving in its favor. That’s Microsoft’s incumbent advantage at work, and Salesforce.com has to worry about what happens when cloud computing a la Microsoft becomes available at your fingertips.
Which brings us somewhat disjointedly to Workday. I like their moxie, mostly because they have a broader vision of what a vendor can offer in the cloud than Salesforce.com’s CRM-only strategy. I also like the idea that the Cape Clear acquisition can bring application integration to the cloud. This ability to leverage interconnectivity – and its cost – across multiple customers is a hugely important part of the on-demand story.
When done right – GT Nexus is my favorite example – many-to-many connectivity is ideal for hosting in the cloud. An integration hub in the cloud lends a cost-effectiveness and level of productivity to complex processes that depend on lots of connectivity – like GT Nexus’ global trade logistics management – that simply cannot be done on premise.
Workday’s Cape Clear vision clearly lies in this direction, even if it’s not actually available today. Right now, a customer running HR in a multi-tenant cloud using Workday has to have a dedicated instance of Cape Clear in the cloud to run its integration requirements – there’s no multi-tenancy in Cape Clear today. This leaves the leveragability of Cape Clear a future capability, and one they recognize as important, but not ready for prime time quite yet. Wait a year.
While there are many other cloud contenders in the market today, I think there aren’t really any that have surmounted these essential problems. Either the vision is there but the execution lacks (SAP and its Business ByDesign is the category winner here), or the choices are more difficult than they should be (Salesforce.com), or there are still massive holes (like this one from my fellow blogger Phil Wainewright) that need to be filled in (Everyone). But don’t be confused by this pessimistic-sounding ending. Cloud computing is the future of the industry, plain and simple. We just have to sort out what kind of future it’s going to be.
Joshua Greenbaum's opinions on enterprise software have annoyed enough vendors that he now checks under the hood of his PC every morning before he boots up. For disclosures of Joshua's industry affiliations, click here.
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