SAP to take on SaaS - The Future is Now

 

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

 

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.

 

Obama's Tax On Outsourcing

 

Stephanie Overby has written an article for CIO.com entitled “The Truth About Obama’s “Tax on Outsourcing” in an attempt to clear up all the questions that were raised when the President attacked the Tax Code for creating loopholes if a company creates a job overseas. Overby freely admits that she can’t clear up all the mistaken beliefs because the White House may not have been as clear about its objectives as was needed. In addition to identifying the five (5) misconceptions that are circulating, she also provides some necessary definitions of terms which help the reader to better understand the issues and the real targets of any proposed legislation. Those five areas in question are as follows:

        I.            Is “Outsourcing” the same as “Offshoring”?

a.       Outsourcing means contracting to any third party. This could be to a third party within the US.

b.      Offshoring means a NON-US location.

c.       The distinction to be made is: work being done at the US company’s own foreign facility called a “Captive Center”, versus offshore work being done by a third party, in essence offshore outsourcing.

      II.            Will the tax apply to “Offshore Outsourcing”?

a.       This was the point that was not made clear initially by the administration. Overby helps us out and states that the Obama plan will only apply to US companies with “Captive Centers”.

b.      So this will affect the IT Vendors such as IBM Global Services and Accenture AND ALSO Non-IT Vendor companies that maintain a presence abroad.

    III.            Will India’s IT Services Industry suffer the most from the proposed taxation?

a.       No. IT Vendors such as Wipro and Tata will not be affected. The tax is aimed at US Multi-National companies conducting operations in foreign lands.

    IV.            Will this taxation create more US jobs?

a.       Unlikely.

b.      There has been no indication that US companies would lessen their foreign presence due to the tax. In fact most multi-nationals set up shop overseas to access cheaper labor or new markets”.

c.       Such a tax could cause MORE offshoring to offset any increase in taxation. In fact US IT Vendors may chose to relocate entirely overseas.

      V.            Is this protectionist tax policy certain to pass into law?

a.      Daniel Masur, an outsourcing attorney and partner in the Washington, D.C. office of Mayer Brown states, "It would be viewed by the rest of the world as protectionist and would trigger a wave of retaliatory legislation, and it would be bad for American business."

b.      Masur continues and states, “However, given Congress's propensity in recent months to write major legislation over a weekend and Congress's preoccupation with populist sound bites, such a provision could be buried in the next stimulus or budget bill".

 

IBM and SAP vs. Oracle and Sun: Let the Speculation Begin

 

In light of the recent mega-acquisition of Sun Microsystems by IT titan Oracle, the rumor mill has begun to turn. As a follow-on to my posting in this Blog last week dated May 11, 2009 entitled Oracle Purchase of Sun: “A Game Changer”, I have found two article’s that my readers may find of interest. Here is a brief synopsis of each:

An IBM marriage to SAP:

CNNMoney.com posted a Fortune Magazine article from their Tech Daily by senior writer Jon Fortt entitled IBM-SAP combo not in the cards – exec. In it CEO Sam Palmisano’s spokesman lays out why such an acquisition is unlikely. I cannot help my flair for the melodramatic and immediately what comes to mind is that old line from some film noir movie “Your lips say no, but your eyes says yes”. Some of the points for such a purchase are:

  • IBM’s Websphere, DB2, and Cognos provide the foundation for SAP’s business apps.
  • IBM is one of the few (Google and Microsoft notwithstanding) that could afford the $50 billion  SAP market value plus a premium.
  • Such a combination could in essence provide all the software an enterprise could need.
  • Others (e.g. Oracle / Sun) have embarked on this portfolio strategy.

IBM’s retort to the above is a recognition to tread softly as not to upset their existing partnership relations. I’m afraid I’m reminded of yet another famous line (with apologies to the Shakespearean aficionados – if I may be allowed a bit of poetic license) Methinks he doth protest too much. { The original line "The lady doth protest too much, methinks” is from Hamlet Act III Scene II. Queen Gertrude, not realizing that Hamlet has staged this play within a play to trap her and her husband whom Hamlet suspects of having murdered his father, speaks these famous words to her son, Prince Hamlet.  See answers at yahoo.com --- but I digress}

Oracle could play the old IBM trick: 

To continue on with the “speculation” theme of this posting, Rob Enderle examines  the aforementioned mega-acquisition and comes up with an interesting strategy in his article in InternetNews.com How Oracle-Sun Could Use Google to Become the New IBM. Apparently, back in the 60’s when IBM was king, IBM locked in its customer base by bundling software with the lease / purchase of its hardware. Enderle posits that Oracle stand this strategy on its head and proposes that Oracle bundle its software and services with the Sun Hardware and this time it is the hardware that is the free commodity (or close to it) and not the software as was the case for IBM in the 60’s. Enderle has an analysis on UNIX and Linux and how Java is “a bone fide platform in its own right”, but I will have to leave it to you to grasp the nuance, since I cannot. The missing element to this strategy is the desktop component. Enderle closes the loop in this strategy with an Oracle – Google alliance (if this is possible) and has Oracle emerge as the new IBM. Such an alliance seems improbable, but worth the mention.

 

 

Oracle Purchase of Sun: "A Game Changer"

 

In late April 2009 Oracle announced its $7.4 Billion purchase of Sun Microsystems. As you can imagine, this deal will have a significant impact on the IT industry, but just how much of an impact remains to be seen. Invariably acquisitions of this size and nature will be examined for any possible anti-trust issues such as anti-competitive influences on the market-place. This process by regulators will be done here and abroad and the end-result may be the necessity to sell-off some assets of the newly combined business. If you are looking for an excellent in-depth analysis of this deal I highly recommend Bruce Guptill’s article in SandHill.com The Impact of Oracle – Sun. In it Guptill sees a totally changed IT Industry with Oracle emerging as a “portfolio” company with the following abilities and offerings:

·         Hardware

·         OS

·         Middleware

·         Applications

·         Development tools

·         Databases

·         Production environments for Hosting

·         SaaS

·         On-premise subscription services; and

·         Consulting solutions (vertical and horizontal).

 

Although Sun is primarily a hardware vendor, Guptill sees this as a play for Sun’s software capability. He quotes Oracle’s CEO, Larry Ellison, “Sun's Java programming language and Solaris operating system were the main attractions for Oracle”; and specifically as regards Java, “the single most important software asset we have ever acquired.”  Guptill believes this asset alone places Oracle at the epicenter of the industry. Sun has also played a key role in open source by opening Java and Solaris to developers and this should give Oracle the ability to influence such software development especially in the following specific vertical markets: financial services, government, academia, and high-performance computing. Lest we forget the hardware business, Sun’s server and storage revenue have been estimated at an annual amount of $7 billion and $9 billion respectively. All of the Sun components, from software to hardware, should provide Oracle the foundation to build its SaaS and Cloud Computing services.

Can Oracle successfully integrate the services and hardware businesses that come with the purchase of Sun? Guptill tells us to be on the lookout for Oracle Management to sell of some of these hardware lines, or alternatively as mentioned above, regulators may force Oracle to divest itself of some of these assets.

Guptill concludes his article with a brief description of the impact such a purchase has on several stakeholders and competitors. For example:

For Sun: This probably means the demise of Sun CEO Jonathan Schwartz who had pushed for the IBM acquisition of Sun rather than Oracle. Sun Chairman, Scott McNealy, although a friend of Larry Ellison, will probably go as well since a ship needs only one captain.

For MySQL: It should fit nicely into the Oracle family as a web server database engine.

For IBM: This was a lost opportunity at more profits and the ability to rein in Oracle competition. Also Sun’s capabilities would have enhanced IBM’s Cloud Computing efforts, but now this advantage goes to Oracle.

For SAP: Guptill sees the advantage going to SAP in the interim while Oracle’s sales teams learn how to integrate Sun products into the Oracle family. I am not so sure I agree. In light of SAP’s recent sales history any advantage may be illusory. See SandHill.com Software News Summary article SAP Struggles. The title tells it all.

For Hardware Vendors: For those that have partnered with Oracle in the past the loss could be significant.

For Users: Future investments in Sun hardware may be put on hold as the install base waits for reassurances on the direction of the server and storage lines of business.

Never a dull moment.

 

The Mobile Revolution Is Upon Us

 

Well folks, I’m out of breath. I was minding my own business just cruising the net for interesting stories and then all of a sudden I stumbled upon a treasure trove of fundamental information. It all began when I came across an article by Michelle Megna entitled What’s Behind the iPhone Success Story? and read in the first sentence that Apple sold 3.8 million iPhones in the last quarter (that’s three months for the non-accountants) for a $1.5 billion boost to sales revenue during the worst recession we’ve had in approximately 70 years. I was interested to read Megna’s reporting of the reasons behind this success story – 1) the too numerous to list apps, 2) the interconnectivity with the Mac for ease of data transfer, 3) the consumer preference of the iPhone to the Netbook. You’ll have to read further down into the article before you come across the astounding sales numbers for RIM’s Blackberry devices for the comparable time period. And so the story ends – or so I thought.

So I’m in this smartphone / mobility state of mind when I come across Andrew Dod’s article entitled Strategic Considerations for “Going Mobile”. Dod’s article takes this topic into the stratosphere with countless references to vital information. He begins by calling our attention to the old days and another revolution, 1994 that is and modems firing at 14.4 bps. Companies quickly realized that the paradigm had shifted and they needed to be a part of the internet and figure out how to compete and make money.   With over 4 billion mobile devices in existence today the same questions asked in 1994 are being asked again:

·         How do we get our business on mobile?

·         How can we easily create and distribute content on mobile?

·         How do we integrate mobile into our business operations?

·         How do we ensure effective adoption of our mobile applications?

·         How do we extend and grow our business on mobile?

 

Dod cautions us that mobile is not just for marketing but can help the enterprise achieve its core business objectives. With the excess of mobile devices out there Dod declares that content should be upper most in the mind of the business strategist to address the“significant variations in operating systems, screen sizes, display resolution, processing speed, memory, and performance.” Dod lays out the three major types of content, each with its own unique character and requirements to fit into the business strategy:

·         Text messaging SMS (short message service) delivers simple content but is limited in how much it can deliver - only 160 characters.

 

·         Mobile Web (WAP): This is where your smartphone uses WAP (wireless application protocol) to access Web sites. The WAP browser is simplified for your handheld device but is fully interactive. Use of the WAP browser is different from a PC browser. Web sites usually display clumsily on the smaller mobile screens. It is better to deliver tailored offerings with a limited portion of the content and functionality available at the full Web site.

 

·         Mobile Applications: Since mobile devices support numerous platforms, rich media applications have become available enabling a much more vibrant user experience with video and audio. This allows for content developed specifically for the mobile device. Dod suggests that the smart business treats the mobile medium as its own medium, rather than an off-shoot of online.

Dod’s emphasis throughout his article is the importance of content when delivering it to a mobile device. He has devised a list of what he calls the ten C’s of mobile strategies. It is really quite ingenious. I could not do it justice in this blog posting and so I highly recommend his article to all my readers.

Continuing on with this treasure trove of information, many of my readers may remember my Blog posting last August 4, 2008 entitled Mobile Computing: A Unified Platform Is Essential As Technologies Converge regarding Jim Hemmer’s “Mobile Bang Theory”. Just to refresh your recollection Hemmer’s theory simply states that one action from a mobile device can be the catalyst for many other internal, as well as external, business reactions yielding significant ROI. Well Hemmer is back with a follow up to his Mobile Bang Theory entitled The Mobile Bang Theory – Part II: Let the ROI Sparks Fly. He sees the global economic meltdown as an aid in bringing cost containment more into focus for the enterprise and thus putting mobility projects on the top of the “to do” list for IT managers.

Hemmer’s take on the current mobile revolution is quite fascinating. He really sees a BIG PICTURE when he describes the inherent benefits of mobility. His vision combines multiple systems and devices and networks and processes and people and the end result is faster ROI. He emphasizes this faster ROI by explaining that the global recession provides opportunities in the sales cycle to impress your customers. He takes this lesson from the former president of Scandinavian Airlines, Jan Carlzon, who turned the company around during a deep recession. As Carlzon explained each customer interaction was a “moment of truth” for the company to impress the customer. Hemmer takes the moment of truth approach and refines it to fit today’s economic environment. These moments of truth become “Trigger Points” where the sale can be won or lost based on the timely and relevant use of data that can be brought to bear via mobile devices.

To be sure, mobility is not solely for the sales cycle. Hemmer’s article is full of other real examples of the use and benefits to the enterprise deploying the latest mobility devices and applications. He presents examples of mobility’s use for field service operations and also the productivity gains for IT Management itself as data can be retrieved real time to provide visibility into the operations. Jim Hemmer’s article is a nice companion piece to Andrew Dod’s article. And as Andrew Dod stated in his article:

“Mobile is here, now, and only going to dwarf the first Internet wave due to its ubiquity, essentialness, convenience, and proximity to nearly all we do.”

 

 

No Slowdown in Offshoring for the Foreseeable Future

 

Orla O’Sullivan reports for Network Computing in an article entitled, Obama Not Impeding Offshoring, TATA Says, that the campaign pledge to slow the flow of work to cheaper labor markets, either by directly employing people abroad or by engaging third-party service providers based outside of the U.S. has not occurred and in fact may be on the upswing. O’Sullivan discussed this matter with one of India’s leading providers of offshoring services, TATA Consultancy Services.

A large portion of TATA’s services are to the financial services industry, and this segment is growing with actual IT Operations taking place as banks and other financial services firms send more and more work offshore. O’Sullivan further reports that back in October of 2008 TATA purchased Citigroup Global Services Limited, Citi’s Indian offshoring services unit providing business process outsourcing. TATA’s next step is to sell its’ banking software products in the US.

As Raymond Strecker, global consulting practice head for TATA North America, describes this current spurt of growth:

“Our infrastructure business is growing the fastest. That is, inside the glass house, or data center: remote server administration, server repair, network monitoring, and various infrastructure services.”

It appears that as banks find the need to cut costs in this current global economic slowdown, that more regulations will just force these institutions to become more creative. If a bank or financial services firm finds it uncomfortable to have operations offshore, there doesn’t seem to be any prohibition from employing onshore service providers who do have operations offshore and thus indirectly reaping the benefits of cost savings.

 

How To Create A Shrinkwrap Agreement

 

Last year, April 19, 2008, I posted an article entitled Is a Clickwrap Agreement Enforceable?. The article defined the terms and gave a general understanding of where we encounter these types of agreements. My editorial comment dealt with my “natural aversion” to the non-negotiability of such agreements. Based on the number of hits the article receives, it is easy to discern the interest in the topic and it seems appropriate at this time to augment the article with a “How To” approach. During the course of my research, a colleague of mine from my days at SAP, Patricia A. Dalki, discussed her views on the subject. Patricia has done the heavy lifting on researching the “How To” approach when drafting  such an agreement and has kindly shared her thoughts on the subject with me. Her research included an article by David L. Hayes of Fenwick & West LLP entitled, The Enforceability of Shrinkwrap License Agreements On-Line and Off-Line and she also cited an article I had included in my original posting mentioned above by Jason Haislmaier entitled, How Do I Build an Enforceable Online Agreement? – Not (Always) the Way SalesForce.com or Google Would.

With the kind permission of my friend and colleague, Patricia A. Dalki, here are some tips how to create an enforceable on-line agreement:

 1.  Record Evidence of User Acceptance

  • Record evidence of user acceptance and the formation of each on-line agreement using a consistent, auditable process.
  • By procedure – maintain evidence that the only way to access the service or product being offered is to scroll through terms and click “I accept” – user must have accepted.
  • To the extent possible, keep records of time, date, and source of acceptance.

2.  Require Acceptance Before Delivery of Services or Payment

  • Require acceptance before payment or delivery of the services.

3.  Make Rejection Clear and Simple

  • Provide a clear, simple method for customers to reject the contract.
  • Allow users to exit the process at any time.
  • Do not require the customer to take additional steps or expend effort/money to reject the product or service.

4.  Make Assent Unambiguous

  • Secure an affirmative, unambiguous manifestation of assent to the agreement from the customer.
  • The more the customer has to do, the better.
  • Examples include:

a.         Mouse click “I accept” or “I agree” button;
b.        Type “I agree” and submit (speed-bump for users, but more deliberate);
c.        “I accept” checkbox next to each provision, especially with an unusual or onerous provision; and
d.        Offer alternative “I don’t agree” option with an explanation that the user cannot use or access the product or service.

5.  Condition Use on Acceptance (covered in the introductory paragraph)

  • Expressly state the user’s access to or use of the product or service is subject to these terms.
  • Expressly state that you will not provide the product or service except pursuant to these terms.

6.  Provide Notice of All Terms

  •  Draw attention to the on-line agreement.
  •  Make sure the customer sees it, e.g. no “below the fold,” small print, or hidden text.
  •  Place the “Accept” option at the end of all terms.
  •  Require the user to scroll though all terms before making the acceptance action.
  •  Consider requiring the user to check an “ I accept” box for each provision, especially for an unusual or onerous provision.
  • No link to terms or scroll boxes
  • Advise user to print and keep a copy of the agreement.

 

Will Microsoft Emerge from the Economic Meltdown a Winner?

 

If you read Mike Elgan’s article in InternetNews.com, Get Ready for Microsoft’s Big Comeback, you will see that the answer is yes. If the Tech Industry doesn’t have any bailout money foisted upon it, much unlike our banking industry, then this market will do what all markets do in a capitalistic system, i.e. only the strong will survive. That is really what an efficient marketplace does with its competitors. But enough about me griping about the impending fascist state of this administration and in particular the all powerful Timothy Geithner. Let’s get back to Microsoft. Read Elgan’s article. He foresees the impending shakeout in the Tech industry and recognizes that the weak players will fade away and some marginal players will be swallowed up by bigger players. He also takes note of the past miscues in Microsoft’s marketing, the ever unpopular VISTA operating system, and its’ much ballyhooed legal struggles.

Although he mentions it in the subtitle to his article, it takes Elgan a while to get to the pile of cash that Microsoft has been hording. So let’s deal with the 800 pound gorilla in the room first before we get to the nuances of Windows 7 and Microsoft’s plan to leverage it and reclaim its’ reputation and continue to dominate the marketplace. Cash is King. Microsoft has an estimated $20 billion in cash on hand just waiting to exploit a downturn in the market. As for survival and emerging as the dominate player after the current economic struggle, see paragraph one above regarding “only the strong will survive”. Elgan posits that Microsoft could buy Yahoo, Facebook, Twitter, and Hulu all in the same year. He doesn’t predict such a sweeping acquisition scheme, but he does recognize the coming consolidation in the industry and that the cash-rich enterprises will act in their best interests and flourish.

And now for the nuances to their reemergence, Elgan sees Windows 7 as the vehicle Microsoft will use to recapture the glory days of the pre-1990’s debacles. It is not so much a four-step approach; but rather Elgan sees four categories where Windows 7 will dominate:

1.       Netbooks: Mobile computing will kick into high gear. As Windows XP eventually will fade into the sunset, Windows 7 Operating System will be the operating system of choice and not the much beleaguered VISTA.

 

2.       Touch Screens: The transition from mouse, icon, and menu to the mouseless touch will be slow, but Windows 7 is poised to take advantage when the switch gets into high gear.

 

3.       Gaming: Growth in this sector will be exponential. Four categories to watch are i) console, ii) cell phones, iii) internet, and iv) desk top. Microsoft will dominate in 3 of the 4 categories, bowing only to Apple in the cell phone arena.

 

4.       64-bit Computing: Office 11 will ship next year in a 64 bit version and Windows 7 will provide the power boost needed for fast business computing.

 

Gartner: 2009 IT Spending Revised Downward

Well as the first quarter ends, the staff at CIO Update report on the latest analysis from Gartner regarding the direction of global IT Spending in their article Gartner Calls for Grim Spending Contraction. I guess you can tell from the title which direction IT Spending will go. It appears that the projection for 2009 based on the 1st quarter results is a decline of 3.7% in IT Spending this year.

The current global economic recession is affecting not only software sales but also hardware sales, IT Services, and telecommunications and this deterioration in sales will surpass the 2001 IT Industry downturn. The contraction in IT Spending is global; however the US and Western Europe will be hardest hit. Global Gross Domestic Product (“GDP”) is forecast to contract by 1.2% which is the largest hit to the global economy since 1982. Government stimulus packages will not have any short-term affect and IT Spending is not expected to improve until global financial markets stabilize.

The report summarizes the expected end results due to this downturn as follows:

  • "The slowdown in IT spending will reduce new market penetration and will slow replacement activity.
  • The impact of reduced new penetration will be more strongly felt in emerging markets, while the impact of reduced replacement activity will be more strongly felt in mature markets.
  • Consumers and businesses will continue switching to lower-cost products, extending the life of existing devices and extending their current contracts and purchasing agreements."