Software strategies and more…

I have been thinking of a hybrid cloud for a while.

Over the past several years it was my opinion that certain technologies made sense to offer as a SaaS business model. Tried and true IT services such as datacentre, processing power, storage, application hosting etc. allowed for businesses of all sizes to access infrastructure or platform technologies in a fairly vanilla format to scale their IT capabilities at the rate of business need rather than and invest and wait or wait and invest approach.

Now it occurs to me that many mid and large organizations are better off utilizing a ‘hybrid cloud’ architecture to meet the needs of their employees, business processes and the extended business. This hybrid cloud focuses more on the client side applications and business processes. Yet this model is far from simple.

One article I recommend reading is by Vanessa Alvarez and is called “Management Tools will be the Cloud Glue”. In short, the article talks about new management tools that utilize web and open source tools to address the different workloads and functions that businesses need as their data, applications and business processes – that are enabled by IT travel across mainframe, client/server, and SaaS/PaaS/IaaS models – and make these visible to the IT department. Interesting companies doing this include CloudSwitch , enStratus, and Intelliden (now part of IBM).

Another by Charles Babcock is “Hybrid Clouds Floating to Enterprise Forefront” . In his InformationWeek article Babcock also talks about the challenge of adopting infrastructure and platform as a Server tools while also addressing governance and security requirements. Again the theme here is the need of more complex businesses to manage their data and ensure that custom processes are effectively implemented across the business – whether this is on-premises, hosted, or integrated with a pure cloud solution.

Both of these articles touch on the needs of more mature organizations and their challenge to combine technology that has been customized to meet existing business processes with the scale and availability of cloud services. It has been my opinion, given my experience in the ERP space as an analyst and product manager for Microsoft Dynamics, that partners and ISVs would be well positioned to offer line of business applications as a service. This would allow for organizations that had a stable core ERP (finance, operations, supply chain, etc) environment to implement and grow in a more ‘dynamic’ fashion.

Yet, as I continue to think about why this has been slow to happen it occurs to me these partners and ISVs must still struggling with multitenancy issues. In other words, the line of business processes that I assumed would naturally lend themselves to the cloud are also those that may have been most customized. Thus while they can be hosted, this is typically in isolation (single tenancy). Such a model is not (profitably) scalable the way platform as a service and even ‘office’ as a service is.

So what may be the next step?

I feel the future for many organizations will still be a hybrid cloud model. The maturing of management tools and services will help many organizations focus on managing their data and information security while optimizing its provisioning across on-premise and cloud services. In the case of business applications this may take the form of core accounting tools being brought into the cloud akin to how many HR and payroll apps already are. Through management and security tools more accounting, billing, payable information can be exposed to a greater number of planning, operations and eco-system tools that live both locally and within the cloud.

I am still working collecting more insight on how mid and large organization can successfully adopt a hybrid solution and welcome your point of view.

Woke up to read (amongst a weekend worth of posts) the following article from Information Week’s Global CIO: Oracle’s Larry Ellison Declares War On IBM And SAP.

I must admit it hasn’t been a secret that Oracle has been marshaling for this battle, after all any company that spends approximately $25 Billion in acquisitions since 2005 (source) must start making money back at some point. The ‘billion dollar’ question in my opinion is whether the promised fusion of all its applications really works?

Having worked for a company that at one time stated an intent to unify its ERP code across all of its disparate applications only to find that neither customers or partners wanted this – not to mention the engineering pitfalls that become readily apparent – I doubt whether the current plans for fusion can be met in a way that will appease all the stakeholders Oracle needs to oust IBM or SAP as the respective market leaders in high-end servers and business applications.

In the Global CIO article, “Ellison promised that the second half of 2010 will be a momentous one for not only Oracle but also the entire IT industry and its enterprise customers because that’s when Oracle will roll out its completely reengineered Fusion software lineup along with more integrated and optimized Oracle-Sun systems, along the lines of the wildly successful Exadata 2.” Given this promise happened during the Oracle earnings calls, I cannot see how this is much more than a rally cry to sales that he hopes to the Wall Street will echo in an increase of stock price.

By the way Oracle’s stock price, much like Larry’s bid to win the America’s Cup back for many years prior to this one, has been stuck in the doldrums - neither rising or falling much over the past several years – recently it has grown at market average but still trailed SAP, IBM and Microsoft’s growth. A reflection that while Oracle has been busy amalgamating and consolidating many IT players there has not been an overwhelming belief that will pan out for Oracle or its customers.

One important aspect of fusion that Oracle promises, but again trails some of its immediate rivals, is that Oracle promises many of its fusion application can be run either on-premise or via the cloud. SAP realized the need for this hybrid strategy when it attempted in 2007 to launch Business By Design and Microsoft has been working on this since 2005 with its Software+Services strategy. And IBM has been driving its ability to deliver infrastructure as a service and many of its applications as a service for the past several years as well – these have culminated into its Smarter Planet initiative. So Oracle is far from being a thought leader here.

Personally, I think the most telling quote is at the end of the article, Larry says, “So we’ll be delivering those applications both by selling the software directly, kinda the old way of doing it, which is still the most popular, by the way; we’ll be selling the Fusion applications integrated with our hardware—our servers and our storage and our networks; and we’ll be selling it on the cloud.” He later added, “our cloud or somebody else’s”.

This is worth noting if you read the article on Oracle sniffing (original post by Dennis Howlett). Might one conjecture that by acquiring SUN and (especially)  JAVA that Oracle will start charging customers relentlessly for access to any products Oracle deems ‘fused’ thus boosting revenues at the potential expense of customer privacy and satisfaction? Will customers stand for this (thus allowing Oracle to achieve the stated path of dominating IBM and SAP in their respective markets?) or might their customers seek out comparable solutions from IBM, SAP and others for database, BI, ERP, CRM, etc during their next refresh?

Time will tell.

Dynamics NAV is not dead. The delay makes both business and customer sense, here is my two cents on why.

At the time Dynamics NAV 2009 (’6′) launched I was the product marketing manager for Dynamics ERP in Canada. The launch brought significant improvements to NAV 5 with regards to 3-tier architecture, .Net tool integration and many new role-tailored and partner ready components. The biggest challenge at the time wasn’t partner readiness, end-user readiness or the stability of the platform. In fact, many of these were well in place based on Microsoft’s early adopter programs and had gone through rigours tests for compatibility, stability and extensibility.

The challenge – and I kid you not – was that NAV 2009 was launched in the U.S. the week the leaders of the three largest automotive manufactures flew their private jets to Washington D.C. and subsequently further accelerated the impact of the recession in the U.S.A and globally. As such, NAV 2009 and then NAV 2009 SP1 entered the market in the depth of a recession and at a time when many customers were stalling or dropping plans for ERP up-grades all together.

This had a significant impact on the growth and adoption of Dynamics NAV 2009, which has the largest installed base of any Dynamics product. As Microsoft Dynamics serves predominately the midmarket, partners who had NAV customers and prospects turned in many (not all) cases to securing their base and helping these customers survive and build as needed. Combine this with the promise of many new features coming in NAV 2009 SP1 (delivered in August of 2009) and it just made sense.

As the market for ERP has began to recover in the Fall of 2009 and the deployments of NAV 2009 SP1 just beginning to gain momentum I certainly understand why the launch of NAV ’7′ would be delayed. Simply put the change in architecture from 2-tier to 3-tier effects many existing customer upgrades and the custom or third-party solutions and add-ons. While sales slowed, customer and partner education efforts did not. Now NAV 2009 is ready to come into its own and allow many customers both upgrade and newly deploy a solution with integration into more of Microsoft stack of applications and leverage significant advancements in web tools to extend NAVs capabilities to other parts of their business. 

While I am no longer with Microsoft, I feel this delay will help the vendor, its partners and its customers adopt a solution that has much to offer without having to worry about being rushed to the next version. Further ISVs can continue to integrate their solutions into the NAV 2009 web services layer easing future customization and migration efforts.

Having worked on the analyst and vendor side of the ERP equation I have learned there is one thing that means more to a CEO and CFO than the cost of the software and its implementation. That is the time it takes to ‘go live’ once the selection has been made. A common term for the costs during this time is ‘time to value’.

For midsized firms investing in ERP can be one of the most expensive investments to the business. The costs can go far beyond software and services as these projects often impact all employees, partners and customers. The wrong choice – or the right choice poorly implemented or adopted – can impact careers, business effectiveness, and (potentially) customer confidence. To address this, vendors have invested in implementation templates and methodologies to address how their partners and customers can see results faster and manage moving from phase 1 of an implementation to the second and even third.

One methodology that seems to be getting results is SAP’s Fast Start. SAP began training its partners on Fast Start in 2008, but uptake has been accelerated by the recession as the vendor has looked to grow its midmarket presence all the while companies wary of long implementation times from tier 1 solutions felt they were in many cases better off doing what they could with less. Partners who have adopted Fast Start have reported go live with SAP Business All in One of less than a month. A figure unheard of in the past and placing SAP’s offering in line with implementations of solutions like Sage’s Accpac, Microsoft’s Dynamics GP and even many of the emerging ERP SaaS offerings. To SAP’s credit they’ve made information about Fast Start open to not only their channel but to the customers as well.

Time is money and if a solution (esp. with small or midsize firms) takes too long to implement both motivation and interest in adoption can wane quickly. Not to mention the impact that a prolonged implementation cycle can have on profits, business stability, and the organization ecosystem of partners and customers.

Regardless of the solution selected, customers should take it upon themselves to understand what can be expected in terms of ‘time to value’. This can be deduced from past deployments (references), partner implementation capabilities and tools, and vendor frameworks and training programs. Business executives/sponsors and IT decision makers should consider these when developing the RFP used to identify the vendor and/or partner solution fit with their needs.

There has been much adieu about Oracle in the news latest and their promise to deliver a stack. Fellow analyst Ray Wang has a good write up here , and there are other notable reports here , here and here  .

Meanwhile SAP reported down but leveling earning for their fiscal Q4; reports here , here  , and here (as well as many others across the web).

Nonetheless, SAP still remains the top dog in the business software space and is revving up its engines to grow into the mid-market via partners, expand its footprint in BI through its investments in the BOBJ toolset and strengthening partnership with Microsoft and of course driving more value for its enterprise consulting and implementation partners.

But given the nature of large ERP implementations and the strong investments that went on from 2004-2008, can we really expect SAP to continue to drive sales as the level that many investors and technology analysts has grown to expect? Moreover, can SAP keep up growth in an environment where two of its largest competitors are preaching one-stop stack solutions?

My feeling is “Yes”.

However to do so, SAP will have to focus on building go-to-market approach that leverages their installed base and offers them the flexibility to expand via a Software as a Service (SaaS) model. Whilst Oracle wrestles with aligning all the packages it has acquired over the past decade into a suite and Microsoft depends of partners to drive innovation and interoperability across both Microsoft and other partner solutions – SAP should rapidly adapt itself to something similar to SalesForce.com’s Force.com model. Thereby making it easier for line of business needs to be met with ‘cloud-based’ software that has strong integration into SAP’s core solutions and middleware.

SAP must also invest in its mid and lower enterprise sales channels. Over the past 5 years, SAP has done a lot to develop this channel and build competencies in selling to the midmarket industry segment. This channel is now both competent and ripe for the picking by its competitors who can offer them the ability to sell solutions from databases to collaborative tools. SAP needs to reassess its commitment to these partners by either strengthening its own partnership with vendors that can provide incremental business to its ecosystem or acquire some of the emerging vendors that can meet this need – potentially allowing their partners to position leap frog technologies.

SAP also needs to continue to grow its channel business if it is serious in gaining midmarket ground. Microsoft Dynamics has over 10,000 partners globally. SAP is no where near that. Given the softness many tier 2 ERP vendors are feeling (read Syspro, Epicor, Sage) SAP needs to selectively go after some of these companies more established partners. If not, then you can bet that a re-energized Oracle will making it even harder for SAP to grow in the midmarket in the long term.