Software strategies and more…

Not that much of a surprise to those watching SAP‘s moves over the past 5 months. The changing of the guard combined with a big promotions and promises of in-memory based ERP and BI tools meant SAP needed to bolster its assets and the acquisition of Sybase just made sense. In addition, the need for SAP to start building a bit of an empire like nemesis Oracle has done meant that SAP needed to step outside its more traditional lines of business and incorporate adjacent solutions and technologies needed by its customer base.

Make no mistake about this deal though, SAP needed to back its in-memory promises with some substantial clout. Sybase has invested heavily in the development and testing of in-memory databases with its Adaptive Server Enterprise and SQL Anywhere technologies.  With SQL Anywhere this should boost SAP’s ability to deliver functionality its customer needs for transaction, inventory and financial applications across the business more effectively and across more devices and platforms. ASE gives a big boost to SAP Business Suite users and the power they are looking to handle incrementally more and complicated transactions across large office locations. By moving to in-memory and optimizing its ERP applications and BI tools for them SAP is hoping to lure more customers who may be looking to rid themselves of expensive database license and maintenance costs. And by doing so these customers may get significant boost in performance, scalability and reporting flexibility.

As far as the impact on cloud and SaaS business, in-memory tools may have a growing impact on virtualized servers, application and hosted data centers are looking to bring more services into an as a Service model. Also the partnership of SAP and long-time customer Research in Motion (RIM) may get a big boost as SAP (with SQL anywhere) offers a significant boost to business users using RIM’s popular Blackberry mobile devices to augment and deliver business insight.

My point of view: This was as much an needed move by SAP to both aid in business growth as well as deliver the road map its been preaching to its customers for nearly the past year. Its no accident this happens right before SAPphire in Orlando and we can expect even more in-memory news in the coming weeks. I also expect SAP to continue acquiring firms that it can add to its ecosystem, most likely a server virtualization player – and to do so in the next 12 months.

Salesforce.com continues to ramp up its cloud offering and bolster its position as a leading business applications provider for companies of all sizes. All indications show that later this month there is a big announcement coming from SFDC and VMware about their joint product launch that combines SFDC’s could applications with VMware virtualization technologies. You can see the mock up landing page created here .

Now I am going out on a limb here, but I expect a lot to be made of this partnership as SalesForce.com and VMware bring two big trends together to offer scalable applications and infrastructure environments for their customers – perhaps being one of the first to link Software as a Service (SaaS) with Infrastructure as a Service (IaaS). This positions them very well against Microsoft and IBM and in some cases ahead of Oracle in terms of dynamic customer offerings. A successful partnership may also continue the trend away from maintenance agreements that many large software vendors rely on for earning reports and re-invest back into development.

What else may this mean?

Well given the growth of virtualization (take and assessment here)  in corporate data centres and an increase in the usage of  web-based software to meet employee and business needs – these two technologies have a natural fit. By combining the ability to support growing server needs to an ability to dynamically apportion computing, application and processing resources needed for spikes in business demand (say a large payroll run to the opening of a new store and IT needs for adding people, processes and applications based on projected not real commerce) companies may flock in droves to an offering like this with pretty clear ROI and limited risk.

Build on top of this the growing application platform that SFDC brings with AppExchange and ChatterExchange and real-time application deployment, messaging and even management of both physical and web-based resources becomes readily available to businesses big and small.

Granted this is all speculation – but I’ll definitely be updating this blog in few weeks when the cat is out of the bag.

Late in 2009 both SalesForce.com and SAP began beta testing social applications that proposed businesses could use social tools within their walls to address a variety of needs from financial management and sales tracking to impromptu group collaboration. Since then both of these solutions have gone live and are beginning to garner much interest in the Enterprise 2.0 communities.

The applications are Chatter and StreamWork, respectively. I blogged about StreamWork before as it occurred how in the business environment we use word processing tools less and less and depend more and more on our email to communicate ideas across departments, teams and amongst individuals.

I have also touched on the incorporation of business intelligence and search (here) and how these could automate the presentation of information in the context of what an individual, team or department is doing at any given time. I talked in my blog about how I saw the trifecta of business intelligence, search and collaboration tools adding previously untapped insight, thus value, to employees in a highly tailored, yet automated way.

Now I am seeing the productization of this in both Chatter (and Chatterbox by Financial Force.com) and StreamWork. Salesforce’s Chatter, “…which has been described by Salesforce.com CEO Marc Benioff as a way to make the cloud more collaborative and social.”  adds another dimension to the companies AppExchange so much that the company created ChatterExchange a one stop shop for business grade collaborative tools that can plug-in to the many services and products that businesses are subscribing to from Salesforce.com.

SAP has positioned its self as a thought leader here by doing something completely un-SAP like. By first introducing StreamWork (nee 12Sprints) as a tool to aid in cross organization discussions, decision making and delivery toolkit for organization it took the emerging trends in social collaboration being tackled by the likes of Google Wave and Microsoft’s SharePoint 2010 and packaged them in context of a business application with integration into business processes.

While there are differences between the products, SAP stays closer to a collaboration tool that connects to popular email, content management and unified communications solutions while Saleforce.com’s Chatter leverages what it has learned from relationships with social media tools like Facebook and twitter. Both address the needs for robust, business grade solutions for collaboration, messaging and workflows. They both advance the enterprise from treating communications as transactional and promote relationships that unleash a community’s ability to work together in real time on topics of interest to bring business and customer value.

The exciting part is both of these tools are open to others to develop on top of and thus create a social network of their own for improvement in a very dynamic fashion. While is is not necessarily new of Salesforce.com, it certainly is not the business norm for SAP.

The potential value for using these applications may be tremendous for their customers who can now stay on top of internal and external events, opportunities and tipping points so that they can participate in conversations that previously they may have not even known were happening. Further by offering social tools in the context of the business they have potentially set their customers up to take advantage of that next big leap in productivity making them more competitive and more agile than other organizations.

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.

Recently I noted that SaaS vendors that specialize in business applications are attempting to roll out new programs to attract channel partners and reduce customer churn based on more stickiness in their contracts. One example is here.  As such, I did some research around the web and found a really good blog here that is worth a read to the growing market of ERP, CRM and BI SaaS providers.

The blog articulates the three critical areas for SaaS vendor success, those being (and I quote):

1) Number and cost of prospects acquired

2) Velocity rate and conversion costs of turning prospects into customers

3) Churn Rate

Mr. Cleveland then goes on describing why addressing churn rate is crucial to long term success and as such it needs to be someone’s daily job. I wholeheartedly agree with this point.

In my most recent role with a very large software multi-national, I lived in a world where teams and virtual teams constantly mulled over business strategy, marketing execution, sales excellence, etc. More often than not these teams failed if there was not two things 1) a clear leader 2) a leader with authority.

The reason I feel this is important is that in a very recent discussion I had with a VP of Operations at a North American company that uses SaaS happened to comment the reasons they continue to stick with SaaS are:

1) the trust that the vendor can do the job better than they can (b/c its their focus);

2) the belief that SaaS is the future; but most importantly

3) they forged a strong relationship with the vendor and have someone accountable on their side if there is a problem.

It’s interesting to me that to address this that vendor’s might try to develop a partner network to displace this responsibility. Not to say it cannot work, but I question for how long? And how committed is the vendor to the partner and their ability to support the end customers?

Rather than SaaS customers waiting for vendors to define the engagement model that best suits them, it is my opinion that this is the best time for end-user and those ‘fence sitters’ that are starting to seriously consider SaaS to run, manage and secure business applications that they begin sharing ideas and examples of what assurance they needs/expect from a provider.

My advice for end-user when engaging a SaaS supplier, they need to ensure they have a master agreement of their expectations in place. A good starting place is here with the SaaS customer bill of rights. Take this very well written document and use it as a starting place for a SaaS Master Agreement template – potentially similar to current IT vendor/support Master Services Agreement that you may current have.

(update) I was referred to a document “All About Cloud ROI” can be accessed at http://www.itincanada.ca/itpublic/All_About_Cloud_ROI.pdf that outlines Cloud ROI that was brought to my attention by a reader. Thanks!

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.