by Dennis Byron on October 4, 2007
Microsoft (MSFT) said September 30 that it had introduced “Online” services and “Live” services to “deliver connected computing options for people and businesses.” I found the announcement one of the most confusing I ever received from a software supplier, from the odd Sunday timing, to the stark bifurcation the announcement made between “Live” and “Online,” to the sentence after the explanation of why a hard difference between Live and Online was important, which used both terms (“Office Live Workspace is among the first entries in the new wave of online services”). If Online services are something different than Live services, which is Workspace?
In the annual Research 2.0 review, I gave Microsoft high marks for understanding that people are people, whether or not they are in their personal or professional roles at one instant in time. The future for IT-enabled service providers is one of a single compute structure that supports us all as our roles change during the day—from looking for directions on the way to work, to our roles at work (be they individual contributor or manager), to paying the bills at home, to looking for entertainment before leaving work, to shopping online (hopefully not while working), and so forth. The principle applies over longer time periods as well. Scratch my favorable analysis.
In a Q&A session provided by Microsoft, where it both asks and answers the questions, I think I learned some of the reasons for this mixed message:
• The left hand at Microsoft does not know what the right hand is doing. This is a Business-division-only announcement, perhaps not even discussed with others in the company. Either it is all about company politics or top management does not really understand the importance of Software as a Service (SaaS) as well as I thought.
• The Microsoft PR people had an inch of space left on the press release. So just for good measure, Microsoft announced Dynamics CRM for the umpteenth time.
• Some of Microsoft’s product managers wondered what “scale” meant in enterprise computing. They therefore announced that “participating… high-scale environments where students, faculty, staff and alumni (in select universities and school districts) have unique requirements that blend digital work with digital life” can participate in a trial to see if they can figure out any thing useful to do with Exchange. Scale refers to a degree of pedigree, right; as in select universities and school districts are not pedestrian riff-raff universities and down-scale school districts? Couldn’t the Education group afford a separate press release?
• With the retirement of Doug Burghum from Microsoft, there is no one in top management who was involved in marketing to enterprises in the 1990s. Therefore Microsoft didn’t know that the following wording purporting to understand newness has been used once or twice before: “… this new generation of solutions can break through the boundaries between the isolated islands of information within many organizations, while also enabling people to connect easily and securely with partners and customers…” Talk about old news. Do I need an Online service or a Live service to get voted off these “islands of information?”
Oh well, with Microsoft it has always been two steps forward, one step back. This announcement was a step backwards.
–Dennis Byron
Tags: Software as a Service, SaaS, Office, Office Live, Windows Live
by Dennis Byron on September 19, 2007
Sorry, SAP (SAP), I am a great admirer but Business ByDesign (codenamed A1S) has a few problems. The name is too long, the beta set of users is too small, the price is too high, the reference implementations and demos are too much old SAP, and the channel strategy is too 20th century. The name issue is no big deal; let’s just call it BBD. The others will require a lot of work to overcome because BBD is the linchpin of SAP’s objective of 100,000 users by the end of CY 2010. SAP doesn’t consider BBD to be in “volume availability” until 2008 so there are a few months left to work out the kinks.
SAP says the small/medium enterprise (SME) BBD solution is already helping “an inaugural group of 20 live customers” in the United States and Germany. I’ll have to dig out some old notes but I think SAP had more beta users when it brought Pandesic to the same market with the same delivery-model/channel strategy10 years ago. Given SAP’s estimate of 1.5 million prospects in the 100-500 employee market band (60,000 in the U.S. and Germany alone), 2000—not 20—is the reference threshold it needs to shoot for. SAP BBD is available today for selected early customers in the United States and Germany, with the “opportunity now opening for early customers in China, France and the United Kingdom.” Hopefully there is multiple-thousand-client business in that pipeline given the test marketing that has been ongoing this year. During 2008, BBD is planned for expansion to countries such as Australia, Canada, India, Italy, Mexico, the Netherlands, the Nordic region, South Africa and Spain.
There is good news in the fact that the solution was built from the ground up on SAP NetWeaver. Its host in the Software as a Service (SaaS) delivery model will reportedly use SAP’s own MaxDB open source software database and Unix. But do companies with 100-500 employees even have someone that can use SAP BBD Business Designer?
The indirect channel is of course key to the SME market and the eventual success or failure of BBD. That is not the same as saying it will be sold indirect (such as via telemarketing). SAP needs to and says it will “rely significantly on its partner ecosystem strategy” to drive the SAP BBD offering. The only ecosystem member announced or on SAP’s website as of noon ET 9/19 is ADP. Some of its All-in-One-brand partners were shown on videotape at the press event but that makes channel overlap (SAP used the word “cannibalization” in the Q and A session) a real concern.
And most important, a minimum $4000-5000 per month price tag just does not feel “affordable and easy to adopt.” I am not even sure per-user pricing is even the way to go but I need to do a little more research on that issue. I am guessing SAP’s current SME installed base might be part of the pricing equation. SAP has a lot of customers in the 100-500 employee market band, especially outside of the U.S. That base could be used to build the BBD reference base quickly. But what would extensive customer migration from All in One to BBD do to the revenue flow from those current customers?
As Research 2.0 has discussed in its annual review of SAP, SAP BBD complements the existing Business One, Business All-in-One and SAP Business Suite (nee R/3) solutions. Business One is designed for the small business segment, while SAP Business All-in-One is built “specifically for midsize companies that need deep industry-specific functionality,” what SAP calls microverticals (of which it has hundreds).
The offering puts SAP right up against offerings from its long-time partner Microsoft (MSFT) as well as Inuit (INTU), salesforce.com (CRM) and many others. It will not be just a matter of competing for customers, as SAP is used to. SAP will have to get its BBD ecosystem from Microsoft, Intuit, Lawson (LWSN), Infor, and so forth as well.
–Dennis Byron
Tags: SAP, midmarket, ERP, CRM, SaaS, NetWeaver
by Kris_Tuttle on September 11, 2007
There will be a slew of updates and commentary on the BEA World announcements today and tomorrow after the financial analysts are briefed and put out their obligatory notes.
So to save the reading we’d say this:
It’s all fine. More of the same. Similar to an IBM. Problem is the SOA/SaaS space is being more granular and looking for simpler solutions. BEA is a good company with strong products but they are just too much big iron. We’ve said it for a year or more now but the big bang SOA stack is a non-starter in most places.
To their credit they have introduced the concept of their own microService Architecture (mSA) but it stands as a bit of a contradiction to the BEA SOA 360 degree platform. As far as just how granular it gets and how well it will operate with other systems remains to be seen in the implementation.
BEA may get a a boost from the virtualization opportunity which is part of what they are positioning for. It’s probably the best chance they have in the market right now and should be enough to keep them going.
At a minimum they probably can cut a better figure today next to IBM, Oracle or Microsoft versus where they were six months ago.
There were a few puzzlers in the mix including an alignment with Adobe on form processing and SOAAPPS with EnterConnect?!? Do we really have to clutter up the press releases with sponsor-injected junk?
Tags: BEA, BEAWorld 2007, SOA, SaaS, Software
by Dennis Byron on May 7, 2007
There are two key questions all the leading information technology (IT) providers are asking themselves in the current industry environment:
- Does the company want to be a technology provider or a services provider (using an auto industry analogy, does it want to make parts like Meridian, or does it want to assemble and sell cars wholesale like Toyota?)
- If a services provider, does it want to service IT departments or end-users?
Oracle had previously been inconsistent in its intentions relative to the technology provider vs. services provider question, but in my opinion Oracle President Chuck Phillips’ recent presentation (April 17 about “On Demand”) gave a strong tip as to where Oracle will come down. He said Oracle was already delivering database, middleware, and application products via Software as a Service (SaaS). Most analysis refers only of applications when it mentions SaaS. Oracle’s delivery via SaaS takes strong advantage of Oracle’s grid computing technology, which lets Oracle deliver multiple users (multi-tenant) support for multiple segregated databases (to avoid commingled data among tenants). Some of Oracle’s grid computing and database features let Oracle do that more efficiently and, presumably, more profitably than a services provider using other server-farm topologies and less parallelized databases. I take issue with Oracle’s claim that no one else can keep the data segregated but Oracle has a technical advantage. In addition, Oracle is making changes to its applications to permit them to be segregated as well. Currently we estimate that the On Demand portion of the business is fairly small and, because most of it stems from the Siebel acquisition, very little prior to this quarter was grid-based. The April 17 announcement signals a shift and should lead to a stronger future SaaS revenue flow. Another thing investors should watch for, in addition to the absolute growth in that revenue flow, is how the revenue is accounted for. As Oracle’s SaaS revenue flow grows, Oracle will go through a process, such as the one CA is just completing, where new-model revenue becomes a larger and larger percentage of Oracle’s revenue total. That new model will cause revenue flow to be smoothed out rather than recognized in the upfront manner that the supplier uses to account for “old-model” perpetual right to use license revenue. This will temporarily depress Oracle growth rates vs. what they otherwise would have been beginning as soon as its next fiscal year (which starts on June 1, 2007) given the same amount of sales activity. But analyzing that accounting issue is a good thing given that it means Oracle wants to make cars and not mufflers. A more detailed analysis of Oracle’s April 17 financial-analyst meeting is included in the Research 2.0 April monthly. — Dennis Byron
Tags: Oracle, SaaS