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... blogging on what is happening in enterprise software, with a focus on Future of Work and Next Generation Applications, sparkled with occasional musings on the the state of the industry and outlooks where we are heading.

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    Continuing the spree of expected announcements, it was the unveiling of the Oracle and NetSuite partnership today. True to the leak from the Q4 earnings call last week Thursday, this week we saw Oracle partnering with Microsoft on Monday, on Tuesday and now NetSuite on Wednesday. What will Thursday bring?

    We have shared our takeaways from the Microsoft and partnership announcement already so let's dissect this one:

    Takeaways from News Facts

    • Oracle and NetSuite announced a strategic alliance focused on plans to deliver integrated HCM and ERP Cloud Services for mid-size customers.

    My POV
    Surprisingly this partnership is all about HCM - and no mention of any Oracle technology products. Something that was more or less expected after the earlier announcements of the week. But then using Oracle technology at NetSuite does not come at a surprise, as the company has been closely held by Larry Ellison and has been using the Oracle tech stack extensively in the past. Instead the focus on HCM is an exclusive enterprise application focus. 

    But ultimately the HCM topic is also not surprising since HCM took a lot of space at the last NetSuite user conference, only that back then NetSuite planned to partner with a number of different HCM vendors, tribeHR being the most prominently featured one. And this may still be the direction going forward - only that now there are Oracle HCM products in play. 

    Traditionally NetSuite has focused on small and medium businesses (SMB) - not the focus for Oracle HCM indeed Oracle partners with NetSuite for SMB business. We will have to see how the Oracle HCM offering can scale down both process and cost of ownership wise.
    • Deloitte plans to work with Oracle and NetSuite to develop a practice with highly skilled practitioners specializing in tools and implementation services to help customers adopt the soon to be integrated SaaS technologies faster and more seamlessly.
    And then there is the touche by Deloitte - pun intended - which has one of the largest HCM practitioner and consultant teams - providing the necessary implementation services for the combined offering. This puts Deloitte in the driver seat as in regards of getting a piece of the implementation business for the new combined offering. I would expect Deloitte to provide also a significant number of hands to build the integration. This will aide Deloitte's credibility and help NetSuite on the resource side, where I see their product development team stretched quite thin (see findings from SuiteWorld here).  
    • Additionally, Oracle plans to develop a product integration and go-to-market strategy with NetSuite for Oracle HCM Cloud and NetSuite Cloud ERP to deliver a single, integrated solution that seamlessly connects HR and finance systems for mid-size customers. 
    And finally true to yesterdays announcement with, which pleaded for the pre-integration of SaaS solutions, created and maintained by the vendors - the same is provided in the NetSuite and Oracle HCM case. 

    Takeaways from Alliance Section

    • Mid-size customers can gain a competitive advantage by quickly implementing SaaS solutions at a lower cost.
    • Oracle HCM Cloud including Global HR and Talent Management, combines advanced technology, tight integration, best HR practices, and social capabilities.  From recruiting and managing talent, to accurately forecasting future workforce needs, Oracle HCM Cloud enables companies to proactively manage HR operations while focused on strategic business initiatives.
    • NetSuite Cloud ERP offers an integrated solution that connects a business across financials, sales, service, and fulfillment.
    No surprises here. Just expected NetSuite to also mention manufacturing, which was a big push back at SuiteWorld
    • For large organizations where Oracle HCM is already deployed, two-tier deployments of NetSuite in smaller subsidiaries will easily connect with its Corporate HR system.
    This is to be interpreted that the two tier ERP pitch with NetSuite being used for smaller subsidiaries of larger corporations, who run Oracle in the large organizations - is alive and well. But it also makes clear, that HCM in the case will be run centrally and globally. Certainly a cost advantage, but as mentioned, we will have to see, that Oracle HCM is not a to expensive solution to implement for the smaller subsidiaries. And then it may pose some interesting integration challenges between Oracle HCM and NetSuite in the subsidiaries. 
    • Deloitte has a business-driven HR approach, global reach, functional depth and SaaS experience to accelerate both the business value associated with HR and ERP transformations, as well as process and technology cost saving efficiencies.
    Ok - this translates into a preference for Deloitte doing the first integration work, but I am sure if customers insist on an other SI, that would not hinder a deal from being closed. SI differentiation - even with an early placement in a partnership like this - remains a challenge for the SIs. 

    Takeaways from the quotes

    (Emphasis added)
    • "Driving the development and retention of the right talent, and getting strategic data around HR practices can help mid-size companies transform their business operations," said Oracle President Mark Hurd. "NetSuite and Oracle are now working together to provide access to Oracle's leading enterprise-level cloud-based HR & Talent Management solutions that are integrated with NetSuite's Cloud ERP suite applications. With Deloitte implementing these integrated solutions, mid-size companies can quickly gain access to an incredible new level of HR management that can help impact their bottom line."
    No HCM event without retention and flight risk mentioned in 2012 / 2013. There is a touche of Deloitte in this - but no exclusivity statement. 
    Side comment for the PR pros - this press release comes from NetSuite - so it's unusual for the partner to be quoted first, usually the issuing entities executive has the first quote. 

    • "We are excited to work with Oracle to bring customers an integrated solution that combines NetSuite's solutions that automate business processes with Oracle's suite for managing people processes," said Zach Nelson, CEO of NetSuite. "Customers will benefit from the commonality of the products' underlying Oracle-based architecture and the enormous investment in R&D and customer service that both companies bring to the table."
    While Hurd did not use integration, Nelson uses it once, like Benioff yesterday. Nothing compares to Ellison who used it three times in its quote yesterday. But yes integration is key and customers expect it these days, out of the box. 

    Interesting Nelson states the commonality - which is hard to see today. For a business user that usually means user interface - but these are differing quite extensively today. If both Oracle and NetSuite wanted to change that - it should have been announced. Behind the scenes commonality usually means architectural harmony - and though both NetSuite and Oracle HCM are build on the Oracle technology stack - some harmonization in utilized products and versions would have to occur. This is equally a point both companies should have mad clear today. 
    • "Mid-sized companies are looking for solutions that allow them to be nimble and respond quickly to market opportunities," said Jim Moffatt, CEO of Deloitte Consulting LLP. "This newly integrated solution will help these organizations deliver better service at a lower cost, ultimately giving them an edge in the war for talent and a true competitive edge."

    MyPOVIt's somehow ironic, that the two product executives - Hurd and Nelson - leave it to the service executive to stress lower cost of ownership and better service from an integrated solution. In the past these service provider involved offerings usually have not materialized in too much business for the involved service provider - but we will see how well this works for Deloitte in this case. Let's not forget Deloitte has been partnering with Workday for a while.

    Absence of technology and hardware

    To some point surprisingly there is no reference to any Oracle technology products. In my view that's not a bad thing, as the expectation is, that NetSuite is using these to the best of their capabilities already. So mentioning here may have been degrading to their reputation. But there is also the possibility that the technical nature of the integration is not sufficiently hashed out yet.

    I noticed gladly that the Twittershere and pundits did not lament the lack of hardware related commitments in this announcement - as it is the same as with - if needed NetSuite will use Exaxxx to their advantage. No need to add to this press release. 

    Workday angle

    A lot has been written and said about Oracle doing all these partnership to isolate Workday. Not so much in my view. Workday has not focused on SMB like NetSuite and the companies did not partner for any offering. And I don't see how it is easier for NetSuite to sell against Workday given the partnership with Oracle for Oracle HCM. Customers will decide which of the two is the better HCM product - Oracle HCM or Workday - irrespective of NetSuite. What NetSuite and Oracle could do (like SAP and Infor, too) - is to provide enterprise process level differentiators out of the box, that combine HCM and other enterprise processes. Workday would have to enable the same via interfaces. 

    But HCM is hot and drives enterprise automation

    Across enterprise automation - HCM  is certainly the hottest area. We know that since SAP and Oracle invested into buying SuccessFactors and Taleo. So vendors without a HCM strategy - need a HCM story quickly. See yesterday, see NetSuite today. And market pressure most be so high, that NetSuite could not afford to wait for their many partnerships announced at SuiteWorld, to come to fruition. And certainly integrating six and more partners is also a bigger product investment.


    While Oracle is now being understood as a provider of cloud technology, today's announcement makes Oracle also a provider of critical SaaS functionality. If you will, the partnership week started with technology only (with Microsoft) to a mix (with to an applications only (with NetSuite. The partnership certainly can question Oracle's investment in CRM products. But don't expect for a second that Oracle would stop CRM investments. Instead Oracle is working hard to provide the next generation of CRM tools in the area of customer experience and marketing. 

    For NetSuite this alliance fills the current void in the HCM area, that was something the company only was able to close through partnership - given the recent love and with that investment focus of manufacturing.

    So overall again a good move by Oracle and a good outcome for Netsuite. We look forward to learn more on the nature and extent of the integration and of Deloitte's role in detail. 

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    I was invited by Microsoft to their Build 2013 event in San Francisco this week - and it was an interesting experience, contrasted to the modest events I used to attend in Europe with Microsoft - last century. Microsoft moved the event from Seattle last year to San Francisco and was blessed with unusual and nice warm weather and over 6000 attendees. Supposedly the event sold out in a mere 3 days, attendants were global, we chatted with attendees from 15 different countries, Latin America the most prominent region.

    Day 1 Keynote

    Microsoft's product landscape is breathtaking and to pack that all into two keynotes must have been a challenging game of riches. I don't want to to focus too much on the more consumer focused Day 1 - there the relevant news for the enterprise were that Windows 8.1 will come out soon, and the desktop will be more prominent and you will even be able to boot your machine to the desktop again. From all spontaneous applause during the keynotes - this was the most energetic and lasting one. Clearly Microsoft has taken the tile concept a little too far on the PC. But all in all fairness Microsoft should get credit for trying to get one consistent user interface across smartphone, tablet, and PC - and even more for rectifying the issue relatively quickly. And personally I do not think the issue lies with the tiles, but with the light weight nature of the Metro apps. Yes they need to support touch, but they don't need to be oversimplified... I was glad I heard some attendees even talking about the tile dummification since I felt often like that...

    Ballmer also made clear that Microsoft is in the transition from a software company to a company that builds software powered devices (e.g. the Windows tablets) and software powered services (e.g. Azure).

    After Ballmer it was time for the only woman to take the stage, Julie Larsen-Green showed how Windows 8.1 improves touch on small factor devices. She showed a more powerful Bing in connection with Maps that now provides a search across SkyDrive, XBox, HDD etc. - a good feature and similar to what Google showed at Google I/O. The accepting a Skype call without unlocking the computer or logging in is a nice feature - but begs the question who was logged in before - as otherwise in Skype as we know it today - the call will not be delivered. The added multimon capabities will be very welcomed in Windows 8.1 - not just by developers! And keeping DPI scaling dynamic, not determined by the primary monitor will be appreciated by millions of eyes using Windows.

    Next it was Antoine Leblond to keep showing more new functionality but from a  more technical angle. And my impression was - when enterprise vendors talk about 100s (see e.g. enhancements of Workday in Update 19 here) - then Microsoft needs to speak in 1000s - e.g. Windows 8.1 will introduce another 5000 new APIs for developers. Granted - no one needs and uses them all - but that is a massive scope for dot release.  The good news - all this APIs are usually one liners to use - at least in the demos. Microsoft pays tribute to scripting languages here - one line, one statement, one API, one action. Developers do not have to hit the enter key as much as a decade ago...

    And rightfully Microsoft creates value by making their development tools more complete. Adding a visualization and tooling for estimated power consumption certainly will help developers to reduce the power hunger of their mobile apps. And everything gets more connected and easier - e.g. a wizard to create mobile push alerts - delivered through Azure.

    There were tons of more consumer, hardware, graphics and game whizbangs - but the endless collection of new capabilities here and firsts there becomes tiring - check out my twitter stream of the keynote. And granted this is a challenge for every keynote - but maybe Microsoft is trying to do too much for a Build conference audience - pitching both consumer capabilities and developer tools and productivity enhancements. Tough to get under one roof or in one keynote.

    Then it was back to Gurdeep Singh Pall to show the latest on Bing. From his part  of the keynote it is very clear now, that Microsoft is trying to become a platform company, that brings together all the different pieces of the large Microsoft product family all the way rom Bing to enterprise software. And Bing will expose  more granular services and will make them available across for other products and services. 

    But the best demo of Build2013 was only to follow - a preview of Project Spark by Dave McCarthy and Rusty McClellan. It's from the gaming world - but has enterprise software relevance - as we witness the potential travolgimento of an entire industry. With Project Spark Microsoft transforms every Windows8 machine and xBox into a game design work station. In the few minutes of the demo, we witnessed the creation of a complete game, that was instantaneously playable. This has profound consequences on the gaming industry, where the game may start creating, extending, tuning and sharing it. Before you even play it. Crowd sourced projects of multiple designers are equally possible... If you ever tried to build a game 30+ years ago with TurtleGraphics - you would have been speechless, as have I. 

    Now if any of this creativity and personalization could be brought to the enterprise space...

    Day 2 Keynote

    On Day 2 Nadella opened the keynote and positioned the day to be the day for the backend. And Azure has come a long way. He claimed significant adoption of Azure – with 50% of the Fortune 500 using it, 250k customers overall and the addition of 1000 customers per day, and over 3.2M organizations using it with 65M active users. And Azure stores 8.5T storage objects per day and about 900k transactions per seconds. And there are 18+ data centers and 100+ co-locations. That is some serious workload and investment, and just 2 months after the GA of Azure as IaaS, the IaaS payload is already at 20% of overall payload (but it had the benefit of a long beta period).

    Azure has one of the industry most diverse payloads

    Nadella continued with pointing out how the firstparty applications (these are the Microsoft owned ones) keep Microsoft honest and to remain committed to the overall IaaS game. And to his point Azure today runs 300k servers alone for the Xbox community, SkyDrive has 250M accounts and 50M users of Office Web Apps. And then there is Skype with 190M users. And Bing is becoming more exposed to become a platform and uses Azure more and more, for instance for and expected 1B of notifications per month.

    Luckily for customers, Microsoft assumes a first party equals third partywhich  means that Azure customer loads are treated equally to Microsoft loads. An interesting argument as it would mean that it would take away any spare capacity considerations for the Azure cloud capacity. Which puts enormous pressure on the virtualization and elasticity capabilities of Azure – but later more on that.

    Microsoft expands light blue stack

    And true to previous announcements, Microsoft is opening Azure beyond the usual Microsoft tools and technologies – Nadella mentioned making Oracle a first class citizen, adding support of Java to existing node and PHP support. And while we applaud Microsoft to this step – it needs to realize that it will be difficult to create loyalty in this community beyond the IaaS deployments without more support in scaffolding and tooling. But it’s early days and remains to be seen where Microsoft goes with that.

    Visual Studio - already with Oracle DBMS
    deployment capability

    Websites? Websites! Websites?

    I was surprised with Nadella starting the use cases of Azure with websites. Not something I was expecting too much of the Microsoft technology stack to be used. But the following demo showed again Microsofts new leitmotif of a platform that is easy to use – mostly with oneliners: In a demo a number of web site feature and animations were shown. And they were easy to create and maintain. So web site building seem to be one key focus for Microsoft, even made GA for a dedicated product – Windows Azure Websites.

    Mobile matters

    Micosoft has made it easier than ever to create mobile applications, true to the direction of exposing more services in the Azure platform. The good news is that developers can now deploy their applications not only to Windows Mobile, but also to Android and iOS.   And needless to say that Windows Azure Mobile Services went… GA at Build.

    Next it was Scott Guthrie’s turn on stage – finally – putting some light on what is going on at the backend to enable all these mobile apps and websites.

    Finally – Auto-scale

    To dynamically ramp up computing resources in Azure you had to write custom scripts or use other tools to enable this key cloud quality. So finally Microsoft has addressed that by adding auto-scaling capability to Azure. And for most apps this is a welcome change, as it puts the sizing burden, under a given SLA to the provider, in this case Azure. But some specific apps may have to be build up the trust in this brand new features. But at the end of the day the auto-scaling of a cloud provider should bet by far the average capability of an app provider to write scale up and scale down assets for a cloud infrastructure.

    With the new auto-scale feature Azure can scale for websites, cloud services and virtual machines, the pretty standard folding lines to tackle scaling nowadays. 

    Now for the sizing of websites administrators can scale by min / max instances and target CPU utilization. And on the services side, the scaling seems to be service specific, Charles Lemanna showed scaling by CPU as well as queue depth – which is a nice capability, making scaling less technical and more business related. And lastly for virtual machines there is auto-scale capability between a min / max of instances. And with the recent industry change to minute billing and Azure not charging for stop VMs – this can equate into significant money savings.

    Identity, Identity

    For all cloud projects, identity matters greatly, so not surprisingly Microsoft focuses on this – and given it’s hold on Active Directory this is a home run easily. Being able to transfer Active Directory entries and privileges between on premise and cloud is a key claim on the cloud properties of the future. So Microsoft allows the easy federation of on premise Active Directories to Windows Azure Active Directory. And added an easy console that allows to add user privileges to other standard SaaS apps and platforms – we saw Box, Basecamp – but also and Google Apps. Even AWS.

    To prove the oppeness point the omnipresent Box CEO Aaron Levie came on stage – the surprise being that Box and Sharepoint do not have the easiest of relationships. But Build is not a collaboration and documentation management conference – but a developer conference. And have a co-opetitor on stage attesting to the new found openness of Microsoft certainly helps. And Levie obliged to fill the role.

    BizTalk for Business Integration

    And of course BizTalk cannot be missing here – if you want to attract enterprise class applications. Not surprisingly the examples was how hard it is to integrate a SAP system with other applications – SaaS or non. And Microsoft is re-using the already previously built adapters to SAP, Oracle, Siebel and JD Edwards (which shows a bit how dated the product is). But re-use is good and BizTalk services can make these adapters available through modern JSON and REST APIs, which make them much more easy to consume.

    But even more value is created with the BizTalk servers being available in the cloud – what was a tedious, time consuming installation on premise – is now merely a mapping exercise of (hopefully) working APIs. A big deployment advantage for the cloud and shows how even old on premise assets like a BizTalk adapter to JD Edwards can get a fresh start with being deployed from the cloud.

    Examples of out-of-the box authentication capabilities

    BigData not missing

    Needless to say Azure has a BigData strategy, which runs on top of the capabilities of Windows Azure Storage. With the recently launched HD Insight offering, it’s easy to spin out Hadoop clusters to the cloud.

    Equally relational databases can be spun out to Azure. Oracle’s DBMS being the most recent addition and prominently featured in below snapshot. 

    Office for enterprise apps

    A little bit surprising – but in line with the overall platform services strategy, Microsoft also exposes Office / Office 365 capabilities to be used in Azure. The demo example that was chosen was very document centric, and was a good one – recruitment. In the demo a decent good recruitment application was assembled in mere minutes. Office 365 provides new data types, like eg all documents of an user. And the demo tied it together with SharePoint and with the corporate social network (Yammer?). But there is not only document, but equally social and networking capability – as well as email capability. No more worries of building pseudo email clients into enterprise applications – now just authenticate to the user, use his emails, send them on his behalf – and all – if you stay loyal to the Microsoft framework – in a pretty and consistent user interface to the Office apps. 

    Azure... and the 7 dwarfs?

    At some point in the keynotes - it started to remind me a little bit of Snow white - lot's of little helpers - so in likely infringement of copyrights I created the below collage of (Princess) Azure being aided by the 7 dwarfs...

    But cartoonish views aside - the ability to support Azure - in the case of Active DIrectory even by just moving the product into the cloud - are opening new perspectives. As when for example more Bing is being used, more Bing will have to be put onto Azure, which by itself again provides more platform and better services to applications, which drive more usage to Azure. It's all connected to positively propel itself ahead. 


    Microsoft has picked up considerable speed - at least judging from the outside. I do not recall an enterprise software event with so many GAs being casually dropped left and right. The good news is that the company sees to listen - most notably around the new release of Windows 8.1 and the return of the desktop as the dominant control center of all actions Windows. 

    It is clear that the push to services is coming to fruition and all pieces of the Microsoft product realm are helping the use Azure, helping by providing services. If Microsoft orchestrates this right, it will be able to create a mutually beneficial symbiosis between the products providing platform services and their own respective growth. And Microsoft has done a great job with exposing these services in a simple and consumable way, we expect this to help adoption significantly.

    And lastly - the newly proven commitment to openness - with the partnership with Oracle giving proof of that - should make Azure more attractive to future payloads. 

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    With the general availability of the Oracle Database version 12c imminent upon us - it's time to look at what - for now - before more information at the launch webcast tomorrow and real client adoption - is the key feature of 12c.

    The end of multitenancy as we knew it

    We already discussed the implications on the multitenancy term in a previous post. And to quickly re-cap - in the past multi-tenancy in the area of databases was always referred to as a striped database, where different tenant's record were stored in the same tables and the software programs had to find a way to only feed the right records to the right clients. That was a design approach pretty much dictated by system and software capabilities about a dozen years ago. 

    Alternatively vendors would bypass this design by running one database per tenant. And this approach inherently had advantages in regards of portability, data security and tools availability. But it came along with a higher hardware price tag and higher operations and maintenance costs - as more hardware would be needed to support this configuration.

    With 12c Oracle now makes the important separation of its database metadata and user storage data. The two were combined in the past and only Oracle would know how to separate the two. Originally this was conceived for performance reasons, but with significantly more RAM in today's servers, that technical separation is no longer necessary. 

    Oracle 12c effectively makes the metadata of its database multi-tenant, that is to support multiple user databases. The advantage is that the user data bases now do not need to be striped, made multi-tenant anymore. Confusing? Certainly, but once understood - it makes sense. 

    And as Oracle's perspective to view the world from the database as the vantage point is certainly legitimate - so 12c makes the meta data (and with that the user data) multi-tenant. 

    How can a database by elastic?

    Well out post title is certainly a bit contradictory - as a database itself cannot be elastic - as it stores data... And data needs to be kept and stay on HDD (or other media). So let's not confuse elasticity with caching - though there are some common elements. [Sidenote - caching becomes very relevant if you are an in memory database like HANA - see my post here].

    The elasticity with 12c does not come in from the storage side, but from how the metadata to access the user data is handled... and that is highly elastic, with system load determining what part of the metadata and for which user database it will be running. 

    Basically Oracle applies similar principles as any IaaS vendor does when starting virtual machines to the meta data code for specific user data bases that are being requested and / or used. We will need to learn more on the details here - as Oracle with the Oracle VM has it's own virtualization technology - but we expect that to be too much geared to the needs of general programs and applications than to server the specific needs of the database - but we will see.

    The result is an elastic database - and with that users benefit from the key benefit of elasticity - more software can run on the same or even less hardware. And Oracle has not been shy with demonstrating this - checkout the slide below for the specific claims made at OpenWorld 2012:

    Back then Oracle (rightfully) garnered some criticism in regards of the use case chosen - and we are sure Oracle chose something favorable for the cause. But looking back - if Oracle can deliver on only 30% better utilization - then they will have secured their market leadership for years to come.

    The irony is - Oracle can effectively create a business case out of the inefficiency of their former database architecture. But to be fair - that was always known and customers more than willingly traded for that architecture and in return received scalability, stability and reliability.

    Backward compatibilty

    All this would be good and great - but much more difficult to sell, if Oracle would not claim - and again reality checks will have to happen - that moving to 12c is a seamless upgrade. And we need to intuitively give Oracle the point here, as they should and would know how to move a pre 12c database structure over to a 12c one.

    I would even expect that the formerly striped multi-tenancy databases will be able to be upgraded programmatially, especially if the Oracle supported feature of Virtual Private Database was used. as the proofpoint

    A lot has been said and written about this partnership. And there are pros and cons for to renew its dependency on Oracle. But it's clear will gain operating cost advantages from Oracle - as Marc Beniof is on record, that these are only about 1/3 of their current costs. [To be fair that included also the usage of ExaData - not just Oracle 12c].


    Oracle has delivered a key database release with 12c, that if it stands up to the claims made, will solidify Oracle's position as a database provider for years to come. We also think that in combination with the recent alliances, Oracle has taking the step to overcome the disruptions the overall market will face by moving from internet based to cloud based architectures. 

    Nonetheless the NoSQL challenge remains, equally as does the in-memory challenge - and Oracle will need to address these. But for now it's about congratulating Oracle on 12c and looking forward to see the proof points in real end usage scenarios. 

    My latest take on Oracle overall can be found here - takeaways from the Oracle analyst summit. 

    Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .
    Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.
    * Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

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    I had the pleasure of being hosted by SAP for a fully loaded day of HANA briefings - and it was a information rich and very interesting day. Needless to state, that I learnt a lot - and need to review my position on HANA more to the positive, as more progress has been made by SAP than I previously thought had been done, I was aware of and / or had noticed. So a day well spend.

    Suite on Hana

    So the Suite on Hana is really there. Except for SRM and some pieces of SCM. But the rest runs on HANA, using the existing database abstraction that SAP used before in R/3 to make it work with the different database vendors it supports today. I didn't get an ETA for the SCM pieces, but the SRM part should come later in the year. Customers license HANA the same way as any other database license, as a percentage of license revenue, and HANA shares the (steep) price tag with Oracle (RAC option). Good things have their price.

    The database migration is a consulting project that is supported by pre-packaged offerings and tools - but remains an enterprise individualized effort, due to modifications (aka customization outside the Sapanese language world). SAP has developed a number of value points that customers can be pointed to and SAP consulting is ready to validate as well as identify further value points. 

    SAP knows the issues about the missing in action SD benchmark and is working on a new HANA benchmark - that will also come out later in the year. My best guess is the SAP TechEd timeframe in fall.

    MyPOV - Good to see the progress for Suite on HANA. We will see further uptake by end of Q2 and Q3 which will be a good benchmark how well SAP customers continue to respond to the Suite on HANA value proposition.

    SAP HANA One and SAP Hana One Premium

    SAP’s HANA One deployment option for SAP HANA is alive and thrives, and sees uptake by a continuous stream of new customers. HANA One provides a fully featured small scale HANA deployment and pretty good community-based support – suitable both for experimenting and for the data scientists. As it runs on Amazon Web services, it’s easy to deploy, has an attractive price point, and allows you to do even further cost control if you choose the hourly on demand pricing option at $0.99 per hour of compute, not including other AWS charges.

    What I missed amongst the many announcements at  Sapphire Now was that SAP has a new premium offering for SAP HANA One on AWS. The HANA One Premium is geared for enterprises to deploy small scale productive HANA applications on AWS by providing 1) access to SAP enterprise support 2) License grant allowing connection to SAP application back ends and 3) technical connectivity by adding of SAP Cloud Integration into the HANA One Premium bundle.

    MyPOV – SAP has made these alternative deployment options for SAP HANA easy to access, price competitive, and cost effective by running them on AWS. It’s good to see these smaller and cheaper HANA offerings are gaining traction in the marketplace.

    HANA Enterprise Cloud

    SAP HANA Enterprise Cloud (HEC) is SAP’s newly announced enterprise class managed cloud service for hosting large scale SAP HANA applications such as SAP Business Suite on HANA and SAP NetWeaver BW on HANA. SAP reports considerable interest from customers since SAPPHIRE NOW for the reasons I mentioned at the launch shortly before Sapphire. A large number of validations and proof of concepts are being run on HEC which makes sense as it's the fastest to get them going and already runs on the potential cloud deployment platform. 

    HEC may be a very interesting option for some customers considering migrating their SAP applications to HANA since SAP will not only help them achieve the upgrade, but will also take on the task of continual improvement by handling application of enhancement packs and service packs. A good standard cloud deployment benefit that SAP endorsed. This would be an attractive offering given the fast innovation cycles that we are likely to see continuing with both SAP HANA and SAP Business Suite on HANA. It is important to note that HEC is an individualized hosting service, so its customized to each customer’s needs, and the customer has control over timing of tasks such as software updates.

    MyPOV - As mentioned originally - a very good move by SAP - helping customers and itself to accelerate validation and sales cycles. It will be interesting to see how SAP customers will deploy HANA going forward - more on premise or on HEC. The latter is certainly the future and best solution for most of them. But concerns on elasticity remain

    HANA Cloud Platform

    This is the next generation SAP development platform, ABAP free, largely built on open source, develop in Java or Java byte code compatible languges - and deploy to the cloud. Basically the new SAP platform. And while it can run on HEC - SAP understands it as a standalone PaaS platform that powers new SAP SaaS products on the SAP Cloud Infrastructure (SCI) - that is basically the cloud infrastructure on which homegrown (e.g. byDesign) and acquired (e.g. SuccessFactors) run on. Probably a hodge podge that some professionals at SAP are now cleaning out and harmonizing.  

    MyPOV - It's very important for SAP to have an attractive, modern application development platform that even can run as a PaaS. SAP is fulfilling a need that goes back to Shai Agassi back in 2004 (or was it 2005?) statements at TechEd, that SAP will need to support Java and can't expect to attract and retain programming talent on ABAP forever. The PaaS move is a bold but logical positioning we will need to find out and hear more about.

    "Analytics" and Analytics

    SAP - like many other vendors - is victim of the faux analytics term, that is used basically only as the latest buzzword for Business Intelligence. And there are good BI offerings, notable the next generation Business Objects - Lumira. And on the BigData side SAP now supports the usual co-existence scenario of many vendors, that are call outs to Hadoop clusters. Certainly look forward to a demo of that.

    The good news on the Analytics side (the real one, the one that can action or at least suggest an action) is that SAP seems to have ended (the in my view ill fated) partnership with IBM SPSS. Instead SAP went down the common road of using R - and more importantly uses PMML in HANA for 3rd party developed decision models. 

    MyPOV - I heard a lot of talk and understanding for real analytics and I have not given up hope, that SAP will clean out the messaging and call analytics analytics and the new BI offerings... something else. And SAP should invest more into this area - as who wins the holy grail in the analytics area can unseat all the exitsing enterprise vendors.

    Design Thinking

    I also had the opportunity to learn more about the design thinking approach that has taken over for the better on the SAP application creation side. And the approach to build high value, high frequency scenarios out of the box and provide a tool based approach for the the lesser used and valuable scenarios is the right one. The task at hand is herculean, as SAP counts something around 300000 screens across products. 

    The good news is that the early children of the new design thinking process are promising, the consumer apps (myRunway is the most successful one) and Fiori - have a lot of traction and success.

    MyPOV - We can only cross our fingers that the nth UI re-invention will be successful for SAP users and SAP. Granted, all enterprise vendors struggle with this challenge, a lot of work and questions remain - but it's good to see the progress SAP has made. The largest concern remains the limitation to the existing SOAP APIs that are exposed through the SAP Gateway - are they modern and 21st century enough? And if not - can SAP build them fast enough in 21st century best practice style?

    SAP the technology company

    My assessment here needs some caution - as I only met technology oriented executives at this visit. But looking at the recent SAP announcements, the Sapphire focus etc - its clear SAP wants to get the 2nd leg -- next to the application business - in the technology business. And SAP has promising technology in many areas - but the path to have a 2nd leg, successfully use it and be perceived as a two legged vendor (no offense here to anyone) - is a long one.


    A lot of progress has been made by SAP on HANA and it's different delivery options, as well for Suite on HANA and HANA Cloud Platform. The design thinking approach is bearing promising fruits, positively affecting all SAP customers with Fiori. The recent re-organization should allow the company to pick up more speed as it puts responsibilities for single functions in single pairs of hands. 

    But becoming a company with enterprise application and enterprise technology credibility and success is a long and rocky path. As a reference - it took Oracle 10+ if not 15+ years to become a global enterprise application player.  SAP does not have the luxury of that much time.

    My impression is, that SAP has done important steps on product, has done key hires in marketing but now needs to execute on changes in the sales force, the partner ecosystem, the perception in the market etc. The world gets bigger and more complex when you have to legs - or are a switch hitter. 

    And SAP may end up as great technology company but with a neglected business application portfolio in the process. Not a desirable outcome in my view. 

    [Thanks to Greg Chase (@GregChase) for correcting some factual errors and polishing out some Denglish from my side.]

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    This is a re-post from Constellation's website to raise awareness for the SuperNova awards: 

    Call for Applications: SuperNova Awards for innovators in disruptive technology

    Deadline for applications July 22, 2013
    The first awards to recognize pioneers, leaders, innovators who use technology to transform business
    In its third year, the Constellation SuperNova Awards will recognize seven individuals who demonstrate true innovation through their application and adoption of new and emerging technologies. As always, we’re searching for leaders and teams who have overcome the odds to successfully apply emerging and disruptive technologies for their organizations. Special emphasis will be given to projects that seek to redefine how the enterprise uses technology on a large scale.
    Continuing the SuperNova Award tradition, we’re searching for the boldest, most transformative technology projects out there. If you or someone you know has what it takes to compete in the SuperNova Awards, fill out the application here:
    Learn more about last year's winners:
    About the SuperNova Awards
    All entries are evaluated by our all star cast of judges which is comprised of the top enterprise technology journalists and thought leaders. Compelling applications stand to gain additional exposure as the judges may write case studies and articles about such applications.
    Who can enter?
    The awards are open to end users only. End users at vendor companies may enter the awards. We will disqualify any vendor applications.
    • May 1, 2013 application process begins. Submit applications here:
    • July 22, 2013 last day for submissions.
    • August 15, 2013 finalists announced and invited to Connected Enterprise.
    • September 1, 2013 voting opens to the public
    • October 30, 2013 Winners announced, SuperNova Awards Gala Dinner at Connected Enterprise 
    Judging Process
    The judging process is comprised of two phases.
    Phase I: Judging panel reviews applications to determine SuperNova Award finalists
    Phase II: Voting opens to the public. A combination of the public and judges votes will determine the winners of the SuperNova Awards. Judges votes are weighted at 75% of the total. 
    Winners are announced at the SuperNova Awards Gala Dinner during Connected Enterprise.
    A notable list of technology thought leaders, analysts, and journalists will judge the SuperNova Awards. See the full list of judges here:
    Award categories center around Constellation's business research themes. Award categories:
    • Consumerization of IT & The New C-Suite
    • Data to Decisions
    • Digital Marketing Transformation
    • Future of Work
    • Matrix Commerce
    • Next Generation Customer Experience
    • Technology Optimization & Innovation 
    Awards Ceremony
    The SuperNova Award Winners will be announced live, on stage, at the SuperNova Awards Gala Dinner on October 30, 2013 on the first night of Constellation's Connected Enterprise.
    Finalists in each category will be awarded one complimentary ticket to Constellation's Connected Enterprise.
    Winners in each category will win a one-year subscription to Constellation’s Research Library.
    More information about the awards including FAQs here:

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    Today Oracle announced the availability of Cloud Application Foundation (CAF), and never shy, declared it the #1 Application Foundation across conventional and cloud environments. This is a key step for Oracle to integrate products and make it easier to built applications on the Oracle technology stack. We take a look at the announcement and present our takeaways.

    Working up the stack

    On the heels of the Oracle Database 12c general availability and a number of alliances around the cloud, Oracle is not slowing down and announced availability of Oracle Cloud Foundation, which is basically a combination of Oracle WebLogic Server and Oracle Coherence. All together can be found - at the famous 30k feet level - as a part of Oracle Fusion Middleware. 

    And Oracle WebLogic Server is - according to Gartner - the #1 Application Server in the market and probably that let to the rationale of claiming the #1 spot for the Application Foundation space. 

    Building up the stack

    It makes sense for Oracle to work the way up the technology stack - as the products leverage each other - CAF uses 12c heavily - and makes curios when we will see Application releases. 

    But building applications always takes longer - so I would be surprised to see Application news before OpenWorld. But never say never.

    Could it be a little more?

    Actually CAF rurns out to be a little more than just Oracle WebLogic Server and Oracle Coherence, it also includes Oracle Tuxedo, a Virtual Assembly Builder and Traffic Director / Web Tier. And all of that plays nicely together and can be deployed in the Oracle Cloud and / or Oracle Excalogic Elastic Cloud Servers. Needless to say, it works with Oracle Database 12c and uses the databases new multitenancy features. And Oracle has learnt the lessons from the past - you need an infrastructure management tool for these systems at general availability time and Oracle Enterprise Manager can administer CAF and ships with it now. And finally no application products without tie-in from the developer side - so there is a new Oracle JDeveloper version available along side, too. 

    If you throw all the new features of these products together, you come up with a staggering list of features, that comes back to my concerns raised after Oracle Analyst day - how can that amount of code and functionality be built reliably and then be trained and administered. We know the answer to the latter is Oracle Enterprise Manager - but for the rest Oracle will have to show, how its product quality can be upheld with this large scope and how the ecosystem will be trained. Oracle seems to have catered for the concern, mentioning the training availability and even providing the link to the training - in the press release. 

    Oracle WebLogic Server gets cloudy

    Not surprisingly the new Oracle WebLogic Server supports new Oracle Database 12c features like multi-tenancy, as we assumed previously as the driver for the many recent Oracle alliances, specifically as part of the product bundle that will run in Microsoft Azure. Another key feature is the more dynamic connection pooling on the database side, that allows the Oracle tech stack to cope better with bursts of database loads. And finally the dynamic auto-scale feature was something badly missing before and adds a key cloud capability (see also Microsoft Azure recently adding this key cloud capability). All this coupled with with the application continuity features makes this a key Oracle WebLogic Server release.  

    Beefed up Oracle Coherence

    It is good to see that Oracle is releasing a new version of Oracle Coherence with 12.1.2. And while adding to the deployment options is good, Oracle (finally) addresses the caching issue between Oracle Coherence and Database with the creation of GoldenGate Hotcache. The support for live events in Oracle Coherence should help the usage of the product in last millisecond environments such as e-commerce. And the good open source uptake of Coherence is being leverage by Oracle, e.g. by the availability of the Apache built tool Maven.

    TCO Reduction

    And no Application platform without a development tool, which of course is JDeveloper for Oracle, which coupled with the new ADF support for mobile and tablet forms the backbone of how Oracle wants developers to build Java applications. 

    Given the complexity of this environment, it is good that Oracle Enterprise Manager is there to help administer and monitor the whole environment. Equally the common install of Oracle Web Tier with Oracle WebLogic Server and Oracle Coherence will be welcomed. 

    Is SAP HANA driving Oracle?

    The strong focus on in memory caching with Oracle Coherence allows the impression that recent in memory offerings like SAP's HANA may have put some Oracle projects in overdrive. The two products should not be confused - Coherence is at the end of the day a cache vs. HANA being a database. For an application experience though - they accomplish the same - a faster, and if done right, more powerful user experience.

    Cloud or not Cloud?

    As usual Oracle build and positions its products to be practically universally deploy-able. Customers can use Cloud Application Foundation to built on premise, hybrid or public cloud applications, that can run on the Oracle Cloud or other public clouds. And they can buy the hardware with Exalogic Elastic Cloud with it, too - if they wish. And while at the end of the day software boils down to bits and bytes, Oracle will have to show if such a unversal deployment of identical products makes them strong players in each deployment scenario - or just average players. Oracle has the deep pockets to succeed at such a strategy, but the proof in the markets still has to be shown. 

    Implication for Fusion Apps?

    And while mentioned or pointed out recently, Cloud Application Foundation should be / is the foundation for Oracle's business applications, with Fusion Applications being the most recent and technologically modern incarnation of Oracle enterprise applications. But Fusion apps are already shipping - so it will be interesting to learn (soon?) how Oracle's application business is planning to uptake and leverage the Cloud Application Foundation. 
    Building Applications at Oracle can be heaven - as they can be built on a modern, competitive technology stack that competes by itself in the market place - but it can equally be hell - as the technology stack innovates and revolves faster than the more pedestrian  business applications can be built. Rabbit and hare challenges...


    It's all coming together for Oracle, which is releasing all it's 12c generation technology products in these weeks. Oracle Enterprise Manager administers the whole palette of Oracle products, Oracle Database complements product bundles like Oracle Cloud Application Platform etc. Bringing all these products together in reasonable bundles, that work better together and can be commonly installed, operated and maintained - makes a lot of sense.

    As with all new product releases, Oracle will have to prove quality and viability with early adopters, a 12 month beta period for Oracle Cloud Application Foundation as mentioned on the call by Mike Lehmann should certainly help - but we look forward to hear and see from live customers about their experience. 

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    It's been a long time I have looked at Ceridian - and being part of the vendor's yearly user conference Insights in Orlando was a great opportunity to take a fresh look.

    Transformation in Progress

    I remember image, perception and user community feel for Ceridian of that as one of a venerable, but dusty payroll vendors. The system worked, but it was one of the grumpy old relatives that  you would put in the closet before important people visited. I have spoken to many business and IT professionals who would sheepishly look down and away admitting they are using Ceridian. Not better if using ADP - but then there is a everyone does it glow in their eyes.

    Well these times are part of history for the Ceridian, but the company has been transformed under the leadership of David Ossip into a spirited HR vendor that has left the payroll legacy behind and expanded its automation horizon way beyond that. And the changes can be seen in a new vigor and enthusiasm in the partner and client community.

    No longer your grandfather and grandmother's Ceridian.

    Dayforce Benefits - Courtesy @rwang0

    Dayforce is the magic ...

    And the change that literally pivoted Ceridian for the better has been the acquisition of Dayforce, which was completed not so long ago in enterprise software terms, on April 2nd 2012. And with that Ceridian not only got a number of seasoned enterprise software executives, but also the modern, Microsoft stack built workforce management product, that originally had a much more narrow scope with Time & Attendance, Labor Scheduling, Labor Forecasting, Labor Budgeting, Task Management and Employee Self-Service modules.

    But if you build enterprise software with the right architecture you can put much more on the products shoulders and that's what the team around David Ossip is doing. What impressed me most is, that they have been able to rebuild the Ceridian payroll functionality not only in this short time since the acquisition - but are already moving production customers over to the new Dayforce Payroll engine. There are very few payroll turnarounds on the vendor side in the storied payroll annals, that succeed at all, much less in the short time frame. 

    David Ossip on stage courtesy rwang0

    ... and the people, stupid!

    And Software also comes back to people - and starting with Ossip, there is now a very seasoned HCM team at work at Ceridian with the former Workbrain (now Infor), and previously Cybershift (now SumTotal) expertise. Turns out workforce management seems to be a good  breeding ground for great architectures and smart people (fits another workforce management vendor to watch from north of the border, Visier). 

    And then there is Larry Dunnivan who built the legendary Cyborg product (now Accero) and former head of Lawson's HCM products. So plenty of R&D and industry expertise. Combine great product with great marketeers like Alan Rottenberg (former Cognos) and you are less surprised about the pivot from HRO vendor to HCM vendor is on the way full steam.

    Ceridian uniquenesses

    Back when at the Cornerstone conference early June this year, I found some unique attributes in longevity of executive teams, platform, location and product involvement of the CEO. Turns out they were not quite so unique - as the new Ceridian fits the same criteria. Maybe the executive team has worked less together, but it's nucleus comes from Workbrain times. And Toronto and Minneapolis are not your typical enterprise software vendor locations either. And equally Dayforce is built on a single platform and like Cornerstone, Dayforce is not getting tired of mentioning it - and the message does not seem to get tired with customers and prospects either. And Ossip is up to speed on the product - taking live questions on a pretty detailed technical level during his keynote - something we see very seldom in the industry.

    Energized customers

    And not surprisingly Ceridian customers are upbeat and energized. Fuelled by the successful XOXO customer program and seeing their vendor investing into it's product is certainly a feel good factor - as is a very well organized user conference. Most customers we spoke to are optimistic and look forward of things to come. Surprisingly many have transitioned and moved or are planning to move to Dayforce. Those who have moved are happily realizing the benefits that materialize when moving to a single platform. They are cautiously optimistic on the new road map items coming in the next quarters. Likewise there is optimism from the move me program that helps customers to move off the old Ceridian payroll to the new Dayforce payroll. 

    Next roadmap steps

    On the functional side Ceridian is on the run for completion of their talent management suite. Recruitment seems to be on top of the road map for many vendors with Workday planning on delivering their next updates with this functionality as does Ceridian with Dayforce. Looks like we will see a the winter and spring of recruitment.

    And we are excited to see, if we see the same old of recruitment or some new ideas and best practices for the new incarnation of recruitment automation..

    As Dayforce has tackled Benefits in the existing product, is already showing customers recruitment, the planned next steps are performance management, compensation and succession management. 

    Looks like 2014 will see a lot of fully suited up talent management vendors with a complete payrolls for North America and they will be ready to test Oracle and SAP. 


    With one common schema comes also the ability to build dash boarding and reporting functionality. And Ceridian has done well here, allowing both the typical transactional reporting with a user friendly report generator centered around HR user friendly topics. And for more advanced usage, it regularly refreshes a data warehouse with key data and calculates corresponding KPIs.

    As usual when vendors deliver this functionality, customers are excited about the data they have and didn't know or couldn't analyze about. The anecdote of the conference was one customer who could  not believe that there under 25 year old workers beat all other age groups in show up at work performance. Insights lie in the data - they need to be unearthed.

    And Ceridian went further with natural language query functionality - opening up ad-hoc analysis for business users. The next step then is to enable storytelling and the product allows to take screen shots to put into Microsoft Powerpoint, the presentation tool of choice. 

    And lastly - though I did not have a chance to see it - Ceridian says that the user can drill down all the way to the transactional data solving one of the long term quests of software, bridging the OLTP to OLAP abyss.   

    Advice for partners

    Ceridian is moving very fast and if you have software assets, make sure you can fit long term in the ecosystem road map. If you are a services partner look into how you can differentiate, we expect Ceridian to attract more partners outside their traditional payroll and workforce management space, a good opportunity to grow.

    Advice for customers

    You are in good hands with Ceridian for payroll, benefits and workforce management. If you look beyond, take a measured wait and see approach and see how the new releases are delivering new functionality. We expect Ceridian to deliver quality software on time - but new software is... new software. 

    If you are a Ceridian payroll customer on a legacy product, we suggest you look actively into migration plans, the new Dayforce based payroll will give you a better overall user experience and sets you up on the future Ceridian platform. Always a good place to be as a customer, on the latest platform.


    As mentioned - this is not your grandfathers (or grandmothers - they get forgotten in this saying way too often) Ceridian. The company is on an impressive pace re-building some products and extending in all areas of talent management. This is good for customers and partners, but also for the company which is re-energized compared to a few years ago and is on a promising path to become a full fledged HRMS, talent management and payroll vendor. 

    Execution is now key and we will take stock soon again. 

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    NGA (NorthgateArinso) had their analyst on July 16th and it was well attended and provided an update where the company is standing and where it plans to go in the coming years.

    Corporate and Executive Changes

    It was a good opportunity to get to know the new CEO, Adel Al-Saleh, who previously was the Group CEO of Northgate. After the divestiture of the Northgate the Managed Services divisions, Al-Saleh took over for Mike Ettling as the NGA CEO in addition to his role as Northgate Information Systems CEO. Al-Saleh has a long tenured background with IBM and IMS Health.

    Good FY13

    NGA comes out of a good financial year, growing on the sales side and increasing TCV by 36%. With the launch of a Japan office, NGA is now present in this key economy. The company keeps evolving its strategic partnerships with Workday and SuccessFactors and has an opportunity in South Africa / Africa with a joint venture with local SI powerhouse BCX, just named NGA Africa (and not discusses on the call, happened a day later).

    On the operations side NGA keeps improving service readiness and focuses on scaling up in what it has designated its strategic delivery centers. On the products side the euHReka releases 12 & 13 have centered on deeper localization functionality and customer driven enhancements. The MoorepayHR launch for SMB companies in the UK seems to be going well and the company delivered the connectors to run payroll for Workday and Successfactors clients. These connectors and more have been bundled to the new offering the company named Payroll Exchange.

    Recently NGA was named by Gartner (with ADP, Ceridian and Talent2) a member of the leader's quadrant of the 2013 Magic Quadrant for Payroll BPO Services.

    NGA's Strategic Agenda

    The company describes itself as a IP led HR services company, with its core business being the automation of administrative HR processes encompassing the employee life cycle, with a focus on global enterprises - all running on the euHReka product / platform.  Talent Management (NGA calls it Administration) is an Add-on the company equally offers, but depends on the sales scenario and partnerships that are in play.

    Screenshot from Webcast

    Where NGA has a SMB offering with products like ResourceLink and Preceda, it plays in the these markets additionally, which are the UK and Ireland, South Africa (with BCX) and Australia / New Zealand.

    And NGA believes it can differentiate itself by its exclusive focus on HR, it's flexible service delivery portfolio and it's advanced technology platforms and applications. The company takes an opportunistic view in the cloud religious wars, offering its products both on premise and in the cloud.

    NGA FY 14 Priorities

    In the upcoming financial year NGA will focus on the further evolution of its client centric coverage model, drive more maturity into global delivery capability and further investment into the key products (euHReka, Preceda, ResourceLink and Moorepay), the new Payroll Exchange and service center tools and utilities.

    Obviously the company will focus to extend its partnership with Oracle - next to the existing partnerships with Workday and SAP / SuccessFactors.

    Still doing BPO? Yes...

    To my surprise the company never used the term BPO - Business Process Outsourcing, something that NGA provides for their customers and does pretty well. That's where key internal initiatives of standardizing support centers and making not only the service side of the business, but the overall company more customer centric. With no doubt both initiatives will be beneficial for existing and future NGA customers.

    The company now operates over 3000 agents in 8 key strategic delivery centers that are spread over Europe, Brazil, India, Philippines and China.

    Product direction 

    Not surprisingly NGA plans to expand payroll capabilities further, and since the company does a large part of the implementation work in house, there is a focus to reduce implementation times and with that the related service costs.

    NGA's flagship product euHReka has its release 14 right now in testing and release 15 will focus on learning and recruitment capabilities.

    The big ambition on the product side is to standardize APIs internally to work with the new Payroll Exchange product - and to enable this product to automate extensive employee life cycle services not only for the NGA products but equally for other vendor's products.

    Screenshot from Webcast
    With a lack of industry standards and an industry wide interest to keep these APIs close to each vendor's chest, coupled with NGA's iterative approach to the challenge, Constellation Research foresees this to be quite a challenge going forward, but the company merits respect and encouragement for having embarked in the effort.

    NGA and Talent Management - multifaceted

    At this point NGA has a unique strategy in regards talent management functionality- while it de-emphasizes talent management in meetings like the analyst meeting, focusing on what it calls employee life cycle services and payroll, NGA is at the same time adding learning and recruitment capabilities to upcoming euHReka releases. And we expect this effort to continue at least for the near future. 

    In case NGA may decide to end work on talent management - it will find itself in a unique position - as all competitors providing HRMS / payroll and talent management products are scrambling to build offerings in all three markets. 

    But that decision has not been made as we learnt and so NGA keeps both options open - partner for talent management or build some themselves.

    The positioning challenge

    NGA has a unique combination of services and product IP that does not fit the mold that is usually applied by both financial and industry analysts. Being KKR owned there is no financial analyst scrutiny at this point, but as the the question of my esteemed colleague Brian Sommer showed - it's tough to make out NGA. Take a look at the blog post of my former colleague Amy Wilson from the NGA analyst summit in April 2011 - and the challenge for the analyst community is clear.
    But the onus should not be on the company - but on the analyst community to better understand NGA's unique capabilities and the accompanying challenges.

    The problem we see with the IP led services positioning is, that today all services business are trying to differentiate themselves through differently functional and capable IP offerings - and NGA has more with software IP assets and a global BPO delivery organization. Together with ADP, NGA is the only player for large enterprise to run their multi country payroll and HR systems.

    Advice for partners

    Make sure your service offering is in a stable area that NGA has no interest to cover. If you are partnering with NGA for international payroll services that NGA is not covering, you are probably in good hands, as you can expect NGA to be more flexible than ADP - for better or worse.

    Advice for customers

    We see four scenarios where euHReka customers and prospects may find themselves these days:

    • You are most likely using and or planning to use NGA for multi country payroll services, maybe a international HR system, potentially a BPO play. NGA is well positioned to aid you with both, make sure you exercise the customary best practice provisions on the SLAs and penalties side.
    • If you are looking for NGA's talent management for the unified user experience, make sure you keep NGA committed to provide and strive for best practices (or at least good enough support) of future talent management trends that matter to your enterprise.
    • If you are having a 3rd party talent management system but want to use NGA's HR system and payroll offerings, make sure to get commitments to keep supporting your talent management system through robust interfaces for the usage time frame you see.
    • Finally - if you use one of the vendors that NGA partners with (as of today Workday and Successfactors) then make sure that both vendors reassure you to support the interface for the lifetime you expect to use them or the maximum you can negotiate. You will need to not only understand NGA's road map - but equally Workday's or Successfactor's road map and realize where they may encroach on each other and how to insulate your enterprise against that possible event. 


    NGA is making good progress on many good housekeeping initiatives. Rationalizing products, consolidating centers, standardizing services, making employees more customer centric are all good initiatives - but other vendors are doing the same or at least similar initiatives. The winner will be who out-executes the others.

    What I missed was some visionary and leadership pieces, something NGA showed in the recent past with the idea of a BPaaS (Business Process as a Service) idea and plan. 

    The other key aspect will be for the executive team to position NGA's unique product and services capabilities in an easy understandable manner that reflects these capabilities of NGA and at the same time allows analysts and influencers to apprehend and correctly position these capabilities. 

    Not only execution, but also positioning will be key for NGA in the next 12 months. 

    You can find NGA's Storify here and  mine here.

    [Disclosure: I had the honor and pleasure to run Products for NGA from Summer 2010 till Spring 2012]

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    On July 18th SAP released their 2nd quarter 2013 results - you can see the results here and listen to the recording here.

    Cloud and HANA saved SAP's Q2 - almost

    For the first time in a long time, SAP did not grow their software license revenue.  In Q2, SAP recorded 982ME in license revenue, which is down 77M E less that quarter Year over Year. Instead of addressing the drop in new license growth, SAP emphasizes the overall growth of its software and cloud subscriptions revenue, a paltry 3% or 1.141ME.

    Of the 982ME, in the overall software number,  102ME HANA revenue  is included.  Should we remove HANA - only 880ME would have been recorded in Q2 2013. In Q2 2012 SAP recorded 85 ME HANA revenue - bringing SAP's Q2 software number to 974 ME. 
    Consequently,  it looks like the SAP core business is down by a ballpark of 10+%. (and not the 205 I originally stated here - thanks to Dennis Howlett for pointing this out). 

    From SAP website.

    The cloud subscriptions and support revenue grew from 52 to 159ME, a 206% increase, which is good news - at first glance. 

    But let's dissect the cloud subscriptions and support revenue a  little further. This is revenue that comes from SAP home built SaaS applications (like byDesign or the SaaS CRM product) - but mainly from the former Successfactors and Ariba products. If we do a ceteris paribus and assume that the revenues of Successfactors and Ariba would remain constant - not withstanding the SAP acquisition - then these should contribute 76.6 MUS$ (Ariba) and Successfactors claimed 73.2 MUS$ - which is a total of - let's round up - 150 MUS$ - at today's exchange rate 107 ME (all based on calendar Q2 2011 data - as 2012 they were already acquired / being acquired). So the good news is, that there is growth in these numbers and SAP's homegrown SaaS products must be contributing - but not the stellar growth rate that SAP wants us to believe in. 

    Why is SAP weak in core license sale?

    The questions from the financial analysts unfortunately did not point into this area - so we can only speculate - and state to what we know. 

    SAP is well licensed if not over licensed for most of their accounts in North America and Europe. So SAP needs to sell the business suite where it's not yet in the  market and there it is focusing on the BRIC countries  - and it seems to have done a very good job in Brazil. And it singled Mexiko out as well. But SAP - like all vendors - seems to have had issues in APAC. Basically SAP needs to execute very well in the BRIC countries to keep up core license sales, if these markets do not do well economically or if SAP blunders execution  - then SAP won't be able to keep up core license sales. If HANA would not be around - SAP would be a shrinking company on the license revenue side. 

    And HANA is the product that SAP need to fill the missing revenue - but it looks like SAP was asking for too much from the just two year old in Q2 - as HANA revenues grew only by 20%. SAP said that HANA deals are year end loaded - which leads to the impression that SAP and their sales reps are using HANA to close the year well in Q4. Any missing sales could be filled with HANA licenses for running the Suite on it - starting a push in the fall. Always assuming customers have budget and SAP can convince them of a winning value proposition to move the Suite on HANA. 

    If SAP is a cloud company...

    Through the conference call both Bill McDermott and Jim Hagemann-Snabe referred multiple times to their view that the cloud age has started, customers are buying cloud products etc. - they should have been asked then, how they plan to convert their product portfolio from a mixed portfolio to a more and more cloud based product portfolio.

    We all know, that SAP has a number of homegrown SaaS products and then the acquired entities like Successfactors, Ariba and hybris. But this is not a complete SaaS suite - so either SAP is missing out on bringing all its products to the cloud - or it's only a partial push to SaaS. This will be a vital area to watch as SAP does not have any SaaS offerings in Finance and Manufacturing, two key enterprise automation areas. And maybe the earnings call was not the right platform to announce future cloud plans - but it would have made the whole move to cloud more credible for SAP if the co-CEOs shared the company's plans going forward - as a consequence to their (correct as we think) observation about the cloud becoming a must have

    Verticals to the rescue?

    SAP seems to have gotten more focus on their vertical offerings recently. Certainly making Verticals Hagemann-Snabe main responsibility has helped the matter. And certainly SAP has significantly more potential on the vertical side than for its horizontal offerings. Overall the market has been under penetrated and mostly been addressed with customization. But with the main focus being to move Suite customers on HANA - it may be tough to convince customers, who are not on HANA to move to an industry offering that may be improved or upgraded soon. SAP will need to explain how vertical investments can be used between the older conventional database platforms and the new HANA platform.

    The larger challenge is that in the past SAP - like other enterprise automation vendors - has not been able to solve the vertical automation puzzle yet, for a variety of reasons (good for a whole other blog post). But that does not mean that SAP may not be able to address and solve this now for the first time. Assuming SAP will succeed - this will however not address the overall revenue challenge that SAP faces. The reason is that in most sales scenarios the vertical functionality is an add-on from a revenue portion - compared to the horizontal piece of the pie. And true - there is untapped potential - those enterprises that have not been conquered by standard software vendors yet - banking anyone? But these opportunities form the minority of the overall vertical enterprise automation market - so at the end of the day, even a very successful execution by SAP on the vertical opportunity - will only be able to address a smaller portion of the SAP revenue challenge that SAP faces. 

    Can the sales force do it?

    SAP has a formidable sales force - but it's an on premise enterprise application license sales force. Traditionally SAP succeeded to sell the integrated suite vision to the executives to who the overall working of the enterprises matters - to the CEO, CFO and CIO. But SaaS applications are often sold to the line of business executive - often against the establishment guidelines and standards. Sales reps need to setup a whole new set of relationships - that are even harder to develop since they sold SAP to these companies before - and that wasn't always a popular decision with the line of business executives. Many, many preferred products and installations that were used and preferred in a division or line of business - got replaced by SAP as the central, CxO mandated product. It's not only hard to change the comfort zone - but the SAP sales reps also need to re-invent themselves.

    The other challenge we see for the salesforce is, that they are an enterprise application sales force that now needs to sell HANA technology. And while it should be still easy for an applications sales rep to sell the move from another database to HANA - after all SAP was always sold with a database - it's a different story to sell pure HANA technology opportunities. SAP recently told me - correctly - that of course SAP still has sales reps selling Sybase - but that salesforce does not have the reach and cannot generate the volume that SAP needs from HANA - which is around at least 1 BE in the next 4 quarters. 

    So it's good news for the salesforce when we learnt - deep buried in the Q&A section of the earnings call - that SAP has made the sales of on premise vs on cloud commission neutral to the sales reps, which used to be one of the primary challenges of vendors transitioning from license to service products. But SAP will have to do a lot to re-train or hire a technology sales force that can sell north of 1 BE of HANA licenses year after year. 

    The reason is that enterprise application sales reps are a different breed of sales reps than the enterprise technology sales reps. While an application sales rep is supposed to sell the standard automation as much as possible that  is supported in the product - the technology sales rep is supposed to chase non standard automation, that can be built on the technology's standard capabilities. Both skills are seldom combined in professionals, who even if they have them - need to build separate relationships and rapports with their customers and prospects. 


    We are seeing some potential structural revenue challenges coming up on SAP's horizon. Emerging markets and HANA may not be enough revenue potential that SAP can exploit, to keep traditional license revenue growing. And SAP will need to have a lot of help from the new subscription based services to compensate for the reduced core license revenue. Or monetize other markets like mobile and social better.

    We will see how the SAP co-CEOs will address this challenge going forward and wish them luck on the journey - as a strong and growing SAP is better for the market place and its customers 

    And lastly I would have hoped my fellow financial analyst colleagues would have harped more on these questions in the Q&A section - but what hasn't happened - can still happen. 


    Re-reading the post I realized I missed the vertical aspect of the post - funny how this sometimes happens. So don't be surprise if you re-visit and are surprised to find it.

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    Over the weekend we learnt that SAP is making more changes at the top - with Hagemann-Snabe giving up the co-CEO role in May 2014 and likely moving to the supervisory board then. With that the other Dane is leaving the SAP executive board - but not so much in Wiking raid retreat speed as Lars Dalgaard did. 

    The official story line

    SAP played this that Hagemann-Snabe always said he would be available only for a limited time for the co-CEO role - and that he notified Plattner of his request to move out of the role by 2014. This triggers a supervisory board meeting and with that a public notice under German public company regulations. And SAP deserves kudos for actively addressing this change in a press and analyst call - even though Plattner did not have all the answers we are sure he would have liked to have in place today.

    Plattner countered Hagemann-Snabe's resignation by suggesting to make him a member of the supervisory board - subject to shareholder approval (which of course isn't an issue with the three SAP founders Hopp, Plattner and Tschira owning way over the 25% needed to establish a member to the supervisory board). Hagemann-Snabe and McDermott will operate the business as usual for the next 10 months to come - that is sharing the CEO role and Hagemann-Snabe looking after the vertical aspects of the SAP software portfolio.

    Behind the scenes

    The reader needs to keep in mind that German supervisory boards are staffed half by shareholders, half by employee representatives. With Plattner having to go back to the supervisory board with Hagemann-Snabe's notice, this knowledge was also in the heads of the employee representatives. And while there is no reason to doubt their professionalism in regards of the confidentiality of a personnel change - the safe choice is to pro-actively communicate the change to the public - and with that to the employees. And as mentioned before the stock markets. 

    Did Hagemann-Snabe surprise Plattner?

    We know how fond the SAP founders are of the co-CEO model. It balances things out, gives more bandwidth etc. So if Plattner knew for sure that Hagemann-Snabe would be leaving - why not have the next junior partner for McDermott groomed and ready to go in time? Well, Plattner answered this literally with saying I could not find another Jim. Which lead to some good questions from the press in regards of the viability of the unusual co-CEO model. You need to have the right talent to operate in such a leadership model. 

    As an alternate view I would not be surprised that McDermott wanted to be the sole CEO of SAP at some point, and Hagemann-Snabe knew that and took himself out of contention with saying he wants to fill the role only for a limited time. To give some more credibility to this, the respected German daily F.A.Z.unearthed that in an interview with German management magazin Capital McDermott once answered to the question of being a co-Ceo with is this a the joke?

    Why not co-CEO with Sikka?

    That is one of the questions in the room - but what has not happened, can still happen. And Sikka's position just got stronger with the last re-organization - as he is since then completely in charge of all product development activities. It's now time for him and his team to deliver and they have their hands pretty full. Maybe with Hagemann-Snabe's move to the board in May 2014 Sikka will become co-CEO - but that would not have been true to the statement today, starting McDermott being the sole CEO. So the message for Sikka has probably been to deliver the products that the company needs to grow in all product areas - and good things will follow for him once proven.

    The German Angle

    Despite all the international operations and success of SAP - a large part of its employee base and much of its DNA is still German. For instance at the shareholder meeting in June Plattner reassured the audience that the official company language ("Amtssprache") is and remains German. Bill McDermott's remarks had to be translated from English to German. 13 of SAP's 16 supervisory board members are German. The necessity for this press conference came from German public company regulations to relay supervisory board decisions with no delay. SAP's German labor council leader was quick at hand at stating that Germany as location had been weakened and that there is no more representation of Germany and Europe at the CEO levels. Fears got even more fuelled by SAP moving its communication department from Walldorf to Palo Alto recently.
    So Bill McDermott has his work cut out not only in Germany but all over Europe, where Hagemann-Snabe handled almost all customer interactions. How these first meetings will go will be a key indicator for McDermott's success in his CEO tenure. It speaks for him offering to learn German and potentially even moving or spending substantial time in Walldorf or Europe. Nothing would win the hearts and minds of the German employee base more than these symbolic actions. But McDermott will be well advised to find some Walldorf based executives to be a sounding board for him - and Mucic, Leukert and Goerke come to mind. 

    The Pros and Cons of Co-CEOs

    The continuous mutual complimenting of McDermott and Hagemann-Snabe has been seen for many years now. And there are advantages in the different backgrounds and styles of two professionals - as you always get a multi-dimensional perspective and feedback on things. When this is not desired - it requires intense coordination and choreography - and that takes time. This is the time that McDermott will save now and will hopefully use wisely. Freeing up 2-3 hours of a CEO's time per week can make a huge impact on a company's success. The question now is, who will play the role of McDermott's sounding board. In the short run Hagemann-Snabe is of course around - but there will have to be a partner or partners for that. With Plattner preferring the technical topics and playing the role of instigator and mentor with Sikka - he is not the natural counterpart for McDermott. Oswald does not speak much English. Brandt is retiring. So it will be interesting to see who will fill that role. Working closely on future earnings calls with Mucic, he should be the forerunner for this role. 

    What's next?

    SAP is a complex organization so in the past most promotions came from within. Bill McDermott himself was the highest hire SAP made in the last decade - that did not join through an acquisition. And the tenure of the acquired CEOs - John Schwarz and John Chen has not been long enough to be of a lasting impact. 

    We will see if McDermott will promote further on the internal promotion path - or hire from the outside. The organic path would be to make Rob Enslin an executive board member running sales and market operations. Then there is the retirement of Werner Brandt - and as we learnt in typical Plattner style side remark - that Luca Mucic will be his successor.

    That one resolved - there is the question what to do with veteran Gert Oswald - on the executive board since 1996 (!), continuously expanding his area of responsibility. But he is 60 - so we will see if his contract will be extended - or not.

    What will go a long way would be for the board or McDermott to promote or bring in a board member from Asia or Latin America. These are growth markets for SAP and they look for representation at the top - which is missing so far.  

    And maybe these promotions will be to the global management body, the body under the executive management board. Right now Ensslin is the longest tenured non executive board member, Calderoni and Leukert were just added in the last re-org, and Mucic was added quietly. With Poonen leaving, I would expect CMO Becher getting a seat in the global management board, marketing is too important and Plattner agrees with that - for not having it presented in one of the two management boards. 

    Advice for partners

    Not too much changes, unless you were a product partner that relied on Hagemann-Snabe for the success of the partnership. In that case find some visibility with McDermott, Sikka or Plattner immediately. Everything else at board level is transitioning, so the same advice is valid for partners going through Brandt and Oswald.

    Advice for customers

    Dennis Howlett makes the case clear why customers need to take notice and genuinely care for executive level changes here

    We don't think too much will change - unless your executive board sponsor is one of the current co-CEOs. McDermott will have to reduce his exposure here, and Hagemann-Snabe will have to hand it over. Less customers will be directly served by a CEO - but that may be too their advantage - as they may get sponsorship closer to where it matters, in the product development organization. We recommend to actively start moving your executive sponsorship to where your critical automation areas are - if it's with technology go with Sikka and / or directs, if it's with the Business Suite Leukert is your man and if it's vertical automation then ... wait for the dust to settle a little. 


    SAP already streamlined the organization with moving all development responsibility to Sikka in the last reorganization back on May 24th (my take here). It now has simplified and accelerated the decision processes on the CEO level with putting the reins in McDermott's hands exclusively, we expext this transition to happen faster in day to day operations than the formalities. 

    Everyone knowing and having experienced McDermott knows that customer relations are in very good hands. SAP's challenges are however on the technical side - and that's where McDermott will need to have a firm, steady and foremost credible hand. McDermott will have to earn his respect on the key technical development side, with European and Asian clients and win the German employee base over. 

    In short he has to turn into a global CEO that can project his charisma and communication skills beyond English speaking audiences and cultures. From all I know McDermott can make that transition - if will be for the better of SAP. We wish him das Glueck des Tuechtigen. (translated freely - the luck will come to the hard working). 

    Find key articles and tweets in my Storify collection here
    My predictions on future (organic) executive level nominations are here

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  • 07/24/13--23:54: Quo vadis OpenStack?
  • This post was overdue by now - but today's (July 24th 2013) events triggered it into existence, as I wanted to write a post on the OpenStack dynamics as we see them unfolding in the coming quarters since a long time. Cloudscaling's Randy Bias unbiased (pun intended) open letter to the OpenStack community was just the spark that was needed.

    OpenStack turns 3

    With all these babies turning toddlers - we have plenty of 2 and 3 year olds around now. Time to take stock. And specifically for OpenStack - the toddler had a growth spurt of massive proportions in his 3rd year with IBM and HP joining the party. 

    For a real world toddler that would be like being given an Olympic size swimming pool and half a Disneyland as personal play area. Maybe exaggerated - but if you consider the resources and scale that IBM and HP brought the OpenStack 2 year old - the analogy may not seem so grandiose after all. And I am not mentioning what the joining of RedHat and VMWare would mean for the 2 something year old.

    What started as little less than 30k lines of code with the Nova compute project (from parent NASA) and the Swift storage platform (from parent Rackspace) has now ballooned into a 600k lines of code 3 year old, that also dabbles in dashboarding (Horizon), image storage (Glance), identity (Keystone), networking (Quantum), block storage (Cinder) and many more activities.

    Open Letter

    Cloudscaling CTO and co-founder Randy Bias stirred things up with his open letter to the OpenStack community. There he states that practically AWS has won the battle for innovation in the cloud - out executing the OpenStack conglomerate and that it's time to honor this reality. Basically OpenStack should focus on integrating the on premise data centers with public cloud offerings, bowing to the Amazon APIs. Bias adds how APIs got somewhat hijacked by Rackspace in the early OpenStack life years - so the OpenStack community should not treat APIs too much as holy cows.

    And while Bias is certainly right on the Rackspace influence, we think he underestimates the unwillingness of the big boys in the OpenStack community to let AWS get away as the winner. IBM, HP, RedHat etc all did not join OpenStack to declare AWS as the public cloud standard (and winner) but to form a broad alliance against the GAMO (Google, AWS, Microsoft and Oracle) vendors. And in their mind - they haven't even started to compete - it takes enterprises like IBM and HP months to get resources shifted, allocated and productive. For them 12-24 months are necessary to even see what speed the 3 year old can develop - being put on an enriched diet, more exercise, more teacher, enrichment etc (ok, the analogy gets quirky here).

    The OpenStack Core Dilemma

    The key takeaway from Bias letter is that the core problem of OpenStack are the close to their heart interests of each of their members. While Bias blames Rackspace correctly, we should not let him get away, that an embrace of AWS (and GCE, which he mentions, too) - would certainly help Cloudscaling to monetize some strategic investments. And the same is valid for IBM, HP, RedHat, VMWare, AT&T, Cisco etc - all of them have their own interest, strategy and path for differentiation - and as they hope - domination of the cloud going forward. 

    The interesting question for the observer is - how long will the OpenStack community play nice with each other - and when will the gloves come of? This is very hard to predict at this point, but we think that the easy life for the 3 year old will continue for 1-2 years - as the rich uncles and aunts (IBM, HP etc) - just get serious to invest in the 3 year old. They will play nice for some time  and then may get into a fight for the elementary school the 5 year old should join for kindergarten.

    And likewise - should any major player in the OpenStack community see the chance to step up to the GAMO players - we do not think they will hesitate for a second. But they would have to make sure they can pull it off and break free from the rest of the pack - as they risk to loose cherished inter-operability that they have been promising and selling to their customers.

    This reminds me of the situation of an escape group in cycling (yes maybe too much Tour de France recently) - this group needs to work together to keep the peleton at bay (here the GAMO vendors) - but if any of the riders in the group thinks he can win - he will go for it and all cooperation is so passe.

    It all plays into AWS hands

    With all uncertainty that can be created in the OpenStack community for now and the near future - it all plays in AWS hands - and to a certain point in the rest of the GAMO players - as they offer a clear path and roadmap to the future. And it's this reliability and track record that enterprises ultimately make the foundation for their cloud investments. 

    And while e .g. IBM and HP have significant trust credit in the market and with their customers, they still need to earn their trust specific to the cloud - something they are lacking in comparison to the GAMO players. So it will be interesting to see how the adults in the Openstack community will be able to keep the hot headed members in check - for their mutual benefit.


    The noise levels in the OpenStack community are up... and the potential cracks form this noise will only make the core argument of Bias' letter - the AWS leadership - a stronger one. But the desire of the large contributors to OpenStack to create a counter balance to AWS is and will remain very high for the foreseeable future. 

    It will be interesting to see if those enterprises (the IBM, HP, Cisco, AT&T etc) will be able to gloss over these noise levels and get the OpenStack community to not only deliver but also become so competitive towards AWS and the other GAMOs, that they can take market share from them. Exciting times ahead.  

    P.S. And for those who are wondering - quo vadis - latin for where are you heading / going?

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    After spending more than 25 years building enterprise applications, and realizing that I will have probably another 25 years to work, I took some time to reflect, on how I want to spend the rest of my working years...

    Short Version

    I am thrilled to change perspective from the vendor to the analyst side and start to analyse, comment, advise on the key trends of enterprise application software, with the fundamental changes happening through the cloud, and there follow the basics of these changes, with covering IaaS and PaaS for Constellation Research. At this point I think the foundation for the next generation enterprise applications needs to get richer - so don't be surprised to see some forays into analytics, BigData, mobile, and social - and actually their incarnation as SaaS. 

    With Constellation Research I am very fortunate to join a great and dynamic analyst firm, with great individuals on board, and where I have colleagues that I can consider friends already. Can't get much better. I am committed to continue blogging here, so no worries. But checkout also my Constellation Research site here

    Longer Version

    Reflection needs some time off, so I was lucky that my last position gave me some good time off, on this beautiful construct British HR calls the garden leave. I used my time in the garden to get some things off the bucket list. Seeing the US Olympic track and fields trials live in Eugene, was something I always wanted to do since watching them on TV as a little boy in Germany and Italy. Running a (very slow) marathon came off the list, too - and it was so much fun I ran another one (faster) and 4 half marathons during that time, too. I would never have thought 3 years ago that I could / would be a runner and enjoy running to the point of a healthy addition. Also took of a great Caribbean sail trip from St. Lucia to Grenada. Spend a lot of time with the kids, helped the USYVL as clinician and IT advisor - and most notably, avoided travel. Done enough of that.

    Looking back the enterprise software industry has been very good to me - right from the start where my first internship got me to test and document SFA software. Lucky me, Kiefer & Veittinger would become the largest European CRM vendor, and having been something like employee #2, I was very lucky to be taken on the ride and help making it a great ride. And I will forever be thankful to Georg Kiefer and Klaus Veittinger for a tremendous level of trust and empowerment, that I have never seen before and later. I learnt a lot, was able to do a lot and most importantly had a lot of fun helping to build a pretty unique company. The approach to generate uniquely configured enterprise software based on standard objects, inherit an information model into this construct and only allow break points (today APIs) to customize the system - has been unparalleled so far.

    And when the time came, first through a partnership and then through step wise investment, Kiefer & Veittinger became part of SAP as their first acqHRired (the term didn't exist then) company, I was blessed with luck again. Not only was I charged to lead the pre-cursor of SAP's CRM (FoCus) - but Hasso Plattner also insisted that I would be part of the product development team - and the team developed the first installments of SAP CRM with Marketing Analytics, on top of SAP BiW (how it was called then). Laying out the 5 year roadmap for SAP CRM was a great learning opportunity and till today gives me a sense of ownership in regards of SAP CRM. And I was equally lucky to later work in the Office of the Chairman, directly for Hasso Plattner and Henning Kagermann on special projects. An amazing leadership duo. The Vorstandsassistent job is a fantastic opportunity to get to know a company inside out.

    I was lucky to work on very interesting projects, combining some of the business consulting skills we used as a differentiator at Kiefer & Veittinger with SAP internal projects. Can't mention too much, but e.g. verticalizing the sales force, getting marketing more consumer company style and more about perception than technology, were two of the projects that became public. But I wanted to build software again and along came Oracle, which wanted me to help build CRM applications.

    Working for Oracle during the boom was a thrill. I was familiar with Silicon Valley from long stints with SAP's Lab in Foster City and then in Palo Alto - but the pace was even more frenetic. And getting the first version of the Oracle e-Business Suite out of the door in 2000 was a major accomplishment. I am still very proud of the team, that through hard work and very long hours managed to ship the OLAP and BI CRM applications before the respective OLTP apps. And soon after the first PRM product of an enterprise vendor. I learnt a lot from my then managers Mark Barrenchea and later John Wookey. Weekly meetings with Larry Ellison were a unique, challenging and exhilarating experience. I will be forever thankful for all the help, guidance, support directly and behind the scenes by Judy Sim, Charles Philips, Sergio Giacoletto and Sonny Singh. Getting a global sales force to do what is not intuitive - is a huge and fun challenge. But I wanted to build software again and along came Fair Isaac, now FICO - looking for a head of products.

    Working for FICO (then Fair Isaac) was an amazing experience. I joined in time as the company was overdue to create their new platform and products for enterprise decision management, an analytical area that is still very near and dear to my heart. I am very proud of the team that managed to keep the lights on in many critical customer situations and select a new platform to build the next suite of products on. But the timelines for the new platform weren't realistic to pursue, which I was pretty clear about and that ended my short time with FICO. I am very thankful to my then boss Bernhard Nann for a lot of guidance, learning and support. And likewise to a great team where I learnt the most from Carlos Serrano-Morales and had the best operations director ever with Stachia Clancy.

    So I had some time on my hand, was stuck in beautiful San Diego and took my first sabbatical. I was tired of creating, fixing and turning around enterprise software - so when SAP was looking for a Chief Application Architect in Palo Alto, a position where you had to manage no one but could work on interesting architecture projects - that looked like a perfect job to me. And a great job it was - I learnt more in the time at SAP Labs then ever in my career about technology - since for the first time I had the time to research, learn and design things - as my main job. Before anything like this was always time constraint and to a certain point a luxury. I remember very insightful conversations with Ike Nassi, Rainer Brendle, Karl-Heinz Roggenkemper, Kay van de Loo and Larry Cable. And I am very thankful to Frank Samuel for the best crash course on my SAP know-how gap of 9 years. I had the privilege to work on very exciting projects - but saw too many good ideas and concepts not finding uptake in Walldorf. Having worked on both sides of the Atlantic, that was particularly troublesome to me - and I missed building products that would make a difference in a few quarters and not - maybe - in years.

    So along came NorthgateArinso, which was very interesting to me as I could learn beyond CRM not only with a new area of enterprise automation with HCM - but also, that the life as a BPO provider is different to life at an enterprise software vendor. When your weekend update has an issue Monday morning as a BPO provider, you end up loosing money by paying penalties for missed services levels by 8 AM... And a lot of credit goes to the former Arinso team that figured out to make R/3 multi-tenant and enable a powerful and cost effective BPO platform. I was lucky to have a very strong team of executives working for me, with Muhi Majzoub taking care of the UK and leading it to the start of a new ResourceLink product, with Eric Delafortrie to show me the ropes around HCM and making the euHReka product a success, two gifted managers with Christine Morris-Jones and Sam Xydias, who ensured a 0 escalation period from down  under and Tony Whitehead who managed a business unit successfully on the very challenged ProIV product.   It was also my first experience working with private equity and I am thankful to Dhruv Parekh as a great confidante in these terms. But NorthgateArinso wanted to de-emphasize products for the benefit of services, a risk which was there all along - so I found myself in the garden.

    I know I mentioned some former colleagues here - and I know I have missed tons of great, challenging and inspiring colleagues. Management by wandering around is something I love to do and I think is essential for a product team's success. Software is build by people and you need to know them, give them time and attention, listen and learn first and foremost... so to the many unnamed former colleagues I have had in Mannheim, Bangalore, Reading, Boston, Foster City, San Mateo, Palo Alto, Redwood Shores, Herndon, Los Angeles, Geneva, Munich, Milan, Paris, Stockholm, Dubai, Singapore, San Diego, Atlanta, San Ramon, San Jose, Irvine, Brussels, Bristol, Peterborough, Hemel Hemstead, Manila, Adelaide, Sydney (and sorry to the locations I forgot) - I have not forgotten you and the many things I learnt from you. 

    Through my garden leave and sabbatical I realized, that maybe I don't want to go back at fixing, creating and making enterprise software successful again. There were good and interesting opportunities, but somehow I could not muster the excitement these opportunities would deserve. I knew Ray Wang from our time at Oracle and he has been coaxing me towards analyst work since a long time. I always enjoyed conversations, meetings and briefings with analysts. 

    All my contacts in the analyst world I talked to told me, that the toughest thing for an analyst is all the writing. And so I put myself through the a post a day routine - and you see the results of that on this blog. And while I am far away the writer I would like to be - I started to enjoy it - even having withdrawal syndrome, if I didn't post something for a day or two... And I am thankful to all the readers of this blog, all the great feedback I have received, encouragement and great criticism.

    From the little I know about it - the analyst world is changing, away from the large firms, the medium size firms have disappeared or have been acquired and I wanted to be part of something, that was changing the way how analyst services are presented and consumed. So Constellation Research looked like a good fit, and I am thrilled to have started there this week, covering the basics of the enterprise software transformation that we are witnessing, with IaaS and PaaS, with forays into what makes these successful, SaaS, analytics, social, mobile and BigData.

    So please follow me along the way, I look forward to hear from you and I promise I will give my best and try to make and keep it exciting and fun - as it has been so far!

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    I wanted to write this post since a while - and as summer vacations are coming up for me and family as well as fellow readers - I wanted to start a summer series... keeping it with Mark Twain's famous - sorry I wrote you a long letter - I did not have time to write a short one  - this could well backfire - but it's worth a try. Shouldn't take more than 2 minutes to read.

    There seems to be a lot of interest around recruiting functionality in the HR enterprise software space these dags... So let's understand why that is...

    Recruiting is... old

    Well, relatively speaking. Apart from payroll and core HR systems - recruiting functionality for most vendors has seen many moons by now. One of the first functionalities to be build for the internet - because it had to run outside of the firewall - it is now showing its age. Time for vendors and new entrants to renovate or relaunch. Anyone still using an ATS?

    Recruiting is ... competitive

    With Oracle buying Taleo, the recruiting leader is no longer available as a partner for the talent management vendors, who preferred to build other talent management functionality and partner with Taleo. Biggest evidence - with a remediation plan - is Workday.

    Recruiting is... where it all starts

    Many of the HR enterprise system installations are in a state of challenging status quo. They are aging, they have their quirks, but somehow the workarounds have grown on enterprises. But for those enterprises that want to start new - they can start where all new HR starts - with a new recruit. And with that the promise (of the vendors) and the hope (of the users) - that by starting right - all will end right.

    Recruiting is ... socially affected

    Everybody knows that somehow social could travolge recruiting. It's kind of intuitively clear - as most hiring happens through someone knowing someone - so something that social networks could help with. See the LinkedIn growth - a de facto HR software company. But no one has really figure this one out.

    Recruiting could be... different

    One interesting approach to recruiting is the former Mr. Ted's Jerome Ternynck's Smartrecuiters. Make the software free - and pay in case of positive business outcome - a successful hire. Could change the whole market from license based pricing to outcome based pricing.


    It willl be interesting to see who will take the crown for best in class recruiting functionality. Plenty of conventional approaches to it out there (think e.g. Oracle and SAP), plenty of fresh starts (think e.g.Workday and Ceridian), plenty of promising starts (think e.g. Cornerstone), plenty of re-thinking (see e.g. Lumesse), plenty of change game potential (think e.g. Smartrecruiters) and plenty of wildcards (e.g. LinkedIn or even with a little bit of fantasy... Facebook anyone?).

    Exciting times ahead!

    P.S. 2 minutes? Hope not much more - but hope for some more think time. Feel free to comment (if Google Blogger works... hope so!).

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    After a very long 12 years it looks like Steve Ballmer is calling its quits at the helm of Microsoft. Actually it will be 13 or years when he retires. 

    No need to add to the speculation on possible successors - internal, external etc. the question really shareholders should be asking is - can you find an individual to successfully lead the diverse Microsoft businesses? Are they potentially not synergistic to each other? And ultimately - would Microsoft being split into separate businesses not be a better return for shareholders?

    To give credit to Steve Ballmer (and Bill Gates who may becoming more prominent these days and coming months in Redmond, after all he is getting into the age where most managers become CEOs...) - they tried to sort this out by focusing on devices and services. But that was too abstract and the devices are too diverse - it's different to sell smartphones vs game consoles - and the service portfolio was too wide, too - provisioning servers in Azure is different than taking orders in Dynamics.

    So time to untangle Microsoft - here are the suggestions...

    • Operating systems (Windows in all its flavors)
    • Cloud (Azure)
    • Productivity (Office, etc)
    • Business Applications (Dynamics et al)
    • Gaming (XBox & co)
    • Consumer Products (if you like keep venturing with the Surface, maybe a phone etc). 
    Now, finding a CEO is never easy - but if you think about it  - it's much easier to find six CEOs for the above entities than for all or Microsoft. And you make keep some in place that are running entities that are similar to the above - like e.g. Nadella for cloud and Tatarinov for Dynamics.

    And you could still cross license, subsidize across these entities. But each of them would be able to position themselves with their own marketing, decide where to sell with their own sales force, build their own products, have their unique support experience, select their best partners etc. And you could still have perfect fights over cross charges and bad delivery and partnership - in short keep the press entertained.

    Finally - and this is all speculation of course - I think investors will trust more and hence vote with their security purchases - into the six entities - than into Microsoft as a hole. Microsoft running on full steam with six entities as it's offspring - may achieve more for customers, partners, employees and mankind than the behemoth it sometimes is these days.  

    Now I can only hope Bill Gate reads this... 

    Missed my takeaways from Build 2013? Read them here

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    Attending VMWare's VMWorld conference this week in San Francisco was an interesting experience - we got to witness a lively ecosystem, a company with a strategy and really passionate - if not even cultishly loyal - user base. But where there is light there is also shadow - and we will describe both in this post.

    Monday takeaways

    VMWorld kicked off with the usual CEO keynote and Pat Gelsinger did a good job walking through the status and upcoming plans, in one of the most methodological and structured keynotes I have ever seen. Guess the chip engineer background does make a contribution to presentation style here.

    Not surprisingly VMware keeps forging ahead with its server virtualization work - making vSphere 5.5 generally available in Q3 2013 - which amongst many other features - gives customers a better handle to deploy Hadoop atop of VMware (courtesy of project Serengeti). And not surprisingly the support for enterprise applications has been increased -  SAP and Oracle in the forefront - with a doubling of logical cores to 320, supported memory to 4 TB and a 50% increase in virtual CPUs to 3096. This will allow customer to move even  more ambitions payloads to be virtualization.

    So far so good - steady state on constant improvement - the main thrust of VMware's R&D though will go into the creation of the Software defined data Center (SDDC) - by itself not too much of a surprise - given the Nicira acquisition and the need for a compelling overall data center strategy. And this of course triggers more complex and extensive management needs - as much more than the conventional server load is being virtualized. The new products are VMware NSX and VMware Virtual SAN, the former is expected to be GA in Q4 2013, the latter go to public beta in Q3 2013.  

    Noticeable - especially in comparison to last year - was the absence of the so called end user products which had prominent keynote time last year. It looks to me as if VMware may have tried to buy time here - or realized the VMWorld audience is not the decision maker for this product category.

    In contrary to end user products - Gelsinger / VMware did talk about hybrid cloud, brought Bill Fathers on stage - and Bill talked about the data center plans - which are now going to be 5 in North America (2 existing and one planned by VMware, and 2 in partnership - surprise, surprise -  with Savvis). Moreover VMware offers a connect service with a product called Direct Connect - the enablement on top is for disaster recovery and desktop as a service (DAAS). A good start - but much more is needed.  

    And last but not least VMware re-iterated it's commitment to Pivotal and Cloud Foundry, both companies will work to deliver a commercially supported Pivotal CF PaaS - that can run both on vSphere and vCloud hybrid service. 

    Feel free to check out the Storify tweet collection on the keynote here

    Analyst & Press meeting takeaways

    This turned out the be one of the better press and analyst meetings out there, with plenty of time for presentation and questions to all the key executives of VMware, kudos to the AR team. 

    My key takeaways amongst a lot of good learning and information were

    • It was good to hear from VMware's strategist Shekar Ayyar that the investment is flowing into the three priorities of SDDC, hybrid cloud and end user computing. Overall VMware sees an addressable market of US$ 50B in 2016. 
    • The strong dependence of VMware on partners is both an opportunity and a challenge - lower sales costs, but the ecosystem needs to be treated well - and it apparently feels treated well. 
    • The relationship of VMware with OpenStack seems to get more and better clarified, with Raghu Raghuram clarifying interfacing strategies on a number of layers between the two offerings.
    • When I asked Bill Fathers on one of the strongest VMware hybrid cloud sales arguments - that VMware knows the loads in the private cloud better than anyone - and that they should therefore become the adviser on what loads to move to the public cloud when - I got a lot of agreement, but that this - for now - is a professional services opportunity only.  
    • The future of Socialcast remains in question - but Sanjay Poonen eased concerns here - but VMware still needs to flesh out more. To be fair - it was Poonen's 6th day with VMware and for that he did a formidable job.  
    • And finally I had the chance to ask Pat Gelsinger where he sees the growth for the likely reduction in compute virtualization revenue (no pushback here!) - and the answer was that in the short term it will be management, NSX and end user computing, then storage and then hybrid cloud. 
    • Lastly I found all VMware executives remarkably friendly, open and almost eager to answer even critical questions - not all analyst meetings are like that, other vendors take note.
    Feel free to check out the Storify tweet collection on the keynote here

    Tuesday Takeaways

    The mornings keynote was different than in previous years - when it used to take a product and show me the features approach. So this year VMware tried to pitch new products in the real world scenario of the IT side pitching SDDC to the end user (ironically being played by Carl Eschenbach, VMWare's COO). Personally I liked the idea and execution very much - but was surprised that most of the audience did not - which reminded me that most of the audience lives and breathes very close to the compute virtualization. Not much pitching of a business case needed here - it's known and it's been done. 

    Not surprisingly the press spin machine slowed down - with only three press releases - one on the Horizon product side that can now deploy desktops to vcloud hybrid service, partners can offer desktop as a service and there is extended smartphone support with new VMware ready smartphones. 

    Buried in the VMware Cloud Management press release was the little fact that this product was the strongest growing product area of VMware - not surprising - but a good and key datapoint. 

    And lastly a VMware and Cisco joined customer success press release - well not a surprise here again. 

    There is money in virtualization

    Nothing validates the ecosystem better than a visit of the showfloor. And with VMworld being in Moscone - the comparisons to other shows that take place there - like OpenWorld, Dreamforce, Build etc is easy. 

    So what I am looking for are usually two things - interest by the attendance and marketing spend by the exhibitors... needless to say that the attendees were all over the place, but even more surprising was the marketing spend, that was way north of what you see even at much larger events like OpenWorld and Dreamforce. 

    Usually I look at the ridgeline of the booths - and you usually see a Matterhorn like profile - with the organizer's booths being at the center. VMWorld however, had an Ayers Rock like profile - with a lot of multi storey booths reaching out far to the edges of Moscone East and only one row each on either side of the exhibition floor of poor man booths. 

    Equally interesting - apart from the hypervisor competitors - everybody was there - the hardware vendors, the networking vendors, the data center management vendors, and the software vendors in the ecosystem. Yes, there is a lot of money in virtualization. 

    Reality Check

    As analysts we sometimes need to be careful not to live to much in the bubble that is created by Silicon Valley and by the constant briefings with cutting edge content by vendors. Many fellow analysts were wondering why to even attend VMWorld... as the VMware compute hypervisor revenue stream gets commoditized - and the move to public cloud would end VMware's stronghold on the corporate data center. 

    But chatting informally with attendees, mostly while waiting in the queues catching a bus, pick a table at the attendee lunches, chat with them at appreciation events, poll the after seeing a demo on the show floor...  gives a sense for what is real in the customer base. And to my surprise from the over two dozen companies I spoke with - none had concrete plans to move to public cloud. Didn't even have applications running in the public cloud. The most I got was a beta of Office 365... 

    And at the risk of running into a self fulfilling prophecy here - of course the VMWorld attendees are there, because they do have a significant compute load in their data center. But I was honestly surprised that there was so little public cloud reality at these randomly polled enterprises.

    VMware's opportunities

    As previously stated, VMware may have more time for the transformation than previously expected. But the main asset I see for VMware is, that the company has the deepest understanding of how onsite compute resources are used. It really comes back to that knowledge and finding a way to productize this going forward - in connection with the threat the public cloud poses for the company. 

    More down the road - if VMware's gamble on SDDC starts to pay off - which is a potentially big IF - it has the opportunity to really build differentiating end user computing scenarios - think of e.g. secure social networking, the machine to social relationship, the hybrid cloud load balancing etc.
    The other good news is, that VMware has a very loyal user base - I have not seen such a loyal and positive user base at a user conference since a long, long time. Sapphire conferences in the  middle 90ies maybe. 

    VMware's challenges

    Based on this, there maybe much more future on running hypervisors for compute in the corporate data center than previously expected. VMware's challenge is the pressure on these revenue streams. The good news is that the executive team is aware of these, acknowledges them and has now a bold strategy in place to move the corporate data center to the software defined data center. 

    But to achieve this the company needs to master an aggressive product development agenda, mastering not only networking, but also storage virtualization. But ultimately the question will not be if VMware can deliver, but if VMware can deliver enough critical functionality in time to be a relevant player and keep off larger competitors like e.g. Cisco and Juniper for the networking virtualization. The acquired assets of Nicira help a lot here - but there is more work to do. 

    Finally VMware needs to change the way it goes to market. Great to have a cultishly loyal user base and a very successful channel - but both will not win the battle for the SDDC. The user base is to far removed from the CxO level decision making about SDDC and the channel will have different options to play this game. And VMware's competitors have larger direct sales forces with entrenched relationships to the CIO. 


    A very interesting VMWorld where VMware laid down an ambitions strategy to get the control of the SDDC. The company will have to change the way it sells to succeed with that strategy, which may change this show going forward - less geeks and more suites. Interesting marketing challenges.

    And it looks like VMware days are less counted than I thought, the threat of customer moving load to the public cloud is much less imminent than I suspected. So it will be less the the port to the public cloud, than the replacement of on premaise loads by cloud loads through a vendor switch, like ridding itself of an on premise CRM system and switching to, which poses a challenge to the VMware market. 

    Finally a very ambitions product development agenda, but you can't fault VMware for that - and it's too early to call the state of progress on that. In the meantime the company deserves credit for going for it. We will have to check in approximately 6 months from now on progress of these plans. 


    And checkout my interview with Dennis Howlett here: 

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    After a long weekend due to labor day, Microsoft and Nokia hit the press with the intention to acquire Nokia's smartphone business and licenses by Microsoft. Which was a rumor many times in the past - but nonetheless a surprise that it (still) came through now (at last).

    A surprise - or not?

    There have been numerous rumors before, that Microsoft would buy a smartphone maker, and those rumors were often around Nokia, HTC and Blackberry. So now the rumors have come to an end - with the new Microsoft & Nokia combination. 

    At the end of the day Microsoft needed to correct its weak position in the smartphone space - after all it competes with Apple and even more with Google - who either have an integrated device business - organically built or bought from Motorola. Understandable that the decision makers in Redmond did think that they could not compete. 

    What does Microsoft get?

    Microsoft gets Nokia's smartphone business, Steven Elop and some executives and licenses key patents for 10 years and will license also the mapping and location services of the HERE division of Nokia for the next 4 years. . 

    Nokia - a shadow of itself

    The once darling and clear mobile phone market leader - only 10 years ago - and a true smartphone pioneer - is only a shadow if itself now. I remember using the Nokia Communicator and the shock and awe its fax capability had back then - amongst many other then cutting edge features. 

    Nokia now is merely three divisions with NSN (network infrastructure), HERE (maps and location services) and Advanced Technologies (development and licensing). Some of my contacts in the intellectual property circles already started to call the new Nokia a potential patent troll - we all should hope it will not come to that. 

    Organizational Implications

    With Elop talking over the devices and bringing its team over from Nokia - it questions the role of Larson-Green who will report to Elop and was one of the rising stars of Microsoft executives, even a potential Ballmer replacement. We do not expect that Larson-Green will play a diminished role for long, the question is only will it be at Microsoft or at another company.

    And Ballmer's email to employees also described the alignment of the Nokia marketing, support, etc functions with the new organizational model, meaning they will be moved to the respective functional leaders. Something we see critical - see our view on the CEO succession here

    Devices - no matter what

    One has to admire (to a certain point) the guts of the decision makers in Redmond. Despite record write down on inventory of the ill fated Surface tablet - they seem not to have enough of the device business. The belief of these decision makers must be that to succeed in the device space, Microsoft needs to have very tight control over software and device. 

    Microsoft had that with the Surface and did not / has not succeeded there. Now it will be more of the same - the question is - what will be the secret ingredient to make the device strategy a success now?

    Was there friction?

    The easiest explanation for the intended acquisition would be, if there was still some sort of friction between Microsoft and Nokia. That this wasn't personal is shown that the Nokia executive team, that was involved with smartphones, is moving over to Microsoft. 

    A potential reason could be that the architects of this acquisition know, that Nokia was not funded well enough to make a difference in the market place (aka marketing spend). That's an argument one could buy in.

    The other possibility is, that the lines of communication between software in Redmond and hardware controlled in Espoo where too long and not effective. If this is the case the acquisition also makes sense - but will be a point of concern to the other Windows Mobile partners like HTC etc. Needless to say Microsoft has already addressed these concerns and its also clear that Windows Mobile will only become a success in the market place if - at least for the next 2-3 years - there is a successful multi vendor strategy.


    The merger of two weak players does not make a strong one. But it certainly gives Microsoft more direct control and the chance to invest at will into the smartphone business. The appetite for more device business and exposure is baffling - it was never Microsoft's strategy, the company has become market leader with the help of partners and the recent issues of the Surface tablet would not have encouraged many boards to do more device business and risk more of the same. You certainly cannot proclaim a lack of guts by the Microsoft board. 

    The next quarters will tell what held Nokia back - was it Nokia - or was it Microsoft. Exciting times. 

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    I had the pleasure to attend the VMWorld user conference last week - if you have missed my takeaways you can find it here. VMworld is a come together of all professionals and companies involved in virtualization, IaaS and PaaS - as already 6 months ago I was asked during briefings if I would be at VMWorld or that we would see each other there formally or informally.

    [I kept the sequence in alphabetical order - there is no preference or ranking of vendors here!].

    AppEnsure was founded with the idea to bring an end to perennial finger pointing that happens between different functions of technical support, when a performance problem occurs, while the business side is in agony. I met with the founders that went the hard way by looking at the network packet traffic - by inspecting the packets and recording normal application performance and then being aware of issues coming up. Sounds pretty hard but with both founders coming from a networking background they seem to know what they are doing and have mastered a perennial problem for the business users. 

    Atlantis computing brings a solution to the usually sluggish VDI situation - by moving the whole desktop and storage into server side RAM. Obviously a huge performance boost - that brings the VDI experience ahead of even very fast SSDs - and the cost seems to be controlled by amongst others by compression and in-line de-duplication of requests across the clients. Atlantis claims that the cost of a virtualized PC is below of that of a real PC - while offering better performance. Give their impressive list of customers they are clearly on to something - making usually performance challenged VDI deployments scale is an obvious strong point. 

    CloudPhysics, founded amongst other by two VMware alumni, makes reporting and simulating load in a VMware running data center easier. Strong points are the focus on usability - it has to work in 60 seconds and show a benefit - said founder and CTO Irfan Ahmad and the crowd sourcing or community based building of cards - the way CloudPhysics stores and display system information. This should be a powerful combination that will the company drive adoption. If CloudPhysics manages now to advise the IT community on which system loads could when be moved to the public cloud - there is a home run potential here.
    CloudVelocity makes it easy to move multi tier apps to the public cloud - without need for modification. Sound like really hard if not impossible to do - but with the founding teams is ex Neopath and with that has significant expertise in file exploration and transfer. Right now the company focusses on Disaster Recovery - and more interesting - Cloud Cloning and Migration. The company has the experience and guts to potentially create one of the first migration products between private cloud and public cloud - and there to multiple providers. The strong point is the non invasive way to just read and transfer files to different cloud environments.

    Next up was iland - a relatively small cloud infrastructure provider that nonetheless has been able to play with the big guys around development and test cloud offerings, disaster recovery and VMware related services between private and public cloud. The strong point is the companies expertise with VMware and smart product and service development around the needs of the ecosystem. It's encouraging to see dynamic players enriching the numbers of options companies have to build out their cloud infrastructure and that these players can chart a successful course through the market. 

    Not really a startup anymore Jamcracker addresses the need to offer a framework and platform to vendors that want to sell cloud applications and services into their respective ecosystems. And while large public cloud providers will create their own platforms and stores, Jamcracker is a viable option for telecom providers, IT Distributors and large end users, as e.g. public institutions. As such Jamcracker plays a critical role for the adoption of web services in different industries, the strong point being an integrated platform and significant complexity reduction for the operator.

    Teradici plays in the VDI space and own the PCoIP protocol that allows the host side compression of video images and its delivery to non PC clients. Teradici technology features heavily in VMware's horizon VDI product but the company works also outside the VMware ecosystem. Teradici's strongpointt is a turnkey solution around their PCoIP protocol starting with hostside hardware acceleration, over optimized network usage all the way to enable VDI clients. It's good to see a system play around a strong protocol - you don't see these often these days anymore - but in a performance critical space like VDI they have room to go.

    Zerigo is part of the larger 8x8 Inc and focuses on bringing the Destop as a service (DAAS) to the SMB companies. The company exploits some of the weaknesses in scaling, licensing and usability that the VMware products have, that focus on the larger customers. Strong points are the understanding of the SMB market and creating smart software add-ons that create a simpler and easier to use user experience.

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    This week I learnt about an outage that happened at a provider of Microsoft Office applications. Which reminded me about the sad state of high availability across the industry.

    More on the provider

    The provider is a medium sized infrastructure vendor that is successful in providing hosted Microsoft Officer applications, basically running the servers for Outlook for their clients. They are  not small with 5 corporate locations on both sides of the Atlantic, and 10 datacenters in the US and Europe. The provider is professional and has e.g. achieved SOC2 and SOC3 compliance.

    The vendor offers a a 99.999% up-time guarantee - but that was definitively broken by being down for most of a workday from 7 AM till 3:30 PM.

    What happened

    Clients noticed in the morning, that they were not able to get their emails, send emails and work with their calendars. When calling the provider, calls went dead, the provider's website and support applications were not available. The first provider to client communication happened then over... Twitter. And Twitter remained the lifeline between provider and customers till - you may have guessed it - the Twitter account went into Twitter jail for hitting the daily limit of 1000 tweets. And while that seems generous - it's not much if Twitter is your only ways of communication with multiple hundreds customers.

    What went right

    The provider got the system back, tried all they can do to get customer informed (so they were obviously in the dark), offered the usual letter form the CEO in the next 24 hours and had that followed up by the COO. The vendor communicated pro-actively that they had broken the service levels, and that that they would waive the requirement to ask for re-imbursement, and re-imburse customers diretly based on their SLAs.

    What went wrong

    In the CEO letter the provider already offered an issue with their routers as the root cause of the outage. And while it's fine to not have the ultimate reasons 24 hours post an outage event - you need to do better than the following from the letter of the COO- 48 hours later:

    "the routers connecting all our systems each received an invalid update”

    As my colleague Frank Scavo pointed out - that is pretty passive language - no one did the update. Was it the provider, was it the router manufacturer etc - we do not know. No one is taking responsibility. 

    Moreover there was no mention why all the routers went down, why the update was not tested separately and routers were not switched in groups, why were no backup routers held back etc. 

    And the provider explained that the phones (VoIP) and customer support systems were down - because the provider is using its own infrastructure. And while drink your own champagne is a good argument - it is an empty glass when you have a system outage. The provider missed to explain how this happened and why e.g. their DR for their operational systems did not kick in.

    The lack of an answer on both of these areas does not instill confidence to customers.

    The sorry state of HA

    We all know that data center components should only be switched in groups and with redundancy - but obviously this went wrong at the provider. Equally running your critical customer systems on the same infrastructure with your customers is a disaster waiting to happen - and it happened to this provider.

    So why do well known and proven HA principles get broken? The reasons are manifold. Human error, overconfidence (both are my bets in this case), cutting corners cost wise, not thinking the impossible, etc are all likely. And human nature is good at discrediting highly unlikely events - but when they happen we too often do not think of it was the decision makers looking the other way back then when they came up.


    Outages are always unfortunate and can't be planned as the Dilbert cartoon requests. It comes back to how a provider reacts, investigates, communicates and then remedies the sources. On reaction and investigation the provider was solid with a B rating - but on communication and remedies they only deserve an F.

    And HA on Twitter is easy - get a 2nd and 3rd account and switch over when your main account goes to Twitter jail. Yours truly knows about the 200 tweets per hour limit well. So follow holgermu1, too. Just in case. Happened twice this year - so far. And I won't beat 400 tweets per hour - promised... now wait...

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    The yearly Workday Rising conference is coming upon us - a key event for Workday, customers and the overall HCM market... All eyes in the HCM world will be on Moscone Center from September 9th to 12th, and with that Workday has earned the attention of a whole industry and market.

    Time to get some topics out there that we would love to have answers for after this week.

    [This post is trying to follow the structure of my May blog post about What I would like SAP to address this Sapphire... that, if interested - you can find here.]

    The Future

    Workday has done a superb job to achieve its market position and overall recognition. And it has for the first time laid out major innovation pieces coming in the future with Recruitment and BigData. It the near time it will be key to understand how these projects are going, what they will deliver and what the road map on top of these deliverables look like. And more longer term - if Workday will share what similar large investment areas there maybe going forward. More horizontal functional extension in HCM, more vertical functionality, more Financials functionality - maybe a surprise? 

    My hope is that the company will continue to chart a course similar to the e.g. BigData timelines for similar large and strategic initiatives - something all enterprise software vendors are inherently uncomfortable with - but something that bides a market  leader well. Anyone remember how Siebel kept the ecosystem in its breadth by the march through the six generations of CRM?

    More sweet Suite?

    Recently Workday has ramped up its messaging on the benefits of running a modern, cloud based integrated HCM and Finance system - and the benefits are on hand (see e.g. Mark Nittler's excellent post here) - but the argument may also play into the hands of even larger automation owners like e.g. SAP, Oracle and Infor. 

    Nonetheless this is a move in the right direction in my view and it will interesting to see what innovative and differentiating argument - maybe from a unique HCM perspective, the higher ground for Workday - we will hear this week.

    What Clouds will it be?

    Workday has done a great job on evangelizing the benefits of the cloud and putting most of the competition on their heels on the topic. But Workday also built their in house technology to run their cloud apps - something that may become a concern both from a modernness and viability perspective. 

    Therefore I saw the unintended communication at HP OpenWorld on Workday allowing to run development and test systems on Amazon's AWS as a very good proof point and key industry support. It remains to be understood, what keeps Workday so far to not officially run on AWS as production system. And along the same lines it will be interesting to hear Workday's plans to  learn  more about plans and architecture to deploy to different public clouds (e.g. HP's). And maybe we could even see large customers pressure Workday to an inhouse deployment on an OpenStack cloud? 

    In Memory

    We are seeing SAP spending a good amount of change on getting the HANA message out. Less known is the fact, that Workday has been deployed on an in memory object model right from the start (see Curt Monash still valid review here). No need to make noise about it from Workday's perspective then - but now would be the time to share experience and learn from in  memory computing (e.g. before also Oracle jumps on the bandwagon as expected in 2 weeks at OpenWorld) epertise and establish a strong differentiating positioning for in-memory architecture.

    Next Generation Recruitment

    Workday has certainly raised the ante on their upoming recruitment product. We hope to learn more about the upcoming functionality and hope that Workday will use this opportunity to build recruitment from bottom up newly in 2013 to truly differentiate themselves from the existing bread and butter functionality. 

    Designed for mobile first is the claim, and we expect that to be delivered - but we equally expect a thought leading way how to deal with social media beyond Chatter. And not just for the travolging aspect social for recruitment - but for the overall product suite.


    From what we can see Workday gets dragged into providing payroll functionality more and more as a product deliverable, as seen with the recent announcement and confirmation of the UK (2015) and France (2016) payrolls. And while the company has done a very good job with interfaces and partner programs - at the end of the day larger international customers - Workday's sweet spot - would like to have this critical piece of information delivered from their vendor - with no potential finger pointing on integration, compliance and payment issues. It will be interesting to see if this ultimately will lead to a rethinking of the Workday in product supported payroll scope.


    One of the other larger product development deliverable of Workday that's on the horizon, is their BigData initiative. The traditional transactional vendors usually chose a co-existence model - keep their transactional data in one silo, and the no-sql data in another and let the magic work in between. 

    With Workday's object model though - there are other options to build this - and they could become true value drivers for its customers and products - let's hope we will learn  more in this area at Rising.


    Workday comes off a stellar quarter - and it will be interesting to see how customers, partners, the whole ecosystem feel about the performance and about the next quarters to come. As known, Workday not only needs very good execution to the product side (that we focused a lot on in this post) - but needs it equally on the go to market, partner development and enablement as well as customer success side. And that across many more geographies. We look forward to see and learn how the company handles the good problem of growing very fast - one of the more strategic overall topics we plan to keep a keen eye on. 

    Vision & Thought Leadership

    Workday has done very well in this category and haunted competitor s by mini bus loads- effectively becoming the though leader and company to beat. But we are reaching now a point - with the advent of recruitment and BigData functionality - where the company needs to charter it's next chapter. This Rising conference maybe too early still, same for the HRTech conference in a short 4 weeks from now - but we would hope at least for some glimpses and  maybe the testing of some basic directional messages. 


    Market leadership does nothing more than bestow high expectations of its bearers. Combine it with a significant amount of thought leadership and the expectations go even more up. User conferences are a key indicator for the health of both as they can move the needle even more forward - or show signs of less of pressure on the gas pedal. 

    No question it will be an interesting 4 days - looking forward to it. 

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    With this mornings announcement of SAP announcing it's intention to acquire San Francisco based analytics vendor KXEN, we may witness the beginning of the fall season for acquisitions by the usual suspects.

    Actually - that prize may go to IBM - who finalized its acquisition of Trusteer the other week - but more on that later.

    Real vs faux analytics

    To clarify this post to the novice reader - we only refer here to the real analytics - the one that according to the definition either recommend an action - or even perform an automated action. That's what the Greek -tics suffix is all about... Unfortunately some marketeers found that analytics is a nice new word open for abuse as a buzzword and re-purposed it for the dinosaurish sounding reporting and the ancient BI and the more recent dashboarding. All of these are not analytics as we mean it here... and analytics as KXEN provides them. Look forward to Jonathan Becher and team to sort this out, clean it up and land on the true analytics side soon. (More on this here.).

    SAP and Analytics

    This is a long story that I won't put down in this blog - but it was a story that was finally coming around. SAP has gone from having no story (before the Business Objects acquisition), to a wrong story (when it was partnering with SPSS), to a confusing story that needed to be explained - but was turning to the better.

    Again - I won't dive into the details - but a complex story it is. And what it was lacking was the necessary tool aspect to build analytical applications - the tool you want to give - ideally the business user - a  tool in the hand to have a chance to solve a complex business question in order to take the actions to steer towards the desirable outcome.

    So far no vendor in the analytics field has been able to give these tools in the hands of business users, best case the power users, and I have blogged about the quest for the holy grail of analytics before...

    The case for KXEN

    KXEN has built a suite of analytics products mainly around scoring algorithms and data mining - and the good news is that these are easy to understand for business users... almost any person going through higher statistics or business classes has solved decisions with weighting and scoring and at least heard of data mining.

    So with KXEN SAP gets tools that allow to drive to analytical decisions not only for classic on premise data, but also unstructured data - both of which SAP could not easily do before and in most practical circumstances would have to resort to an R built model. And while R is a good choice for SAP overall - it only caters to the geeky data modeller and statistician - not to the end users...

    Additionally the forays of KXEN into sentiment analysis and recommendation as well as the Genius product that is catered for marketers - provide interesting products for SAP to leverage. Most interesting will be the packacked apps that KXEN has built... on top of

    One SAP interna

    It's surprising that the quote on the press release comes from unusually low in the organization - Michael Reh - which may point to a less board centric communication stategy, but potentially also a more collegiate and decentralized acquisition strategy. The hope is that this is not a signal of less importance of analytics for SAP.

    The competitive angle

    One cannot think of SAP acqiring KXEN without the IBM acquisition of Trusteer. We blogged earlier that SAP wants to be a technology company - and then you need to react if one of your key competitors - and IBM has become that for HANA in the last 3-6 months - does a strategic acquisition that propels them forward. And KXEN is a good reaction - that even passes IBM given the higher end user focus of KXEN over Trusteer.

    And then it makes - ahh - the irony - SAP a salesforce partner. A large group of KXEN's executives team comes from (BI / Reporting tools and Service Cloud) and KXEN had (rightfully) decided to put a number of their models in the cloud on top of Let's expect grown up reactions from both companies and we see another co-opetition relationship forming. The fun fact will be that it will SAP's KXEN running on the salesforce cloud infrastructure using data in an Oracle database.

    Implications for Customers

    There is no reason for KXEN customer to fear the acquisition - assuming SAP will secure the management and expertise diligently - and if concerned - secure support and commitments now for as long as can be negotiated. But understanding what SAP plans to do with KXEN on top of HANA will be interesting and probably valuable for KXEN customers - so they should wait and see at least for these plans to crystallize soon.

    For SAP customers looking elsewhere confused and potentially disillusioned by the current state of analytics - this is exciting news and they should press hard for the road map of integrated offerings.

    Implications for Partners

    While  many services companies in the IT field maybe looking at how successful IBM is acquiring analytics companies and making a services play out of the business - it's too early to tell if SAP can create a similar services ecosystem around analytics. In general it's worth watching and looking for value added services that can be build or productized on top of HANA.

    Implications for SAP

    SAP gains a very good analytics company and now needs to maximize the return for mutual benefit of customers and ecosystem. It has taken a long time to create a good analytics story - now, one can only hope it becomes a great one.


    A good and fitting acquisition for SAP that will make HANA a better competitor in the (true) analytic space with SAP gaining a end user friendly tool, some interesting packaged apps and a thorough data mining and scoring engine and expertise. If you are a fan of (true) analytics like yours truly - then this is a great  move.

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