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Wednesday, March 28, 2007

SAP's Shai Agassi calls it quits

SAP confirmed today that its product and technology executive Shai Agassi is quitting the company to "commit himself to his personal agenda of environmental policy and alternative energy sources and other issues."

Agassi was the architect of SAP's Netweaver strategy, its service-oriented architecture. He was also slated to become co-CEO with Leo Apotheker, who is currently president of SAP's Customer Solutions and Operations group.

At the same time, SAP announced that Apotheker will assume the new role of Deputy CEO immediately, putting him in line to succeed the current CEO, Henning Kagermann.

What does it mean? It's hard to tell. There's not a hint anywhere that there was any problem between SAP and Agassi. Agassi, who is an Israeli, was one of the few non-German's among SAP's top executives. By all accounts, he was a major force to push SAP from its stodgy image in client-server systems to its current Internet architecture. His influence will no doubt be missed, although SAP's statement indicates he will remain as a consultant to the firm.

If anyone has more insight on Agassi's departure, I'd love to hear it.

Update, 8:30 p.m. Curt Monash has a "contrarian view" on Agassi's departure. He says that "SAP may do better getting out from underneath Shai’s overarching decision-making." He writes:
[SAP's technical strategy] has been heavily developed and refined on Shai’s watch, with major contributions from lots of other folks. The issue isn’t vision any more. What SAP needs to do better is execute on the vision.
...
SAP is doing plenty of things well enough to mine its massive installed base. But preserving and increasing the size of the base? For that, vision needs to be turned into more substance. And of senior SAP execs I've talked with and listened to — in Shai's case mainly the latter — Shai wasn’t necessarily at the top of the substance list. Indeed, he’s the only one who routinely left me shaking my head about a gap between rhetoric and actual technological fact.
For a different viewpoint, read Sramana Mitra's take on the news. She thinks it reflects a conflict in style between SAP headquarters in Germany and Agassi's powerbase in California. Agassi needed to get the CEO job to change things, and when that was deferred, he couldn't see staying around.

Update, Mar. 29: Josh Greenbaum, as usual, has good insights, including a review of the SAP executives that will need to fill the role Agassi has played.

Related posts
Oracle/SAP lawsuit: view from Rimini Street
SAP license sales grow, but short of target

by Frank Scavo, 3/28/2007 05:53:00 PM | permalink | e-mail this!

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Tuesday, March 27, 2007

Oracle/SAP lawsuit: view from Rimini Street

Yesterday, I spoke with Seth Ravin, CEO of Rimini Street, about Oracle's civil suit against SAP and its TomorrowNow (TN) unit for theft of intellectual property. Rimini Street, like TN, is a third-party maintenance and support service provider for Oracle's JD Edwards, PeopleSoft, and Siebel products.

Ravin is in a unique position to offer a perspective on Oracle's suit against SAP/TN. Not only does his firm provide nearly identical services as TN but Ravin himself was co-founder of TN's third-party maintenance services for PeopleSoft and JD Edwards. He was also TN's president until retiring to pursue other ventures shortly after SAP acquired TN in 2005.

Some of Ravin's observations match those I've already written in my first post and second post concerning this lawsuit. For example, Ravin emphasized that Oracle's lawsuit is not about TN offering third party support. Nowhere does Oracle object to SAP's offering third-party support for Oracle's products. Larry Ellison in fact has spoken of the third-party support model as "capitalism," and Oracle itself offers support for SAP's products through its partnership with Systime, as I noted previously.

He also observed that Oracle's security on its customer support website, by Oracle's own admission, allows anyone with a user ID to download any and all materials on the site, even those that Oracle is claiming in the lawsuit were outside of a particular customer's license rights. Oracle also does not appear to immediately disable user IDs and access to Oracle's customer portal upon expiration of a customer's support contract. Such poor information security practices and lack of access controls might be a defense for SAP in this lawsuit.

But Ravin also had some new insights into the lawsuit.

A question of intent
First, he believes that it is unlikely that SAP as an organization has any conspiracy to steal Oracle's intellectual property. Stealing Oracle's IP would have no business value to SAP and opening the door to such a lawsuit is certainly not in SAP's best interests. Furthermore, if SAP did want to steal Oracle's trade secrets, it certainly would not be likely do so from their own offices, traceable through IP addresses on its own network. If this were truly a case of corporate espionage, SAP would have done a better job of covering their tracks. I find this to be a convincing argument.

That leaves the most likely explanation -- if there really is an issue -- as that of errors by one or more employees getting confused and mixing up client logins when processing multiple download requests from Oracle's customer portal for new clients. Ravin notes that Oracle customers have the right to download support materials up to the expiration date of their Oracle maintenance agreement. When a customer plans to terminate maintenance, Ravin thinks that TN -- as the customer’s contractor -- likely offers to download all the support material for which they have the rights to. At this point, Ravin believes the TN consultant should write those materials to a CD-ROM or other appropriate storage device and hand them over to a customer.

Picking up on Ravin's theory, I can picture at least two scenarios. First, imagine a TN consultant who has several Oracle customers that have signed up for TN's services and plan to terminate Oracle maintenance agreements. Perhaps the consultant simply forgets to log out with one ID and accidentally uses one client's authorized ID to process another client's authorized download. Perhaps logins get mixed up or are not managed well to ensure that they are never used again after a client's Oracle maintenance contract expires. Since Oracle's site looks the same regardless of the login ID and since Oracle does not seem to immediately turn off access rights after maintenance contracts expire, there is plenty of opportunity for innocent human error.

Or, perhaps the consultant downloads all the material he needs for all his current clients using one login ID and then splits up the material for each customer according to what materials the customer has rights to. From the consultant's perspective, he's just trying to save time logging in and out of Oracle's support site, but from Oracle's perspective, monitoring these activities, it looks suspicious.

Without having seen Oracle’s evidence in this case, there are several scenarios such as those I've outlined above that might explain the situation. There would be no intent on SAP's part, or even the consultant's part, to steal Oracle’s trade secrets, but merely human error in carrying out legitimate activities on behalf of customers.

All about SAP
Ravin points out that while Oracle has every right to protect its intellectual property, if this involved any party other than SAP, Oracle would have followed the traditional process of notifying the party of the inappropriate downloading and seeking to resolve the issue. If the inappropriate activities were then to continue, a cease-and-desist letter might be called for. And certainly, Oracle would have cut off the offending user IDs from further access.

But in this case, it appears that Oracle gave no warnings and took no actions to stop the offending behavior. Rather it quietly monitored the activity for several months, building a case, and then springing a lawsuit. Why? Because creating a "giant media fireball" (Ravin's phrase) works in favor of Oracle's PR campaign against SAP.

Ravin says he would be surprised if any of the Oracle materials went through the "firewall" at SAP and reached SAP's development organization. He expects that a much clearer picture will emerge when this case goes to trial, if it gets that far. In the meantime, Oracle makes SAP look bad and it gets to play the part of the victim.

I asked Ravin how the lawsuit was affecting business at Rimini Street. He was reluctant to paint the lawsuit as good for business, but in fact, he says that sales activities have included a windfall of TN prospects and customers, as Oracle customers looking for third-party support do not want to get in the middle of an Oracle versus SAP battle.

It's going to be interesting to see how this case develops.

Update, 5:00 p.m.: Andrew Nelson, CEO of SAP's TomorrowNow, is quoted in the Wall Street Journal. "We believe we've done absolutely nothing wrong, and we're going to defend our position vigorously," Mr. Nelson said. "We believe our model is an appropriate and legal way to do business."

Related posts
SAP subject to criminal charges?
Oracle sues SAP and its TomorrowNow unit

by Frank Scavo, 3/27/2007 02:24:00 PM | permalink | e-mail this!

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Saturday, March 24, 2007

SAP subject to criminal charges?

John Pallatto brings up some interesting points in an opinion piece for eWeek on Oracle's lawsuit against SAP alleging theft of Oracle's intellectual property (IP). If Oracle is successful in its civil lawsuit, it probably opens up SAP--and individuals within SAP--to criminal prosecution.

He writes,
The next question that comes to mind is whether any of this activity, if it occurred, was done with the knowledge and approval of top SAP executives, or whether it was some mindless rogue operation carried out at SAP's TomorrowNow subsidiary in Texas.

If Oracle can prove its civil charges that SAP employees systematically looted intellectual property from the Web site, the next step could be state and federal investigations that could result in indictments.

Unless SAP can come up with some plausible explanation as to why people inside its organization were apparently downloading "vast libraries" of Oracle products, a lot of SAP jobs, reputations and cash could go down the drain. The very existence of the company would conceivably be threatened by this brewing scandal.
I did a quick check for cases of criminal IP theft and found this news site on intellectual property cases, which is maintained by the U.S. Department of Justice (DoJ). In addition to cases related to counterfeiting of branded products and software piracy, there are also examples such as these:
These are all criminal cases, which means the defendents could potentially face fines and jail time. There are many, many more examples on the DoJ website. (I should emphasize that the last two cases mentioned above are only indictments, and that the charges have not yet been proven in court.)

So, Oracle's civil complaint against SAP is serious, and it would appear it could lead to criminal charges.

Pallato also brings up an interesting point regarding Oracle's investigative strategy. He writes,
It's clear that rather than block the expired and bogus customer accounts from accessing the Web sites, Oracle chose to quietly monitor and trace the activity to investigate who was doing it and why. The results are this lawsuit.
It appears that Oracle has known about SAP's alleged downloading of Oracle materials for some time. But instead of locking the door, it continued to monitor these activities, building its case. If true, SAP has handed Oracle a potent weapon in the form of this lawsuit.

I've also been wondering about the apparent lack of security in Oracle's customer support website. Apparently, anyone with a customer ID could download anything, even materials for which the customer was not licensed--even internal documents that no customer was authorized to receive. If Oracle took such little care to protect its intellectual property, could that be a point that SAP could use in its defense?

Yesterday, SAP responded to Oracle's complaint to say that it would fight the lawsuit. "SAP will not comment other than to make it clear to our customers, prospects, investors, employees and partners that SAP will aggressively defend against the claims made by Oracle in the lawsuit," SAP's Steve Bauer said in a statement.

The discovery phase of this litigation is going to be interesting, potentially even more interesting than the DoJ's failed attempt to block Oracle's takeover of PeopleSoft.

Related posts
Oracle sues SAP and its TomorrowNow unit

by Frank Scavo, 3/24/2007 05:20:00 PM | permalink | e-mail this!

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Thursday, March 22, 2007

Oracle sues SAP and its TomorrowNow unit

Today, two days after it announced third quarter blow-out quarterly results, Oracle filed suit against SAP for massive theft of its intellectual property. The complaint targets activities of SAP's TomorrowNow subsidiary, which offers third-party support for several of Oracle's products, namely, PeopleSoft, J.D. Edwards, and Siebel.

The allegations
The complaint, filed in U.S. district court in San Francisco, alleges that TomorrowNow (TN) personnel repeatedly accessed Oracle's customer support system, using customer passwords, to download thousands of support documents, bug fixes, and other Oracle property, allowing TN to build its own library of Oracle materials to use in servicing customers that do not have Oracle contracts.

If what Oracle claims is true, it doesn't look good for SAP. It appears that Oracle has been monitoring server logs for its customer support website going back to last November and has come to a number of conclusions:
  • Oracle claims that TN personnel used the login credentials of customers who were ending their Oracle maintenance contracts to download materials related to products those customers hadn't even licensed. (Apparently, Oracle does not check which products the customer has license rights to when providing access to its support site.)

  • Oracle claims that TN personnel accessed Oracle materials from TN's offices, which are connected to SAP's worldwide network. The filing doesn't say so, but the question arises--did any of these materials find their way into the rest of SAP's organization? I'm sure Oracle will be asking a lot of questions along this line during discovery.

  • Oracle claims that TN used automated methods to search and download entire libraries of material. The number of requests was so many that it is not feasible that a user could actually review the results of each request before going on to the next.

  • Oracle claims that TN downloaded materials intended only for Oracle's internal use. (It is not clear why such documents would be accessible through Oracle's customer support site.)
To be clear, Oracle does not appear to be claiming that it would be illegal for TN to access materials on behalf of and in support of customers' existing Oracle contracts. The complaint is focused on TN allegedly using its customers access to build a library of support software and documentation, saving itself the expense of duplicating Oracle's effort.

What were they thinking?
Could SAP be this stupid? I've interviewed Andrew Nelson, CEO of TN, in the past, and I always had the impression that they were quite sensitive to potential legal issues. I would have thought that TN would try to be super-clean about how it handled Oracle's property. Of course, Oracle's complaint presents one side of the story. On the other hand, it's hard to believe that Oracle would be making this up.

Certainly, TN can't say they didn't know Oracle was watching them. Two years ago, when SAP acquired TN, I noted that Larry Ellison was threatening legal action. At that time, he said:
SAP has every right to provide support for PeopleSoft applications as long as they don't violate our intellectual and contractual property rights. It might make it awkward for them. That's our intellectual property, and they should be cautious.
Oracle does not seem to taking aim at any of the customers or former customers that appear to have allowed TN personnel to use their access credentials, although Oracle would probably have a pretty good case, especially if customers knowingly allowed TN to misappropriate passwords. From a public relations standpoint, however, I don't think Oracle wants to be suing customers.

Implications for the third-party support industry
The other side to this story is what it means for the nascent third-party support industry. Other providers, such as Rimini Street, are also growing software contract maintenance businesses. Ironically, Oracle itself has a partnership with SYSTIME to provide third-party support for SAP. To some extent, any consulting firm that provides tech support to Oracle's installed customers could be considered a competitor to Oracle in its maintenance business, although few of them offer what could be considered replacements for Oracle support. Oracle has never acted like it feels threatened by the host of small players that offer services to its customers. A thriving support community can be considered a sign of a vibrant ecosystem around a software vendor.

I've been sympathetic to third-party service providers, such as TN and Rimini Street, because I think they serve as a counter-balance to software vendors that might otherwise become greedy with customer support dollars. I would hope that there could be a thriving industry of third-party providers, but clearly they need to do so without misappropriating the intellectual property of others. If Oracle believes that SAP has stolen its intellectual property, Oracle is right to take legal action.

If even a portion of the allegations are true, it would appear Oracle has a strong case against SAP. Oracle is seeking injunctive relief: it is asking the court to order SAP to stop doing what Oracle says it is doing and immediately to return all materials it has allegedly stolen. It is also asking for unspecified punitive damages, restitution of ill-gotten gains, damages, attorneys' fees, and other compensation. The complaint also indicates that Oracle is in the process of filing copyright registration for materials, which if Oracle is successful in its litigation, may entitle it to statutory damages for copyright infringement.

You can read Oracle's complaint on the Wall Street Journal website.

Update, Mar. 23. Some commentators (Motley Fool, InfoWorld), are comparing SAP's alleged actions to Oracle's actions in appropriating Red Hat's Linux distribution for Oracle's own Linux support services, undercutting Red Hat's pricing in the process. Such comparisons miss the point: Red Hat's licenses allow (actually, must allow) redistribution of materials licensed under open source licenses. Oracle's license agreements expressly do not. Oracle is an aggressive competitor, but its actions toward Red Hat do not misappropriate Red Hat's intellectual property.

Related posts
Oracle/SAP lawsuit: view from Rimini Street
SAP subject to criminal charges?
TomorrowNow a threat to Oracle's maintenance business?
Rimini Street expands 3rd party maintenance for Oracle products
Oracle faces threat to Siebel maintenance fees
Ellison threatens SAP regarding PeopleSoft support
SAP to provide maintenance for PeopleSoft products
High software maintenance fees and what to do about them

by Frank Scavo, 3/22/2007 01:24:00 PM | permalink | e-mail this!

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Tuesday, March 20, 2007

Did Oracle just drain its pipeline?

Oracle has just announced quarterly results that exceed Wall Street expectations: a 35% increase in profits, a 27% increase in revenue, and a new license sales jump of 57%, far above the 30% increase that analysts were expecting.

Oracle was under particular pressure to show better results than it did in the previous quarter, when its share price came under pressure as the result of results that, according to the Wall Street Journal, "reflected some sluggishness in North America."

Oracle may have also been eager to contrast its performance with SAP's, which missed its sales goals in the previous quarter.

So, how did Oracle pull off such outstanding results this quarter? I happen to know that Oracle was extremely aggressive in closing last-minute deals at the end of last month, making what appeared to be desperate offers to get prospects to sign before the quarter ended.

At the time, I took this as a sign that Oracle was either going to have a very bad quarter or a very good quarter. Now we know.

The problem, of course, is that this game cannot go on forever. Such a tactic merely pulls in deals from the next quarter, putting even more pressure on the vendor to meet expectations from a pipeline that has been drained of many prospects. Nearly every software vendor plays this game from time to time, but the intensity of the effort in this case surprised me.

So, my guess is that Oracle's results without these last-minute antics would have been more consistent with SAP's, indicating a slowdown in new deals for enterprise software. I just heard today from some concern from another vendor that the level of activity seems to be slowing recently. If so, expect to see disappointment at the end of this quarter.

Update, 4:30 p.m. PDT: Listening to the Oracle's analyst conference call, Oracle co-President Safra Catz sounded gleeful, almost giddy, in her recap of the firm's results. During the Q&A session, however, her tone became somewhat more subdued when asked about pipeline assumptions for Oracle's upcoming fourth quarter. She said,
Obviously, pipelines are very big. Bigger than last year in Q4. But we are assuming modestly lower close rates than we had last year. Just...we just are always trying to be cautious. Even though, the truth way, last year's close rates were not outrageously high or anything like that, or one or the other. The reality is the pipelines are very, very big. But pipelines don't tell the whole story. We are just going to have to close an enormous amount of business--in North America, a billion dollars of new license revenue. We are very upbeat. But we have used reasonably conservative close rates.
In fact, Oracle's guidance for the upcoming fourth quarter is rather conservative. Catz is predicting new license sales to increase only by 5-15%. She kept justifying this conservative forecast with the explanation that it will be difficult to show year-over-year growth compared to last year's fourth quarter, which was exceptionally strong. But I still think the problem is not with last year's fourth quarter, but with the quarter that just ended, where Oracle drained the pipeline of many deals that would have otherwise closed next quarter.

I could be wrong. Check back in three months to find out.

Related posts
Oracle hustles Hyperion
Rumor mill: Oracle to acquire SAP
SAP license sales grow, but short of target

by Frank Scavo, 3/20/2007 02:35:00 PM | permalink | e-mail this!

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Monday, March 19, 2007

Microsoft's Project Green is dead

Microsoft is now claiming there was never any intention to merge its four ERP products into a single code base.

First a little history. Back in 2003, Microsoft began working on an effort to migrate its four newly acquired ERP products (Great Plains, Navision, Axapta, and Solomon) to Microsoft technology. None of these products were purely Microsoft under-the-covers. For example, Axapta was (and still is) written in its own development environment (MorphX), in its own language (X++ ), using Oracle as its preferred database.

Internally known as Project Green, this effort was aimed at converting the four products to Microsoft technology and converting their program code to a single code base while retaining the best features of each product.

If anyone could afford such a massive undertaking, it would be Microsoft. But Microsoft was not familiar with the enterprise system market and soon found out that its existing ERP customers were not all that keen on Project Green. Most of them were not eager to face a major upgrade/migration to a new product. And competitors used Project Green as a reason not to choose Microsoft, since what Microsoft was selling was going to be replaced by a new product. As Microsoft senior VP Orlando Ayala testified in court, selling ERP was a "humbling experience" for Microsoft.

Early signs of trouble
In addition, it started to look like Project Green was too much to bite off even for Microsoft. In 2004, Doug Burgum admitted that Microsoft was slowing down its work on the project, cutting the developer headcount from 200 to about 70. Some of the delay was attributed to Microsoft's problems with development of Longhorn, its next-generation server OS. Project Green was to built on top of a common services layer known as Microsoft Business Foundation (MBF), which needed capabilities to be provided in Longhorn, so if the delivery date for Longhorn slips, MBF slips, and Project Green slips.

Problems continued in 2005, as Microsoft's ERP unit pushed out its release date for the new version of Axapta and indicated that some products would be going into "maintenance mode." Josh Greenbaum even speculated the Microsoft might sell off its ERP products.

Lowering expectations for Project Green
A few months later, Microsoft began to redefine its goals for Project Green. Instead of rewriting all of its ERP products into a single code base, Microsoft would incorporate new technology and functionality into its existing products in incremental "waves." Microsoft still held out the possibility, however, of merging the four products into one successor product, but it made no commitment.

Later that year, still holding four products in its portfolio, Microsoft took the easy way to convergence. It simply re-branded all its ERP products as "Dynamics." For example, Microsoft Axapta became Dynamics AX, and Great Plains became Dynamics GP. It also announced a reorganization that pushed its ERP unit down one level and demoted its head, Doug Burgum. At the same time, Microsoft appeared to abandon any hope for MBF. Read my post at the time for quite a bit of insider feedback on these developments.

Then, about a year ago, Microsoft indicated that its release date for a converged product would be pushed out yet again.

Attempting to rewrite history
Now, for the latest news. According to Computerworld, Tami Reller, a Microsoft VP of business solutions marketing, is claiming that "there were never formal plans for a big-bang development project to meld the different applications." Furthermore, Microsoft executives are now downplaying "the notion that the software vendor has backtracked from its road map for pulling its four ERP product lines more closely together."

I had long felt that Project Green was not smart from a customer perspective. But it appears now that even the technical migration--which Microsoft should have been good at--was too ambitious. For example, I noticed in a recent Axapta sales presentation that X++ is still around. Instead of converting Axapta to C++, Microsoft has simply embraced X++ in its Visual Studios development tool set. Voila! Axapta is now pure Microsoft technology.

The ironic part is that Microsoft's solutions today are really good products, backed by the deepest pockets in the software business. So, small and mid-size businesses should continue to look at these systems and buy them as they fit their requirements. Perhaps now that Project Green is dead, they can do so without uncertainty about the future of these products.

Related posts
Microsoft pushes out the goal line for business apps convergence
Another false start for Microsoft's business apps
Reorg highlights troubles at Microsoft Business Solutions
Microsoft rebranding its business applications
The Microsoft ERP lock in effect
Microsoft: Project Green to appear in waves
Microsoft fuzzes up the definition of Project Green
Microsoft to put enterprise applications on the auction block?
Is Microsoft dying?
Microsoft eats more humble pie in enterprise software business
Microsoft Longhorn cutbacks threaten Project Green
Microsoft shortens Longhorn
Microsoft slowing down Project Green
Microsoft: selling enterprise software is a "humbling experience"
Yet another update on Project Green
Microsoft Project Green details emerging
Feedback regarding Microsoft's Project Green
Is Microsoft upstaging Great Plains, Solomon, Navision, and Axapta with "Project Green"?

by Frank Scavo, 3/19/2007 09:22:00 AM | permalink | e-mail this!

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Tuesday, March 13, 2007

Impact of daylight savings time change: bigger than Y2K

Back in January, I wrote that the change in U.S. daylight savings time (DST) rules, which took effect last weekend, might be a mini-Y2K. As it turns out, in some ways, it's a bigger deal than Y2K.

According to press reports, errors have been introduced into calendaring systems at many companies as some users have applied DST patches and others have not. It's gotten really confusing for some organizations where meetings are scheduled with participants outside the organization and in different time zones. Many companies have still not gotten their calendars straightened out.

Meeting schedulers, such as Microsoft's Outlook and Exchange, are just the tip of the iceberg, as they are highly visible and errors are annoying. How many other applications that depend on accurate time-of-day, such time and billing systems, are defective today because of the rules change?

Handheld devices are also problematic. My own experience is that it took me nearly two hours to get my Blackberry OS updated and synchronized with my desktop Outlook applications. Multiply that by the number of Blackberry users worldwide and the economic impact just for this one device is significant.

Why weren't we better prepared? I believe that many organizations deliberately underestimated the potential impact of DST rule changes after their experience with Y2K, which many felt was over-hyped. With warnings of the end of civilization, or at least computerized civilization, companies spent millions of dollars preparing for the turn of the century. But when the clock turned at midnight, nothing happened. It was nearly impossible to find reports of computer failure. Many business executives concluded that the whole thing was a hoax by IT vendors and service providers to spend money upgrading systems.

With that backdrop, it's easy to see why the DST rules change wasn't considered a big deal in many organizations. As it turned out, there's probably been more practical impact from the DST change than there was from Y2K. The difference, of course, is that with Y2K the economic impact was largely felt prior to the calendar change. With the DST rules change, there has been more impact after the fact.

eWeek has a good summary of the "nightmare issues" that some organizations are facing with calendaring systems.

If you've heard of other examples of economic impact from the DST rules change, please email me or leave a comment on this post.

Related posts
Mini-Y2K: Change in daylight savings time rules

by Frank Scavo, 3/13/2007 03:37:00 PM | permalink | e-mail this!

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Friday, March 02, 2007

i2 seeks patent license shake-down fees

A Spectator reader called my attention to this news yesterday. i2 Technologies is launching a patent licensing program to make available (for a fee) selected patents that do not apply to the company's supply chain management focus.

In other words, the patent program will NOT affect i2's current lawsuit against SAP, which is over one of i2's patents related to process planning, factory planning, sales negotiation and tracking, manufacturing allocations, and management of available to promise (ATP).

So what's the purpose of i2's patent licensing program? In one word, money. It appears that i2 has been applying for patents for general purpose approaches to system design, apart from its core expertise in supply chain applications. For example, the initial offering in i2's patent licensing program will be an i2 patent (US Patent No. 6,169,992) that relates to "the use of a Web browser utilizing an executable client application in order to enable interactive queries of a remotely located information repository."

i2's press release goes on to comment that the patent is relevant to Internet applications using Asynchronous JavaScript and XML technology (AJAX). AJAX is a web development technique for creating interactive web applications. AJAX makes web pages more efficient and responsive by exchanging small amounts of data with the server, so that the entire web page does not have to be reloaded each time the user makes a change."

Of course, i2's investors will cheer i2's move as a potential source of additional revenue. But, in my opinion, this program is another example of software patents going too far. AJAX technology is a hot topic in software development these days, as companies such as Google use it to make web-based applications much more user-friendly and efficient. For example, if you've clicked and dragged on a Google Map, you've seen AJAX in action.

Now, I'm not saying that Google Maps infringes on i2's patent. But I am saying that anyone using AJAX to access a remote database may now need to look at i2's patent claims. At what point do patents such as this one stifle rather than encourage innovation?

For more on the subject generally, see this Wikipedia entry on the software patent debate.

Related posts
SAP: If you can't beat 'em, sue 'em

by Frank Scavo, 3/02/2007 08:24:00 AM | permalink | e-mail this!

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Thursday, March 01, 2007

Oracle hustles Hyperion

Oracle is seeking to make an addition to its series of acquisitions in the enterprise software space. The target this time is Hyperion (HYSL), one of the leading vendors of business intelligence software. The deal was announced today.

The parties have agreed to a cash offer of $52 per share, or approximately $3.3 billion. The offer is about 21% above Hyperion's stock price prior to the announcement.

Although this is a big deal, there's really not much risk. Hyperion is already an Oracle partner. In fact, it runs Oracle's E-Business Suite and Siebel systems internally. There is also not a great deal of overlap with Oracle's existing offerings. Business intelligence is a complementary product, and these solutions tend to integrate easily with other products. There is a little overlap with some of Oracle's own reporting products, but not much. When customers want industrial strength performance management tools, or business analytics, they typically go to vendors like Hyperion.

The market for business intelligence products has been one of the brighter spots in enterprise software in the past few years. Because of Sarbanes-Oxley, companies are paying more attention to monitoring business performance, and vendors like Hyperion have responded with more products to analyze trends in the mountains of data produce transactional systems produce. As a result, the market for these products is growing at a compound annual rate of 11% per year, well above the business software market generally.

Another plus for this deal: Hyperion is a Tier I vendor, with 12,000 customers, including 91 of the U.S. largest 100 companies. Many of these companies are also customers of SAP. So, ultimately, this deal could give Oracle another avenue into these sites.

The market also seems to view the deal positively. Oracle's share price is up over 3% a few hours after the deal was announced. The transaction is expected to close in April.

Check out Hyperion's website for more information. There is quite a bit of material there about the Oracle/Hyperion deal.

Update: Computerworld is reporting mixed opinions from Hyperion users on the deal.

Update, Mar. 12: Clint Boulton points out that Hyperion's products are not all complementary to Oracle's. Specifically, Oracle's own financial planning and budgeting applications and the excellent performance management products that it acquired from PeopleSoft. He quotes Keith Gile at Business Objects (a Hyperion competitor), who listened in on an Oracle conference call about the deal:
"Basically, their management came on the phone and pretty much threw 'em under the bus and said these things weren't good enough, and therefore, "we went out and bought a pure-play, best-of-breed performance management solution in Hyperion."
So, in the view of Gile and Boulton, the addition of Hyperion's products threaten to dilute some of the products Oracle already has in its portfolio.

Related posts
Rumor mill: Oracle to acquire SAP
Oracle does the right thing with open source acquisition

Philly pulls plug on failed Oracle project
Two more business intelligence vendors are hooking up
Vendor consolidation hits business intelligence sector

by Frank Scavo, 3/01/2007 08:39:00 AM | permalink | e-mail this!

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Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

About the Enterprise System Spectator.

Frank Scavo Send tips, rumors, gossip, and feedback to Frank Scavo at .

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

Selecting a new enterprise system can be a difficult decision. My consulting firm, Strativa, offers assistance that is independent and unbiased. For information on how we can help your organization make and carry out these decisions, write to me.

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Strativa: ERP software vendor evaluation, selection, and implementation consultants, California
StreetWolf: Digital creative studio specializing in web, mobile and social applications
Vinnie Mirchandani: The Deal Architect
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Si Chen's Open Source Strategies
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