Wednesday, May 30, 2007
Latest on the Oracle/SAP lawsuit
It's time for an update on Oracle's lawsuit against SAP alleging theft of intellectual property by SAP's TomorrowNow unit, which provides third-party support for some Oracle products.
Here's the latest:
- On April 30, Oracle asked for a court order to force SAP to preserve electronic records that Oracle might want as evidence. In its filing, Oracle complained that SAP has not responded to a proposed "stipulation order" concerning such records, such as server logs. (As a side note, this is a good example of how new federal eDiscovery rules are coming into play in litigation.)
- On May 9, the judge in the case resigned after finding herself disqualified and requested that the case be reassigned to a different judge. She did not give a reason for her resignation. The news means that a trial will be delayed, however. Her filing noted that "all pending dates of motions, pretrial conferences and trial are hereby vacated and are to be reset by the newly assigned judge."
- On May 10, SAP CEO Henning Kagermann said in a speech to shareholders that SAP would put up a "massive fight against the accusations" that Oracle has made. "SAP respects the protection of intellectual property," he said. "At the moment we are investigating every single claim in the lawsuit and composing the defense that we will file with the court."
He also positioned the lawsuit as an attempt to kill the third-party Oracle support business. "Even if Oracle portrays it differently in its petition, we believe what this is about is an attempt to make it more difficult for third parties to provide service and support for Oracle software," he said.
- One week later, Oracle and SAP agreed to extend the deadline to June 1 for Oracle to file an amended complaint, with SAP's response now pushed back to July 2.
- Then, yesterday, TomorrowNow CEO Andrew Nelson began to speak up, not so much about the lawsuit directly, but about the value of his firm's services relative to Oracle's. In an interview with CNET's silicon.com, he questioned the value to customers of paying maintenance fees so Oracle could invest in future products, such as Fusion. He said,
Oracle customers no longer value pre-funding a Fusion application that they no longer understand, that's uncertain to them and that they're not sure they will ever use.
Oracle has to respond to that. The challenges they've created through their M&A strategy... they've really dug a hole for themselves.
In the meantime, TomorrowNow continues to sell new business, though it's not clear how much of it is for Oracle support. Last week it announced that it expects to sell support contracts for 10 clients of Baan (now Infor's ERP ln).
Not to be left out of the action, TomorrowNow competitor Rimini Street sends word that it has picked up a new deal to support a Siebel implementation at medical products manufacturer Beekley Corporation. Rimini Street claims a savings for Beekley of 50% in support costs, while stabilizing the system and improving Beekley's service to its customers.
Expect more news next week when Oracle amends its complaint, and then July 2 when SAP is due to respond.Update, Jun. 2:
Oracle has amended its complaint to include copyright infringement. Read more in my post for June 2
.Related postsOracle/SAP lawsuit: view from Rimini StreetSAP subject to criminal charges?Oracle sues SAP and its TomorrowNow unit
Sunday, May 27, 2007
More on Microsoft's attempted patent shakedown of open source users
There's a good overview on the battle between Microsoft and open source developers/users/distributors--of all places, on CNN's Money website. The lengthy article goes into the history of software patents, an overview of open source licenses, a biopic on Richard Stallman, the father of the GPL open source license, and the latest chess moves in the Microsoft/Novell agreement regarding Linux.
The good news is that the U.S. Supreme Court recently raised the bar for the types of patents that Microsoft is using to threaten open source. The bad news is that large corporate customers of open source are more likely to be cowed by the threat of lawsuits than they are to fight Microsoft's shake-down attempts on principle.Read more
on the CNNMoney.com website.Related postsMicrosoft threatens Linux usersStrange bedfellows: Microsoft and Novell in Linux dealThe economics of open source
Thursday, May 24, 2007
The coming wave of IT staff retirements
Over at Computer Economics we've just published a special report on the soon-to-be-felt impact of baby-boomer retirements on IT organizations
From the abstract:
As the baby-boomer generation ages, a growing number of senior IT professionals are nearing retirement, and many organizations have not fully prepared for the loss of so many leaders and experienced technical staff members.
Furthermore, as younger IT staff replace older workers, the demographics within the typical IT shop are changing, leading to a number of "generational issues" (differences between generations in their skills, culture, and experience) that will need to be addressed.
This special report, based on our survey of over 150 organizations, documents the extent of these problems by size of organization, highlights the various strategies that IT groups are taking to deal with them, and provides practical recommendations for IT executives to prepare for the coming generational transition of the IT workforce.
This issue might not have the doomsday sounds of Y2K, but it might have a greater long-term impact. For many organizations, loss of knowledgeable staff might be the tipping point for finally replacing many of those legacy systems.
An executive summary of the report is here
Monday, May 21, 2007
Google and Saleforce.com to team against Microsoft?
The Wall Street Journal
this morning is reporting that talks are underway between Google and Salesforce.com concerning a partnership. The goal is to combine Google's email, instant messaging, and other online services with Salesforce.com's applications, effectively providing an alternative to Microsoft's desktop and business applications.
By teaming up, Google and Salesforce.com could be better equipped to contend with Microsoft, a mutual rival. Google has long competed with Microsoft in areas such as search and email. More recently, Google began offering online word-processing, spreadsheet and calendar services for consumers and businesses -- Web-based applications known as Google Apps -- that offer an alternative to Microsoft's productivity software.
Salesforce.com also competes with Microsoft's customer-relationship management software. Microsoft plans to offer a Web-based version of that software that could compete more directly with Salesforce.com.
I say, why stop there? Google should acquire Salesforce.com outright. That would put Google's best-in-class scalable infrastructure underneath Salesforce.com's best-in-class software-as-a-service (SaaS) platform. It would catapult Salesforce.com's position as a provider of enterprise applications to small and mid-size businesses, leapfrogging Microsoft's nascent attempts in this area.
A Google buyout of Salesforce.com? I think it's a real possibility.Related postsSalesforce.com unbundling its platform from its appsComputer Economics: The Business Case for Software as a Service
Wednesday, May 16, 2007
Oracle bolsters its PLM-credibility by acquiring Agile
Oracle has made a big move into product lifecycle management (PLM), with its announcement today that it is acquiring Agile Software, one of the leading niche vendors in this space. It's an all cash deal, for $8.10 per share, or nearly $500 million.
Agile's software has been well-regarded as a solution for centralizing and managing product information. In a nutshell, Agile creates a central respository for all sorts of product information, such as specifications and drawings--information that in most organzations resides in a variety of paper and electronic files, scattered in various departments. Agile creates one system of record for all such information, making it easy to access and maintain by anyone with rights to see it or change it.
PLM systems are not easy to implement. There are many cultural obstacles to getting these various departments to standardize and normalize naming conventions and specification data. There are also countless debates about who "owns" what information. But organizations that implement successfully realize huge benefits, such as faster new product development, rapid engineering change, higher product quality, and reduced cost of service. Companies using Agile's products include Acer, Flextronics, GE Medical Systems, Harris, Heinz, Johnson & Johnson, Lockheed Martin, McDonald's, Micron, QUALCOMM, Shell, and ZF.
Agile's financial performance hasn't been as successful as its product concept. Agile rode high in the late 90's as part of the Internet boom, as Agile's products provided a platform for customers and suppliers to collaborate on product development over the Internet. Its stock price exceeded $100 per share briefly at the end of 2000, before starting a decline that saw it under $6 in late 2002--the result of the dot-com collapse. It's bounced around between $6 and $10 since then. It hasn't been helped by finding itself in trouble recently over its misstatement of employee stock options, forcing it to take a charge of nearly $70 million in accounting adjustments. It's combined losses since 2001 have exceeded $140 million.
Agile's failure as a niche vendor underlines the fact that PLM is an enterprise solution, and to be most successful it ought to be part of an intergrated enterprise suite of products. So, hopefully, its acquisition by Oracle will help it to become more successful in the future.
On the other hand, Agile really bolsters Oracle's credibility on the engineering side of the customer's house. I've evaluated Oracle's E-Business Suite in the past on behalf of an engineering-centric organization, and although Oracle was making progress in PLM, there was an awful lot of functionality that was only promised in future releases. It wasn't even close in terms of the functionality offered by Baan (now Infor's ERPln) The addition of Agile to Oracle's portfolio should solve that problem quickly.
For more details on the deal, see Oracle's press release
as well as a special page on Agile's website
.Related postsi2 kills off its SRM business
Tuesday, May 15, 2007
No such thing as a mid-market company
thinks that enterprise software vendors are mistaken when they try to segment buyers according to size. According to Josh, the requirements of software buyers do not vary significantly according to the size of the company. Rather, they are driven primarily according to the organization's view of technology.
Here's my simple market taxonomy, which I believe pretty much spells out the death of the mythical mid-market company.
Market segment #1 consists of buyers for whom IT is a utility, much like electricity and water, that is a basic commodity but has little if any role in defining strategic advantage. IT keeps the lights on, but it is really secondary to the task at hand.
Market segment #2 consists of buyers for whom IT is a major strategic differentiator, one of the things that drives competitiveness and supports innovation. These buyers also use IT to keep the lights on, but the real reason they buy technology is to deploy it at the cutting edges of their industry.
I think Josh is on to something. Nearly all enterprise software vendors segment the market according to size. The reason: it's easy. Deciding whether a lead should be assigned to the direct sales force or to a reseller is simple--just see how large the organization is, either by annual sales or number of employees.
Likewise, business planning is straightforward. How large is the addressable market in a certain territory? Simply count the number of firms in each size category and SIC code. Furthermore, because most vendors price software according to the size of the company (i.e. the number of employees, or number of users), forecasting average selling price in each market segment is a simple calculation.
Carrying the scheme further, vendors often target their product offerings according to the size of the buyer. For large companies, they may sell a full-featured product (e.g. mySAP, or Oracle E-Business Suite). For the so-called mid-market, they may sell a completely different product (e.g. Oracle's J.D. Edwards). Or, they may pre-configure the big-company product into one or more mid-market versions that supposedly represent typical mid-market requirements (both Oracle and SAP utilize this approach as well). The problem is that, invariably, the buyer always seems to need one or two features that are not in mid-market product or the pre-configured template.
As with most sales and marketing issues, the problem is that vendors do not look at the market from the buyer's perspective. Companies do not generally go looking for a "mid-market solution." When they say they do, what they really mean is that they want the mid-market price and ease-of-use. But their primary driver is to find a product that meets their requirements. This leads to all sorts of interesting stories, such as having to convince the vendor that a so-called mid-market company is actually a good fit for the vendor's big company product, or vice-versa. I always find it amusing when I have to sell a prospect to the vendor.
Fortunately, most vendors have a few grey-haired sales types that "get it," in spite of what the program dictates. Finding those individuals is the key.Related postsMaking money in software with a niche-industry strategyHow not to buy softwareThe case against case studies
Friday, May 11, 2007
Cultural obstacles hindering SAP growth
The Wall Street Journal
has a long page one story today on SAP, highlighting cultural issues hindering the firm's progress as a worldwide software vendor. It begins, "Five years ago, Germany's largest software company decided it had to become less German."
An interesting statistic: in 2000, SAP employed 3,900 software developers, 75% of whom were based in Germany. In 2006, the software development headcount increased to 8,500, but only 60% were German.
SAP also made other changes to become less "German." It adopted English as its language for corporate meetings. In place of its traditionally methodical approach to software engineering. , and it began to use a rapid product development approach to bring new products to market, under the leadership of Shai Agassi.
Predictably, these changes have created quite a bit of conflict within SAP's organization, especially in Germany. The WSJ article describes the impact on SAP's German staff:
In August 2005, a German employee complained to a local newspaper that Mr. Agassi's "boys come in at very high levels, without even being seen by the staff here." Five months later, Germany's national Handelsblatt newspaper published an article headlined "SAP and Globalization -- March of the Americans." One German manager was quoted saying, "It's clear Agassi would like to get as many functions as possible to the U.S." Mr. Agassi says his mission was "to bring the best talent we could find anywhere into SAP, regardless of location."
In April 2006, SAP executives hosted a town-hall meeting in Walldorf on the "Americanization of SAP," where workers aired concerns over the increasing use of English and the hiring of engineers overseas. A few months later, a handful of SAP workers, including Mr. Schick, won enough support to start a workers' council, roughly equivalent to a labor union.
This explains much behind the departure of Agassi, who grew impatient with the pace of change, especially when it became clear he would not get the top job at SAP until at least 2009.
It also provides insight into why SAP's growth has trailed that of Oracle's, a fact which Oracle is trumpeting these days in full page ads in major newspapers.
Read the WSJ story
for much more.Related postsSAP's Shai Agassi calls it quits
Saturday, May 05, 2007
Transportation Security Administration has a problem with security
The folks entrusted with ensuring the security of U.S. air travel seem to have a problem with their own information security.
The Transportation Security Administration, a department within U.S. Homeland Security, revealed that it "lost" a computer hard drive containing Social Security numbers, bank data, and payroll information for about 100,000 of its employees. They are not sure if they just misplaced it or if it was stolen.
Here's the part that baffles me: the data was stored on a portable, external, disk drive.
Why on earth would TSA write confidential employee information to a portable disk drive? It brings to mind a similar incident last year where a laptop computer was stolen with confidential information on millions of military personnel. A Veterans Administration employee had take taken the laptop home with him, where it was stolen.
The Associated Press has the full story on TSA's information security incident
Maybe the problem is that many IT security professionals are not taking this threat seriously. A recent study we did at Computer Economics found that a significant percentage of IT security staff surveyed think that physical loss or theft of computer hardware or storage is only a minor threat. This is somewhat surprising in light of the number of respondents who reported such incidents in the past year.
An executive summary of our study, Trends in IT Security Threats
, is on the Computer Economics website.
(c) 2002-2014, Frank Scavo.
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