On-demand

Say what you want about him, but Larry’s never been one to mince words:

"The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do. I can’t think of anything that isn’t cloud computing with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?

"We’ll make cloud computing announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of cloud."

Of course, Oracle has its cloud-based offerings and will only continue to grow that base and development budget.  Cloud computing, from and end-user perspective, really doesn’t mean too much: cloud or no cloud, what does it matter to the application being served to the user?  You still need some sort of network voodoo, some type of middleware logic to handle data interfaces and messaging, and of course the end-user application and platform OS or browser.  No matter if the infrastructure is on-premise or not, the user still has to interface with the app to accomplish his business goals – whether the app server resides in-house or in the cloud somewhere. 

It’s really a matter of technical semantics more than anything else.  Of course, on the the cost-benefit front, a cloud-based approach is favored by many due to lower support costs and increased portability and access.

I think what Ellison is getting at is the fad-like obsession the tech world has with trends and the hype marketing that surrounds them.  “Cloud computing” is a hair away from being found on cereal boxes, and I think it’s this hype cycle that Larry finds somewhat insane.

(Counterpoint: it’s this very hype that will drive tons of interest in Oracle’s cloud offerings and make Ellison’s numbers continue to glow, but that’s an aside.)

Of course, I find almost all enterprise software marketing almost totally insane, but that’s just me.  It’s all crazy, it’s all 60% gibberish, it’s all buzzword soup.  Why get ruffled now?  Software marketing reform should have happened years ago.  Anyone remember BullFighter?

Detroit folks: MiPro is co-hosting a breakfast seminar with Workday about the increasing attention to the on-demand model of business application delivery.  If you’re in the area and would like to attend on the morning of Tuesday, October 8th, we still have space.  Workday will be there to explain its version of on-demand means, and Christine Ferguson, VP of HR Strategy at Workday, will give a demo of Workday’s HR and Payroll solutions.

The location is the Townsend Hotel in Birmingham, MI, and if you haven’t been there before, it’s the hotel.  It’s impressive.

Again: we have space and would love for you to come.  If you’re at all interested in what Workday is and what Dave Duffield has been up to, click below to learn more and register for the event.

Dave Duffield is the guest on tomorrow’s Bill Kutik Radio Show (hosted by our friends at Knowledge Infusion).  Listening to Bill is entertainment enough, adding Dave to the show makes this a can’t-miss event.

A few years ago, while at the HR Tech Conference, I had the opportunity to attend an interview session with Dave that was moderated by Bill.  This was during the very first days of Workday.  It will be very interesting to hear Dave’s view of software, HR applications, and the SaaS space now that Workday has a few years under its belt.

A bit about the show….

Workday CEO and Chief Customer Advocate Dave Duffield will be featured on The Bill Kutik Radio Show, airing Wednesday, September 17 at 12 p.m. EDT. Dave is a recognized pioneer in enterprise software and human resources (HR) technology and the founder of five companies including PeopleSoft and Workday.

To tune in live, click here: The Bill Kutik Radio Show. The Bill Kutik Radio show is also available as an iTunes podcast.

About The Bill Kutik Radio Show
The Bill Kutik Radio Show is a bi-weekly talk show featuring Bill Kutik, one of the leading independent analysts in the HR technology marketplace. Bill’s show features unedited and unrehearsed conversations with industry leaders, including practitioners as well as executives for some of the world’s leading technology providers

Hope you tune in!

What is the cost of a fumbled upgrade?  For J. Crew it was $3MM in unanticipated costs which, according to J. Crew, contributed to their recently announced earnings miss of 4 cents a share.   How did Wall Street respond?  Typical overcorrection seems to be the response with shares trading 15% down in after hour activity.

Ben Worthen highlighted J. Crew’s stumble in his business technology blog in the Wall Street Journal, mentioning that J. Crew isn’t the first company to blame poor earnings results on technology.

There was a wave of businesses blaming poor results on tech-projects-gone-bad in the early part of the decade. We haven’t seen it much lately, though.

One difference: Nike, Hershey and others that had problems in the past went out of their way to blame the tech vendor. J. Crew never once tried to pass the buck. The company didn’t respond to our requests for comment, which also means we don’t know which company sold the offending technology. You can search the Web for “J. Crew” and “systems” and find the names of several companies J. Crew buys software from, but there’s not enough evidence for us to point a finger.

What strikes a chord in me in the report is that Worthen assumes that the poor upgrade is the result of “offending technology.”  Our experience however, leads me to be much more suspicious of the implementation/upgrade approach, executive sponsorship, project budget and timeline constraints, and ultimately the implementation team itself.  All too often we see companies approach an upgrade as a routine activity that can be performed easily by their staff (all while their staff stays on top of their regular day-to-day responsibilities).   Supplemental staff is reluctantly brought in via simple commodity broker staffing firms that can only provide bodies and not real experience from both a people and process standpoint.

Obviously, this doesn’t fly too often.

[click to continue...]

BusinessWeek’s Steve Hamm’s insightful piece about Workday absolutely nails what we are hearing ourselves from our customers and prospects:

Ever since veteran software entrepreneur Dave Duffield launched his new startup, Workday, a year and a half ago, people have wondered if it could become the next Salesforce.com (CRM). Marc Benioff, Salesforce.com’s chief executive, had shaken up the customer-relationship management software world and created a company with a market cap of $8 billion with an online service that replaces expensive and complex traditional software packages. Could Duffield and Workday do the same? Just now, there’s growing evidence they can.

Workday has landed three large companies as customers—important votes of confidence that it can be trusted to handle some of a corporation’s most crucial computing tasks. Flextronics (FLEX), the biggest of the three, plans on rolling out the Workday human resources management system worldwide for more than 200,000 employees in the next two years. “Workday could definitely be the next Salesforce.com,” says David Smoley, Flextronics’ chief information officer. “Their model is in line with companies like us. We want to keep things as simple as possible and keep costs as low as possible.”

The other major customers are Chiquita (CQB), with 25,000 employees, and Life Time Fitness (LTM), which plans to adopt all three of Workday’s services, adding accounting and payroll to human resources management.

If Workday does a good job of serving these clients it will gain credibility with large corporations that are looking for alternatives to traditional software packages. “They’re in the phase where they’re getting big customers. If they do well with the rollouts they’ll get the attention of a lot of mainstream corporations,” says analyst Jim Holincheck of market researcher Gartner (IT). David Dobrin of B2B Analysts is even more effusive: “Workday is like the iPod for enterprise HR software. It’s a better and simpler way of doing things, and people can see it.”

Right now, ERP and SaaS have a (relatively) symbiotic relationship, even within the same enterprise.  But SaaS is clearly the emergent, progressive concept (intelligently discussed here in what is must-read reading for anyone interested in the space) and will likely attract an increasing number of devotees — eventually at the expense of in-house software.  ERP certainly has its strengths, but the SaaS model is becoming more validated every day, which accelerates the maturity/acceptance curve.

(thx Jeff)

Businessweek recently published a surprisingly negative article about SaaS, saying that its hype can be largely undeserved for a number of reasons.  Now, I like BS-calling as much as the next guy (maybe a bit more, actually), but I found Gene Marks’s reasoning to be too generalized and all-encompassing.

Marks says:

Myth 1: SaaS is cheaper. No, it’s not. In fact, it can be a lot more expensive. Most service providers charge each user by the month. If you’ve got 10 people using a product, and they’re costing you 50 bucks a person each a month, that’s $6,000 a year. Most in-house systems have one-time licensing fees and optional support agreements. Spreading out the payments is nothing new, either; tons of software leasing companies will finance your purchase and spread out monthly payments over time. When you look at SaaS over the long term, it’s usually not a cheaper option.

Considering that on-premise enterprise software for a large firm can easily run into the millions just for new license acquisition, this argument pales quickly.  And support (maintenance) agreements for such systems are not “optional” — they’re mandatory.  Seeing how I’ve seen annual maintenance bills upwards of $400K/year, we’re not talking spare change, either.

And really — let’s not get into the costs associated with new hardware investments or modifications to existing infrastructure.  Let’s not get into new servers, new application security policies, network provisioning, desktop client modifications, and permissions.  Let’s not get into end-user performance issues and the time and expense needed to troubleshoot and remedy them.  And let’s also not get into aggregate IT staff allocations on a man-hour basis, because the numbers get crazy quickly.  Suffice to say that all of these get figured into the equation when trying to calculate the TCO of on-premise enterprise software.

SaaS may not be cheap, but it certainly might be cheaper.  And there is value in having fewer on-premise headaches with trashed servers, corrupt databases, and angry end users that the internal helpdesk must deal with.  It becomes an intangible quality-of-life discussion for the enterprise.

[click to continue...]

Quite a bit, actually.  This is one that you should look at deeper than the headline.

Last week, Appirio announced that it bagged Series B funding upwards of $5M by Sequoia Capital.  It’s worth noting that Sequoia is the same firm that underwrote upstarts such as Google, Yahoo, LinkedIn and PayPal.  The pedigree is Midas-esque in its strength.

Jeff Kaplan of THINK IT Services nails it in a smart piece entitled The Market Implications of Sequoia Capital’s Funding of Appirio:

Many analysts and trade pub reporters have questioned whether there is a role for consulting and professional services in the SaaS market. There is no question that traditional professional services firms such as Accenture and CAP Gemini are still searching for the right way to scale down their methodologies and costs to fit the on-demand services market. However, Appirio’s revenues have grown more than 400% in the last three months, during which over 1500 customers in 80 countries have adopted its on-demand solutions.

In other words, the SaaS consulting market, as a market differentiated from blue-chip ERP/enterprise IT consulting, has been financially validated.  This isn’t “so-and-so customer chooses so-and-so SaaS vendor, so check out how SaaS is maturing.”  This is an order of magnitude stronger than win stories or market buzz: this is $5M of real dollar validation by an investment firm that has a history of picking winners.

Here at MiPro, we continually are trying to refine our methodologies, delivery timetables and cost structures for our on-demand (Workday, Authoria) clients.  We know the SaaS market is a different animal entirely than, say, our mainline PeopleSoft ERP practice.  On the macro level, it’s good to see the validation Kaplan suggests from a broader market vitality perspective.  In a more subtle level, it makes me proud that we are working in the exact same direction as some of the biggest names in SaaS/on-demand consulting.  Cool stuff.

Phil Wainewright:

Enterprise software giant SAP has lost one of its brightest software-as-a-service stars to SaaS titan Salesforce.com, I can exclusively reveal. Steve Lucas, who spearheaded the development of SaaS at Business Objects, acquired by SAP last year, left the company at the end of June and began work straight away at Salesforce.com, where his job title is (bear with me, it’s quite long): senior vice-president of platform marketing, AppExchange and Force.com.

Salesforce.com arguably has the most impressive collective vision of where SaaS will go from here.  This is particularly validated by all-star pickups like this one, as well as Erin TenWolde, who also recently started at SFDC.

It will be interesting to see how SAP adjusts its SaaS roadmap in the wake of Lucas’s leaving.  If this is true:

Lucas is proud of what has been achieved at Business Objects, but he said that SAP’s ability to make broader progress with SaaS is stymied by the lack of a central vision for the model. “SAP doesn’t have a SaaS strategy,” he told me. “They don’t have a single piece of paper that states what their SaaS strategy is.”

…then SAP might be rudderless in terms of SaaS for quite some time.

Here’s an interesting breakdown, because this is a topic MiPro gets asked about constantly.  Even with SaaS maturing and rapidly approaching its commercial tipping point, there is still some resistance out there.  According to Forrester Research, here are the top eight reasons.

(via Jason Averbook)

Joshua Greenbaum’s recent article had a few good points that I’d like to reiterate, especially as they relate to Salesforce.com’s (SFDC) struggles to get its growth to the next stage.

SFDC is struggling to find the next big thing for itself, and Greenbaum says organic development frameworks/guidelines ain’t cutting it.  Greenbaum, via Cowboy 2.0, suggests that Force.com software partners are having the ground rules changed midstream, and draconian development and platform guidelines are denying otherwise viable 3rd-party apps.  In this quest for platform and value control, Greenbaum asserts that SFDC is terminally limiting its capability for organic expansion into a broader niche.

[...] the scuttlebutt at this writing is that he has: SFDC is pulling the plug on a number of existing partners’ efforts to build on Force.com, largely in an effort to protect SFDC’s turf and stifle interesting new apps that don’t fit the development model (ie. our way or the highway) of Force.com. It’s obviously SFDC’s prerogative to limit its PaaS play to whomever it likes, but closing the door on potentially worthwhile apps that are not built on native Force.com technology (the gist of Cowboy’s problem with SFDC) is a move to limit the scope and influence of Force.com at a time when SFDC can’t really afford more limits on something that is showing very limited results already.

The next stage of speculation is logical: if organic platform development efforts are faltering, then infusion is needed.  And infusion, in this sense, means acquisition.  While this might seem a logical decision path when internal technology investment dollars aren’t getting the job done, often they’re a deal with the devil.  Yes, you acquire new technology, new value and new customers, but does it take your concept — your platform — to where it needs to be?

[click to continue...]