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Wednesday, October 17, 2007

SAP Makes An Interesting Move

Close on the heels of the planned acquisition of Business Objects, SAP makes yet another move – this time a small one – acquisition of Yasu, a very small player in the business rules market. An Indian firm, YASU has quietly built comprehensive rules platforms based on Rete for both Java/J2EE and .NET, and created a promising environment for business analysts as well. Business rules platforms are an increasingly popular alternative to conventional programming to automate decisions, analysis to action, and policy compliance. This popularity is indicated by the strongly growing revenues of most business rules platform providers. With this announcement, SAP enhances its BPM offerings and provides customers with the agility they need to easily embed new business rules in business processes, increasing their independence to create solutions while ensuring compliance. SAP claims that solutions from YASU Technologies will enable customers to encapsulate business rules as enterprise services that are independent of applications. As business process experts build new applications, they can easily reuse and apply these services to ensure that business decision logic, including rules that ensure compliance, is uniformly used throughout their enterprise applications.
SAP says that the technology from YASU Technologies will be embedded into the SAP NetWeaver technology platform as part of SAP NetWeaver Composition Environment, a solution that gives developers tools to easily compose new business scenarios and adapt existing ones, and will enable partners to integrate the solution directly into their offerings. With an expanded BPM portfolio, SAP can give customers new innovative ways to govern business rules across multiple organizations and ensure that business processes comply with centrally defined business rules.

There had been recent demands from various quarters to bring together BI, BPM, BRE as a converged service and this small step by SAP is in the right direction. In addition to being operationally efficient, organizations need BI- and BPM-driven business processes for more effective business operations.Together, BI and BPM offer a comprehensive operational view. BI takes the role of finding patterns and reporting, BPM picks up where BI leaves off towards design and execution and the loop gets closed here. The combination of software infrastructure (such as orchestration engines, logic containers, service registries and service buses) with these design and composition environments is described as "integrated composition technologies" within the business process platform (BPP) model. SAP makes an interesting move towards this.

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Friday, October 12, 2007

Enterprise Software : Accelerated Innovation Is the Key

M.R.Rangaswami writes on what ails the enterprise software industry.

They say that youth is fleeting. In the enterprise software industry, the youth are fleeing.One need only look at the hairlines of today’s software leaders. The current wunderkinds are not looking to create the next wave of corporate computing applications, but are instead gravitating toward emerging fields, such as web 2.0, biotech, and anything “green.” Bill Gates was 19 when he founded Microsoft (MSFT). Steve Jobs started Apple (AAPL) at 21. Even Marc Benioff was in his 30s when he founded Salesforce.com (CRM) — and at 42, he remains one of the industry’s youngsters. Software companies need to do more to attract the next generation of business leaders who will drive the evolution of the industry for decades to come.

MR is very perceptive in his observation that the industry is dominated by old hands.His prescription for rejuvenating the industry is indeed insightful and the approach very fresh.
To be fair, the enterprise software industry continues to chug along with some advances. SaaS applications enable business to experience an increasing number of best-of-breed solutions for features such as ecommerce, human resources (HR) performance management, and product life-cycle management, all of which have been extended to incorporate on-demand delivery options without IT overhead required. Improved implementation methodologies, from preconfigured templates to expanded professional services resource capacity characterize the ecosystem today. Faster rollouts, global scale ups – all these are becoming commonplace. The future of the market leaders in this space will be largely defined by their ability to win over business users by addressing their pain points and helping them achieve common corporate goals I think innovation –accelerated innovation is the key to advancements in the enterprise software industry.
I think innovation – accelarated innovation is the key to advancements in the enterprise software industry. I think the wave of consumerism engulfing the tech world is challenging the halo of enterprise software. As I wrote here, In this age of contribution economy – a phenomenon that we are seeing ever since the Internet started to connect everyone to everyone else all the time, people from around the world can more easily contribute leading to exploding results - caused by the coming together of energy, ideas, and knowledge. Some of the more familiar examples of these collaborative efforts include blogs, open-source software, podcasts, and even the nonprofit online encyclopedia Wikipedia. We are also seeing customers leading the charge of innovation and the economist article on user-led innovation exemplifies a new form of collaboration. The rise of online communities, together with the development of powerful and easy-to-use design tools, seems to be boosting the phenomenon.
I am optimistic about the enterprise software world embracing innovation centered around consumerism sooner than later - The impact of consumerization on enterprise and opportunities to leverage such advances are all groomed in the consumer space itself. The transition of such things into enterprise IT thereby happens automatically – in a way, advances in consumer space dictates the corresponding fallout in the enterprise space. True, but difficult to believe – right? Someone referred this phenomenon as akin to a civil war. An analysis of the past shows that in a significant number of cases the technologies that were originally focused on consumer space have made deep impact over time have made deep impact on the enterprise space – Personal computers, search, IM all are shining examples of this powerful trend. Native web companies keep coming out with a lot of full blown but trial offerings that entices lot many more consumers and many a times a revenue and utilization value evolves out of more and more usage of such offerings. In the process the consumer space gets more and richer forcing successful offering to be pushed into the enterprise –in larger numbers and faster pace.

MR is in a way definitely right – a mixture of more young people along with some of the best minds (who could be older)driving the enterprise industry would make this transition happen faster.

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Wednesday, October 10, 2007

Anachronistic Practices

Being called a global citizen looks fanciful – and frequent fliers are seen as “those privileged” (or suffering lot depending on whom you speak to) amongst business circles. There are several unhighlighted issues that travelers come across while moving around the world. Vinnie is vocal about India’s discriminatory travel policies. I do share Vinnie’s view that this is blatant discrimination. These policies were relevant in a way till about 2/3 decades back, when the economic and political order were totally different. There is no reason today for following such an archaic regulation in what is seemingly a fair world!! With the dollar losing value against the Indian rupee, its going to pinch foreign travelers visiting india a lot harder on two counts - generally the dollar tariff also gets adjusted to exchange variations and other expenses related to travel also suffers this dollar value depreciation. This needs to be done away with no more time lost for a decision. Normally economics will dictate fair sense to prevail in a market aligned economy, but it is a situation where demand far exceeds supply. I believe that this is in a way a global phenomenon. As a global traveler, I find that the Indian hotel tariffs are definitely amongst the highest – probably in the same league as Tokyo and London and this is completely unjustifiable. Unless competitiveness sets in fairly deep – these issues tend to go unnoticed amongst the hospitality industry folks but as consumers being part of the larger ecosystem , the response is status quo is NOT OK.The problem in India is that the head is in the current century and the tail is in the previous century – there are some laws laid by the British when they ruled India in the 1800's, which are still being referred to for enforcements.

As a related point, GCC countries routinely discriminate between westerners and asians on compensation benefits. Sandy Kemsley talks about inordinate delay(8-9 working days for turnaround) in Visa processing by Indian consulate in Toronto – and the discussion is to primarily highlight scope for process improvement there. Well- Sandy agreed. All other things being equal, consulate practices are more or less reciprocal in nature. If you are an Indian citizen and resident in India, the US embassy may take upto 6-8 weeks(on an average) to even schedule an appointment for interview for processing a visit visa – add 2-3 days for further turnaround post interview. AMEX, the most talked about financial institution finds it impossible to recognize my credit history and long association I had with it outside of America when it takes for processing my credit card application while in the US.
Well regulations and processes always need to be current and fresh – these need to be aligned to modern day economic realities. Part of the job of the cognoscenti is to raise the awareness and keep pointing to such imbalances and discriminations.

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Sunday, October 07, 2007

SAP Plans To Acquire Business Objects

I wrote a brief note for sandhill on SAP's plans to acquire Business Objects. Recently, Oracle moved into the BI space aggressively by acquiring Hyperion. I wrote then,” All I can say is that once can expect more attention on Cognos & Business objects while expecting more traction for players like Outlooksoft". Few weeks later SAP acquired Outlooksoft.
BI is clearly one among the fastest growth area in enterprise application space today. The consolidation in the BI space was expected for sometime. SAP says that the primary driver for the acquisition, its biggest and a reversal of its avowed organic-growth strategy, was the potential to gain new business. SAP is racing towards reaching its goal of more than doubling its customer base to 100,000 by 2010, mainly by winning more small and medium-sized companies as clients. Business Objects has more than 43,000 customers, according to its own data, and made 2006 sales of $1.25 billion. It says about 40 percent of its customers are already customers of SAP.The two companies said they would continue to offer standalone software as well as integrated solutions from an unspecified future date.
BOBJ's preannounced less than expected numbers for 3Q07. This reflects the increasing competitive landscape within the BI sector. Analysts infer that the license growth were negative this quarter. Business Objects also offers its software on demand over the Web as so-called software as a service. SAP plans to start selling a broader on-demand offering next year, though the launch has been delayed, and Oracle mostly inherited on-demand customer-relations service Siebel.com with its acquisition of Siebel Systems. Oracle has spent more than $20 billion in recent years on buying companies to challenge SAP's lead in the business application software space. The business intelligence-software market is worth at least $8 billion and is expected to grow by 11 percent annually until 2010, faster than the wider software market. SAP said the acquisition would be earnings-dilutive by a single-digit eurocent amount next year but would add to its earnings per share from 2009 onwards. Next in line – perhaps players like Cognos, Informatica etc. As an aside, would like to revisit this acquisition 12/24 months from now to see how such mergers benefit the players , industry etc. – and that include the customers.
Read the full note here.

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Tuesday, October 02, 2007

Amazon .com : Optimism, Culture & Customer Obsession

Amazon.com is a posterchild for internet economy and applied technical breakthroughs. It also excels and defines the gold standard in many other things ranging from strategy setting to fostering unique corporate culture centered on customer obsession.
I thoroughly enjoyed reading Jeff Bezos interview in the current issue of HBR. I read it and re-read it again and found it exhilarating. If you base your strategy first and foremost on more transitory things—who your competitors are, what kind of technologies are available, and so on—those things are going to change so rapidly that you’re going to have to change your strategy very rapidly, too says Jeff Bezos. He says as much as strategy needs to focus on arriving at answers for what might change in the next five to ten years, it is also important to note that what may not change in the next five to ten years. What you really want to do companywide is maximize the number of experiments you can do per given unit of time. The key he says, really, is reducing the cost of the experiments. The HBR editors find that Amazon’s strategy and culture are rooted in a sturdy entrepreneurial optimism. Amazon encourages people to take big strategic bets regularly at all levels of the organization. Jeff takes pride in the fact that they are willing to plant seeds and wait a long time for them to turn into trees and adds that Amazon management is not always asking what’s going to happen in the next quarter, and focusing on optics, and doing those other things that make it very difficult for some publicly traded companies to have the right strategy. One way to back up an idea for trial is to ask is, “Is it big enough to be meaningful to the company as a whole if we’re very successful?

One of the reasons that it’s so difficult for incumbent companies to pursue new initiatives is because even if they are wild successes, they have no meaningful impact on the company’s economics for years and he adds in the case of Amazon, a seed planted tends to take five to seven years before it has a meaningful impact on the economics of the company. If in the old world you devoted 30% of your attention to building a great service and 70% of your attention to shouting about it, in the new world that inverts. A lot of its strategy comes from having very deep points of view about things like this, believing that they are going to be stable over time, and making sure our activities line up with them.

Why is Amazon not like eBay? Jeff reasons out : our customers who are buyers are very convenience motivated and Amazon wants to make it really, really easy to buy things. Metrics like revenue per click or revenue per page turn remain very high, as efficiency is the focus - a customer wanting quick service may not have the patience till an auction closes. On the controversial part of third party sellers offering their products/services as part of the main offering he rationales that Amazon doesn’t make money when it sell things; it makes money when it helps customers make purchase decisions. Read his take on customer focus as against competitor focus : If you’re competitor focused, you tend to slack off when your benchmarks say that you’re the best. But if your focus is on customers, you keep improving. Every new employee, no matter how senior or junior, has to go spend time in our fulfillment centers within the first year of employment. Every two years they do two days of customer service. Everyone has to be able to work in a call center. Corporate cultures are incredibly stable over time. They are self-perpetuating, because they attract new people who like that kind of culture, while the people who don’t like it eject themselves. Cultures are very hard for competitors to copy—and a source of great competitive advantage if you have the right culture for the right mission. They also limit. There are things that you cannot undertake. You have to be accepting of what your culture is in your thinking about strategy. Read the full interview - excellence never happens in pockets!

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