Reality Check | Ephraim Schwartz | October 2007

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October 2007

October 30, 2007 | Comments: (0)

The success of software as a service rests on IT

Five tenets of SaaS integration Contrary to what SaaS (software as a service) vendors claim -- namely, that their wares are pay-and-play -- SaaS requires intervention from IT.

Yes, three or four years ago, SaaS was rudimentary CRM, not much more than a contact database in the sky, says Simon Peel, senior vice president of marketing and strategy at Cast Iron Systems. But that picture has changed dramatically.

In fact, many SaaS solutions have become mission-critical. And as the model has moved from the departmental silo to full-fledged enterprise app, seamless integration with other mission-critical apps -- such as ERP, CRM, contract management, and supply chain management -- has proved key. In short, it's not just about importing names to Outlook anymore.

Here are the five tenets of SaaS integration, further proof of the lasting importance of IT.

1. Integration takes the hand of a professional

Not to pick on anyone, but sales force administrators have a simple world to live in compared with hard-core IT folks.

Yes, a sales operator can switch on a CRM app just as SaaS vendors promise. But there is a lot more going on when it comes to implementing a fully integrated SaaS solution effectively.

The first thing you want to plug in to your SaaS solution is the master data record of names, addresses, and phone numbers. That way, when a salesperson calls a prospect, he or she won't get a wrong number because data in your Oracle database wasn't synched with RightNow.

And it only gets more complex than that. What if a salesperson pushes the order button, but the SaaS CRM application isn't linked to the warehouse system?

Peel tells me of a major financial services company that uses 10 temporary employees to take data from one application and rekey it into another. If one of those temps doesn't show up for the day, some orders will not be placed. Here someone needs to understand the workflow and all the business processes from quote to cash -- and how to thread them together seamlessly.

2. Multiple parts mean multiple skills are needed

When a sales manger asks for an extract of data on customers or needs billing info and shipping, that's when the IT team will say, "We knew you'd need to come to us in the end."

Yes, you may be able to extract and import a CSV file into an Excel spreadsheet, but what happens when you need it again and again? That's when integration becomes an urgent problem that requires skills beyond the scope of a single person.

The Oracle guy may know the Oracle applications, but do they know how to write code that sends information up to a Web service hosted by the SaaS vendor?

You need somebody who knows both of those things, Peel says. And this is where having a versatile set of skills in the form of the IT department down the hall comes in handy. After all, if you want to perform bidirectional synchronization in real time and you want it immediately, who you gonna call?

3. Shortages translate to SaaS-IT codependency

Ariel Kelman, senior director of platform and product marketing at Salesforce.com, is quick to flip the "SaaS needs IT" idea on its head.

"IT needs SaaS," Kelman says, adding that every CIO he talks to complains that they don't have enough time, people, or hardware infrastructure -- a good reason why they are starting to look at SaaS.

Kelman does admit that Salesforce APIs are at the lowest level of how every customer integrates and on top of that sits "some type of middleware solution."

Salesforce offers native connectors to support some of the most common and simple use cases with the likes of Oracle and SAP, but moving beyond, say, master data synchronization requires IT and middleware integration ISVs.

4. Integration in a box or as a service may help broker SaaS-IT peace

Aware of a hole in the SaaS-IT relationship, vendors are moving to fill it.

For example, Procuri, a company that offers SaaS solutions for spend management, strategic sourcing, and contract and supplier management, has partnered with Seeburger, an integration middleware vendor, to offer integration as a service. Procuri takes the Seeburger Business Integration Server and hosts it.

Cast Iron's solution is offered in a box, either behind the firewall or also as a service. The company packages up the kinds of IT skill sets required for integration. Peel doesn't claim that you can buy the appliance and ignore IT. Rather, he would say his company's solution makes integration easier for IT.

As an example, he points out that the appliance allows IT to configure systems for integration using drop-down menus rather than code.

5. At its heart, integration is a four-part story

The major integration issues for IT typically center on four technologies.

First, connectivity to a SaaS solution as an end point: The middleware must understand the Web service calls on one end and the database calls on the other.

Second, mapping -- transforming data from one form to another.

Third, intelligent workflow that understands the business rules in play for each operation and that can flag duplicate records.

Finally, guaranteed delivery -- the ability to ensure the right information went from one application to another.

Salesforce's Kelman is right when he says we are at a tipping point in SaaS deployments. It's no longer a question of whether IT admits SaaS into the enterprise. It's a question of how IT makes it work.

Posted by Ephraim Schwartz on October 30, 2007 03:00 AM

October 24, 2007 | Comments: (0)

New services unveiled at CTIA wireless conference

While there were no blockbuster announcements made at this year's CTIA Wireless IT & Entertainment conference in San Francisco there were some products that stood out from the rest for their originality.

ABBYY USA, an OCR [Optical Character Recognition] vendor unveiled its Business Card Recognition [BCR] applet.

The applet resides on a cell phone and uses the handset's built-in camera as the OCR reader. The software then extracts the contact information and puts it into the phone address book.

Currently it is only available for Windows Mobile platform.

WeatherBug certainly sees which way the wind is blowing and announced a Web application for the iPhone and iPod.

Users will be able to access so-called streaming neighborhood-level weather conditions.

What I like about this is the fact that while in Phoenix if its hot its hot all over Phoenix, in a city like San Francisco which has probably a dozen micro-climates within the city boundaries, neighborhood level weather forecasts are a great boon.

Figuring out what to wear in the city by the bay is always a crap shoot.

A WeatherBug Dashboard Widget is also available for Mac OS X Tiger.

Mobile Fuelfinder from NumberLink aids drivers in finding the cheapest gas in their area.

User's register free online and then dial one number, 1-877-637-6374 and automatically get the lowest priced gas available in their area via a text message.

Symbian announced a couple of interesting technologies: FreeWay and ScreenPlay to enhance graphics and connectivity on a cell phone.

FreeWay is an IP networking technology that will give users "broadband" speeds, according to Symbian officials.

In other words it takes whatever 3G service you have and uses client technology on the handset to enhance performance.

ScreenPlay is a graphics technology that integrates hi-def video quality with games and animations.

Finally, AT&T teamed up with Napster to offer 5 million full-track songs over the air.

Starting in mid-November, Napster Mobile service will offer the 5 million song catalog along with preview samples of every song.

Of course, users can download the song and I imagine the cost will be added to your wireless bill.

A five-track Pack option offers a discounted price of $7.49. Otherwise a single song is priced at $1.99.

AT&T also announced a deal to stream MobiVJ, MobiTV music video channels for up to eight music genres directly to the handset for $6.99 a month.

Posted by Ephraim Schwartz on October 24, 2007 02:19 PM

October 23, 2007 | Comments: (0)

CTIA conference name change telegraphs a sea change in high tech

The CTIA (Cellular Telecommunications Industry Association) conference has extended its name and that tells us something important.

It is now called CTIA Wireless I.T. & Entertainment 2007. Last year it was just CTIA Wireless.

The Association now claims the show targets both enterprise-level companies and entertainment industry vendors selling consumer products.

Not such a strange mix when you consider that the enterprise is now getting all of its best technology ideas from the consumer space.

But what the name change tells us is that wireless as a term and as a technology can no longer stand alone.

Wireless technology has lost its cachet.

Therefore, the CTIA needs a hook if their lucrative event is to continue. It may not if the name change isn't big enough to attract exhibitors in the future.

The mobile phone for those under 35 years old is far more than a wireless device on which you talk.

The fact is that wireless is now just part of a bigger communications story with the emphasis no longer on any one technology that delivers the message.

The focus has shifted to the kinds of communications you can have, such as wiki collaboration, text messaging, instant messaging, Voice over IP, social networking, photo sharing, and gaming.

Facebook users don't care about wireless technology. They care about the hundreds of applications they can download and put on their various devices both wired and wireless.

Perhaps if the CTIA changes its name one more time to CTIA Unified Communications 2008, they'll have a chance.

Posted by Ephraim Schwartz on October 23, 2007 02:04 PM

October 23, 2007 | Comments: (0)

Banking on busted IT projects and dormant IP

Resourceful VCs can help you unearth treasure buried in your IT asset sheet

The news of the day is that Silicon Valley is awash once more in VC money. The dollars are rolling in. So why shouldn't your company get a piece of the pie?

According to Henry Chesbrough of the University of California at Berkeley Haas School of Business, 90 percent of corporate IT assets sit dormant inside the balance sheets. Where, you ask? In the form of untapped IP (intellectual property).

Managing Director George Hoyem's VC firm Blueprint Ventures specializes in what he calls "early stage" corporate spinouts -- ventures undertaken to capitalize on hidden IP.

"Early stage" refers to the fact that these spinouts are smaller than what typical buyout companies invest in. They are not full companies, and from their perspective, they don't have the upside potential they want. Blueprint findings note that early-stage spinouts "were less likely than traditional startups to generate 10X or higher multiples."

Nevertheless, Blueprint manages about $100 million to $200 million from investors who believe they are getting solid returns.

LANDesk, a company spun out from Intel, sold to Avocent for $416 million. Here's a company that Intel was likely to shut down, and instead Blueprint wrote Intel a check for $50-plus million -- about an 11X return on Intel's original investment, according to Hoyem.

Monetizing dormant IP has not yet registered with VCs looking for revenue-generating businesses.

"These kinds of early-stage IT spinouts don't meet their [corporate] hurdle rate or strategic core direction," Hoyem tells me.

So Blueprint comes along and says we can liberate assets and turn them into startups, which the company has done for Intel, Fujitsu, and NEC, among others.

For example, American Electronic Power (AEP), a utility in Ohio, was working with Cisco to put up networks on medium-voltage power lines in order to become an ISP for rural parts of the country.

Along the way, however, AEP discovered being an ISP was not its core competency. So AEP took its technology and Cisco's and bundled it into a separate company called Amperion in 2001. Amperion is now the leading medium-voltage power-line communications company for broadband over utility lines, according to the company. That's a nice win-win example for everybody.

But sometimes Hoyem sounds a bit like a predator on the prowl.

"One day, the music will stop at Google," he tells me -- I'm on the phone, so I can't see if he's twirling his mustache -- "and Google will be a great hunting ground for us."

Wow, this guy is good.

"They will have all these patents," Hoyem adds. "And some exec will come in and say, 'What are we doing here? We need to focus.'"

Of course, no definitive numbers are available on these deals, but typically about 19.9 percent goes to the parent company. That percentage represents the barrier at which a company doesn't have to consolidate earnings, profit, and loss, up through its income statement.

After that, 15 to 30 percent typically goes to the new founders and the new management team, and it's used to lure talent to the startup. The remainder goes to the investors.

Dormant IP aside, think of the hundreds of projects in which companies spend millions, if not hundreds of millions, only to never complete them. Blueprint figures out how to value these assets and structure spinouts -- certainly worth looking into while the VC money is still flowing.

Posted by Ephraim Schwartz on October 23, 2007 03:00 AM

October 19, 2007 | Comments: (0)

Unified Communications: an explanation of what it is

You will be hearing the phrase unified communications [UC] ad nauseum over the next several years. Therefore, I am taking it upon myself to explain what I think UC is.

There are basically nine ways to communicate directly with another person. Here they are:

1. & 2. Home phone and home voice mail
3. & 4. Office phone and office voice mail
5. & 6. Cell phone and cell voice mail
7. Instant messaging [IM]
8. Text messaging
9. Email

[Thanks to Chris Lyman, CEO of Fonality for the idea of 9 ways to communicate.]

10. Wikis [My own idea. Blogs and social networking are indirect. Wikis are a bit problematic because wikis can be used to collaborate in real time.]

What UC wants to do is take those nine or ten ways to communicate and turn them into one.

This is done by coming at communications from a different direction.

Instead of thinking of communications as the various devices and methods you use, UC solves the problem of how to communicate by looking at it from the point of view of the single person you want to communicate with.

The person becomes the one way to communicate. Devices become irrelevant because UC renders them so.

How does this work?

Say that I want to call my friend Max. Instead of taking a shot in the dark and trying him at home or on his mobile I just bring up the name Max on my cell phone contact list, or at home I might have him on my IM roster.

Imagine if I could even just say his name or type his name on screen. As long as I have access to his name I no longer have to guess how to reach him. Unless of course he doesn’t want to communicate with me. We'll get to that later.

Once I access the name Max, thanks to "presence" technology I now know if he's reachable and how to reach him.

Presence is enabled by using many technologies. Presence actually only finds devices or locates devices because they are communicating their presence in the network. But this allows owners of these devices to use that information and add to it by saying whether or not they are available.

My mouse might roll over Max's name and a drop down menu appears that tells me he is in a meeting but available by text messaging.

Again, remember that the network only found the device. It is Max who adds the information that when the network finds me tell it that I am in a meeting and that I am only available by text messaging.

When I receive this message I write my communication and click on send.

Or, maybe I speak Max's name into the phone and the response is, he is available on cell phone only. I say call.

Worst case scenario, I see Max's name on the list of people I know and when I select his name it tells me he is out of pocket and is only accepting emails.

What if Max doesn't want to be reached?

Well, some of these technologies are opt in, like IM. Max can click on his own name and say, unavailable. But to some extent UC technology usurps the opt in process.

For example, unless Max physically turns off his cell phone, the network knows he is available. And not just that his phone is turned on but that he's not using it. Of course he can choose not to answer it but I, the caller, will know that.

With UC users can also set up their cell phone's voice mailbox to convert any message into a text message or a wave file in email. The possibilities are unlimited.

Telephony is now becoming digital. It is moving from a black box called PBX which contained arcane protocols layered one on top of the other for the last century to a software program written in a standard programming language, including open source, that sits on a server.

Anything that you can design in software will be doable within your communications system. This is unified communications.

Moving beyond your desire to communicate with Max, on the business side, information from your corporate directory will also be available to a UC system.

Here, you may not be trying to find a person but rather a skill set or one of many managers who can approve a document to complete the business process.

In the old days dial tone only gave you access to a device on the other end. It often became a roadblock stopping the workflow.

On the other hand, the unified communications dial tone is a facilitator that removes the roadblocks and keeps the workflow moving along toward completion.

Posted by Ephraim Schwartz on October 19, 2007 10:46 AM

October 17, 2007 | Comments: (0)

Are we witnessing the demise of the big "platform?"

Rumor has it Oracle is about to announce another delay in its Fusion platform.

It's no secret SAP has had problems with NetWeaver and some say was the primary reason behind Shai Agassi leaving the company.

Microsoft made it a point in its announcement this week of its unified communications solutions to say this is not a platform play.

UC has many layers and many companies participating and offering technology for each of those layers, said Gates and his executives.

Take a look at the video interview with Eric Swift, senior director of Microsoft's unified communications group where he says just that.

Put it all together and we certainly can ask ourselves if the era of the big platform is at an end?

Has the, let's call it, "unified" architecture theory of high tech run its course?

While the big enterprise software vendors spouted their theories of one company owning the stack and how it would simplify IT infrastructure and how its benefits would create a more competitive company, the enterprise continued to do what it has always done, buy best of breed solutions that it needed to solve a problem.

Figuring out how to integrate it into the rest of the infrastructure came after the fact.

Perhaps SOA was the final nail in the coffin of the platform view of the world. SOA speaks the language of heterogeneity and integration.

Seen in that light, we might even conclude that Oracle's attempt to buy BEA and SAP's to buy Business Objects is nothing less than these companies desire to change direction.

They now realize they need to offer the kinds of point solutions that their customers always wanted.

Will Fusion and NetWeaver die a slow death of neglect?

Perhaps they will be postponed and postponed again until customers stop paying attention at which point they will officially be announced as abandoned.

Stay tuned.

Posted by Ephraim Schwartz on October 17, 2007 01:29 PM

October 16, 2007 | Comments: (0)

The lie that is Voice over IP

In light of all the hoopla around unified communications--especially at today's Microsoft UC event in San Francisco --and in light of the fact that the backbone of any UC platform is VoIP [Voice over IP], I just thought I'd inject a brief note of realism into the discussion of the future of UC and the current reality.

In other words, when it comes to VoIP, the emperor has no clothes. Or at least let's say he is scantily clad.

What do I mean? Simply this. VoIP is not half as good as my old AT&T service. I not only speak for myself here but friends and relatives who are using it as well.

What are we using? Comcast and Vonage to name two.

Problems? Where do I begin. Let me count the ways.

1. Scratchy connections with lots of static.
2. Dropped calls in the middle of a conversation.
3. Spotty coverage within a single household with dead spots.
4. One-way conversations, that are supposed to be two-way,
but unfortunately, I can't hear the other person
although they can hear me.
5. Certain local numbers not accessible. I am told I
have reached a non-working number. [Go figure.]

I'm fairly certain that some day it will be better. But I'm just saying it's not there yet. I don't care how many commercials they have on TV with supposedly independent customers singing the praises of VoIP, it just isn’t so.

How independent are they I wonder? I

So let me not be a lone crier in the wilderness. Let's hear it from others out there who can add to my VoIP reality check.

Posted by Ephraim Schwartz on October 16, 2007 02:10 PM

October 16, 2007 | Comments: (0)

Gates continue to talk about what's needed in unified communications

Gates live -- at Bill Graham Auditorium -- talks about Microsoft's new unified communications offering.

"Software innovation is being brought to the business phone call." Gates still continues to call it a phone call. Very old school.

Gates alludes to AT&T.

Once you picked a PBX vendor that was it. Even if they didn't make a lot of money on an initial sale, Gates said, if you wanted to move a phone, that cost. Gates says it cost him $700 and a week's lead time to move a single phone.

Gates described that when AT&T ran the only telecommunications network, directory and environment, there wasn't much you could do.

"People just accepted this as the way it was."

This was the way it was in the PC industry as well, says Gates. But now Bill claims companies like Microsoft and Intel changed those types of monopolistic practices. Hmmm.

Now, says Gates, because each layer uses a specialized company and technology the single company strangle hold is broken.

We are witnessing a revolutionary change from the vertical to the horizontal. Now you can take digital services and put it beside the PBX so you can get presence and other benefits with your PBX, Gates told the audience.

However, Gates sees this as an interim step. Part of the communications evolution.

According to Gates the PBX will eventually disappear and we will have a 100 percent transformation to software based communications.

"This is as profound as the shift from the typewriter to the PC," Gates said.

The level of innovation you unleash when you get communications on to a software platform is unlimited, Gates told the audience.

While Gates claims the cost savings for UC comes from reducing phone time such as reducing the time people have to be put on hold until the right person is found, plus it adds the richness of screen sharing, which reduces the need for travel, again Gates seems to miss a major business point.

Jeff Raikes, came on stage and he too seems to miss the point. Raikes says business users waste 37 minutes a day making calls to people who are not around. "That adds up to 30 hours a year," said Raikes.

Big whoop. The real cost savings will come from embedding presence and identity into enterprise applications like ERP or CRM applications.

Knowing presence in Word or a PowerPoint might be nice but if you are an insurance company mid-level exec waiting for an approval, you can save days not minutes in an approval process by finding the right person.

Perhaps this wasn't mentioned because the Microsoft UC system is all about the desktop and adding yet another application to it. Rather it should be about integration and embedding these UC capabilities into other applications.

Gates seems to have missed the main point of cost savings, that is reduced time due to presence. It is about embedding UC into a workflow to reduce the time spent in routing and approvals.

Posted by Ephraim Schwartz on October 16, 2007 09:30 AM

October 16, 2007 | Comments: (0)

Bill Gates -- live from Bill Graham Auditorium, San Francisco

Screeching music, like the sound of the Blue Angels flying overhead, the lights flicker and a guitarist comes on stage playing notes to match the jet planes.

I expect the curtain to be pulled back any moment, ala The Wizard of Oz, and a small, well-intentioned man to appear.

Sure enough, yes, it's Bill Gates, chairman of the board.

No tie, suit, benign smile.

He's excited to be here.

What is this all about, he asks.

[ Video: Bill Gates launches OCS | Bill Gates launches OCS, part II | Bill Gates launches OCS, part III ]

The magic of software helping us to be more productive and more creative. taking the magic of software and applying it to phone calls Gates claims is what this is all about.

Sounds sort of old school, "phone calls."

This is a transformation of the business of the traditional PBX, says Bill, comparing the PBX to the mainframe of yesteryear.

[ See also: Microsoft: The next AT&T? ]

Moving phone calls onto the Internet, using industry standard servers we have a different way of doing things, says Gates and everyone would have to agree with that.

But competitors claim Microsoft's PBX capabilities for business are thin, very thin.

Competitors claim call routing or any call center functionality, such as press 1 for one service and 2 for another service is beyond what Microsoft can do it in its first Unified Communications offering.

What's Bill doing now?
Paying homage to Moore's lawyer, a requirement for any high tech speech.

And he mentions the Altair computer as the reason why he dropped out of school all those years ago.

When he gets to something substantial about unified communications I will report back.

Posted by Ephraim Schwartz on October 16, 2007 09:19 AM

October 16, 2007 | Comments: (0)

Microsoft: The next AT&T?

Company unveils its unified communications platform, vies for "21st century dial tone" dominance

Microsoft, AT&T Enterprises looking to step into the 21st century by dumping their legacy PBX systems have some big names after their wallets, as Microsoft today will follow Cisco, Siemens, and IBM into the unified communications (UC) fray by officially announcing the final pieces of its UC platform.

With Chairman Bill Gates and President Jeff Raikes standing by, Microsoft will unveil OCS (Office Communicators Server) 2007 for the back end and Office Communicator 2007 for the client side. Essentially an upgrade to LCS (Live Communications Server), OCS will provide a platform for IM, voice conferencing, videoconferencing, and presence.

Exchange 2007 delivers messaging, calendaring, mobile e-mail, and voicemail capabilities to round out Microsoft's two-component UC vision.

Of course, no announcement would be complete without a parade of partner and customer testimonials. Expect them to be 100 percent ga-ga over the platform.

According to Kim Akers, unified communications general manager at Microsoft, the two most important UC components are presence and identity.

Some analysts, however, believe the spotlight should be narrowed, singling out presence as the star of the show.

Whereas identity manages access rights, presence gives users insight into others' availability. And it is this dynamic capability that many analysts feel will quickly become a critical element of any workflow that requires human intervention.

What's behind the enthusiasm over presence? The answer comes from Akers: "Presence detection can be embedded into the business logic of the workflow."

That way, if any one of five people has signoff privileges at a given stage in a chain of events, a business rule based on presence could find out whether any of the five is currently available to move the process along, thereby avoiding long delays.

Brent Kelly, senior analyst at Wainhouse Research, calls presence the "dial tone of the 21st century."

In other words, presence, not the dial tone, is what we will use to contact people. If you like, you can call it an "intelligent" dial tone.

Instead of trying to call a colleague, hoping you can reach them, presence will tell you when he or she is available and whether they are at their desktop or on a mobile device.

"He who owns the presence technology will own the rest of the solutions platform, or at least have a major influence over it," Kelly says.

And this is where competing UC technologies play a major role, as each of the three major players -- Microsoft, Cisco, and IBM -- has its own presence solution.

Microsoft believes a server-centric model offers the most cost-effective platform. Cisco is betting that a network-centric solution will help it sell enterprises lots of hardware.

IBM, in the meantime, is proposing a bit of a hybrid. Its Sametime is software-centric but differs from Microsoft's solution in two distinct ways.

First, IBM has partnered with both Cisco and Siemens to tap their networking hardware. Second, IBM has based Sametime on the Eclipse development platform.

According to Wainhouse's Kelly, Eclipse offers developers a better development environment than Microsoft does. Because its code is open source, ISVs and corporate developers can do more with the platform.

"From developers I have spoken with, it is easier to integrate with Sametime than with Microsoft," Kelly notes.

Moreover, because Microsoft puts the intelligence in the server rather than the network, it puts companies at risk of losing local capabilities in the event that the central system goes down.

Jamie Stark, technical product manager for the Unified Communications Group at Microsoft, counters that OCS can be structured so that "if any single server role goes down or becomes unavailable, the request would fall to a secondary server. If critical components like mediation servers, gateways, and front ends go down, users will not experience broad disruption, as the functions will be taken on by other servers in the pool."

Cisco, on the other hand, builds redundancy into the local switch so that if the Cisco communication manager goes down at a central point, users will still be able to call locally and perhaps even call out.

Stark's defense aside, Wainhouse's Kelly says that Microsoft is aware of the local usability problem and has promised to fix it by next year.

In any event, Microsoft claims its server-based solution is more cost-effective than competing UC solutions, mainly due to its ability to increase IT productivity.

Up until now, communications infrastructures have remained separate, meaning that companies have to had to manage multiple directories to provision a user. While it is true that nowadays directories can exchange information, each directory still has to be managed by someone with domain expertise in a particular communications area.

By basing its UC infrastructure on AD (Active Directory), Microsoft believes it has put an end to the need for that kind of specialization.

"You don't have to have different people to maintain many sets of infrastructures. It is all built on AD," Microsoft's Akers says.

Of course, because Microsoft owns the productivity application space, integration here will also be very handy. Roll your mouse over a name in a Word document and a pop-up window will tell you whether the person is available. Click on the name and the system will ask whether you want to IM, conference in, dial out, or e-mail the person.

IBM Sametime has an equivalent solution for Microsoft Office. The company last week announced it will do the same for Symphony, its own productivity suite.

If you thought Microsoft's ownership of the desktop was big, think about this: Whoever owns the UC platform will in essence become in this century what AT&T was in the last.

UC could be even bigger than Windows, IBM Global Services, and Cisco's routers and switches all rolled into one.

Posted by Ephraim Schwartz on October 16, 2007 03:00 AM

October 12, 2007 | Comments: (0)

Reading between the lines of the Oracle bid for BEA

It is the end of an era.

Oracle's take over of BEA, be it imminent or eventual, along with last week's acquisition of Business Objects by SAP tells us that we will see a major change in how the enterprise buys software.

Let's leave software as a service [SaaS] out of the picture, for the moment at least, and look at what is happening just among the giant on premise application vendors.

For better or worse, the battle for survival between these major vendors who offer a single, all encompassing solution, from database to middleware on up through applications versus the point solution vendors is ending.

The single solution vendors have won. At least for now.

This is for better or worse because point solutions offer a number of benefits to a large company.

For one it gives them a vendor with domain expertise who can help them use technology as a competitive differentiator.

Secondly, it allows a company to remain flexible. Because they are not dependent on a single vendor, they can pick and choose best of breed solutions.

It also puts the buyer in the driver's seat, at least to some extent.

If you're Nestle and you just spent $100 million deploying an all SAP solution, if dissatisfied a CIO's threat to go elsewhere would ring somewhat hollow, wouldn't you say?

On the other hand, if your company spent $100,000 or even $500,000on a point solution, it would be somewhat easier to admit a mistake and correct it when the software doesn't do what you ask of it.

Unfortunately, it looks like all of those point solution benefits are going, going gone.

Last week's Reality Check said "what we will probably see now is an accelerated pace in acquisitions and consolidation among software vendors as each major company vies for what remains of the pure-play vertical solution ISVs."

Oracle's latest acquisition attempt makes the point. But don’t discount the importance of SAP's acquisition of Business Objects for what it means, either.

It means, one of the very largest software vendors is no longer sitting on the fence, making only small, strategic acquisitions. For the most part SAP preferred to build rather than buy technology.

That will now change. SAP has decided to join the fray directly. If it wants to scale and compete with the likes of Oracle, Microsoft and maybe EMC it has no choice.

On a more positive note, what enterprise users will lose in vendor independence, flexibility and domain expertise, they will gain in ease of integration, deployment and support. Of course, that will happen as soon as the software vendors figure out how to integrate their latest acquisitions.

The wild card in all of this are the SaaS vendors. The fact that the big vendors are getting even bigger may actually push companies towards SaaS.

There appears to be benefits to SaaS both on the business and technology side.

The fact that it becomes an operational expenditure on the books rather than a capital expense, shouldn't be discounted.

Or the fact that a company can try a solution without investing a great deal of time or money. Plus the low cost of deployment, and the sheer number of choices now available, among other things, may in fact make SaaS an appealing option when put up against a giant on premise vendor who basically will own your IT department.

It is a jungle out there. The big on premise vendors are fighting among themselves for prey and hunting down the smaller pure play vendors. But as SaaS continues to evolve and grow in size,the hunters may become the hunted.

Posted by Ephraim Schwartz on October 12, 2007 12:48 PM

October 09, 2007 | Comments: (0)

Globalization takes on a new look

Cross-fertilization of companies and countries is creating something brand-new

Globalization is not only alive and well, it's happening on a massive scale.

How else to explain why certain Indian outsourcing providers are buying up U.S.-based companies? They do this to get deeper domain or industry expertise, but meanwhile, U.S. companies are pouring millions of dollars and hiring thousands of employees in India and China.

For U.S. companies, this practice allows them to offer a global delivery model. They can provide strong technical and business process capabilities at the best possible cost, accomplished through offshoring or the use of temporary (H-1B) workers.

IBM alone has 53,000 employees in its development and datacenters in India. A Unisys representative sounded almost apologetic when he told me that it has only 6,000 employees in India but added that the company is ramping up quickly.

The fact is that companies cannot be stateless; they have to be
headquartered somewhere. That "somewhere," however, merely pays lip service to local and international laws. For instance, a recently formed company, Darwin/Suzsoft, has headquarters in China as well as the United States and is a melding of Darwin Partners (a U.S. IT consultancy) and Suzsoft (a Chinese outsourcer for IT services).

It’s important to remember that the concept of globalization does not simply refer to companies with worldwide reach. There have always been plenty of those: General Motors, Colgate Palmolive, and the like. Rather, it represents a complete cross-fertilization where companies have global integration of their workforces, their markets, and perhaps over time, their identities.

I present for your edification just one example: Caritor, an outsourcing company with Indian roots but with U.S.-based headquarters. It recently acquired Keane, a U.S. company that specializes in financial services, insurance, health care, pharmaceuticals, retail, and telecommunications. The acquisition strategy follows the pattern of Indian companies such as Infosys and Wipro that have been acquiring U.S-based companies. The Indian companies need to buy what they cannot build: industry or domain expertise in order to move upmarket. Thus, Keane, with its depth of services and expertise, enhances Caritor's market position.

Keane also gives Caritor something it needed badly in order to go upstream and capture bigger deployments and customers: a large U.S. presence.

And yet, I asked Imran Sayeed, senior vice president of global industry solutions at Keane, if Caritor is a U.S.-based presence, why would it need to acquire Keene?

Caritor has always had more employees in India than in the States, Sayeed explained. Keene doubles Carritor's size to 14,000 employees.

Sure, it's true that with modern communications anyone can work anywhere. But the reality is that companies with big projects in mind want – no, demand – a strong on-site presence. This is true for any company on either side of any ocean.

Sayeed continues: "We have more than 7,000 people in the U.S. that are close to the client's headquarters working either on-site or in one of our many offices around the country."

When it was just a matter of maintenance and support then, yes, offshoring made sense, but now companies are looking for a business partner, Sayeed says. They want someone alongside them where they work.

In addition, they need people who understand what the business problem is, and that takes more than just coders. That's the industry expertise I've been talking about.

As U.S.- and Indian-based companies battle for the Fortune 1000 clients, what should the CIOs at those F1000 companies care about?

It boils down to an execution play. The U.S. companies seeking out India and the Indian companies coming here understand their respective strengths.

The execution Sayeed talks about and that CIOs need to care about is not in delivering the solutions so much as in which companies can assure their customers that they have the strongest leaders who can absorb the big changes that globalization brings.

Whether it is IBM absorbing and leading 53,000 Indian employees or Infosys integrating 36,000 U.S. workers from Infocrossing to this side of the Atlantic, the enterprise will need to be reassured that the company they are partnering with can pull it off.

Some will pull it off, but some endeavors will turn out so disastrous that they will become the stories of legend of what can go wrong. Maybe those situations will be taught in business schools around the world.

But whatever happens, globalization is here now.

Posted by Ephraim Schwartz on October 9, 2007 11:04 AM

October 08, 2007 | Comments: (0)

SAP's Business Objects acquistion: The death knell for point solutions?

SAP, the company known for building rather than acquiring technology, did an about-face this week, announcing its intention to acquire Business Objects, one of the largest point-solution ISVs in the BI space.

SAP does not usually acquire large companies. Instead, it more typically makes what its executives like to call strategic "vest pocket" acquisitions of smaller, lower-profile companies to fill in gaps missing in their own technology. But the acquisition of Business Objects could very well represent a major change in the ERP landscape.

From where I sit, Oracle has been on a buying spree for the past several years and, over that time, has learned more and more from each acquisition about how to do it right.

In the meantime, SAP has remained reticent, almost as if it were sitting back and waiting for Oracle to have a major stumble. Unfortunately for SAP, that never really happened. And SAP can wait no longer. Now it will have to play Oracle's game if it wants to remain competitive.

What we will probably see now is an accelerated pace in acquisitions and consolidation among software vendors as each major company vies for what remains of the pure-play vertical solution ISVs. Given a few years of this, point solutions may become extinct or, certainly, an endangered species. Companies will be forced like never before to make a platform decision: Fusion, NetWeaver, or Microsoft and go with it. Of course, eventually, the pendulum will swing back the other way.

As Howard Dresner, principal at Dresner Advisory Services, says, "For every vendor that is acquired, there are 20 emerging companies offering new approaches, technologies, and business models." This will be the case, but it will take a while for these startups to become seasoned enough for an enterprise customer to bite at their solutions.

ERP as a stand-alone enterprise solution is no longer what it once was, a topic I addressed last April. Oracle saw the handwriting on the wall and started acquiring. SAP saw it a bit later and started building, mainly NetWeaver. But for my money, this Business Objects acquisition is an admission on SAP's part that NetWeaver alone won't cut it. It needs to broaden its market potential and market offerings now.

Business Objects' strength is in analysis and performance management categories. According to a SAP statement, the acquisition of Business Objects will give SAP customers the ability to integrate embedded analytics in transactional applications.

With the market for pure ERP systems in decline, the acquisition is not surprising and fits into the SAP strategy, as stated by SAP CEO Henning Kagermann, "to double our addressable market by 2010."

Posted by Ephraim Schwartz on October 8, 2007 12:32 PM

October 02, 2007 | Comments: (0)

DEMOfall: The good, bad, ugly

A look back at the good, the bad and the ugly from the premier launchpad event

I'm just back from DEMOfall, the semi-annual conference that gives startup companies a chance to unveil new technology before an audience of venture capitalists and executives from the venture arm of some of the biggest high tech firms in the world. There are always lots of good and innovative new technologies to write about, but this year, two demonstrations blew me away.

One was not just good but flat out great. The other was one of those examples where you see what can happen when technology goes bad, (or, depending on your perspective, over to the dark side). The ugly part is that there were far too many companies that reminded me of those scary days leading up to the bursting of the high tech bubble.

First the good. No, great.

In a panel discussion entitled, The future through the eyes of young innovators, Michael Callahan, a twenty something innovator and founder of Ambient and a recent grad from the University of Illinois at Champaign-Urbana, demonstrated a communications technology that captures neurological information from the brain and translates it into speech using a device called Audeo.

The demonstration was truly amazing. Callahan stood before the audience and while keeping completely silent -- his lips never moved -- the computer said, "as you may notice, I am not visibly speaking." These words may someday become as memorable as Alexander Graham Bell's famous first words on his telephone, "Mr. Watson, come here. I want to see you."

Callahan's words were not prerecorded. They were the words he wanted to say but those words never passed through his lips.
The technology captures the process taking place in the brain as it sets up the vocal aperture (voice box) before the air from the lungs come up.

"It is not necessarily straight thought. It is a step above thinking but a step below speaking," said Callahan.

The audio technology, consisting of both hardware and software, captures that control signal from the brain and "does a bunch of sophisticated signal processing and turns that into speech," Callahan explained.

On the hardware side, Callahan said that the vocal signal from the brain to the voice box that the device needs to pick up is "about this big" (he placed two fingers about an inch apart).

Meanwhile, the noise from the body such as the heart beat, "is about this big," Callahan demonstrated again, holding his hands a few feet apart.

Comparing it to a needle in the haystack, Callahan explained that on the software side of things, what is needed is signal recognition from a number of different angles.

First applications will be for people with disabilities who are unable to talk.

However, as Ambient Corp., Callahan also will be looking for more mainstream markets. Two he mentioned are gaming and mobile communications.

All in all, it was a sight to behold. Watch the video.

Unfortunately, now I must go on to the bad.

The technology here is also amazing but I just hate the way it will be used. It comes from a startup called Pudding Media.

What Pudding's technology can do is monitor VoIP calls, IM chats and the like, listen in on the conversation and, by picking up key words, place advertisements in real time on screen as you communicate.

The technology is, predictably, opt in. So, if you are willing to expose part of your life, you get something for free -- in this case, the service being offered by a mobile carrier, a VoIP provider, or even a Web publisher, according to the company press release.

Say, for instance, you're talking about going to the movies with a friend. The technology will start displaying movies playing in the area on your screen.

Yes, it is pretty darn amazing but my bet is the first VC to invest in this technology will be a firm that calls itself In-Q-Tel, none other than the investment arm of the CIA.

Have fun.

And now we get to what was ugly about DEMO. Specifically, it was the echo of the old days when companies insisted that profits were unimportant and market share was everything, and so offered whatever service or product they had for free.

There were way too many companies jumping on the collaboration and social networking bandwagon, all of them promising users a free version of their service.

For investors, most of the presenters promised that users would be willing to pay for added services once they were hooked on the (typically) Web 2.0 collaboration, a la FaceBook or MySpace service.

I wrote a blog post on this and named a few names.

Posted by Ephraim Schwartz on October 2, 2007 03:00 AM

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