June 26, 2008 | Comments: (0)
SAP sticks its head in the ground
The contrast between old and new software couldn't have been stronger this week.
With his company beset by competition from Oracle, Microsoft, and Salesforce.com and with new technologies such as software as a service and cloud computing redefining how enterprises think about software, you'd think SAP's CEO would put on his visionary's hat and talk real strategy. You'd be wrong.
In an interview with The Wall Street Journal, Henning Kagermann airily dismisses software's new direction. His exact words weren't published, but here's the Journal's summary: "That's not to say there isn't a role for software from companies other than the SAPs and Oracles of the world. But Mr. Kagermann says that these systems will complement, not replace, traditional business software."
Days later, Salesforce.com CEO Marc Benioff announced that his company is making it easier to integrate Google Apps with the Salesforce platform. Benioff, and his "end of software" mantra can be annoying, but his company changed the game in enterprise software and keeps pushing out new ways of extending its platform. What a contrast to SAP, a company so stuck in the 20th century that its on-demand efforts (along with attempts to reach the small-business market) are pitifully weak.
Salesforce.com does Google
Salesforce.com released tools that allow developers using the SaaS pioneer's cloud-based development platform to integrate with data from Google services via Google Data APIs. Sure. That's an incremental step, not a leap. But it's yet another move toward the day when enterprises will make serious use of Web 2.0 mashups, instead of expensive, proprietary applications.
Ryan Boyd, of the Google Data APIs team, says in his blog that "the new toolkit enables server-to-server communication between the Force.com platform and your favorite Google Data APIs." What's more, developers can use Apex code to access the APIs for the Google's Contacts, Calendar, Spreadsheets, Documents, and Blogger tools.
Boyd says that "CODA, a European Financial applications provider, has used this new library to build a prototype Web application which enables an exchange of data between Google Spreadsheets and their CODA 2go financial application built on the Force.com platform." The end result is an easily made cost allocation spreadsheet -- an important accounting tool.
I'm not a programmer, but it certainly seems that these tools are easy to use. For example, Salesforce.com posted an entry on Monday showing that a developer can pull events from Google Calendar with only five lines of code.
Small but useful
Don't underestimate the power of small companies to develop applications that are useful for business.
A company called Astradia used this week's Salesforce.com/Google event to demo a couple of interesting apps, including one that makes it simple to create and save customer-ready quotes within Salesforce.com.
What's more, the ability to integrate existing business processes with new enterprise applications is an important selling point for a host of new players. For example, NetroMedia, a Canadian provider of streaming media services to customers in 77 countries, needed to update its CRM system. CEO Matt Carson told me that he looked at SAP, but found it too closed, too hard to customize for some of the specialized billing applications needed by his company. Instead, he opted for SplendidCRM, a tiny, open source provider.
Losing NetroMedia's business makes no difference to SAP's financials, of course, but the incident is a great demonstration of why the German software giant has gained no traction in the small-business market and is losing more significant business to Salesforce.com and other, more nimble players.
No, I'm not predicting doom for SAP. Google Apps are rather lightweight, of course, and SAP unquestionably delivers real value. But as businesses get evidence that Salesforce.com and other 21st century-oriented software providers can also provide serious business value -– at less cost and less aggravation -- Kagermann may be eating his words.
I welcome your comments, tips, and suggestions. Reach me at bill_snyder@infoworld.com.
Posted by Bill Snyder on June 26, 2008 03:00 AM
June 05, 2008 | Comments: (0)
Mobile CRM: Beyond the BlackBerry
Mobile CRM has been a marginal technology for years. Once a user developed an appetite for more than the basic calendaring and address book functions of the RIM BlackBerry, additional sustenance was in short supply. But now, a Silicon Valley startup and a burst of innovation from more established players, including SAP, are moving us closer to truly mobile customer management.
It's about time. Salespeople have always lived on the road, and it makes no end of sense to be able to connect wirelessly with the rich information stored in CRM systems back in the office. Sure, the BlackBerry and its handheld competitors have long offered the basics of calendaring and contact management, but e-mail aside, when you think about the cost and back-office complexity, the ROI isn't great.
Meanwhile, cellular coverage has improved dramatically, handheld devices are extremely powerful, and a new generation of tools allows developers to write small, but robust applications and tailor them to a variety of hardware platforms. "Perfect storm" is an awfully tired metaphor, but a lot of factors have come together to enable CRM vendors to push deeper into mobility.
Rethinking the mobile app
Sheryl Kingstone, an analyst who follows CRM and other applications for the Yankee Group, says that her company’s surveys show strong demand for mobile CRM in the enterprise, but only if vendors get it right. Mobile applications, including CRM, have to be rethought and not just dropped onto a mobile device, she says.
Ribbit, one of InfoWorld’s startups of the year, built a software platform that enables developers to create voice and telephony applications in a familiar Web application development environment. Once built, those applications can be linked to other Web apps, including SaaS-based CRM from Salesforce.com and other companies.
A Salesforce.com developer, for example, used Ribbit's API to build a mashup that converts voice messages to text, then drops the data into the Salesforce CRM. Users can also call into the application remotely to add information or view data.
Analyst Denis Pombriant of Beagle Research was impressed with Ribbit's Salesforce application because "it doesn’t treat the handheld device as if it were just a small computer. It tailors the application to the small screen."
SugarCRM, the largest open source CRM vendor, has added a lot of mobile features to its latest release, due at the end of the month. Sugar 5.1 will allow users to run all 20-plus modules of the CRM app on their BlackBerrys and iPhones. It's a big improvement over earlier versions that only ran eight or so modules on mobile devices.
Sugar 5.1 comes with the first set of enhancements to Module Builder, a tool to let nontechnical users create new modules based on Sugar core logic. Users can now build up a history of customizations and establish one-to-many links between modules, including ones running on mobile devices.
Chris Harrick, a SugarCRM vice president, says the software now supports devices running Windows Mobile, the iPhone, and other cell phones equipped with a Web browser in addition to the BlackBerry, which remains "the most solid, enterprise-ready platform."
SAP steps up
SAP, meanwhile, has become deeply entrenched in the BlackBerry via its alliance with RIM. The German software giant is making some its core CRM applications native to the BlackBerry. It started with the usual basic apps on the BlackBerry (calendaring and more) and will add functions such as forecasting, sales pipeline, and lead sheets before too long, says Vinay Iyer, SAP's vice president of CRM marketing. Data, like e-mail on the BlackBerry, can be updated via the usual "push" from the BlackBerry Enterprise Server, instead of by manual synchronization.
Making the apps native to the BlackBerry is a very smart move since there's so much overlap between the customer bases of both companies. SAP shops that already support the BlackBerry won't have to spend much on additional training or hardware to take advantage of the mobile capabilities. Apple and the iPhone will have to scramble to get a toehold in this market.
For now, SAP is concentrating on its alliance with RIM. But the agreement announced in May between the two companies is not exclusive, and SAP is open to collaborating with vendors of other devices in the future, says Iyer.
It's likely that there are still bugs and broader technical issues standing between a truly mobile CRM and the mobile sales force, but progress is finally being made by some big players -- and a few noteworthy little guys.
I welcome your comments, tips and suggestions. Reach me at bill_snyder@infoworld.com.
Posted by Bill Snyder on June 5, 2008 03:00 AM
May 08, 2008 | Comments: (0)
Out in the cold: small businesses' ERP deficit
It took the United States just 45 months to defeat the combined forces of Germany, Japan, and Italy. It has taken SAP 48 months to get Business ByDesign, its SaaS (software as a service) play for the SMB market, off the ground. And it still isn't ready for prime time.
Oracle, meanwhile, doesn't even pretend to care about smaller businesses; CEO Larry Ellison has repeatedly said that it costs too much to go after a relatively low-margin market. And Microsoft? It has a tentative SaaS offering, and just for CRM at that.
So small businesses' on-demand ERP options are limited to offerings from small providers such as Intacct and RightNow Technologies.
The real problem here is that the major enterprise software players are structured to deliver massive, on-premise business applications like SAP R/3, Oracle E-Business Suite, and Microsoft Dynamics. Doing anything else requires not just technological change but cultural change -- as well as a willingness to accept a new business model. And there's no better example than SAP.
NetWeaver sinks Business ByDesign
Last week, the German software giant put the brakes on Business ByDesign, just days before the opening of its annual Sapphire conference in Orlando, Fla. "We have to work out how expensive it will be for SAP if we run this product in a hosted environment. We have to make sure we make enough money with the product," said co-CEO Henning Kagermann.
The company is now projecting "substantially less" than the originally targeted 1,000 customers in fiscal 2008 and is pushing back by as much as 18 months the previously stated targets of 10,000 customers and $1 billion in revenue by 2010. Not only is the company pessimistic about BBD's rate of growth, it's cutting back spending on the program by some $160 million this year, notes Sanford Bernstein analyst Charles Di Bona.
Digging a little deeper, it appears that a large part of the messy economics of BBD is (big surprise) Netweaver 7.1, SAP's latest iteration of the big honking platform that nobody likes.
In an interview at Sapphire with a group of industry watchers called the Enterprise Irregulars, Kagermann spilled the beans, saying, "We know we can have TCO, but need NetWeaver enhancements. There's a very close link between the TCO of Business ByDesign and NetWeaver." SAP set a price of $149 per user and tried to work backward to a cost structure that allowed for a reasonable profit, but hasn't been able to do it.
Kagermann deserves credit for frankness, but that's about all. SAP has talked about the SMB market for years, but has yet to get the program off the ground. Jeremiah Stone, a solution manager for Business ByDesign, says BBD has been cooking for four years, including two years of application development. Think about that: four years of development without serious thought to the business model. And now, it's cutting spending on a program it once called critical to the success of the company. Astonishing. Makes me glad I'm not a shareholder.
Henning, meet Marc
If SAP were really serious about succeeding in the SMB market, it would have to make a very serious move. My idea: Buy Salesforce.com. It's no secret that Salesforce.com founder Marc Benioff has toyed with the idea of selling his company, and SAP could certainly afford it. Salesforce.com has long since solved the technological problems that caused a spate of embarrassing outages a few years ago, and it has a large and loyal SMB customer base.
I don't expect that to happen; it would be an admission that SAP -- a well-known sufferer of the "not invented here" syndrome -- has failed a crucial test. And in a larger sense, that failure speaks to the larger failure of enterprise software to meet the needs of smaller businesses.
The wave of consolidation that has swept the enterprise software world since Oracle bought PeopleSoft has been accompanied by a drive on the part of the largest survivors to build and sell complete software stacks. Although there are reasons that the stack strategy offers benefits to the enterprise customer, it clearly doesn't serve the interests of the little guy.
Luckily there is a wealth of smaller companies busily adopting open standards and moving toward the SaaS model. If you're responsible for IT in the SMB world, that's the place to look.
I welcome your comments, tips and suggestions. Reach me at bill_snyder@infoworld.com.
Posted by Bill Snyder on May 8, 2008 03:00 AM
February 11, 2008 | Comments: (0)
Interesting rumor making the rounds this morning that Salesforce.com has approached Oracle and offered to sell itself for $75 a share. Wall Street is paying attention; shares of Salesforce.com have been trading as high as $10 a share above Monday’s opening price. If true the offer would be a huge premium over Friday’s closing price of $50.87 a share.
The rumor apparently started with a blog posting by Tom Foremski on his Silicon Valley Watcher Site. Foremski, a former reporter at the Financial Times and a reputable guy, attributes his scoop to a “reliable source.”
No way to know if Foremski’s source is accurate, but even if he or she is, I’d be surprised if Oracle is really interested. In a quick note this morning, Cowen analyst Peter Goldmacher, who has followed both companies closely for some time, says “While we would not be surprised if [Salesforce.com] made such an overture, we would be very surprised if Oracle didn’t laugh them out of the building.”
Goldmacher notes that the deal would start by knocking a full point off Oracle’s margins and would take Oracle way down market (that is, to smaller customers) an opportunity the company has repeatedly said it has no interest in. It’s also worth noting that most Oracle acquisitions have been very bottom-line-oriented. That’s because most of the targets have had large streams of recurring maintenance revenue, which helps margins and earnings. Salesforce.com’s software as a service model is completely different.
To be candid, I was wrong about Oracle and BEA Systems. So maybe I’m misreading this one as well. But for now, I’d remain very skeptical.
I welcome your comments, tips and suggestions. Reach me at bill_snyder@infoworld.com
Posted by Bill Snyder on February 11, 2008 11:25 AM
January 14, 2008 | Comments: (0)
The tech team at Cowen & Co. on Monday published a note containing its picks for potential surprises in the technology business this year. One of the most interesting: “The Growth of On-Demand Software Vendors Hits a Wall.”
Analyst Peter Goldmacher, who has followed the fortunes of the on-demand vendors for some time, had this ugly bottom line: Share prices of Salesforce.com, Concur, Taleo and Vocus could trade down as much as 30% - 50% relative to the market as investors decide that these companies don’t really have bulletproof business models.
There’s an unpleasant corollary as well, although the Cowen team doesn’t mention it. Salesforce and brethren have been fertile fields for IT job seekers. That could change very quickly.
The conventional wisdom, Goldmacher says, holds that SAAS will do well even if IT budgets contract because “software delivered as a service can be deployed for such a minimal up-front investment that new customer signings and net subscriber additions will continue to grow at a rapid clip.”
But those claims have not been tested in a slowing economy, he says.
HR and marketing departments -- important consumers of on-demand software -- traditionally bear the brunt of corporate belt tightening early in a business downturn, and that could but a dent on new deployments, and the growth of seats at established accounts.
The exposure of SaaS vendors is heightened by the fact that nearly all are one-product companies and are fighting the increasing inclination of corporate IT buyers to consolidate spending with a few large vendors such as Oracle, the analyst writes.
None of the potential surprises are billed as sure things; the hit to SaaS is given a probablility of 30%. Indeed, to make Cowen’s list, events had to have a probability below 50%. Still it’s interesting reading and good food for thought.
Here’s the rest of the list. Items are listed in descending order of probability; the higher up they are on the list, the more likely they are to occur.
10 - The Telco Threat to Cable Becomes Glaring
9 - The Growth of On-Demand Software Vendors Hits a Wall
8 - U.S. Legislation Favorable to Alternative Energy Is Passed During an
Election Year
7 - Google Experiences Meaningful Adoption of .Google Apps. By Medium
& Large Businesses
6 - Qualcomm Abandons Gobi
5 - PlayStation 3 Fails to Achieve Critical Mass, Developers Shift Focus to Wii
4 - AMD Loses its Infatuation with 30%+ Market Share to Focus on a
Profitable Niche Strategy
3 - DRAM Market Conditions Turn Favorable by Mid-year
2 - Cisco Lands a Major Wireless Infrastructure Deal with a Tier-1 Service Provider
1 - Hollywood Studios Announce Intention to End Physical DVD
Distribution and Embrace Cable VOD and Broadband Downloads
I welcome your comments, tips and suggestions. Reach me at bill_snyder@infoworld.com
Posted by Bill Snyder on January 14, 2008 01:19 PM
TOP STORIES
ADDITIONAL RESOURCES
- Why Linux Threats Mean Business
- Do you have the power to resolve technical issues with one call?
- Take control of your content- leverage Microsoft SharePoint
- Four Steps to Disaster Recovery and Business Continuity Using iSCSI
- Flexible, Scalable, Enterprise Storage for Virtual Infrastructures
- Virtual Servers Meet Virtual Storage
