Posted on September 27, 2007
Filed Under Software, Technology & The Web | 1 Comment
I went over to the InfoWorld Virtualization Forum this week to get a better understanding about the technology behind the buzz. I figured I was missing something when I read all the hype that built up around the VMware IPO and other virtualization concepts. But when I heard Stephen Hilton, an IT executive at Credit Suisse (which is doing a big server virtualization project) say virtualization “would drop out of the vocabulary in three years,” I felt better.
I was convinced before I went that “virtualization” is just a buzzword du jour, today’s “dot.com.” So I was predisposed to hear what I wanted to hear I’m sure. But I understood his point to be that this was nothing new and just the way IT infrastructure needs to be built. That’s the way I understood it too. IBM has had it for 40-50 years on mainframes; it was only a matter of time before it would be used to better utilize PCs on networks. Eventually, it will be built into every type of server software; freestanding virtualization will go the route of the spell checker, from separate product to a check-box feature of a higher order product.
To be clear, I understood the concept vis-à-vis servers going into the conference venue. Working on Multics marketing in the early 1970s, I was there at the beginnings of the virtualization that EMC’s SEC filing treats as if it was ancient history (which I guess it is). The logic says “Let’s do for the 25 million x86 servers out there what VMS and AOS/VS did for VAX and Eclipse in the 1970s.” And what IBM’s VM did for its proprietary systems at the same time Multics was commercially announced. Given the 30-year-plus maturity of this concept and its inevitable commoditization, the barrier to market entry is low. VMware has a first mover advantage (usually short-lived in IT marketing) but Red Hat, Microsoft, Novell, IBM and others are right behind.
“Server virtualization” adoption uptake will be an interesting process to watch but I don’t see the technology as too exciting for investors long term as the spell checker syndrome kicks in. Not surprisingly, panelists at the InfoWorld event mentioned that cultural issues, lack of standardization of operating systems, shared services issues, and lack of applications that take advantage of server virtualization are bigger issues than the technology itself in terms of adoption. On the other hand, they see virtualization technology as a great way to inculcate some much needed high availability (HA)/failover capabilities into their infrastructures. In fact, I heard more about HA as a benefit than better PC resource utilization in the various user and vendor presentations.
So as for server virtualization: great concept, not a differentiator for very long, kind of like rack and pinion steering and electronic ignition (no other choice after a short time lag).
The other problem is that given that virtualization is such a hot buzzword, it is being thrown into the IT investment research mix in ways that make entirely no sense at all technically. Back when the VMware IPO came out, I said I don’t understand why I would want to virtualize my desktop PC and laptop? According to IDC (according to EMC), less than 1% of non-server personal computer devices are virtualized. I was surprised that it’s that high.
So I was happy to hear that “desktop virtualization” suppliers don’t want me to virtualize my PC. They want me to get rid of it. They will replace it with X-Windows. That’s right: X-Windows. See the series of white paper and case studies I did for HP in 1992. Dave Cohen of Merrill Lynch scoped it all out at the InfoWorld meeting. His caution though was as follows: “Don’t just move all those management problems into the data center.” Now that I understand what they are talking about when they say “desktop virtualization,” I do actually think there is a big market here: for the management of diskless appliances, all the devices “out on the edge” that are not on the desktop. Let’s call it “non-desktop virtualization.”
And there was another up and coming buzzword, “application integration.” Read that one as electronic software distribution and associated features, also circa 1992.
–Dennis Byron
Tags: virtualization, VMware, IBM, EMC
Posted on September 26, 2007
Filed Under Software, Technology & The Web | Leave a Comment
Red Hat (RHT) investors should be worried about a growth rate lower than reported in previous quarters. Don’t worry… yet. The apples-to-apples trailing-12-month growth rate was about 35% in March 2007 so 28% for the most recent quarter does not seem like anything to be worried about, given the current perceived IT spending slowdown and the natural gravity effect all high flyers experience. The September 2007 trailing 12-month will probably come in around 30% even after we backcast for independent Metamatrix results in 2006.
Red Hat is guiding to 23-24% growth in the current quarter so the trailing-12-month number is in danger of falling below 30% by the end of the year if there is any kind of minor hiccup. But Red Hat management said that the way long-term contracts are handled differently quarter-by-quarter affects these growth rates and that there is good news in bookings “off the balance sheet.” Ok? Give ‘em a quarter; they have been straight with us up until now.
They did publicize bonus structures for the former JBoss guys that in retrospect were wildly optimistic. But I do not believe that was purposeful on Red Hat’s part. So if you insist on worrying, be concerned that management launched into yet another rationalization of that 2006 middleware acquisition. Red Hat has made organizational changes to accelerate JBoss’ growth in the second half of this fiscal year, which ends next February. (As an aside, to further justify its JBoss acquisition, Red Hat management quoted an application deployment software forecast from IDC for 2007-2011 that was significantly higher than my last forecast for that market while at IDC. I am guessing IDC changed the definition of application deployment software after I left, maybe to count non-price-list software integrated into Windows. But JBoss was never going to get a big piece of the $9.5 billion to be spent on application deployment software in 2011 (my number) or $12 billion (the current IDC number according to Red Hat) for two reasons. First, that IDC forecast is 25% legacy-hardware-based and composed of large categories such as transaction monitors where JBoss does not even compete. Second, of course, it is the JBoss/Apache/open-source and Microsoft models of application deployment software commoditization and convergence that makes my forecast so much lower than IDC’s current alleged prediction.)
Management also explained how Red Hat Enterprise Linux (RHEL) both competes with and cooperates with VMware. They also explained the VPro desktop virtualization product that Red Hat is working on with Intel (INTL). Given Red Hat’s dominance already of the Linux space, the so-called desktop virtualization space is something Red Hat should concentrate on. The absurdity of the term “desktop virtualization,” which I will post about in a few days, does not change the fact that the opportunity for managing non-desktop diskless appliances is huge.
Management also announced that the RHX software exchange will be enhanced by a partner portal this quarter. This will provide partners, many of whom are small understaffed open source (OSS) software providers, much needed ecommerce support for their products. Such partner products will also be accessible to a common Red Hat service experience.
I was sorry to see Red Hat step into the government-sponsored issue, seeming to be happy about government mandates worldwide that preclude competitors. This attitude is from the school of thought that says “if you can’t beat Microsoft in the marketplace (against whom Red Hat doesn’t really compete if you study the rest of its statistics), hire a lobbyist, make a political contribution, and ask for a government hand-out” in terms of a wired contract or stifling regulation. Acceptance of that big-company attitude, something you expect of IBM, is the biggest concern to come out of Red Hat’s latest quarterly conference call.
–Dennis Byron
Tags: open source software, Linux, virtualization, middleware
Posted on September 25, 2007
Filed Under Companies, Markets & Finance | Leave a Comment
Big companies like Microsoft sometimes thrust their bumbling incompetence right into plain sight. This week is a good example. The success of Halo 3 is juxtaposed with a $500M flyer on Facebook, more price reductions on Zune (Zune?), and a program to allow corporate customers to downgrade their new computers from Vista back to XP.
There are a number of things Microsoft has launched that we’ve been pleased with and even the potential of some of their server-side technologies is interesting. However for every one of the good things there seems to be a equal or greater utter failure that offsets potential gains.
We’ve researched Microsoft for some time and it is a cheap stock with great cash flow and so on. However the management team needs a major reset of strategy and some discipline to make the stock interesting.
Back at IBM in the late 80’s and early 90’s the administration and red tape at the company made it almost impossible for some customers to do business with the company. During these times those of us in sales trying to make our numbers would end the meeting with: "We have met the enemy!" and adjourned to our local watering hole.
IBM sales were a disaster for a few years until they figured it out and made their wildly successful thrust into the services business.
– Kris Tuttle
Tags: Microsoft
Posted on September 21, 2007
Filed Under Software, Technology & The Web | Leave a Comment
When compared with its leading competitors, Oracle (ORCL) had good results on the topline for its quarter ending August 31, 2007. Subtracting estimates for Agile, SPL Worldgroup, Metasolv and especially Hyperion on the back of an envelope, and a bit more for the half dozen other smaller acquisitions since last year’s first fiscal quarter, Oracle year over year quarterly revenue growth was about 15%. By comparison, Microsoft (MSFT) grew about 13% in its most recent quarter and SAP (SAP) and IBM (IBM) grew about 10%. My estimate for IBM of 10% is for the Software Group only and includes a backcast calculation for its acquisitions.
My estimate isn’t based on an attempt to discriminate organic vs. acquired new license vs. maintenance vs. consulting; you can’t compare against the others if you do that. This is just top line. By its metrics, Oracle said “Our Q1 database and middleware new license sales growth rate of 23% was the highest in seven years… If we continue to grow our middleware software business at the same rate we grew it this quarter, Oracle will challenge IBM for the number one position in middleware by the end of this year.” As we guessed last December would happen, Chuck Phillips said he would stop picking on BEA (BEAS) on this metric.
Strangely out of nowhere, Larry Ellison said SAP NetWeaver had “disappeared” since Shai Aggassi resigned. “It is not doing very well,” he claimed without giving any specifics. Also based on new software license revenue, Oracle claims to be the fastest growing middleware company. Of course, Oracle does not provide middleware statistics so you have to take Oracle’s word for it or do some triangulation. The last time I did such a triangulation in the spring (I don’t agree new software license is the best metric), SAP was growing faster than Oracle in middleware while Oracle was growing faster than SAP in ERP. Somehow I doubt that Shai’s new fondness for wind-up cars would change that in a few months.
On the applications side, it was the usual mantra: “We continue to take applications market share from SAP.” Oracle is upfront about why; it bought the share. Oracle is less upfront—as you would expect—in explaining the difference between its strategy and SAP’s.
• Oracle’s growth strategy is acquisitive; SAP’s is organic.
• Oracle says it’s expanding in its own base (including non-Oracle-application Oracle database users); SAP’s growth strategy includes moving down market and into Software as a Service (SaaS) looking for totally new customers.
• Also, maybe a secret worth keeping, Oracle doesn’t say that it is already strong in the mid market via JDEdwards.
• Oracle says it is moving beyond ERP to industry-specific software; SAP already has both, an industry-specific integrated ERP/CRM capability (rather than, for example, an Oracle Pharma ERP product based on eBusiness Suite and an Oracle Pharma CRM product based on Siebel)
The most important difference is that Oracle has an objective of growing EPS 20% a year through 2010. SAP’s goal is different, raising its user count to over 100,000 by the end of 2010. With different goals, all of the tactics are going to be different as well.
One thing’s for sure. The installed base census Oracle bought two to four years ago is clearly paying off Vis a Vis the EPS goal and that really only kicked in earlier this calendar year. Look for more throughout the fiscal. The open question is: Did Oracle learn anything from the old Computer Associates as it began executing the Charles Wang strategy of the 1990s?
–Dennis Byron
Tags: middleware , ERP, SaaS, CRM, NetWeaver
Posted on September 19, 2007
Filed Under Companies, Markets & Finance, Software, Technology & The Web | Leave a Comment
Sorry, SAP (SAP), I am a great admirer but Business ByDesign (codenamed A1S) has a few problems. The name is too long, the beta set of users is too small, the price is too high, the reference implementations and demos are too much old SAP, and the channel strategy is too 20th century. The name issue is no big deal; let’s just call it BBD. The others will require a lot of work to overcome because BBD is the linchpin of SAP’s objective of 100,000 users by the end of CY 2010. SAP doesn’t consider BBD to be in “volume availability” until 2008 so there are a few months left to work out the kinks.
SAP says the small/medium enterprise (SME) BBD solution is already helping “an inaugural group of 20 live customers” in the United States and Germany. I’ll have to dig out some old notes but I think SAP had more beta users when it brought Pandesic to the same market with the same delivery-model/channel strategy10 years ago. Given SAP’s estimate of 1.5 million prospects in the 100-500 employee market band (60,000 in the U.S. and Germany alone), 2000—not 20—is the reference threshold it needs to shoot for. SAP BBD is available today for selected early customers in the United States and Germany, with the “opportunity now opening for early customers in China, France and the United Kingdom.” Hopefully there is multiple-thousand-client business in that pipeline given the test marketing that has been ongoing this year. During 2008, BBD is planned for expansion to countries such as Australia, Canada, India, Italy, Mexico, the Netherlands, the Nordic region, South Africa and Spain.
There is good news in the fact that the solution was built from the ground up on SAP NetWeaver. Its host in the Software as a Service (SaaS) delivery model will reportedly use SAP’s own MaxDB open source software database and Unix. But do companies with 100-500 employees even have someone that can use SAP BBD Business Designer?
The indirect channel is of course key to the SME market and the eventual success or failure of BBD. That is not the same as saying it will be sold indirect (such as via telemarketing). SAP needs to and says it will “rely significantly on its partner ecosystem strategy” to drive the SAP BBD offering. The only ecosystem member announced or on SAP’s website as of noon ET 9/19 is ADP. Some of its All-in-One-brand partners were shown on videotape at the press event but that makes channel overlap (SAP used the word “cannibalization” in the Q and A session) a real concern.
And most important, a minimum $4000-5000 per month price tag just does not feel “affordable and easy to adopt.” I am not even sure per-user pricing is even the way to go but I need to do a little more research on that issue. I am guessing SAP’s current SME installed base might be part of the pricing equation. SAP has a lot of customers in the 100-500 employee market band, especially outside of the U.S. That base could be used to build the BBD reference base quickly. But what would extensive customer migration from All in One to BBD do to the revenue flow from those current customers?
As Research 2.0 has discussed in its annual review of SAP, SAP BBD complements the existing Business One, Business All-in-One and SAP Business Suite (nee R/3) solutions. Business One is designed for the small business segment, while SAP Business All-in-One is built “specifically for midsize companies that need deep industry-specific functionality,” what SAP calls microverticals (of which it has hundreds).
The offering puts SAP right up against offerings from its long-time partner Microsoft (MSFT) as well as Inuit (INTU), salesforce.com (CRM) and many others. It will not be just a matter of competing for customers, as SAP is used to. SAP will have to get its BBD ecosystem from Microsoft, Intuit, Lawson (LWSN), Infor, and so forth as well.
–Dennis Byron
Tags: SAP, midmarket, ERP, CRM, SaaS, NetWeaver
Posted on September 19, 2007
Filed Under Air, Research | Leave a Comment
New report covers the growth of the VLJ services market, the predicted expansion of the Small Aircraft Transportation System (SATS) to local communities nationwide and the NASA-inspired technology that is enabling a potential seismic paradigm shift in air travel. The report also covers VLJ manufacturers, competition, manufacturing, regulatory, environmental and other issues specific to this new emerging market. Highlights are below:
VLJ Air Taxis Predicted to Relieve Overburdened Commercial Industry
Commercial airline traffic is predicted to see sustained annual growth over the next two decades, pressuring a lagging air traffic control infrastructure. VLJ air taxi services and increased utilization of hundreds of idle secondary landing facilities can substantially alleviate this pressure.
New Technologies Enable Small Aircraft Transportation System to Dramatically Expand
The Research 2.0 report affirms that only 660 of the approximately 5,400 public use landing facilities are used for scheduled air carrier flights as part of the standard commercial hub-and-spoke network system. Most of the other 4,800 facilities are utilized substantially below capacity. According to NASA, 93% of the U.S. population lives within a 30-minute drive of a SATS-type airport, while only 22% reside within the same distance of a major or hub airport. A NASA-sponsored five-year public private sector research project has shown that enabling technologies can support SATS’s mission of providing a “safe travel alternative, freeing people and products from existing transportation system delays by creating access to more communities in less time.”
Very Light Jets Offer Unique Advantages Over Existing Air Travel Options
The principal technological breakthrough behind the VLJ is a newly developed small, compact, lightweight jet engine with sufficient thrust force to propel the aircraft. VLJs are defined by several general specification factors, including a maximum passenger plus pilot capacity of seven, a maximum take-off weight below 10,000 pounds, acquisition cost of $1.2 million to $3.7 million and the performance capability to operate on runways approximately 3,000 feet long. Their maximum flight range is usually around 1,700 nautical miles. Fuel and maintenance direct operating costs for VLJs average $0.70 to $1.50 per mile. The report finds that VLJ manufacturers include a mix of new entry start-ups and traditional aerospace industry names. Forecasts for VLJ unit sales over the next decade vary considerably from 2,500 to a high of 8,000 or market sales of $6 billion to $20 billion.
Air Taxi Market Predicted to Create New Demand with Fresh Value Proposition
According to Research 2.0’s analysis, with the emergence of VLJ air taxi operators, true on-demand personal air transportation can become economically feasible on a broad scale. These services will drive growth of the air taxi market, which historically has been more like the charter model. On-demand air taxi services, like traditional automobile taxis, provide one-way point-to-point personal transportation immediately upon request. These aircrafts operate between landing facilities or near traveler destination locations, thus delivering value and flexibility not possible with the traditional (scheduled) airlines.
The report finds that the market size for these services is an estimated $2 billion to $7 billion annually. Most new technology air taxi services are start-up operations financed through private equity sources and founded by individuals well known for previous leadership roles in IT, traditional air transportation, aerospace and finance.
Beyond the airline industry, the ripple effects would inexorably alter regional economies by redefining overall travel related supply and demand patterns. These trends would likely usher in new economic development opportunities, particularly for those local areas closest to regional airports. The speed and magnitude of this prospective change will depend upon the ability of players in this personal air transportation sector to discern creative, compelling business models that clearly offer maximum quality, efficiency and customer responsiveness.”
The full report is available for Research 2.0 subscribers or individually from Research and Markets.
Tags: On-demand, air travel, VLJ, air taxi
Posted on September 17, 2007
Filed Under Software, Technology & The Web | Leave a Comment
Working at the torrid pace that typifies the Common Market, a first-level European Union (EU) court on September 17, 2007 upheld the EU Competition Commission’s 2004 findings based on a 1998 complaint by Sun (JAVA). It said that Microsoft (MSFT) did indeed need to take steps to increase interoperability between its Windows-based client operating software and other providers’ servers, and to offer a Windows client version without Windows Media Player. Microsoft did not say whether it would appeal but my guess is we should now stand by for the next big blast of related news in a little over a year, which will be a nice round decade after the initial complaint was filed.
Because both of the things EU Competition Commission asked for in 2004 have happened already, because Microsoft’s legal counsel has said for years that he thinks of Commissioner Neelie Kroes like a big sister, and because Microsoft has long ago reserved against the fines levied by Commission (less than a billion dollars and likely “paid for” with cheap Euros), it appears the remaining items of real importance to the information technology (IT) market is how the related open source software (OSS) issue is resolved and whether the EU approach applies worldwide.
On the worldwide aspect, the court’s press release says the 250-page opinion says “The Court considers that that practice enabled Microsoft to obtain an unparalleled advantage with respect to distribution of its product and to ensure the ubiquity of Windows Media Player on client PCs throughout the world…” What place the EU has in analyzing worldwide markets and their competitive implications have implications for every manufacturer of any type of product, not just IT, that wants to do business with the Europeans. For more detail on the OSS aspects, see my opinion over at ebizQ.net.
In the meantime, European consumers have already paid a “tax” for their use of Microsoft products in terms of higher prices. It just doesn’t look like other business-stifling EU taxes. Instead Microsoft collects the tax and passes it back to the EU in the form of a fine.
But Microsoft shareholders are also being as poorly served by Microsoft as the EU consumers are by their politicians. Microsoft shareholders have to put up with this near decade-old distraction for at least another couple of years. Unlike American politicians and competitors, most of whom settled the same issues in 2001, the EU commission has not constructively discussed procedures with Microsoft and the EU keeps increasing the threat level. I say “Microsoft, get out of Europe. Let the Eurocrats continue their slide down their innovation-stifling rat hole of regulation.” Microsoft should spend that money in vibrant economies like India and China where this century’s innovation will take place, not where the 19th century’s innovations took place.
But Microsoft spokespersons today were full of all the usual platitudes about the EU laced with attempts to buy its way out. It emphasized its spending of a half a billion in R&D in Europe in FY 2007, up from basically zero in 1998. Of course, that is not organic growth; it is mostly because Microsoft acquired Navision in 2002. Oh how I wished the EU Competition Commission had opposed that bad Microsoft investment.
–Dennis Byron
Posted on September 13, 2007
Filed Under Companies, Markets & Finance, Software, Technology & The Web | 2 Comments
On September 5 Sun (now JAVA on the ticker) met with NYC financial analysts covering a wide range of issues. The meeting had a heavy emphasis on partnering and channels as the two key tactics that will revive growth for Sun’s systems, storage and networking businesses. There were formal presentations by Sun executives and questions from the analysts about the IBM (IBM) and Intel (INTC) partnering agreements as well as an agreement with Juniper Networks (JNPR).
On September 5th, I didn’t hear any mention of or questions about another “long-time” Sun partner, Microsoft (40 months being a long time in the Internet era). Yet the first major partnering news out of Sun, post the NYC meeting, is the September 12 announcement dramatically expanding the Microsoft/Sun relationship.
Sun is to become a Windows Server OEM across the entirety of Sun’s product line. Previously Sun certified Windows on x64 systems but now Sun will pre-install the technology. The deal does not include other Windows components but this arrangement is similar to what Microsoft does with other hardware partners. Systems integrators and other Microsoft partners add the other Windows components such as Exchange, SharePoint and so forth. As an example of how partners might use the pair, they said that together they will be implementing AT&T’s interactive TV on a Sun/Windows platform.
In addition, on September 5, the technology topic of the day was virtualization. Again, there was no mention of Microsoft. On September 12, Sun and Microsoft said the two companies would collaborate closely on cross-platform virtualization. To be fair, at the 9/5/2007 NYC meeting, Jonathan Schwartz did say that most virtualization today is about Windows workgroup servers and compared Solaris as a virtualization platform against Windows and Red Hat (RHT) Enterprise Linux. Because Solaris has virtualization built in, even into its storage solutions, the deal makes sense for Microsoft. And the growth of the Sun x64 business provides Microsoft a good channel for its products, perhaps balancing any business it might be losing to Linux/Unix servers from hardware distributors that were formerly exclusively Windows dealers. Microsoft cited recent IDC numbers on why Sun would care to hook up with people that want Windows.
Sun said twice that 100% of its customers use both Solaris and Windows; I have a problem with that statistic logically (I am checking with Sun on its meaning) but it proves our research findings that users really want open choice, not just open source or just Microsoft.
This agreement represents a continuation of work on web services, interoperability, identity management, thin clients, and other technologies since the big Sun/Microsoft legal settlement in 2004. Specifically Sun incorporated Microsoft’s storage APIs and Microsoft systems management APIs, and the two did a lot of .NET/J2EE –that’s what the Sun guy called it—interoperability efforts.
So why was there no mention of Microsoft by Sun on September 5th?
I wonder if it is because of the ongoing Open Source Initiative controversy with Microsoft over the MS-PL license. Or is it because Bill Gates gave his going-away speech to Microsoft employees last week in Seattle and Jonathan did not want to pre-empt Gates’ chance to sing Sun’s praises. Maybe it’s because Sun is paying so much to lobby governments all over the world in favor of the Open Document Format, which competes with Microsoft’s OOXML.
Does it have anything to do with left-wing anti-war advertising by the Democratic party or Christian conservatism (breaking the old rule about politics and religion in one sentence)?
Or could it simply be that Microsoft is not a strategic partner in Sun’s opinion, despite the September 12 PR? Sun said in NYC that strategically it does not want to “retail other company’s technologies.” But no, that’s too simple and straightforward a reason.
– Dennis Byron
Tags: Sun, Microsoft, IBM, virtualization, Solaris, Windows, Linux, open source software, OSS
Posted on September 13, 2007
Filed Under Companies, Markets & Finance, Software, Technology & The Web | 1 Comment
Given Business Objects’ French headquarters, I say “Plus ca change, plus c’est les meme chose” (apologies to my French teacher on Avenue Gambetta if I got those little apostrophes in the wrong place or the les should be la). Business Objects’ has announced the “First and Only Complete Close and Forecast and Cost Control Solutions for the Office of Finance.” I enjoy parsing such marketing claims, especially when I recall writing about the same words in 1970 for Honeywell’s announcement of its Model 58 (based on Bull small business systems that Honeywell had inherited from the GE computer division acquisition the year before). I admit to just a little hyperbole almost 40 years ago. In the unlikely case the CFO could have actually figured out how to use the Model 58, he would have been the only one sitting in front of it because it was a single-user machine. And he surely would have been a he at the time.
However, as an impartial analyst in most of the years since Gambetta, I think I could have accurately used Business Objects’ (BOBJ) words of this week to describe the SAP (SAP) R/2 “Controller” module 20 years ago. So what’s really new in the Business Objects’ announcement? The announcement is all about how Business Objects combined its SRC (2005)/Armstrong Laing (2006)/Cartesis (2007) acquisitions with ‘heritage’ products (including earlier acquired products such as Crystal Reports-2004). Parsing of the claim involves accepting the factoid that the new suite’s profitability component and built-in governance are the first in a suite. I have not researched that factoid but Business Objects is a credible organization.
More relevant to the claim is the fact that the suite is what the company calls “best of breed.” That is, it is not built into an ERP suite such as SAP’s or Oracle’s (see the “aside” below) but is dedicated totally to the CFO. I don’t buy any advantage in such a pure-play positioning from any application software supplier. There are no particular plusses in not being more tightly linked to the chart of accounts, ledger, payables, receivables, and so forth as in the SAP and Oracle (ORCL) suites. In fact, in my research I have consistently found that users are willing to accept less functionality in individual software components in order to get the total-suite advantages of “one vendor to blame.” Oracle and SAP (chosen only as examples) bring the added advantage of providing other industry-specific components as well for everything from telecommunications to mining (a dozen or so for Oracle, over two dozen for SAP). This is especially relevant when Business Objects highlights its two vertical extensions (supply chain for distributors, funds transfer pricing for financial services).
My research has consistently found that functionality rules, not a suite value proposition or a best of breed value proposition. So if Business Objects can deliver 50% or more of SAP’s and Oracle’s comparable feature line-up, users will fairly consider it. The Business Objects products’ role-specific features are an example of how it might achieve that threshold. Another way that Business Objects can differentiate this offering is via the Open Appliance initiative it announced in the spring. But it implied that it needs to get its initiative partners up to speed before putting together such a package.
In fact, currently Business Objects will “sell” the grouping, which it calls EPM XI, as a suite but it is not yet priced as a suite. A representative said at the press/analyst meeting that users typically choose to deploy a single “application plus some of the reporting tools” first although a decision is often based on an entire suite’s benefits. Business Objects probably cannot price it all together yet because the “forecasting and cost control” and “close” modules do not become generally available until the end of calendar year.
On the same call, a “private investor” zeroed in on this issue coming at it from a different direction. The question was, “Is the RFP process changing vis a vis Business Objects’ best of breed approach” versus SAP’s and Oracle’s more broad-based value proposition? My guess is that the investor is gauging the outlook that Business Objects might be an Oracle acquisition target.
Assuming Business Objects retains its independence, there is a lot of opportunity in its eventually packaging EPM XI in an appliance with, for example, Open Appliance alliance partner Netezza (NZ). This would really bring things full circle back to the fibs I told about the Honeywell Model 58 hardware/software bundle in 1970.
As an aside, Marge Breya—Business Objects’ VP of marketing—got a kick out of the fact that an Oracle employee, representing of one of the ERP players that competes with Business Objects’ “best-of-breed” approach, called in to the analyst/press conference. It was great French diplomacy that Business Objects answered Oracle’s question fully. Could you see the reverse happening? Maybe Henning could call into to Larry’s financial analyst call on September 20.
– Dennis Byron
Update: According to SeekingAlpha on September 17 the rumor of a possible acquistion of Business Objects mentioned above is picking up steam.
Tags: Business Objects, appliances, ERP, Oracle, SAP
Posted on September 11, 2007
Filed Under Starting Up | Leave a Comment
If you’re like me you have accumulated thousands of PDF documents on your computer, many of which don’t have meaningful names. I added to my own problems by putting an automatic document scanner in place which stores most of my incoming paper documents with useful handles like 2007_07_20_10_29_50.pdf.
Enter a little piece of software (Mac only) called Yep from two guys up in Canada. It basically takes your inventory of PDF files and makes it more like managing photos; including tags, thumbnails and other tools.
It will simplify my daily file management considerably so it will probably justify the paying the $35 when free trail is over. For those Mac users that want to give it a spin you can find it at www.yepsoftware.com.
Like some of the tool choices we have profiled in the past we hope you find this useful.
Tags: Tools, Productivity, Software, Yep, Mac Software, PDF
keep looking »