CIO-Reinvented Blog - By Prashanth Rai

In conversation with Zia Yusuf - SAP TechEd 09

Yesterday we had a great conversation with Zia Yusuf. Zia  is the Executive Vice President, responsible for Global Ecosystem & Partner Group at SAP AG. It was an interesting conversation touching upon various dimensions of community, partners, SI's and social media. Zia & his team have a really tough job moving forward trying to change the perception and or reality of SAP in many areas like

1. the lack of trained quality consultants,
2. of being seen as a "innovation" laggard,
3. changes required in the services partners to deliver to the SME and deliver around solutions like BBD.
4. it being "white elephant" to implement & support,
5. ....etc

What was promising to see was that they seem to be moving slowly but steadily in that direction but they have a lot of work in front of them and they are open to collaborating and discussing on ways to achieve these results. Below are the key / interesting points or thoughts from the discussion that came up during this conversation:

• The community initiatives are thriving, it has reached 2 million now. And its also evident with the growing popularity of the SAP mentors and the initiatives they seem to be taking. The "Blue Jerseys" are great guys.
• The inclusion of SI (System integrators) into the Eco hub. This is a big move. . I think there seems to be a broad set of initiatives that SAP is taking to make the system integrators play nice. They seem to be taking small but progressive steps towards reducing that 1:7 (license cost :implementation cost) ratio, without ruffling too many feathers at the SI's end. Strangely I think a lot of enabling of this will be dependent on the customers and how much they are willing to adopt these changes & enforce some of these things with their SI's & service providers. On the question of SAP Ecohub or SDN becoming a services market place its an interesting discussion for sometime in the future.
• Enabling the Smaller partners - As a part of the ecosystem organization , there seem to be a set of Partner service advisor's that are looking at enabling partners particularly the small / mid sized ones by providing them access to the SAP product technology road map etc etc. This seems to be the only side of the SAP organization that has grown in headcount.
• Factoid - There seems to be a total of 400k SAP consultants globally with 250K of them being in large or in the organized sector the other 150k are typically independent contractors.
• Zia's thoughts on characteristics of great SAP SI firms:
  • Deeply involved with the evolution of the SAP Roadmap
  • Training & certification,
  • Dynamic in models offered,
  • customer service-value driven,
  • Ability to have a longer term relationship.
• A chance to collaborate - Zia is asking for "Use cases" that we can think of where "Social Media" will connect or interact with "Core business processes" that are a part of the Enterprise business processes. Specifically around crowdsourcing etc - Which will change the way business is done! Ideas welcome
• Community contribution into the product, the SDN / communities framework that was created for communities (SDN/BPX) is now a product called Collaborative Workspace and now has 1400 installations.
• SAP Safegaurding - Recently it has been communicated to all the SI's that they need to include / push safegaurding as a part of their implementations etc
• Job board has now been included in SAP Communities / SDN. First couple of days 180 jobs posted on it

Zia is now on twitter and you can follow him @ZiaYusuf

Tags: communities - sap - sapteched09 - zia+yusuf - sdn - bpx - partner

Prashanth Rai

Update: Looks like this would be the last event for Zia with SAP, All the very best to him for all his future ventures.

Disclosure: SAP paid T&E to TechEd.

IDC’s New IT Cloud Services Forecast: 2009-2013

New Cloud Services Forecast Publised by IDC - The new forecast, segmented by offering category, for 2009 and 2013:

Excerpts:

1. The five year growth outlook remains strong, with a five-year annual growth rate of 26% – over six times the rate of traditional IT offerings.
2. The revised figures are still in the same ballpark as last year’s forecast, although they reflect about a six month revenue knock back from what would have been expected from last year’s forecast, due largely to the global recession and, to a lesser degree, to better market tracking and tightened definitions.
3. This year, cloud services will total only about 5% of IT revenue. Even with a compound annual growth rate of 26% – over six times that of traditional IT – they will account for just 10% in 2013. Some might look at this, and conclude that cloud services are not very important – after all, in 2013, 90% of IT will NOT be from public clouds.
4. IT cloud services for the industry - $17B in 2009 and $44B in 2013
5. Of the $27 billion in net new IT revenue in 2013, 27% will come from IT cloud services. Given the 6X growth advantage of cloud services offerings over traditional ones, that percentage will grow very quickly in subsequent years – meaning that suppliers who don’t position themselves as IT cloud services leaders over the next several years, will forfeit larger and larger portions of the highest-growth markets.

Source: IDC

Henning Kaggerman to join Wipro's Board

Dr. Henning Kaggerman is joining Wipro's board as of Oct 27th. I think this is great news for Wipro. It was always a great experience meeting with him at the SAP events. Henning is a big believer / proponent of the consulting or value added approach to IT services & in reducing the implementation / services costs in SAP / Packaged implementations i.e. reducing the ratio between the licenses to services fees. Will be interesting to see how his thinking influences Wipro. Some comments / excerpts:

Commenting on his appointment, Dr. Kagermann said, "I have for long admired Wipro as a company as much for its innovative approach to business as for its strong commitment to values. I am excited at the prospect of guiding the company as it prepares for its next phase of growth"

Azim Premji, Chairman, Wipro Limited said, "We are delighted to welcome Dr Kagermann to our Board. He brings in a unique combination of academic perspective, technical expertise and leadership experience. I am sure that Wipro will benefit from his rich knowledge, insights and wisdom."

Source: 1

Prashanth Rai

Some interesting reading...

Notes from blog posts read today:

• Ratios of new license to maintenance revenues shift from 1:2 to 1:4 and in some cases 1:5.  Enterprise software vendors now in a better position to convert perpetual business models to subscription business models.  Do they have the guts and board approval?
• Indian System Integrators competiting for market share in Europe, Middle East, and Africa as they shift away from the North American market.
• Japanese CIO’s finally realizing that they need to break free from their existing ERP software vendor relationships.  SaaS options now in consideration.  Recent advancements by NTT to host Zoho, Siemens’ 420K employee move to Success Factors, and Flextronics 240k employee deal with Workday have shifted perception that SaaS can’t solve large enterprise requirements.
• Cloud computing - Broad acceptance that enterprises are interested - There's absolutely no question that cloud computing has moved into the mainstream of enterprise technology. Everyone from Microsoft to Accenture to HP to IBM to SAP admitted as much. With the worsening economic conditions and the maturation of cloud computing services, enterprises are actively investigating cloud computing. The main differences of opinion between the legacy vendors and companies like Salesforce and Amazon lie in how quickly and broadly companies will adopt cloud computing.
• Too much discussion of clouds at the infrastructure rather than platform layers - The entire cloud conversation at Structure was very focused on infrastructure. As Daryl Plummer of Gartner has noted, Cloud computing is not about infrastructure. It's about a new delivery and consumption model for IT services that are elastic, metered and abstract away the SW stack. The conference was mostly focused on the lowest layer of the stack and didn't really talk about how the cloud enables transformation at the business process level.

Source: 1, 2

Tags: cloud - saas - maintenance - cio - maintenance+revenue

Prashanth Rai

Telecommuting a way of life

 
Photo Credit David Gartner Photography | www.versusgoliath.com

Cisco recently published the results of their Telecommuting survey, it had some interesting pieces of information, below are excerpts from the same. This is an important trend to track from a productivity, sustainability & technology points of view. Companies specifically in the ICT industry (IT Services companies)should take the lead in this particularly given the nature of work, industry model etc.

Results from the survey:

Productivity and Collaboration

• Approximately 69 percent of the employees surveyed cited higher productivity when working remote, and 75 percent of those surveyed said the timeliness of their work improved.
• By telecommuting, 83 percent of employees said their ability to communicate and collaborate with co-workers was the same as, if not better than, it was when working on-site.
• 67 percent of survey respondents said their overall work quality improved when telecommuting.
• An improved quality of life through telecommuting was cited by 80 percent of survey respondents.
• Telecommuting can also lead to a higher employee retention rate, as more than 91 percent of respondents say telecommuting is somewhat or very important to their overall satisfaction.

Going Green

• In 2008, Cisco teleworkers prevented approximately 47,320 metric tons of greenhouse gas emissions from being released into the environment due to avoided travel.
• The average distance for round-trip commutes varied among global regions: employees in U.S. and Canada reported on average a 30-mile round-trip commute; Asia Pacific employees cited a distance of about 14 miles; Japanese employees cited a 26-mile commute; employees in emerging markets commute an average of 16 miles; and European employees reported a 46-mile commute.
• Cisco employees report a fuel cost savings of $10.3 million per year due to telecommuting.

Cisco Workforce

• Cisco employees spend about 63 percent of their time communicating and collaborating.
• 40 percent of Cisco employees say they are not located in the same city as their manager.
• The average Cisco employee now telecommutes 2.0 days per week.
• 60 percent of the time saved by telecommuting is spent working and 40 percent is spent on personal time.

Source:1

Tags: Cisco - telecommuting - ict - sustainability - productivity

Prashanth Rai

IDC's view of the BI Tools Market 2008

Was reading the recent report by IDC on the BI tools space, below are some interesting points / takeaways or excerpts from the same, The report can be accessed here:

1. Regardless of the specific BI technology, in the short term, the executive mandate for most organizations will be to do "more with less." Although we continue to see healthy demand for BI functionality from business end users, IT departments and business end users alike are being asked to curtail costs.
2. As a result, incremental, small purchases, and deployment of BI technology will dominate the market in the short term. This trend is also likely to push more organizations toward SaaS and outsourced BI and analytics solutions that have a pricing model, which enables better allocation of direct costs to current profitability.
3. IDC is beginning to see evidence of greater interest in outsourcing of advanced analytics processes.
4. Standardization and the expected eventual commoditization of core reporting, dashboard, and OLAP functionality. This core QRA (Query Reporting Analysis) technology, which still forms the bulk of the revenue for BI technology vendors, has been available for decades. Although substantial feature and functionality improvements have been
   made to this software over the years, the lack of differentiating features will continue to drive down the cost of this software.
5. The logical conclusion will be the broad availability of open source or very low-cost commercial reporting,
   dashboard, and OLAP technology with a shift in spending from licenses to support services.
6. QRA tools, there will be an intermediate-term opportunity for some vendors to differentiate their ad hoc query and multidimensional analysis tools based on features and functionality that put a premium on simplicity and performance. This may include use of in-memory deployment techniques, interactive visualization, or associative data management structures
7. The next wave of innovation in the BI market will come from the expansion of the overall business analytics solution to include functionality for supporting:
   • Unified access to and analysis of structured data and unstructured content
   • Collaboration during the process of decision making
   • Capture of knowledge learned in the context of decision making
   • Intelligent process automation, which combines BI functionality with that of business process management
8. In 2008, Oracle reaped the benefits of its investment in Oracle Business Intelligence Enterprise Edition (OBIEE) — the company's BI platform and its different modules for query, reporting, and analysis.
9. OBIEE has emerged as a growth driver in the overall Oracle portfolio.
10. Oracle's 2007 acquisition of Hyperion has only marginally contributed to the company's BI tools revenue.
11. Oracle is well positioned to continue to benefit from OBIEE by selling it to its existing vast applications and database customer base.
12. SAP derives all of its BI tools revenue from the QRA market segment.
13. In 2008, the company's SAP BusinessObjects portfolio benefited from the vastly enlarged sales force and was able to sell BI tools to SAP's applications customers.
14. The company (SAP) ran into some resistance from customers to its pricing structure but was able to overcome this challenge partly through improved communication about its BI tools portfolio road map.
15. Although SAP's rationalization of acquired BI tools has not been completed, the company is well positioned to fulfill the future needs of BI technology purchasers.
16. SAP is also on the forefront of redefining the functionality of a BI solution by integrating traditional QRA tools with those for content access and analysis, collaboration, and event monitoring.

Source: IDC

Tags: bi - sap - obiee - business+intelligence - QRA - oracle

Prashanth Rai

Its time SAP brought the bear (SAP BusinessByDesign) out of Hibernation

(These posts are long over due, but better late then never)

The title of this post is directly from the keynote of the Co-founder and Chairman of the SAP board Hasso Plattner at Sapphire US 2009. Hasso's keynote was for most part technical, talking about in-memory databases and how its going to transform the "Transaction processing system" space. It was geeky and pretty interesting, but during the later part of the keynote - looked like Hasso went off script and focused the keynote / presentation to his management team rather than the customers/partners/others out there. And one of the clear things that he did mention that it was time to bring the bear(Business By Design) out of hibernation.

Lets look at BBD from a customer point of view. A highlight session for me at Sapphire 2009 was the session with the Business By Design customers. This session had two customers one recent , one who had implemented it for a year make presentations and had other customers spread around different tables discussing with various bloggers, media, analyst resources.

Customers who were at the event:

• Bendpak, US
• Research Point, US
• IntelePeer, US
• Envelopments, US
• Nag, England
• Prognosys, India
• Sundolier, US
• Suh'dutsing Technologies
• Skull Candy
• TAM Ceramics
• One Vision Solutions

So as a part of this session I was able to collect data/experience points of 4 of the above highlighted customers.

Common Characteristics of these companies:

• No CIO or dedicated IT Team, It was run primarily by the CFO
• Turnover of around / less than 75 Million$ Companies
• Between 25-50 system Users

Each of these customers have had very positive things to say about their experience buying, implementing and using the product. Will summarize some of the points I heard during the discussion and other research about each of these customers.

1. Outgrew earlier / rudimentary systems like excel, quick books etc
   1. Brent Walters CFO One Vision - "We outgrew our systems"
   2. Beth Siron, the ERP implementation coordinator at Skullcandy - “We were running on QuickBooks and Excel spreadsheets, which is standard for a small company,” she said. “With our rapid growth, we’re not going to be able to continue with our current systems very much longer,” she said. The QuickBooks accounting system wasn’t designed to scale up and is hitting its limits. Additionally, the company needs to do product demand forecasting and manage multiple warehouses. Outdated manual processes worked well in the first couple of years, but that has changed. For instance, currently, e-mail is the method of coordinating the workflow's between manufacturing personnel and the offsite warehouse. Need for future stability. The company realized it needed a standard, stable ERP system that could scale out and would receive incremental future enhancements with new technologies. Siron said, “We want to keep growing rapidly and don’t want to be faced with another implementation in a few years. We needed to find a solution that wouldn’t just fit our needs now, but also four or five years into the future.
2. Need to minimize manual processes and the need for hardcopy files to be passed around & ultimately have a 360 degree view of the start to finish process
3. No need for IT Team / Landscape , Implementation executed by Business Owners.
4. Time from Initiating discussion with SAP to having BBD up and running ranged between two to five months
5. Embedded analytics a big advantage
6. Ability to do some customer specific configurations
7. Quick ROI due to rapid solution deployment
8. SAP - A Brand you can trust
9. One integrated functionality suite

High level cost comparison between ERP in a box and ERP via the Internet options done by OneVision

This also got me thinking in terms of how BBD is a good financial fit for these companies. So I just did a quick back of the envelope calculation - A typical IT budget for an organization is around 1%, so if the typical turnover of the organization leveraging BBD is around 75 million, their IT budget should be around 700K. And If you see the cost of SAP as an integrated suite with no cost on servers etc is 149$ * 30/50 = 50K / 80K, Which is between 7-15% of the overall IT budget. This does seem to make a lot of sense. Thoughts??

Looks like SAP needs to quickly figure out the financial model on how they will make money in this scenario assuming they have addressed the teething technical issues that they had. One question that I did have about BBD is how do they plan to address the customer concern of data lock into this platform.

More on BBD to follow.

Tags: business+by+design - bbd - sapphire09 - sap - ondemand - saas

Source: 1

Prashanth Rai

(Cross posted from CIO-Reinvented)

IT Spending 2009 / 10 - Gartner

Gartner says expenditure on IT is expected to decline 3.7% in 2009. Spending on IT hardware including client computing, servers, storage & printing systems will decline 14.9%. However, it forecasts overall IT spending to rebound with 2.4% growth in 2010 although IT hardware spending will continue to lag next year growing just 0.8%.

Source: Gartner

Prashanth Rai

Is the recession accelerating the adoption of "Cloud Computing"?

An IDC survey has some insights on the topic. The survey was of 332 IT and line-of-business executives, predominantly based in North America, and spread across large, medium and small enterprises. The results are:

Results Summary:

1. Almost half of the respondents claimed there would be no impact But over half of the executives stated that they are, indeed, adjusting their approach to market conditions.
2. Twenty-four percent are reacting to the recession by moving more aggressively in the cloud/SaaS direction: either doing more evaluation, beginning to adopt, or increasing their adoption of IT cloud services.
3. Fourteen percent are reducing their pace of cloud/SaaS adoption
4. The largest portion of customers leaning more aggressively toward the cloud model are in the “more evaluation” stage. This makes 2009 and 2010 a very important time for suppliers to be actively educating the marketplace about the cloud model and their cloud offerings

Source: IDC Blog

Prashanth Rai

Technorati Tags: saas - idc - cloud+computing

Leo's Key Note - Takeaways - Sapphire09

Central Theme - How SAP enables clarity?

Business Suite 7 provides the solid foundation. (Integrated processes - no fragmentation , SOA - Completed roadmap in 2007 - 2800 solutions) Thanks to Henning Kaggerman

Enables to build some of your custom process - Flexibility - SAP Business process management tools - Consume innovation in cheapest, fastest way possible.

Suite Support goes on till 2015

Enabling Clarity of decision making - Clarity anticipates risk

• Business suite + Business Objects portfolio, Closed loop - Strategy to Execution.
• Not limited to the large companies only, SAP Best practices for BI - Integrated with All in One.
• How this impacts Risk Management? - Takes a dig at banks who brought together mathematicians + technology, the problem was the lack of holistic view. One survivor managed relatively better - Goldman Sachs - Risk focus / Global Risk Committee - Right information, at the right time for the right people.
• Risk is part of every industry - it is our responsibility to manage risk.

Value of SAP enterprise support services - Comprehensive support to reduce the overall TCO. 2 Weeks ago along with SUGEN will provide KPI's - KPI index - Business Continuity, Business Process process performance, Protection of Investment & TCO. Committed to a 30% improvement by 2012

Ian Kimble - Insurance Company Example - Pretty neat mobile application used.

Sustainability - Perceived unlimited resources ended, Sustainability strategy - Economic, Social, Environmental risks management. Maximize your "Triple bottom line" - Don't have to wait for Better Place. IT industry cause 2% of the Global Green house gases. Industries first ever Comprehensive sustainability Map - every relevant business process sustainable. Talks a little bit about smart grids on the utility industry site. Sustainability Performance management -reporting / benchmarking - Acquisition - CLEAR STANDARDS.

Ian Kimble - Clear Standards Demo.

Fundamental Change in Customer expectation both from a user point of view and from a buyer POV. Paradigms shifts in Technology cost & Availability - Virtualization, Cloud (Private Clouds) - Coming to us. Flexible deployment models - On premise / On demand combination of the two. Another big trend - Mobile / Miniaturization of transactions. Moving to a digital enterprise from IT enable organization. So huger amount of data - In memory DB's and Real time analytics.

Launch of SAP Business Objects Explorer Software. - With explorer, executives could get answers in milliseconds...brand profitability, customer buying patterns...this could change the way decisions are made" Steve Merry, Sara Lee CIO.

Demo by Ian Kimble - Insurance Company
Natural language search - Polestar + BIA

One Demand Offerings is a key element of the over all SAP strategy - that is a welcome change
Currently Available:

1. CRM
2. Strategic sourcing
3. BI
4. Carbon management

Soon to be launched

1. HCM
2. Expense management

SME - BBD  Business By Design - Clear rumors - Is on display on the show - Live by Design system - Well that's it.

Back to the Timeless software theme - ready for the future. Demo of Timeless software - Collaborative decision making.

Key components of SAP's Clear Strategy

1. Stable Core
2. Best foundation for intelligence platform
3. business process management
4. on premise on demand
5. web20
6. timeless software
7. sustainable ways

Tags: sapphire09 - sap - leo+apotheker - keynote - Orlando

Prashanth Rai