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

Some Global Mobile Stats - Nielsen Company

Some interesting excerpts / statistics from a post by Nielsen Company:

Web visitors using a mobile device increased 34 percent year-over-year, from 42.5 million mobile Web visitors in July 2008 to 56.9 million in July 2009 according to The Nielsen Company.

Year-over-year growth among the 13-17 and 65+ age groups outpaced the growth of the total mobile Web audience, with a youth increase of 45 percent and seniors surging upwards 67 percent in July.

While men continue to make up a larger portion of mobile Web users versus women, comprising 53 percent of the audience in July, the growth of female visitors outpaced the growth of male visitors during the month, with women increasing 43 percent YOY as compared to a 26 percent growth among men.

Source: Nielsen Company

Webcast to check out - Eli Lilly + Amazon AWS

Saw this note on the AWS site,

Learn how Eli Lilly uses AWSto deliver cloud services to scientists in this WebCast hosted by InformationWeekEditor John Foley

Tags: aws - amazon - eli+lilly - webcast - cloud

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

State of the Economy

A few interesting charts about the current economic state or state of the recession :)

Global trade collapsed in the fourth quarter of 2008 and first quarter of 2009 in a way never seen in the postwar era.

The Institute for Supply Management survey offers a forward-looking indicator of industrial production.A number above 50 in the ISM survey implies manufacturing growth whereas a number below 50 implies contraction.

Link to full report

Hat Tip: Imagining India

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)

Weekend Reading

Crunch IT – The Role of IT in a Recession

the overall message was that there is no real indication of if / when we might expect to see an end to this current recession, therefore IT and related industries must learn to adapt and cope with an increasingly challenging landscape, whilst delivering critical benefits to their internal and external clients. It makes me wonder if a protracted global recession will also bring about a fundamental change in the engagement models used by existing (or surviving) technology advisory and consulting organizations. For example, are we likely to see an increase in joint ventures, and risk-reward-partnerships, between advisors and client, as opposed to the relatively more straightforward fees-on-delivery type models that currently dominate our business?

Software's Billion-Dollar Question

Yes, there will be many more billion-dollar software companies - but they won’t look like the ISVs of today.

As the next-generation software leaders reach maturity, they’ll look more like a services and solutions company. Sure, they’ll have a software backbone and a technology platform to enable the services they provide. But to customers, the next software companies will seem more like services companies.

The debate has already begun. Is Google a software company? What about Amazon.com? How about ADP? These companies offer a technology platform, software, services – some automated and some human-powered – all rolled into a solution. Witness the growth of business process outsourcing and knowledge process outsourcing solution providers. At their hearts, these firms are software companies but they are packaged and marketed as services providers.

CollabNet, Spiceworks and many other emerging software leaders could arguably be called services companies already. They deliver software, communities and services all rolled into their solutions.

How about Free?

There's an old joke about a businessman who gives away his products. A customer asks: "How do you make money doing that?" He answers: "I make it up on volume."

It's nonsensical, yes. But a funny thing has happened: Giving away the product has become a legitimate business model on the Internet and even beyond. And it's been getting increased attention. Author Chris Anderson will publish a new book in July titled, Free: The Past and Future of a Radical Price. It's a follow-up to his Wired magazine cover story last year, "Free! Why $0.00 is the Future of Business." Anderson

Indeed, the appeal of "free" has been shown to be so extraordinary that it bends the demand curve. "The demand you get at a price of zero is many times higher than the demand you get at a very low price," says Kartik Hosanagar, a Wharton professor of operations and information management who studies pricing and technology. "Suddenly demand shoots up in a nonlinear fashion." Josh Kopelman, a venture investor and entrepreneur who founded Half.com, has written about what he dubbed "the penny gap." Even charging one cent for something dramatically lessens the demand [generated at] zero cents.

Charlie Rose - A conversation with Nandan Nilekani and Tom Friedman

A conversation with Nandan Nilekani and Tom Friedman

The Rhythms of My Life

When I think of rhythms in my life, they break down into daily, weekly, monthly, quarterly, annually, and decadal.  Here are some examples of how I think about it.

Daily (M-F): Get up at 5am every day.  Spend the first two hours of the morning in front of my computer (a) consuming info and (b) catching up on any email.  Exercise (usually a run.)  From 9am on, follow my calendar until the day is over (which my assistant Kelly manages – it’s very dynamic – and I try to schedule every phone call and meeting.)  When I fly somewhere, I try to do it either first thing in the morning or at the end of the day and I try to sleep on the plane from take off to landing.

Weekly (S-Su): Sleep until I wake up.  Hang out with Amy. Go for a long run.  Catch up on email.  Stay off the phone.  Go to a movie.  Read a book.  Relax and rest.

Monthly: Life dinner with Amy (on the night of the first day of every month) – exchange gifts, review the previous month, and talk about goals for the next month.

Quarterly: One week vacation completely off the grid (no phone, no email) with Amy.  36 hour offsite with my Foundry partners (both backward and forward review as well as 2x / year facilitated performance reviews of each other).  Deep review of all financials (personal and for every company I’m involved in.)

Annually: Once a year three day weekend trip with my dad.  Once a year “Feld Men’s Trip” with my dad, his brother, my brother, and my two cousins. 

Decadal: Personal review of my life (usually happens over a few months.)  I’ve done this at age 30 and age 40 and expect to keep doing it.

Prashanth Rai

Enterprise Cloud Adoption

I was thinking of something appropriate to write for my first blog back, so I thought I will start with something that has been top of mind for some time now. "how will enterprises adopt cloud computing? " . And I am sure there is no simple or there isn't one correct answer to it.But I figured there are a set of factors that impact the choices / path that an enterprise ends up taking. So what are these factors? Below is an initial list of things that I could think of, I am sure there are many more, please add.

1. Maturity of IT department in the enterprise - Architecture,Structure,Process etc
2. The management's view of the IT department / CIO's place in the Management team / Political will/clout of the IT Department
3. Current state of investment in inhouse IT Resources/ infrastructure & investment payback period
4. IT Resources,Utilization levels / monitoring
5. Understanding of core / context IT systems - Standardization of systems / processes
6. IT Internal Staff Numbers/ Volume / Types of activities / roles they play
7. Existing Outsourcing / Offshoring operations/Contracts
8. Pressure to reduce cost / need to avoid capital expenditures
9. Willingness of the Management team to be innovators

These factors in varying degree's impact the decisions organizations take in adopting the "Cloud" or not. So I was wondering what could be a typical road map that organizations will adopt as they move towards the cloud, so below is a graphic with the first stab at it. In this approach I haven't factored in the private cloud option, that I will cover later.

This is only indicative, different organizations are probably going to adopt it very differently or some leading vendors will help them leapfrog further up the value chain. Please share your thoughts on this.

Tags: cloud - cloud+computing - enterprise - aws+amazon

Prashanth Rai

(Cross posted at the bti.typepad.com)