Interesting pictures from SAPPHIRE NOW….

Folks, I wanted to share some of the interesting pcitures we snapped at SAPPHIRE NOW in Orlando.

Guess who is the real Panda here?? This is Samir, my colleague who dedicatedly manned the booth.

Whi is the real Panda?

When you got down in Orlando airport, you must have seen a lot of colourful adverts on SAP, Oracle, IBM and others. Hey, we also spent some money showcasing ourselves:

BackOffice advert in Orlando airport

Finally have you seen a partner who was taking a behemoth (SAP) head on? Yeah, you must have seen these huge trucks with adverts on the side that showed this….!!!!

Are you frustrated with SAP MDM?

Enjoy the long weekend.

Is ‘real’ real time computing a game changer? – Part 1

Folks, I have just come fresh out of Sapphire NOW and am looking through my notes. Each time I reflect upon some of the key messages and see if something (a technology, a trend or a person) is going to change the game. After spending more than a decade seeing data being churned out in the transaction world, the analytics world and now the social media world I am more than convinced that ‘real’ real time computing is around the corner. For starts, see this short youtube video that puts things in perspective.

Let’s take a step back and see what has succeeded and what has failed in a typical enterprise. Let’s first look for things that are working well:

Transactions: One thing which has worked really well in the last decade is Enterprise Resource Planning. Most of the sane world has moved from home cooked IT applications to a package application that has integrated processes from finance, HR, operations and sales.

Extensions: From the basic ERP build, organizations have extended the processes to impact extended supply chains, B2B transactions, customer and supplier relationships.

Let’s look at things with which customers are still struggling even after pouring millions of dollars:

Analytics: To my surprise, even large corporations (including the big boys in the developed world) are yet to define a well architected analytics theme. This includes defining a corporate datawarehouse strategy, underlying architecture, tools, satellite data marts & ODS and an excellent reporting strategy.

To give you a picture, I was working with a very large fast food company (USD 3B in revenue) running SAP but was struggling to deliver a unified analytics platform. They were debating BusinessObjects and SAP Businessware house for long while SAP went and bought BusinessObjects!  The ability to leverage analytics as a tactical tool across the corporate is like looking for the ‘holy grail’.

Data: This topic is a disaster. Not a single company I have come across positioned data as a ‘strategic’ asset. This reflected in the quality of data that was pumped into the ERP, master data laying all over the IT applications, failed MDM projects and what not.

No matter what kind of replumbing was done to tie IT as a stratetic tool to help the CEO, the data game was long lost from the beginning. When that CEO was not able to get his information (business ready) in real time and could not use information to derive insight….IT as a whole has lost its sheen. My next part will discuss how IT can take control of data and what is going to be the game changer in the coming years.

China beating India in Outsourcing? Not really.

Recently I met up with my good friend in KPMG who informed me about the recent publication by KPMG on China’s growing prowess in IT Outsourcing. While I would like to agree with Kenny but the reality is far out from what is being discussed in analyst circles. Recently, I had a chance to peek into a report that my previous employer (MindTree) had prepared subsequent to their foray into China market (sometime around Nov 2009). I totally agree with the report in saying that China is going to take a while before it catches up with India in terms of scale, skill and processes pertaining to IT outsourcing. I have compiled the reasons why it will take time down below:

a) Process Maturity: I can name atleast a dozen Indian IT companies who have been certified at SEI-CMM level 5. Not just in  name but these companies practice what they preach. Let’s take an example of managing people processes. I have seen robust processes and platforms that manage hiring, allocation, training, deputation and termination of people. This is very important if you have to scale from few hundreds of people to hundreds of thousand in headcount. Here Indian counter parts are way ahead of Chinese outsourcing firms.

b) Strategy: With due respect to Chinese manufacturing and export engine, I am yet to see an overall Chinese startegy to propagate a game changing move in the Outsourcing world. In India, we can see NASSCOM all over the world (especially key markets such as US and Europe) pitching Indian outsourcing story. The lobby plays a major role in both taking the message to market and set a country level agenda which is executable. China is yet to mature in having a cohesive startegy to propagate this message.

c) Cultural Aspects: China is more suited to assist the Asian markets such as Japan and Korea. The cultural orientation is more suited to assist these two countries in their out sourcing and right locate cost initiatives. I am yet to see any big Chinese IT Outsourcers land a sizeable deal in the US or Europe. The only way it has happened so far is that Accenture or IBMs of the work have opened their Chinese units that take a portion of work from global accounts.

d) HR Strategy & Maturity: Let’s understand that setting up successful IT Outsourcing models is an intensive excercise in ‘Recruit & Retain‘ tactics. Retaining top talent in an off-shore environment calls for deep management capabilities, HR processes, mindset and attitude. India is more suited with its leaders like Premji, AshoK Soota, Narayanamurthy, N Chandrasekaran who are pioneers and role models in this space. The biggest weakness in China is that there are no pioneers who is committed like the Indian leaders who are willing to build this business ‘brick by brick’.

Overall, my thoughts are that China is atleast 5 years behind than India when it comes to IT sourcing. Only when it masters all these 4 areas and put together a cohesive plan it can aspire to beat India in its own game. Until then China has to play…..捉住

Should we slot IBM and HP in the same league?

Today I took sometime to analyze two of the largest stack players in the market – HP and IBM. I do work with both these companies (as a partner) and have tremendous respect for the organization and its leaders. The question which popped in my mind is ‘should we mention both these companies in the same note’? Do they get classified in the same league from a business model standpoint? Here are my findings:

 

HP-IBM Segment Reporting 2009

a) After 5 years of transforming itself, IBM is now in a league where it is probably competing with Microsoft. As you can see from the spreadsheet above, IBM has sacrificed it’s revenue (in 2004) to pursue gross margin. Today IBM’s gross margin is second to none and we got a clue of this master stroke move when it sold it’s desktop business to Lenovo few years ago.

b) Now, exactly 6 years forward, IBM now is in a leagure where it is competing with Microsoft and Oracle and may partner with HP in the future. Let’s take a look at the revenue model of both IBM and HP. IBM generates $ 55 Billion (as on 2009) from technology services. This is the number of the largest service provider in the world! No denying that.

c) Looking at it the other way, HP is two thirds hardware (64%) and IBM is four fifths a services and software company. Hardware portion of IBM business predominatly revolves around 17% ($ 17.1 Billion) and another 2% is made financing it.

d) During the downturn (2008-2009), the only portion of the business that showed growth for HP is services. Rest of the business segments (IPG, TSG, PSG) showed de-growth. HP was right in timing EDS acquistion and also having Mark Hurd come in to contain cost. Going forward, chances are likely that HP will pursue IBM’s strategy to increase it’s services pie and decouple it’s low end hardware business (PC oriented).

e) If IBM brings it’s hardware growth to less than 10% of its revenue any time soon, we can see IBM and HP partner on deals. The competitive stance can change and HP-IBM partnership on select deals will become a reality.

f) Five (5) years now, the battle could be between ‘slick’ stack players like IBM, Oracle and Microsoft. HP might find itself in the same situation like IBM during 1990s.

Atleast my HP counter parts in Singapore will agree to some parts of these argument even if the could not agree to the larger play

Tech Prix – Race between Stacks, Suites and the Cloud

First let’s agree that there are three groups of players – Stack guys, Suite guys and the Cloud guys.

Let’s focus on the stack guys first. The stack guys are those that are advocating the customer buy the entire system – chip to application – from a single vendor to help spare the customer from the frustration of having to build systems in piece parts. The folks who belong to this club are the old biggies – IBM, HP (got stronger with EDS acquisition) and the newbies – Oracle (with SUN buy in), DELL (with Perot acquisition), XEROX (with ACS acquisition). Also let’s look at the recent acquisition (mainly in 2009) patterns to get an idea about the stack consolidation:

- Oracle buys Sun Microsystem for $7.4 Billion

- Xerox buys Affiliated Computer Systems for $5.7 Billion

- DELL buys Perot for $3.9 Billion

This clearly indicates that the stack players are stacking up to strengthen the ‘chip to application’ strategy. The strategy is simple. Acquire a customer, penetrate deep into the stack from Micro-processor, Server, Network, Storage, Database, Middleware, Management, Applications and Services. This is akin to ‘sinking the dagger’ so that the customer is nailed and cost of replacement is nearly astronomical.

IT Stack

 It’s a long drawn battle in this space and again we could see consolidation in line with market dynamics. One more recession or cost squeeze we can see one big fish eat the other to become even more stronger.

Now, let’s take a look at the Suite guys. The suite party is led by Microsoft (quasi suite) followed by SAP. The Suite guys predominantly focus on the software piece (OS, Database, Management, Application). Even here the only pure play suite player is SAP. This company is still playing hard to keep its application dominance without going down the stack hierarchy. After its acquistion of BusinessObjects and Sybase (few weeks ago), it is heading towards reaching 1 Billion users through application suite alone.

 

The third group comprises of the Cloud players. This is the likes of Google (the lone giant) followed by Salesforce, Netsuite and others. This group has come hard to takeaway the customer by addressing the expense side of the P&L. While both the stack and suite guys are addressing the ‘return on asset‘ on the balance sheet, the cloud guys have a curve ball that is going to change the dynamics of how investments are going to be made. 

Here is my 2 cents on how things are going to pan out in the next 5 years:

a) It is going to be extremely difficult for pure play suite players to last the mile. With continued on-slaught from the stack players (IBM, HP, Oracle) and the new cloud players (Google) the suite players will have to seek scale, size and strategy that can hold them from the onslaught. I see only Microsoft as the quasi-Suite player that can stand hold up in the race.

b) The battle will be fought at the crossroads of how the Stack and Cloud can converge to bring greater innovation to the customer. Probably Google buying stack assets (say DELL/Perot) with a grandiose plan to move the customer base to the cloud over next 5-6 years.

c) We are at the ‘cruicible’ of innovation and the cost of innovation will have to be borne by the consumers (the customer). I am seeing a lot of customers who have taken position with stacks (IBM, HP) and dabbling with both suite and cloud players. Soon the economics be clear as to how the transition will take place to a balanced ‘cloud based stack‘ or ‘stack based cloud‘ which will bring greater benefit to the customers.

Who said IT is boring??

Sapphire NOW 2010…A peek

Day One opened with a simulcast between both Orlando (Orange County Center) and Frankfurt ( ) with anchors Matt Fri (in Orlando) and Conny Czymoch (in Frankfurt). I should say that this was one of the best Sapphire from a standpoint of event management, precise display of technological prowess and finesse.

Interaction between both Orlando and Frankfurt teams were seamless and well chorographed. Seemed like SAP with steriod shot of yester years.

Bill McDermott opened the key note address with a ‘RUN BETTER’ caption and open arms. Incidentally, it marks the 100th day where both Jim Hagemann Snabbe and Bill have been the co-CEOs at SAP. My take after speaking to few of my SAP contacts is that SAP was never so energized than when it was under the prime of Hasso and Henning. Kudos to teamwork between Jim and Bill. Leo Apotheker’s interim regin is long forgotten!

A few things which excited me were:

a) Bill’s key note specch which clearly explained SAP’s vision of being omnipresent in the business eco-system. On-premise, On-demand and On-device. Looks like SAP tactics to achieve one billion users by 2014 (timeline could vary)  through analytics (BusinessObjects) and mobile devise play (Sybase) seem a possibility.

b) Vishal Sikka was able to explain SAP’s timeless software vision and explain why Sybase NOW. He sounded confident and pounced on opportunities to speak his mind.

c) SAP is going ahead with Business ByDesign release. So much so for commitment (let’s be reminded that SAP has ploughed hundreds of million dollar on this). Only time will tell if this will help SAP realize SaaS strategy leadership.

d) In line with the social media theme, hoards of bloggers like Ray Wang tweeting from every corner of the massive event, Dennis Howlett taking timely videos everywhere, Larry Dignan summarizing key trends, James Governor regaling crowds. And as at every Sapphire, the chance to meet an ever new group of bloggers.

Looks like SAP is re-inventing itself as ‘Suite play’ against a bunch of ‘Stack play’ competitors just waiting at the fence. More about this in the next blog…

It’s SAPPHIRE time, SANTANA and SAP new beginning…

Folks, my team is all up beat to board the Sunday morning flight to be at Sapphire 2010 in Orlando, Orange County Convention Center. This time, you can catch CPM Consulting at booth 3211 with the following big red banner: 

CPM at Sapphire 2010

The man behind the screen is none other than BackOffice Associates founder, Mr. Tom Kennedy. We are going to rock Sapphire with a combined show of strength in areas of ‘Data management‘ and ’Financial Performance Management‘ .

You will see all of us decked in flaming red shirts walking the corridors. Tom is quite keen to showcase the company’s new entree..MDMb. Tom is going to be his passionate self (along with the team) during the breakfast and key note lunch sessions during the event. Don’t miss meeting him if you are there.

Meanwhile let’s take a look at what SAP could do something different this time around. When I was there last time (around same time and same place), it was Leo Apotheker’s first time around as sole CEO os SAP. He took the stage to propagate the $6.7B baby, BusinessObjects. It was all about ‘visibility‘.

But then again, Leo was fresh out of board room win over Shai Agassi and SAP had some big challenges in terms of revenue short fall, confusion in managing customer maintenance issues (spiking AMC from 17% to 22% move) and big delay & confusion in Business ByDesign. Now Leo and some other execs are no longer at SAP. It’s now Bill McDermot and Jim Hagemann Snabe all the way with a lot of Hasso sauce thrown in!

So what could we expect in Sapphire NOW 2010? SAP will come out as a new customer centric organization (thanks to Bill McDermott) with focus back on ‘Technology’. Did someone say Sybase? Yeah, the theme is going to be ‘visionary’, ‘progress’ and ’leadership’. I do not want to see another boring (not literally) pitch on ‘agile columnar database’ or lengthy sessions by PepsiCo on their CRM implementation.

Did you all know that it’s Santana live at Amway arena this time? While my man plays ‘Maria Maria’ and rocks the crowd, I wish SAP takes time out to communicate clearly how they want to change the game. My wishe list for this Sapphire:

a) Vishal Sikka should come out and explain why SAP bought Sybase? Is it in line with the goal of having ‘1 Billion users by 2010‘?

b) Bill McDermott and Hagemann Snabe to come out and tell the SAP vision and game changing play that will excite the business community.

c) Hasso coming out to support his team and give insights into what’s happening at SAP . This time around let’s not hear that agile columnar database thingy. Wrong forum sir.

I am confident that the others (Colin Powell and Sir Richard Branson) will do a terrific job. So let’s chill out at O’Shucks Pub along International Drive and wait to hear something which gives goosebumps which we got back way back in 1993!