The Changes at SAP — What Matters and What Doesn’t

SAP co-CEO Jim Hagemann-Snabe has resigned, and is likely to move up to the Supervisory Board. President and corporate officer Sanjay Poonen has also resigned, off to parts unknown, and SuccessFactors founder Lars Dalgaard resigned June 1. Ariba CEO Bob Calderoni has taken over as SAP’s cloud leader. And Vishal Sikka recently added leadership of all of SAP’s development efforts to his expanding portfolio.

Lots of changes at SAP, but what does it all mean? In a nutshell, less than it may appear. Solo-CEO Bill McDermott still has to execute on sales, especially given the less-than-stellar quarter, and Calderoni in particular still has to help cloud sales expand, as it was the cloud that rained on SAP’s recent quarter the most. Considering Sikka’s HANA is the foundation and the leading edge of all of SAP’s product efforts, his move to head up all of development represents more of an acknowledgement of the status quo than anything particularly new. And with Snabe, the “other” technology guy out of the picture, Sikka gets to have sole ownership of this key portfolio, which may simplify things across the company.

Poonen’s departure does put into question the fate of the company’s mobile strategy, which was given to him as his next challenge following his success at driving SAP into the upper echelons of the BI/Analytics market. I wrote earlier in the year about the “end of mobile”, which got me taken to the woodshed, Poonen-style (main weapon of coercion: lunch). Mobile revenues didn’t make the highlight reel from last quarter, and my guess is that mobile is going to be a major issue in coming months as the company tries to boost revenue from the mobile assets it acquired over the last two years.

Also needing some attention will be the Asia-PAC markets, which definitely didn’t perform up to expectations in the last quarter and are clearly slated for something new. I would expect that McDermott will be making some personnel changes in that part of the business soon– it’s too important to not shore up with some kind of personnel shift, if for no other reason than to make a statement that getting this market back on track is an important priority.

That’s business as usual, but there’s a lot more going on at SAP that will have a greater impact than the musical chairs at the top. I had a briefing recently about SAP’s Connected Car strategy, which includes some fascinating new business models for generating revenue — and consumer customers — for SAP. Selling software and services that change how cars interact with their drivers — think of the car as a commerce platform, and not just a transportation machine — could have a major impact on SAP’s revenues and overall business cloud moving forward. Ariba is another nascent opportunity, and the company has yet to really leverage its opportunity in synergy with SAP. Using Ariba to drive new business through a 21st century version of the dotcom era net markets concept has huge upside potential for SAP, and Calderoni and company have only just begun to get that effort started.

Suite on HANA, everything on HANA: that’s also just getting started, with a huge potential for net new revenue on the horizon. The Rapid Deployment Solution implementation model is beginning to have a huge impact on customer costs and innovation strategies, and even good old Solution Manager is going to see a new purpose, and a much more cost-effective implementation lifecycle, as part of the cloud push.

There’s more, and that’s the point. SAP’s management structure is both broad and deep, and while the departure of a co-CEO is newsworthy, this departure means less than it might seem on face value. Don’t get me wrong, Snabe is going to be missed, as a person and a business leader — though it’s going to take 10 months for that to happen anyway, so we’ll get to play Danish swan songs for while. More importantly, there are changes that will make a difference at SAP that will be felt for a much longer time than the impact of Snabe’s resignation, and that’s what really matters to SAP, it’s customers, and its partners. I personally wish Jim all the very best, but I’ll not mourn his departure. There’s just too much else going on.

The Microsoft Reorg and Microsoft Dynamics: Odd Man Out or Shining Example?

Three words were missing from Steve Ballmer’s memo to his employees last week that, on face value, looked ominous for Microsoft Dynamics. The first two words were business process, and the third was industry (okay, he said the word once, but in reference to Microsoft’s industry sector). And as I read and re-read the memo, the void seemed to only grow: services and devices without a focus on packaged software (which Ballmer did mention, only to say that there wasn’t a future in it), business processes, or industries looked like the setup to a sale of the division that specializes in these three concepts.

The truth, luckily for Dynamics and perhaps unluckily for a few private equity-backed buyers I know of, is that enterprise software has a future inside Microsoft. And while Ballmer said that Dynamics still needs a “special focus” – which sounds a little like damning with faint praise – the concept of Dynamics acting as the “unifying fabric” of Microsoft remains in place.

So rather than worry about whether Dynamics will be jettisoned as part of a new focus on devices and services, the question about Dynamics’ future is really whether it will get lost in the enormity of the changes that are part of a wholesale, and desperately needed, reorganization of Microsoft.

Part of what should help Dynamics’ cause is that two of the executives who surfaced as part of the senior leadership in the reorg have solid backgrounds with Dynamics. Satya Nadella, who now heads the cloud and enterprise engineering group, spent a year running Dynamics in 2006-2007, and Tami Reller, the new EVP of marketing, came to Microsoft when Great Plains, a flagship Dynamics product, was acquired in 2001. In addition, the fact that key members of the Dynamics team, which is still run by Kirill Tatarinov, will have dotted line responsibility to Satya and Tami will hopefully continue to solidify the links between Dynamics and the rest of the company.

But ensuring that those links translate into face time and development and marketing budget for Dynamics may take more than having a track record with three of Ballmer’s direct reports (Kirill included) and some dotted line reporting. The irony of the “special focus” that Ballmer mentioned for Dynamics is that, as far I can see, Dynamics does a better job fulfilling its mandate to be a leader in its core market than some other, bigger-profiled divisions are doing fulfilling their mandates to lead in their respective markets.

While Dynamics may need “special focus”, many of the core businesses at Microsoft need much, much more. Here’s a quick list:

Windows 8 phone: as I have noted before, Windows 8 phone is so dead in the water that no big box retailer in the Northern California runs ads for Windows phones. Some telcos just don’t even bother carrying the phone: My carrier, Sprint, is finally coming out this summer with two low-end Windows 8 phones, which I predict will be largely DOA. Meanwhile, Windows phone is internally fragmented in Microsoft, and as I wrote here, partners and customers have recently had trouble getting support for embedded Windows phone development efforts, among other problems. Result – Windows 8 has pretty much zero penetration in the phone market this side of Redmond.

Lync: as I also have noted before, Lync is an embarrassment. It’s as if Microsoft decided that Google’s bad habit of releasing buggy beta software was a virtue to emulate, and so decided to get the latest versions of Lync out in the market well before they are ready. I recently conducted two workshops for a client that has made a corporate switch to Lync, and in both cases we simply couldn’t get Lync to work. In all I have tried to use Lync for a number of different purposes, including joining in on a recent analyst call run by the Lync team during which Lync crashed and burned, and have successfully conducted one and only one call using Lync in over a month. Result – a living, breathing advertisement for WebEx and Go-to-Meeting.

Xbox video: I wrote about this mess last year, and it’s still a mess. The latest: Xbox forgot that browsing titles is a good way to find interesting movies. Browse the Windows 8 Xbox store using the categories in the UI and you find, frankly, a lot of second tier crap masquerading as something someone would spend good money watching. You’d think that was all Xbox video has to offer. But as long as you know the name of a movie or movie star you are interested in, you can search and find an impressive number of great movies. But name by name search is the only way. For a company that has put a lot of effort into Bing and the search market, Microsoft has a very 20th century version of search running in the Xbox video store. Result – Netflix, iTunes and Amazon Prime can all sleep well at night.

Windows 8: As I wrote here, the confusion created by not differentiating the touch experience enough has made for a much bigger mess than Microsoft should be in regarding Windows 8. Apple has no touch screen laptops, and when I show mine to Mac users you can see their eyes light up. But instead of leveraging this opportunity, the best Microsoft can say to date is that Windows 8 is beating Vista’s uptake in the market, which is kind of like saying Windows 8 phone has surpassed Palm OS in the phone market. BFD. Result – more time for Apple to come out with a unified OS strategy, while a lot of corporate upgrades go from Windows XP to Windows 7 instead of Windows 8.

There are more, but I’ll leave it at that. The point is, just planning and executing a reorg sucks a huge amount of executive cycles, and then there’s the execution side. Considering how big the reorg is and how numerous the problems, one has to wonder how much time even execs like Satya and Tami will have to think about Dynamics. Satya’s recent keynote at Microsoft’s Worldwide Partner Conference had a demo of Dynamics CRM, and he managed to mention it 10 times, primarily in the context of CRM. Tami never said Dynamics once in her keynote. Ballmer also mentioned Dynamics in his WPC keynote, but it was largely in the context of a “last but not least” mention that unfortunately really was last and least. Better than nothing, I guess.

As I said at the beginning, I first thought that the “significant opportunity” Ballmer referred to with respect to Dynamics involved a sale, but I have been assured by my contacts inside Dynamics that, quite to the contrary, Dynamics is alive and well and poised to thrive inside the new Microsoft. I believe them. For now.

But the proof will be in the pudding: we’ll know if Microsoft really means to leverage this “significant opportunity” when the “unifying fabric” concept starts to get much greater play with the likes of Ballmer, Reller, and Nadella, and that also means some discussion about the things that Dynamics is good at, like business processes and a focus on industries.

There’s a place for both in a services and devices company – services that don’t directly support or enable business processes or are tailored for specific industry requirements are relatively low in strategic value to customers, and therefore won’t be as valuable to the new Microsoft as well. And devices – tablets, hybrid PCs, Xbox Kinect, and even Windows phones – can have their greatest strategic value when they are enabling complex business processes to be undertaken in more automated and effective ways.

Ironically, the sickness that Ballmer is trying to root out with his reorg is so vast and pervasive that the fact that Dynamics is doing relatively well means it may not get the attention it deserves. With so much to change at Microsoft, it may come to be that Dynamics changes the least of all.

Google Envy at The NSA

I have to admit I’ve been chuckling at the degree of shock and dismay at the revelation that the NSA, in the name of security and anti-terrorism, has been monitoring all manner of cell phone and web-based electronic data. And going to a lot of trouble to do so, using court orders and a lot of complex technology to get ahold of and process the information our government needs to keep us safe from terrorism.

Meanwhile, Google, in the name of Google’s profit margin and share price, has been doing the same or better without anywhere near the same level of shock and dismay. In fact, Google gets as much or more information than the NSA out of the Internet, cell phones, and other data sources from a very willing population, which gives it up to Google apparently without hesitation or regret. And as Google controls the data model behind this information flow, instead of having to integrate a vast array of disparate data Google engineers have a relatively easy time building the analytical models they need to further their business goals.

Maybe the NSA just has the wrong approach, or business model, or both.

Because it’s clear that if you sign up to the Google experience you’ve effectively handed a public company an information stream that would make the NSA – and their counterparts around the world – drool with envy. Right now we don’t really know the extent of the information being gathered by the NSA, but it’s clear they’d have to work hard to find a single source of information as effective or a user population as willing to hand over their digital lives as Google’s.

Maybe instead of sneaking around and bothering with clandestine court orders, the NSA and Uncle Sam should adopt Google’s methods. It’s really very simple: Google’s business model is based on getting you to use their tools and services for free in exchange for giving Uncle Eric (and Uncle Larry and Uncle Sergey) as much information about your actions and interactions as possible. In a perfect Google world your email, phone calls, messages, videos (those you make and those you watch), photos, music, news searches, banking transactions, purchases, location, voice, speech and facial characteristics, information sources, friends, social graph, and, with Google Glass, the contents of your visual field, are all captured and analyzed by Google. (And please forgive me if I left out some favorite Google service, there’s just so many and I’m only one blogger.)

Google then takes that information and uses it for…whatever it wants. That includes targeting you with more goods and services, as well as selling your information to advertisers who want to target you with their goods and services. There may be other things as well – for all we know they’re fighting terrorism and global warming with your data. But, short of a lawsuit or a Wikileaks-like leak, we’ll never know.

To me the difference between the super-secret NSA and the super-secretive public company called Google is that the NSA is chartered to monitor communications (outside the US, and not inside, according to critics of the executive order that has allowed it to gather Verizon’s data) in order to safeguard our country. I’m pretty much okay with that, the Boston Marathon bombing another reminder that there’s a they out there who really are trying to get us. And while the NSA operates under a veil of secrecy that is sometimes a little too secret, there are oversight committees in Congress and the Executive branch that give me some reassurance that its actions are taken in accordance with the law.

And there’s still the Fourth Estate – or what’s left of it, ever since Google started to aggregate content for free, capture a ton of online advertising, and kill the business models of most news organizations (but I digress) – that can pitch in like the U.K’s Guardian newspaper did last week and at least call out a situation where the NSA’s actions are worthy of further scrutiny.

Google has no such oversight, no particular legal constraints in the U.S. for its information gathering activities – though the more privacy-conscious European Union is hot on their case. And Google’s motives beyond profits aren’t nearly as clear – or potentially pure – as the NSA’s. In fact, from where I sit, the NSA ought to be massively jealous of what Google is able to do in the name of free enterprise, out in the open and with the blessing of both government and the people, while the poor NSA has to sneak around in the dark of night like a bunch of spooks begging for a little data in the name of national security.

Maybe the NSA should buy Google? Or maybe Uncle Eric has been hobnobbing recently with presidents, prime ministers, and dictators as part of a road trip to shop the idea that Google should acquire the NSA or France’s DCRI intelligence agency, or at least let them outsource their data gathering activities to Google.

In the end if you’re outraged by what the NSA is doing, you should be equally outraged at what Google is doing. And if you couldn’t less about either one, good for you. You’ve become the model citizen that Uncle Eric wants you to be, and, assuming you’re not in jail or on a do not fly list due to your information profile, you’re clearly not a terrorist either (though you might be a massively stupid one begging to be caught if you’re a terrorist and a consumer of Google’s services.)

Even so, we need to make sure that all us of understand where patriotism, privacy, and unbridled commercialism intersect, and what our choices are in terms of what happens with the digital signatures we’re leaving behind. I for one think the NSA may have a case for doing what it’s doing, I’m much less sure that we should be giving Google a pass as well.

Microsoft Needs an Enterprise Reboot Now

I don’t usually like to admit I was wrong, but my love affair with Microsoft’s Windows 8 strategy is over. While I still think the basic strategy is a sound one for the enterprise – a single code base for building touch-enabled apps that can live on phones, tablets, laptops, desktops, and anything else Windows 8 will run on – I’m a little tired of the lack of execution on key parts of the strategy.

As Windows 8 is a proxy for Microsoft as a whole, my shift on the operating system side is really about the company as whole. Here we are in mid-2013 and it’s clear: Microsoft either reboots its enterprise strategy and refocuses on breaking down the software barriers that have impeded Windows 8 (and frankly, pretty much the rest of the Microsoft software stack) from reaching its full potential, or the company will have effectively scroogled itself.

My understanding is that this imperative isn’t lost on Microsoft, and some sort of major organizational reboot is already underway. And like his peers, I’m guessing is that Steve Ballmer will follow the path that every software exec of his relative generation seems to be taking in the twilight years of their careers: hardware.

Freudian, Viagra-fueled analyses aside, it’s a phenomenon worth thinking about. The latest convert (following Larry Ellison’s disastrous Sun foray and Hasso Plattner’s promising HANA adventure) is SAS Institute, whose CEO, James Goodnight, has taken to pulling an Intel Sandy Bridge processor from his pocket (easy does it, Sigmund) during his keynotes to extol the virtues of modern hardware to his customers.

However smirky the thought, this isn’t as crazy, stupid, or metaphorically overdrawn as it may seem. Microsoft is already a hardware company, and it really just needs to do a better job making that component of its business an equal partner to the software and services side. And considering what Microsoft is trying to do with hardware, there’s a lot more to their potential than what Oracle has been trying to do, and a way better fit than what SAS is trying to do by pushing hardware to rooms full of BI/analytics customers.

Most importantly, it’s what hardware, as a general term, can do in combination with the software and services that Microsoft already sells or is planning to sell that makes this a potentially compelling direction for Microsoft to take. One of the best and most promising examples of this is Xbox Kinect – the potential that comes from adding voice, video, motion, and infrared to the available user interface technologies in the enterprise is one hell of an amazing idea. In case you didn’t see it, Microsoft just released an upgraded Xbox that includes a more industrial-strength Kinect system (though one that isn’t, yet, truly ruggedized for industrial use, but that’s coming too, so I understand). It’s also got Skype, a Windows 8 UX, a so-far-obscure connection to Azure, and a few other bells and whistles that make it so much more than just a gaming platform.

Even better, Kinect isn’t just a piece of hardware and a bunch of games trying to morph into an enterprise-ready user experience. Xbox is a portal into one of the worlds’ biggest online communities, 46 million strong and with a growth rate of 18 percent over last year. That’s a solid base for understanding the interplay between great hardware, services, and software and driving a new combo strategy into the enterprise.

Windows 8 is also part of Microsoft’s hardware promise, though it’s pretty obvious that Surface 1.0 was a bit of a flop. Floppy hardware notwithstanding, as I have written before, my experience using a Windows 8, touch-enabled laptop has convinced me that the touch/desktop hybrid is the future of enterprise productivity. Surface 1.0 was a mistake partly because the price point looks ridiculous when compared to some of the Windows 8 laptops now available, and more because the Windows 8 team confused itself and the market by pushing a worthy new OS into becoming a bi-polar standard-bearer for Microsoft’s own internal confusion: Windows 8 is way cool and full of potential on a touch-enabled machine, but using it on a non-touch enabled PC is like watching a Blue Ray movie on an old black and white TV.

What Kinect and Windows 8 touch have in common is the true foundation of the new Microsoft that I think Ballmer has to run with. With these two innovations Microsoft has invented new forms of interaction that define a unique interplay between hardware, software, and services that, at least today, can only be delivered by Microsoft. If the company could leverage that uniqueness into a touchstone (pun intended) for its increasingly impressive software and services play, I think the enterprise – as well as consumer – markets would pay attention.

So maybe hardware is the wrong word, maybe it’s user experiences. Certainly the way Windows 8 operates on phones and touch-enabled laptops is more about the UX than the hardware, and Kinect, if you haven’t tried it, is a pretty amazingly immersive experience for a pretty inexpensive piece of hardware. What is clear from my Win 8 experience is that the more I use the services that Microsoft is providing or supporting on my Windows 8 machines, the more that integration of hardware, software and services becomes greater than the sum of the parts. (Which is pretty much what the new Xbox announcement was really about too.)

Silos of Doom
This pan-Microsoft functionality goes to its ultimate denouement when you look at what Microsoft Dynamics is doing with the full stack of systems software, SaaS services, social, mobile, and, one day soon, Kinect as well. It’s an impressive model of a thoroughly modern hardware/software/services company, bar none.

But that’s the potential. The reality is that structural problems inside Microsoft still make summing the parts somewhere between hard and impossible. And this isn’t a onetime problem that can be solved by some sloganeering – it’s cultural, and these cultural deficiencies need to be torn up by the roots and thrown in the compost bin.

Microsoft’s infamous silos are the biggest candidate for a little mulching: My favorite example is the fact that once upon a time Windows phone users were told to use Google to synch their desktop Outlook contents to their phone, to the general ridicule and shock of Windows phone and Outlook customers. This bone-headed idea graced the official support pages of Outlook and Windows phone despite the fact that the then nascent Office 365 offered an Exchange Server that did a better job synching Windows phones than Google. Of course, that would have required the two groups to talk to each other and work towards a common, cross-silo solution.

This isn’t just a problem from the past. Today, official cross-platform strategies notwithstanding, Windows Phone, Windows Desktop, and Windows Embedded are run by three different groups that also, as far as I can tell, talk to neither each other nor their counterparts in other divisions at Microsoft. Similarly, even after the Window 8 phone launch the Dynamics team had to beg the phone guys for a some Win 8 phones to start working with, and one exec who was finally given one was only able to do so by leaving his first-born son as a hostage (okay, that part’s an exaggeration, but only a little one.)

The resulting lack of synergy and leverage are really damaging the Windows 8 brand, and doing a number on the whole of Microsoft: not a single major enterprise software company I’ve asked recently is planning on a major Window Phone push , customers and partners are giving up on moving embedded Window CE systems to Windows 8 and are moving instead to Android, and for four weeks in a row no big box retailer in the San Francisco Bay Area where I live has advertised a Windows 8 phone. Meanwhile the confusion about Windows 8 touch versus non-touch has smeared the brand pretty much across the board.

Then there’s Lync, which doesn’t. Skype, which does but could do much much more. Microsoft’s BI group, which is centered around SQL Server (a very 20th century notion of the relationship between data and analytics) and frankly doesn’t seem to understand that its greatest role is to be of service to the part of the enterprise where Dynamics lives (as an analyst who covers Dynamics pretty closely, I can count on Django Reinhardt’s left hand how many times the BI team has briefed the Dynamics analysts.) Office, which somehow muscled its way into owning Yammer (huh???), as if social was about creating Powerpoints and spreadsheets instead of driving collaboration into much higher value business processes.

Interestingly, Microsoft has already begun to fix its sales and services businesses to be more pan-Microsoft, and I think the Dynamics group – which, as the smallest piece of the pie, has the most to gain – is clearly and unequivocally pan-Microsoft. But the rest of the company is wallowing in fiefdoms and old tired visions of a past made from monopolizing the PC operating system that don’t, as they say, hunt no more.

So, combing software, services , and user experiences is the way to go. Hardware is part of that, so if Ballmer wants to pull an Xbox, or Win 8 phone, or Surface out of his pocket during his keynotes, more power to him. However the new Microsoft is configured, the fighting against itself has to stop. Microsoft has a great potential destiny to fulfill. But it has get out of its own way first.

SAP Innovates Innovation

If you’ve been following SAP over the last two years the products and services unveiled in Orlando last week wouldn’t have been too much of a surprise: HANA, cloud, mobile, social, and services all showed up at SAPPHIRE in their latest and greatest evolutionary glory. If you weren’t expecting most of the principle announcements at the show then you haven’t been paying attention.

But what wasn’t necessarily apparent until SAPPHIRE 2013 was the re-engineering of innovation that underlies this multi-pronged strategy. Indeed, rather than any individual product, it’s the innovation of innovation that struck me as the most important message of SAPPHIRE. While HANA and mobile are SAP’s two fastest growing product lines, the real growth worth measuring will come from the ability of SAP’s customers to innovate. Which means SAP’s success will need to be measured as much by its impact on its customers’ bottom lines as it is by looking at SAP’s own product and services revenues.

This innovation-squared approach also outlines the challenges that SAP and its customers face in a brave new world where core ERP functionality is more and more a commodity and the next new thing may be less of a packaged software play and more of a services play than many are used to. And while SAP’s motto, “innovation without disruption”, describes a sound, conservative philosophy that is in line with many customers’ aspirations, in reality a whole lot of disruption is going to have to happen, one way or another, if SAP’s ultimate dreams are to be realized by its customers.

But what I find most interesting is that SAP is really proposing a two-tier innovation strategy for its customers that allows them a degree of non-disruptive innovation first, and then a whole lot of game-changing, disruptive innovation second. That non-disruptive innovation involves, among other things, the deployment of HANA, as well as SAP Mobility, SAP’s Rapid Deployment Solutions, and new user experiences a la Fiori as baseline innovations that can significantly raise the bar for customers in terms of processing and throughput while still maintaining business as usual in their companies. The game-changing disruptive part comes from imagining what new analyses, opportunities, and business models can be created once this baseline has been established.

Suite on HANA and HANA Enterprise Cloud are emblematic of this opportunity: running the SAP Business Suite on HANA – on premise or in a private cloud – can provide tier one innovation for any customer that is up on its service packs and willing to invest in new hardware in either a classic on-prem model or in a managed services model. For many customers, the rapid throughput promised by HANA, as well as the overall simplicity SAP is promising over the classic Oracle DBMS environment, should provide enough innovation to justify the expense.

But innovation really gets interesting once HANA becomes a baseline on which to build net new functionality, and that’s where disruption is going to have to come in. A company that can suddenly analyze massive new quantities of data from every possible internal and external data source is now in the position to reimagine its business: Capabilities like advanced predictive modeling can allow a services company to predict outages and provide better SLAs to its customers, while a product company can better predict demand and manage supplies and bring to market new products it had never been able to build before. New research methodologies, new ways to deploy people, new ways of doing everything are now possible……

None of which can take place without a lot of disruption. While swapping an Oracle DBMS for HANA, or an on-premise Oracle DBMS for a private cloud HANA, can arguably be non-disruptive, the imagineering that is required for Tier Two innovation doesn’t happen just by writing checks and pulling switches.

Welcome to the Tier Two innovator’s dilemma.

Here’s the issue, and the opportunity, in a nutshell: Imagineering is hard because predictive modeling is hard, and modeling is hard for most business people because the underlying math and statistics are hard. Business schools may turn out spreadsheet jockeys and management-by-numbers execs by the thousands, but the creative skills required to look at a few petabytes of complex, variegated data and imagine the next new thing hidden in the bits and bytes are few and far between.

I met with Hasso Plattner and Vishal Sikka (respectively SAP’s supervisory board chairman and the technology and innovation executive board member) the week before SAPPHIRE and spent some time talking about the challenge of scaling imagineering and syncing it to the opportunity presented by Suite on HANA and the overall HANA platform strategy. Both Hasso and Vishal acknowledged the challenge in our conversation, and the impressive demos by Hasso’s grad students from the Hasso Plattner Institute on the stage at SAPPHIRE were one response to that challenge.

But sending in the grad students or the data scientists still amounts to the same thing. The best available methodology for Tier Two innovation today is to send in the experts, convene a workshop, sort through the business and the data and come up with the new model that drives the new analysis that drives the new business opportunity. Tier Two innovation is a consulting project, plain and simple.

And while this means that SAP Services, SAP’s consulting partners, as well as startups like Grok, Ayata, and others have a lot of work to do combining HANA and other new technologies with their services offerings, the fact is that scaling Tier Two innovation will take time. There aren’t enough brainy consultants who can translate big data into big business opportunity, much less do that in the context of HANA, mobile, new user experiences, or other innovative offerings from SAP or anyone else.

The good news for SAP and its customers is that Tier One innovation is relatively easy and accessible, and that for many companies Tier One is not just a good place to start, it’s clearly the place to start. And the message from SAPPHIRE is that there’s plenty to do at Tier One to keep SAP customers busy and SAP’s investors happy.

The view on Tier Two innovation is a little more complicated: most companies couldn’t move whole hog into Tier Two if they wanted to – my own experience is that most companies are not set up to operationalize big data: they don’t have the decision-making processes in place to leverage the new insights that big data can provide. And, as I already said, relatively few are actually able to create the big analysis and big insights in the first place, much less do something about them.

Which brings me to my final point. Two-tier innovation is a great strategy precisely because it defines both possibilities today and aspirations for tomorrow. But SAP has to get moving on making those aspirations as real – and scalable – as possible. SAP is a long way from being about to package Tier Two innovation, but packaging the imagineering should be possible.

At least I imagine it is…..

Infor’s Challenges: Is the glass half-full or half-empty?

If you count the hum of engaged customers as a sign of success, then Infor’s recent Inforum user conference was a major high-point for the come-back enterprise software vendor. The customers, all 6000 of them, were definitely there to praise Infor, not to bury it.

But the real issue for Infor will be to do more than just roll out some great strategies for turning over an historically moribund product set and making these products – and their customers – innovators. The big challenge is to maintain this Inforum buzz, and translate it into new software purchasing, as these strategies evolve and are realized in a sweeping set of new products and some interesting updates to its older product lines.

This is the classic “ability to execute” problem that all ambitious companies ultimately face, and Infor is no exception. The strategies look good, without a doubt, but there’s a broad, churning Rubicon to cross before Infor can say it has fully arrived as a 21st century innovator.

There are three major legs to this new vision that were highlighted at Inforum: ION, the company’s loosely-coupled middleware layer that’s tasked with stitching together the old and the new; SoHo, the company’s new cross-product user experience; and the vertical industry focus that Phillips promised at an analyst event earlier this year. Infor’s challenge is to execute on all three, while keeping the updates flowing to key products like SyteLine, Hansen, LN, and S3, among others.

Not surprisingly, keeping the updates flowing to the core products is the easy part. Many of these products, like SyteLine, have a strong product management team that’s been with the product for ages and understands what the customers and partners want and need to keep thing moving forward. I sat in on a couple of update sessions for these products and was impressed with how Infor is moving its core forward.

Infor is also progressing on its new products, of which ION is perhaps the most important, but that progress is tempered by the huge challenge that Infor faces with respect to executing on the ION vision. The challenge with ION is two-fold. The first is to sell ION as a concept that customers can bank on, and in the process make ION the go-to technology for application integration inside the Infor customer base. The second is to keep the customers interested and excited as ION moves through its early teething phases and acquires the robustness necessary to make the dream come true.

Both are always harder than they seem to be. The trick for Infor is to avoid the mistakes that Infor CEO Charles Phillips’ former company, Oracle, made with its Application Integration Architecture (AIA). Faced with a similar problem – the need to provide business process and technology innovation spanning multiple product lines – Oracle came up with an extremely top-heavy, master-data centric approach that required customers to build and maintain a canonical data model, inside AIA, that would make AIA the hub of process and application integration.

To make a long disaster story short, AIA collapsed under its own complexity (along with some other problems that have contributed to the lag Oracle is now experiencing in its software business), and Oracle’s customers went back to building and maintaining application and process integration the hard way: hardwired and peer to peer, and guaranteed to require lots of attention and maintenance as the applications that were hardwired together evolve. Vision: a solid A, ability to execute: a solid E.

This is exactly the fate that Phillips is trying to avoid with ION, while adding some very interesting capabilities. ION promises Infor customers a library of business objects (BODs) that can be used to integrate any of the dozens of Infor products to one another as well integrating third party apps like SAP or Salesforce.com and middleware like WebSphere. The goal, of course, is to make the BODs largely immutable, such that when any of the applications change, ION provides a valuable form of upgrade insurance that makes rewiring the connections between applications unnecessary.

ION has an added functionality that I find impressive: When ION is run in federated mode, all the data in the business objects that flows through ION can be used to populate what Infor calls its Business Vault, essentially a data mart that can in turn feed BI and analytics apps with operational data. With Business Vault able to capture all the cross-application and process data, this becomes a great way to run BI and analytics without touching the operational systems.

This ability to provide upgrade-proof integration and reporting is extremely compelling, but of course it comes with some execution challenges. First and foremost is the need for lots and lots of connectors and business object documents, or BODs. While the number of integration points in any cross-application process are usually limited, the sheer number of potential processes, when combined with the number of applications – Infor and non-Infor – that customers would want to integrate, makes for an interesting combinatorial challenge.

Staying ahead of that challenge is a non-trivial exercise, and essential to the execution side of the ION opportunity. Customers who sign on to the theory of ION will expect to see the BODs they need when they need them, and Infor will have to deliver and/or manage expectations about how long it will take to flesh out the BOD library.

Or else: customers that need integration – and can’t wait – will be building point to point integrations as a stop-gap measure. SyteLine customers, for example, who upgrade to the latest version will have to do that today. And the lack of future-proofing inherent in that model will make it hard for Infor to leverage the kind of cross-product business process integration – adding its enterprise asset management or warehouse management products to an existing application like SyteLine or LN – that is core to the new Infor Phillips is trying to create.

It’s a race – keeping customers interested and excited as the BOD library builds to a critical mass – that Infor can ill-afford to lose. Which makes ION an important bellwether for the overall success of the new Infor.

SoHo, the new cross-platform user experience that Infor is promoting, is another must-win capability that needs to succeed as quickly as possible in order to keep the dream alive. SoHo has three main components, in addition to a new look and feel for all of Infor’s core applications: Ming.le, the company’s social/collaborative software; Motion, its mobile platform; and its BI/analytics platform.

Ming.le is perhaps the most ambitious, and it has a basic design criteria that is near and dear to my heart – the promise of injecting business context into social collaboration, and vice versa. Ming.le demos this capability better than most social collaboration tools that aspire to be business process aware, and it definitely promises to make social collaboration an intuitive part of most standard business processes.

But Ming.le has some teething pains of its own to overcome. The first is ION, on which Ming.le is highly dependent. Customers that want Ming.le first have to implement ION, and that means that ION has to be up to stuff when it comes to integrating the applications and processes that customers want Ming.le to use. Customers also have to do some separate programming in JSON to make Ming.le work: This is particularly essential when it comes to the ability to “drill back” from a Ming.le alert or notification to the actual application where the content that needs taking care of originates – that all-essential business context that makes Ming.le more than just a tabula rasa activity screen.

While the design goals for Ming.le are spot on, there are serious limits to what it can do today or in the near term. Right now Ming.le can’t support non-Infor applications, nor can it support other social collaboration platforms. And some key capabilities for social collaboration, like universal communications and presence detection, won’t be available when Ming.le first goes GA at the end of May. Again, a great strategy and some great plans that have to somehow be enough to keep the customers interested and still loyal to the Infor brand as they plan their social/collaboration strategies.

The third leg of the stool is the micro-vertical strategy, which is also highly differentiating and will also be a major execution challenge for the company. Infor boasts 1700 partners, including 200 focused on ION, but it’s clear that the combination of direct sales staff and channel partners needed to cover 21 micro-verticals is going to need to be seriously expanded. Infor is building a specialized sales team targeting its top 150 accounts, and it’s building stronger ties to global systems integrators in addition to the smaller and more regionally resellers channel. But right now the company has a total of less than 1000 sales reps, and that’s a relatively small number for a company with such big ambitions.

Some of Infor’s ways of tackling these micro-verticals are excellent – the company announced plans for what it calls the Dealer Cloud – powered in part by ION and Ming.le – that will provide a cloud-based network for equipment dealers, OEMs, and their customers. It’s a great idea, and one that could help Infor nail down a key market or two, with the attendant execution problems noted above.

But managing the partner network needed to make Infor’s vision work across this many industries and the globe (42% of the company’s revenue comes from outside the U.S.) is going to be another key bellwether in the journey from vision to execution. Having watched Microsoft Dynamics continually fine-tune its partner network – most of which, like Infor’s, were legacy partners inherited through acquisition – the best thing to say is that Infor has its work cut out for it. Doing this in 21 micro-verticals just makes it all the more daunting a task.

If this assessment looks more “glass half-empty” than “glass half-full”, let me correct that impression. I think Phillips has a great team, a great strategy, and some eager customers. While there are a lot of key challenges, as noted above, it’s those customers who give me hope that this combination of team and strategy could ultimately work.

It’s fair to say that the 6000 customers in Orlando were probably the vanguard of the Infor customer base, and my read on that crowd is that they are much more hungry for new products and innovations than they have been traditionally given credit for.

What many have thought of as a dinosaur burial ground is actually looking pretty lively in terms of the expectations of customers for innovation from their vendor. Many of these customers are sitting on older versions of their Infor products that are either so old or so heavily customized that they will effectively need to re-implement in order to move into the 21st century. Until Phillips showed up, re-implementing meant leaving the Infor fold and hooking up with a Microsoft Dynamics, SAP or Oracle. Now these customers have an opportunity to re-implement without leaving Infor behind. Based on what I saw at Inforum, the customers are prepared to at least give Infor a second look.

The trick will be to turn that second look into a buying decision in favor of Infor. Incumbency has its own ROI, I’ve learned in my years of watching the enterprise software market, and Infor obviously has the incumbents’ advantage in its own customer base. If it can leverage that advantage, and keep adding new customers — Infor reported 3000 new customers in the last year – then this will be one of the great comeback stories in enterprise software. And one well worth waiting for.

The Civic Cloud – Accela Gives Citizen/Government Engagement a Boost

The concept of citizen engagement and its ability to promote a more civil and rational society isn’t just a good idea. Taking the gains in enterprise software with respect to people engagement, back office transaction processing, and the cloud, and applying them to the interplay between citizens and their governments, has enormous potential to dramatically change what has been an historically adversarial and, frankly, waste-ridden relationship.

If this is done right, the benefits to society can be enormous, and not just in terms of saving money and time, or lowering the blood pressure of citizens trying to deal with dysfunctional government processes and government employees trying to deal with irate, frustrated citizens. All worthy goals, by the way. But I also believe that taking the gains in enterprise software, particularly in terms of CRM, the cloud, and mobile, and pushing them into the government sector can provide a platform for bridging the enormous political and social polarization that exists in most democracies – ours in particular.

While we may disagree with what services government should provide – and to whom – I think everyone on both sides of the aisle can agree that engagement, efficiency, and effectiveness should be at the core those services. Admittedly, enterprise software’s track record in applying those principles in the private sector – and public sector – has often been spotty. But for the most part the core processes of government, particularly those that involve direct interaction with citizens and other stakeholders – and that includes contractors providing services to government, companies doing business within the jurisdiction of government entities, as well as government employees themselves – are so poorly automated and un-enterprisey that a little enterprise juice could go a long way in this domain.

This is why I’m interested in companies like Accela, which recently released a cloud-based platform, the very aptly named Civic Cloud, that can serve as the organizing foundation for the delivery of next-generation government services. The Civic Cloud and its associated services are based on the idea that leveraging the cloud as a means to organize core government processes like permitting, planning, zoning, and inspection is an excellent way to take enterprise efficiency to state and local government.

If you’ve ever, as I have, tried to get a building permit or tried to survive a zoning process – even ones that are very straightforward and “by the book” – you know that the bar is set extremely low for the engagement, efficiency, and effectiveness that Accela and competitors like Microsoft, Salesforce.com, Infor, and others are trying to provide.

There’s lot of activity in the public sector vertical, and open government is part of this drive to take what we know works in the tech/enterprise world and extend it to government. What’s nice about Accela’s approach is that it’s easy to see a relatively rapid return on a relatively small investment – thanks in part to cloud-based pricing, which is nothing but good for governments that are strapped for cash to fund major capital projects. It also helps that the company isn’t a startup just getting its feet wet in this new market: Accela has over existing 500 customers and a solid on-prem track record.

A final note – literally the day after I met with Accela, I received a notice from my city telling me that a review of their accounts showed that my wife and I had never paid for garbage service at a rental property we own. Apparently when the house was renovated by my wife’s family there was no garbage account ever set up. So for years we’ve been getting free garbage pickup, assuming that somehow our renters were magically paying the bill. Maybe good for us as greedy landlords, but definitely bad for our local government. The upshot, of course, is that we’ll have to do our civic duty and get paid up – no way we can argue that we don’t owe the city for these services, even though we were never actually billed for them. No doubt because the city’s back office systems were too antiquated to figure out that services were being delivered at an address for which no account apparently existed.

Why I am making this a footnote to this post? It turns out that my city is a new customer of Accela – and while I can’t be sure, I doubt this is a coincidence. Being more efficient and effective does have a price, apparently. At least the city employee I spoke with to unravel the problem was polite and well-informed. Thanks, I think, Accela 

Microsoft and the enterprise/consumer opportunity. Time to go “all in” again?

Microsoft Dynamics has many ambitions, many of them warranted, to become a force for innovation and change in the broad enterprise software market. And Dynamics has a problem, or really a set of problems, that in essence originate from a single source: the rest of Microsoft.

As Dynamics performs yeoman’s service defining, or at least trying to define, the enterprise value of its parents company’s increasingly broad innovation portfolio, the rest of Microsoft is having trouble following suit, or a times even playing in the same card game. Windows 8 and Windows 8 phone were both launched largely devoid of any mention of the enterprise,  and the Yammer acquisition was jammered into the Office division, where the desperately needed business context for making social collaboration relevant is missing in action (unless you think collaborating over a PowerPoint preso is the raison d’etre of social collaboration). Lync 2013 was launched in a similar way – despite a lot of sloganing and some nifty demos, there was no link to real business processes (or to anything  but Lync, apparently).

It’s as if Microsoft corporate is so obsessed with maintaining its position in the consumer market that it is willing to squander an unprecedented opportunity in the enterprise – while ignoring the fact that owning the convergence of enterprise and consumer is the not-so-secret ambition of every company Microsoft is competing against – Apple, Google, Salesforce.com, SAP, and Samsung, to name a few. (Samsung recently began touting Knox, its enterprise secure version of Android,  Google’s Chromebook Pixel  is hedging a bet that touch-screen laptops will be a hit as a converged enterprise/consumer world, and even Blackberry is now trying to cheat death by advertising phones that switch between personal and business mode.)

To my biased eyes, Microsoft’s consumer first/enterprise-almost-never marketing focus is both foolish and unnecessary. Foolish because it is giving the competition a ton of runway and comfort that Microsoft might just muddle its way to mediocrity in the enterprise, and unnecessary because all the rest of Microsoft would have to do is follow Dynamics’ lead: the enterprise software division is actually doing a great job of defining the broader enterprise/consumer message for the company. So how hard would it be for Ballmer to convene all the marketing heads of his different business units, lock them in a room, turn on the blender, and have them create a master message about this enterprise/consumer opportunity?

They could start with Dynamics’ retail initiatives, which are blending Windows 8 touch-based POS systems with back office AX supply chain management and consumer-quality social marketing with enterprise-class business analytics. They’re even prototyping a Kinect-based virtual dressing room for retail – how’s that for enterprise/consumer convergence?  Or they could push customers like Revlon, which is both consolidating 21 ERP systems into a single Dynamics AX instance, but is also building Windows 8 tablet-based apps.

Putting a little enterprise into the larger Microsoft message isn’t just about helping Dynamics make its aspirations come to life. Take Windows 8 as a desktop OS: right now, IT departments are in a frenzy to upgrade an older generation of desktops running Windows XP. The problem is that Microsoft has sort of whiffed on the marketing opportunity for Windows 8 touch, and it would be a little too easy for IT departments to buy non-touch PCs (which are a few hundred dollars less expensive), particularly as Microsoft hasn’t made a great compelling argument about the relative value of Windows 8 touch versus non-touch in the enterprise, much less elsewhere.

But if Microsoft could make a better case for Windows 8 touch as something other than a consumer product, it might be able to direct that refresh towards touch-screen laptops that can double as tablets and blunt the inroads that the iPad and the Pixel Chromebook can or have already made into the enterprise. That in turn would provide the critical mass of platforms that developers need to start targeting their efforts on creating apps that can leverage the ability of Windows 8 to support an end-to-end process that spans touch, mobile, and traditional desktop productivity.

A little enterprise in the overall Microsoft message would also help Windows 8 phone, which in my opinion could use a lot of help right now. Blackberry is trying a comeback, Samsung is trying to make Android enterprise-secure, and the iPhone isn’t designed to be managed as an enterprise resource. If only there were a compelling reason to use Windows 8 phones in the enterprise. We can’t hope to know based on current Windows 8 phone marketing, which compels us to imagine ourselves as soccer moms instead of busy executives, and hipsters instead of blue collar workers.

And what about Lync, which actually is an enterprise product but is marketed in that dead-end space called unified communications? How hard would it be to show how Lync can be used to enhance a collaborative supply chain planning process, or field service maintenance? Put on some blue collars and roll up your sleeves, Lync.

On the other hand, just a couple of degrees of focus on the enterprise from Microsoft’s high-profile consumer product lines would help Dynamics face its biggest challenge: how to define a compelling case for its products in the top tier of the market against three much bigger competitors: giants SAP and Oracle, and even much smaller Infor, which at $2.8 billion in revenues is still more than double Dynamics’ size.

The draft that the rest of Microsoft could give Dynamics would help establish that all-important compelling case for why Dynamics should have a seat at the table against these three competitors, all of which have the advantage of incumbency in the top tier of the market where Dynamics now wants to play.

I think Infor makes for the most compelling case why the rest of Microsoft needs to lean in a little more and help Dynamics make its case. Infor owns a customer base that is famous for sticking with the status quo – the whole reason Infor has made it this far is that its customers have stubbornly refused to move off their ancient enterprise software systems, providing Infor with a steady stream of maintenance revenue over the last decade. Infor is banking on keeping them in thrall for another decade (or until CEO Charles Phillips can engineer an IPO or sale of the company) by refreshing the user experience and analytics capability, delivering innovation by tying its other products together using its ION middleware, and offering a hybrid cloud/on-premise deployment model.

While Dynamics has been able to pick off Infor customers over the years as they have run out runway with the Infor products, that was easy in the pre-Phillips days when Infor had nothing new to offer. But now that it does, Dynamics’ job just got twice as hard. These Infor customers have already proven their reluctance to reimplement on new software, so if Phillips can offer them a way to stay put and innovate, Dynamics now has to look even more compelling in order to get these Infor customers to go through the pain of a migration to a wholly new platform. Just relying on a feature/function bake-off in the core ERP processes won’t be enough – Dynamics has to go the extra mile, and having more air cover from the rest of Microsoft would be a good start.

This extra mile from the consumery side of Microsoft would also help support the changes it has been making in how it sells to the enterprise, which has seen major changes in how the company licenses AX in the enterprise: Microsoft has been selling enterprise licenses of Windows, SQL Server and the rest of its enterprise software for years. In the last year it added AX to the mix, and brought Microsoft Consulting Services in as well:  I spoke with a large Asian heavy equipment distributor that is engaging with MCS to do a massive, world-class business transformation, using AX as the core product. MCS is the prime contractor, and full panoply of Microsoft technology is at play in this account. This is the kind of marquee win that Microsoft will use to solidify a strategic beachhead in the enterprise. With MCS pulling and the consumer side pushing, this beachhead could be secured much more quickly and in a more compelling way.

It’s been a long journey for what is still the smallest part of Microsoft in terms of revenue, and it’s clear that on the sales and services side of Microsoft, Dynamics is getting the attention it deserves: it’s Microsoft’s overall marketing that hasn’t aligned with what Dynamics is doing or the converged enterprise/consumer opportunity. Global systems integrators are now on board, AX 2012 and Dynamics CRM are enterprise class products, and the recent acquisition of MarketingPilot adds some important capabilities in the somewhat over-hyped marketing automation, execution, and planning market. It’s starting to look like a really good enterprise story. It could be even better if only the rest of  Microsoft would play along.

 

 

Microsoft’s Lync 2013 Flunks the Unified Communications Opportunity

Some things are just too good to be true, and Microsoft’s vision for Lync 2013 – its desktop unified communications product – is a good case in point. It’s almost a shame, because rationalizing the many different channels of communication that business users have access to – email, chat, social, video conference, voice – under a single application has enormous potential for optimizing how people collaborate.  And Microsoft’s vision for Lync, as spelled out at its sold-out first-ever Lync conference last month, was a singularly beautiful vision of instant-on, real-time communications enabling amazing feats of collaboration never before possible.

Too bad trying to make this vision happen with the current product set is just a dream – or actually, if my example is any indication  – a bloody nightmare. Based on my experience of the last week just trying to wire up Lync with my Office 365 account, Lync isn’t worth the trouble. But finding out just what Lync and Office 365 can do together once they are wired together – a big fat nothing, actually – made the four calls to Lync tech support and the two calls to my ISP’s tech support a complete and utter waste of time.

Why did I bother in the first place? Because I was intrigued by the promises that Tony Bates, the president of Microsoft’s Skype division, and Derek Burney, the SVP of Lync Engineering, gave at the Lync conference keynote. Their basic message was about how Lync could bring unified communications to my Windows 8 desktop and myriad Microsoft and non-Microsoft devices, and I had to find out if it was true. Because if it was, I wanted in: like most people, I spend a lot of time bouncing between different voice, email, chat, and video conference technologies,  all of which I have to access from different apps with no central management and no way to keep track of all my communications channels, much less rationalize their use.  Having a single pane of glass with which to manage all my communications would be a huge time savings, and would definitely lead to some much-needed efficiency as well.

This ability to manage all communications from a single application is the promise of unified communications, one of those market opportunities that I equate with social collaboration – a great theory that lacks a critical mass of equally great, compelling reasons why the enterprise should embrace the theory full force. This is mostly because, like social collaboration, unified communications proponents have tended to heave their technology up on the proverbial enterprise wall in the vain hope that it will stick, despite failing to articulate how unified communications can directly impact specific business processes.

In other words, the pitch for UC has been largely about cool technology without any attempt to tie that technology directly to that class of enterprise problems that keep line of business leaders up at night. UC is not seen as a solution to a problem these business users have: I can assure you that none of them are waking up at 2 am, smacking their foreheads, and saying “unified communications, that’s what’ll save my bacon.”

So, absent a compelling business context that could interest a business user, buying UC has been relegated to the purview of procurement departments who aren’t paid to pay attention to expensive technology-driven fantasies masquerading as strategies. The result – UC is another market that never lived up to its potential.

But I do believe there is more to this market than ignominy: if there was a great UC platform with a great consumer-like user experience, one that could support existing channels as well as new and emerging one, and it was sold by a vendor that understood how to use UC to enhance some key, bedrock business processes, unified communications, or something like it, could become a powerful force for innovation in the enterprise.

So, while I have been skeptical about the promise of UC, when I saw the Lync conference keynote I had to give Microsoft’s new entry a try. Maybe the only company that effectively plays in both the consumer and the business world will have come up with the perfect bridge product that could light a fire under the promise of UC and give this moribund market a good kick in the keister.

I also figured I was probably a good test case for trying to see if Lync can give the market that kick: I run Office 365, Windows 8, and Skype – which are three of the fundamental building blocks that were referenced in the keynote. And I know enough about the enterprise to see how Lync could give UC some much-needed enterprise context.

If only I could have gotten it to work.

As I had three of the building blocks already, all that was needed was Lync 2013, which was downloaded from the Windows 8 store and was immediately dead on arrival, as I couldn’t sign into Lync using my Office 365 credentials. The problem, once I talked to tech support, was that I had to configure the DNS records in my email domain to allow this connection to take place – easy enough if you know how to do it, though any time you need to call tech support you know you’re no longer in the realm of the obvious. And I had to check with my ISP to make sure that I wasn’t going to totally destroy something else (like kill off my email, for example) by making these changes to the arcane innards of my email account.

In the end, getting the DNS record right wasn’t actually that easy, and it took two more calls to Lync and another call to my ISP before I could sign on and open up the Lync screen. That’s a lot of support just to get to the starting gate – and no way to get there without actually talking to a human expert, as searching the Lync support database was useless. (Partly because Microsoft’s byzantine naming conventions make it hard to get past Lync Server, Lync 2010, and all the other Lyncs in order to find information specific to Lync 2013.)

But once I got Lync up and running, I had to place another call to tech support: I couldn’t figure out how to get that great UC experience up and running as well. I had expected to be able to unify my different communications channels, chat or Skype my contacts from Lync, set up video or conference calls with colleagues, and do all the cool stuff you could see Burney and Bates doing in the keynote.

Wrong, wrong, wrong. What Microsoft doesn’t tell you is that Lync is a walled in community – if the people you want to do the UC thing with aren’t using Lync, you’re SOL: you can’t chat with them, call them, video conference, nothing. Unified communications be damned – Lync can only unify Lync communications. And barely, at that: Skype integration doesn’t come for another couple of months, apparently. To add insult to injury, my attempt to chat with a Microsoft contact whom I know uses Lync returned an error message: Tech support said I needed to email my contact and ask permission to Lync to her. Lync itself couldn’t handle the request.

As for the rest of my contacts, it would nice, at least,  if you’re living inside the Lync moat to be able to tell a priori if the person you want to communicate with is a Lync user. Unfortunately, there’s no way to know who in Outlook is also a Lync user. Outlook and Lync aren’t synchronized, so you have  to guess who might have Lync, or wait until someone who uses Lync lets you know they have Lync, or… just not bother using it at all.

Just to further show what a non-starter Lync 2013 is, there’s no way to link Lync to the Outlook contact database, meaning that if you want to use Lync to communicate you have to load your Outlook contacts one by one into the Lync contact database. This forces the user to do double entry contact database management: Once you’ve moved a contact to Lync, Outlook creates a new folder called Lync Contacts, where any changes you make to a Lync contact inside Lync are replicated. But this folder is not synched with the regular Outlook contact information, so those changes aren’t propagated to Outlook. This means you get to try to use your brain, or what’s left of it after all this, to keep track of what changed in which contact list and synch them manually. Advil, anyone?

Did I miss something? That’s what I asked the Lync support person when we went through this mess. The answer was no: Microsoft’s attempt at UC for the desktop is pretty much useless as a UC tool unless everyone you want to communicate with is a Lync user. Frankly, as a pure communication tool Apple’s iOS contact database has it beat by a mile – from my iPhone I can do Facetime with other iOS users – iOS can auto-detect those iOS users – and from this one device’s unified user experience I can phone or chat or email anyone in my contact database.  There’s no management layer per se, and a lot of other UC-like features aren’t available in iOS. But then again it’s not marketed as a UC platform, while Lync, which basically can’t do anything remotely as useful, is.

The moral of the story is that Microsoft once again has let its reach exceed its grasp, and its vision for Lync 2013 as a unified communications platform is just a bunch of vision, and a poorly marketed one at that. It’s a shame that there isn’t a desktop product that could do what Lync is supposed to do, because the mess of communications channels on the desktop is worth cleaning up.

At least Microsoft tried to up the ante in the failed UC market by telling a good story at its Lync conference about making communications “fundamental” and “humanized”, with broken-down barriers and lots of “access” and “reach.” Too bad Microsoft forgot that Lync also needed the features that would make those aspirations real.

 

 

Infor the Innovator: Is There Room for Another Horse in the Race?

There’s never enough solid competition in the enterprise software market, and it’s been tempting to see the top tier of the market as a three-horse race, with SAP and Oracle the dominant players, and Microsoft,  in the form of Dynamics AX, moving fast to catch up, particularly in the large enterprise.

It’s looking like that’s about to change.

A little over two years ago, the ERP roll-up king, Infor, brought on board a new management team, headed by former Oracle co-president Charles Phillips, and the prospect of another horse in the race started looking pretty good. And based on a half-day meeting last week with industry analysts at Infor’s stylish New York headquarters, the top end of the enterprise software field just grew another four legs and  a tail.

There’s still a lot for Phillips and team to prove before it’s safe to say Infor’s many bets on technology and market focus have paid off, and the race is not always to the swift, however fast they may move. But it’s clear that the notion that Infor is just a collection of products best showcased in the ERP Graveyard has successfully been buried. The phoenix that is rising from the ashes of the likes of Baan, Marcam, Mapics, and more rolled up vendors than you can safely count  definitely looks like a force to be reckoned with.

Before I get into the product and technology strategy, I think it’s worth noting that there’s an important cultural side to what Phillips and his top lieutenants – among them industry veterans Duncan Angove  and Stephan Scholl – are doing. The most visible cultural component is the executive office – a single office, rather spacious, with a massive square-shaped table anchoring center court where the executive team sits and works when they’re in New York. This is no hidden, inaccessible enclave of absolute power: walk up the stairs from the meeting rooms and you might inadvertently stumble in to the only collaborative executive office I’ve ever seen. Instead of being sequestered in their respective seats of power, the Infor team sits and works together, within sound and sight of the rest of the company.

This office layout isn’t only a refreshing change from the usual mountaintop aerie Office of the CEO,  it helps define a culture of openness and accessibility – and an apparent lack of back office politics – that may be an important part of the competitive edge Infor is hoping to have in the market. Certainly it has been a big help in attracting top talent to the company – Infor is doing a good job attracting refugees eager to escape from the internecine, Machiavellian politics of its top competitors. And the collaborative/cooperative nature of the company could be a big part of the secret sauce that helps Infor have a shot at overtaking its bigger competitors – all of whom struggle with balancing competing internal interests that at times seem more problematic than their external competitors.

On to the product strategy. Infor’s major challenge has been to leverage the breadth of its myriad products and provide a coherent upgrade and innovation path for its customer base. This 5000+ company customer base was largely neglected as the old Infor focused on rolling up software companies without a clear vision for the customers’ tech future beyond their role as a source of maintenance revenue.

To rectify this Infor has embarked on an ambitious strategy to create a single user experience,  mobile and social platform, and  analytics and workflow environment for its top products, which include M3 (nee Lawson), LN (nee Baan), CPM (the former Infor 10 CPM), EAM (the former Infor 10 EAM and Datastream), Syteline, Lawson, Hospitality, and Hansen.  The single user experience is perhaps the most significant, and ambitious, part of the technology strategy. User experiences are extremely fluid these days –witness the debates about mobile vs. touch or consumer vs. enterprise – and locking down all its products and industries in a single UX will be hard to build and potentially even harder for the company’s customers to accept.

To this end Infor has created a separate design company, Hook & Loop, to create this experience. So far what they’ve done looks good – is it good enough to tip the user experience battle in Infor’s favor?  Time, and user acceptance, will tell.

In addition, the company has been building out a single integration platform, called ION, that provides what Phillips calls loosely-coupled integration between the entire Infor product set as well as third party applications, including a number of Oracle and SAP applications.  This means that, rather than build a massively bloated master data integration environment, Infor is opting for a more light-weight XML-based event pub/sub model that is easier to build, easier to maintain, and more likely to actually be used than some of what its competitors have tried, and failed, to build over the years.  The success of ION is still nascent – around 1000 customers are using  it today, which is a good start. How much they are using ION, and how extensively, will reveal  it’s true success.

There’s enough to ION to merit  a separate blog post at some point down the line – it supports on-prem, on-demand, and hybrid deployments, peer-to-peer and loosely coupled integration, and it’s based on the OAGIS  business object document standard. If ION really fulfills is promise then Infor will have done what Oracle in particular has failed to do: rationalize its portfolio through integration and make the whole greater than the sum of the parts.

Infor is also standardizing localizations and mobile access across the entire portfolio.  And the company is further refining its cloud strategy, offering new customers the option of road-testing their Infor apps in the cloud and then, as needed, deploying to an on-premise environment or remaining in the cloud, whichever makes the most sense.  This isn’t necessarily the orthodox cloud strategy that the orthodox cloud crowd would like – which is great, IMO. Customer choice should always trump orthodoxy.

In all, it’s a well-thought out approach to rationalizing a huge portfolio of products, most of which were acquired largely without any thought to rationalization.

But even more interesting than this post-hoc rationalization process is the company’s go-to-market strategy, which gives it an interesting point of differentiation in an enterprise software market that frequently lacks effective differentiation. The essence of Infor’s strategy is to tackle what is commonly referred to as the micro-vertical market, as specific vertical industries like dairy or brewing, as opposed to looking at the market through the lens of larger categories like food and beverage.

This makes a ton of sense for a couple of reasons: Infor’s rollup of dozens of enterprise software companies has given the company serious credentials in a lot of very specific markets. Some are familiar markets that don’t seem very “micro”, like aerospace, automotive, pharma, and high-tech. But the others are more micro than macro – like breweries, hospitals, hospitality, and industrial distribution.

Phillips makes this an important distinction, and I think it’s a good one. We tend to think of food and beverage as a market, whereas, according to Phillips, it’s a sector. The micro-verticals – dairy production, brewing, baking, and meat processing – have radically different requirements in terms of how raw materials are acquired and processed, and how finished goods are produced and taken to market. Building software and going to market specifically for these micro-verticals makes tremendous sense.  Whereas, building software and going to market at the sector level tends to produce one-size-fits-none software and the need for a lot of customization and configuration.

This focus also changes the competitive nature of what Infor has to do in order to succeed. Instead of taking on the Big Three head on, Infor can go after a micro-vertical market that is dominated by a combination of relatively small companies and VARs, many of which are privately held and not well-known outside their micro-vertical.

This could make life hard for the Big Three.  Many of these companies Infor wants to compete against are Microsoft VARs that have been getting a little less love from Microsoft since it decided to focus its partner efforts on building a cadre of larger, more globally effective VARs and going direct to the large enterprise.  SAP’s approach to the mid-market – particularly with All-in-One – has lacked a strong degree of micro-vertical focus and could make it vulnerable to Infor’s ability to focus a specific product set on a specific market. And Oracle’s inability to provide an upgrade path to Fusion for many of its micro-vertical customers – particularly its JDE customers – is a point of vulnerability that Infor can attack with this micro-vertical approach.

The Infor team provided some insight into a set of recent wins that highlighted these opportunities, including an impressive number of SAP wins, as well some PeopleSoft and an early knock-out for Microsoft Dynamics. The details were given under NDA, and there was time to discuss only a handful, but suffice to say that they prove a point: Infor isn’t just selling maintenance contacts for aging software– it can compete, and win, against the best.

If they can do that consistently, and keep their renewals up and continue to entice their customers to upgrade instead of shack up with a competitor, Infor will be a great turnaround story and make for a helluva interesting IPO or acquisition (I vote for the latter) down the road.

The great thing about the enterprise software market is that, once you leave the domain of the very largest companies, the number one competitor in most geographies and verticals is “other” – a set of companies too small to be statistically relevant by themselves in any large scale market survey.  If Infor has its way they’re going to seriously dent the impact of “other” in the market. And if they do, the non-others – SAP, Oracle, and Microsoft – are going to have another big competitors to worry about.