HP’s Breakup is Oracle’s Future

The news that Meg Whitman is finally pulling the plug on the Sisyphian task of trying to resurrect HP has profound implications for the future of Oracle, and not just because the mess that Whitman was unable to unravel was an HP made functionally unmanageable by a previous HP CEO: Mark Hurd, now co-CEO of Oracle. I think Oracle has been on the leadership skids for a while, but Hurd’s track record at HP, the end-game of which is now being played out in the breakup of the once-vaunted tech leader, provides a good roadmap for how Oracle ends up on the chopping block like HP.

The news also provides some vindication for the brief reign of Léo Apotheker at the helm of HP. Léo had been tasked with the task Meg has largely failed at – finding and developing a synergistic, One HP sales, marketing and product development strategy. Ironically, considering this week’s news, when Léo tried to execute the first steps of a breakup of HP, he was summarily and rather rudely jettisoned by a board that included Ms. Whitman herself. The fact that Meg has now acknowledged failure in what Leo was hired to do and is now executing a version of what Léo was fired for trying to do shows how far expectations have fallen for HP and how little true leadership the HP board was able to provide.

The fact that the stock market is so far responding favorably to the breakup adds a double-irony to the news. If the past is truly prologue, then breakup is what’s next for Oracle too. The stage is set in a similar fashion: the current leadership team – Mark Hurd and Safra Catz – are numbers people, not techies. Neither has a track record for visionary leadership, product development, or any of the attributes that Oracle will need to get back in an innovation game it has been losing of late — mostly because the main innovations Oracle has been pushing in the market are the engineered systems that Larry bought from Sun and handed over to Hurd. And, as we know from the numbers – Oracle has been sticking to this strategy despite a consistent failure to provide for growth and profitability.

Hurd is by far the most dangerous of the two for Oracle. He’s a hardware guy, a numbers guy, infamous during his time at HP for cutting costs and disabling any mechanism for synergy between HP’s PC, printers, servers, and services divisions. His track record at HP looked good in the quarterly lens with which Wall Street tends to view all public companies, but it was clear from the analysis that took place when Apotheker came on board (and which I was part of) that there was simply no mechanism in place to do anything synergistically: no ability to jointly develop products, no sales force that could sell across the whole HP product line, a services division that hardly considered itself part of HP, a board and senior executive team at odds with itself, and on and on, ad nauseum.

All that mattered, and what Hurd bequeathed to Apotheker and Whitman, was that each group dutifully reported in every quarter with the numbers that Hurd and the Street were looking for. Perhaps the biggest irony in the fate of HP is that it became clear during the breakup discussion that started when Apotheker was in charge, and continued into the Whitman era, was that the main reason not to break up HP was the cost-effectiveness of its supply chain. How pitiful is that – the only point of true cross-HP synergy was in direct materials procurement?

It’s a sad day when one of the biggest strategic values of a formerly innovative tech company comes from its ability to squeeze costs out of its suppliers and logistics chain. Sounds like what you’d expect from a pizza chain – indeed, Tom Monahan, the founder of Domino’s Pizza, used to say that his epiphany came when he realized he wasn’t in the pizza business, he was in the delivery business. Great tasting pizza, who the hell wants that?

What’s the bottom line here with HP? I think the law of the land – literally – dictates that we look no further than the company’s board of directors. Much has been written about how dysfunctional the HP board was, and I think when the annals of Silicon Valley history are written, the HP board will be looked at as one of the worst. Remember the pretexting scandal of 2006? The acquisition of EDS in 2008 – which ended in an $8 billion write-off? The Palm acquisition in 2010 – which resulted in a $2.1 billion write-off. The “oops, we forgot to interview the CEO candidate” screw-up that end with the hiring of Apotheker? The completely and shamefully bungled attempt to announce the intent to spin-off the PC unit, which was instantly retracted and for which Apotheker was made the scapegoat?. And of course Autonomy – the $8.8 billion write-off that keeps on giving, as long as you’re a lawyer.)

This serial mismanagement and negligence at the board level that is nothing short of an egregious abuse of power. That many mistakes, so close in time to one another – why haven’t the shareholders risen up in arms? The answer to that question is left for another time and place. Suffice to say, the board set the stage for the break up by approving disastrous merger after disastrous merger, and letting Hurd divide and conquer, instead of nurturing the culture of innovation and value-add that was HP’s birthright. And so here we are, closing in on the end of 2014, watching HP spin off a division no one would buy (PCs and printers) and a division not enough customers want to buy from (which includes EDS, which no one would buy either.)

I don’t think Oracle’s board has done anything similar – for the most part, the big acquisitions have been accretive, at least to the understanding of most financial analysts. But the Sun acquisition is starting to carry the stench of failure into the rest of the business, and elevating Hurd to the co-CEO spot means it’s virtually impossible that, at least under his watch, Oracle will ditch its hardware business.

Unless the Oracle board – which is currently very much stacked in Hurd’s favor – changes its focus away from hardware back to creating a leadership position in software and services, I predict we’ll eventually see a spinoff of hardware and software that will echo the HP breakup. Mark Hurd will be allowed to ride his hardware herd into the sunset, literally and figuratively, while, hopefully Thomas Kurian, one of the brightest minds in enterprise software today, will be finally given the CEO job he deserves and most certainly covets. If he hasn’t left in disgust by then.

So good luck Oracle, with HP showing the way, you’ve got only one way to go. In fact, maybe giving the hardware division to Hurd sooner rather than later would be a great idea. Continuing the hardware focus, which Hurd will certainly do, isn’t going to end well. The big iron ship sailed a long time ago. It sank Sun, it’s sinking HP and IBM, and if Oracle’s board stays the course, it will sink Oracle too.

Catching Fire in the Cloud: Infor Takes on Customer Stasis, Workday, and Salesforce.com

It’s year four in the Charles Phillips era at Infor, and the more things change the more they remain the same. The changes are impressive – new functionality across a wide swath of its legacy product lines, a new release of Infor XI, its next generation suite, a focus on industry-specific clouds that is such a good idea that I expect it will attract copycats from all over the market, a dedicated data science consulting team, new capabilities for defining and delivering best practices in implementations – it’s a long list, and it all looks good.

But the part that remains the same is the fundamental dilemma that has bedeviled Infor since Phillips rescued the company from the ignominy of being a roll-up of orphaned brands and customers milked for their maintenance dollars: How does Infor get the core of its customer base – companies that almost made a virtue out of lagging behind the market and accepting their roles as cash cows for a maintenance revenue play – to move forward in a timely fashion and make good on the vision Phillips and his team have laid out?

There’s definitely hope, as evidenced by a show of hands during a panel I participated in at the Executive Forum held during the company’s Inforum user conference in New Orleans last week. When asked how many of the audience’s companies were already in the cloud, pretty much every hand went up, much to my surprise and that of my fellow panelists. And yet, when that old, tired question about “how secure is my data in the cloud” was asked later in the day, it was clear that hope had a long way to go before it became truly fungible. (The answer, BTW, is that three of the bigger hacks in a long list of recent security breaches – Chase, Target, and Home Depot – were all against on premise systems. On-premise is, most of us agree, much more vulnerable than the cloud.)

Infor by the numbers reflects the essence of this dilemma: the company is 73,000 customers strong, many of them denizens of a collection of forgotten brands that seem to make up the bulk of the ERP Graveyard website. It’s a prospect list that the entire enterprise software market is drooling for, but only Infor has the majority of them on speed dial.

But do they answer with upgrade orders when Infor calls? Not enough to date. Infor’s first shot at a next generation suite, Infor X, only has 2600 customers today, or about 3.5 percent of the customer base, two years into the vision. ION, the company’s well-designed, loosely-coupled middleware solution (the polar opposite of Oracle’s messy, expensive, and overly complex Fusion Middleware) has 2000 customers. Its context-aware collaboration offering, Infor Ming.le, has 400 customers. The overall cloud vision, however stellar, has 40 applications in the cloud but only 2600 customers (it’s tempting to say the numbers average to 65 customers per application, but I’m assuming that a simple mean isn’t the right way to look at it – most customers probably run several cloud apps from Info.)

But to say this is the story of market failure is to misunderstand the dynamic at play. The 70,000 customers that haven’t upgraded frankly can no longer continue that path with impunity. They have a job to do, and they need to do it soon: the Infor customer base simply has to sign on for a whole slew of upgrades in the very near future, and, unless they’re missing a few brain cells, they’ll be doing the lion’s share of those upgrades in the cloud. This decision isn’t optional: there’s just too many market and business dynamics at play to make it possible for these companies to continue to use 20th century technology and business processes in the 21st century. And if you’re bothering to upgrade, you’re going to go where the innovation is, and that’s the cloud.

Infor’s trick is to play the game as patiently as possible, all the while laying the groundwork for being the very best of a large contingent of suitors waiting to take these 70,000 customers to the ball. This is where Infor has a distinct advantages as a privately-held company. The kind of patience Infor needs is not one of the virtues that characterize Wall Street – au contraire. If Infor had to show results on the quarterly cadence that the Street demands, it would be in trouble, big time. Not because it’s not generating revenue ($745 million in the fiscal year ending last July, up 6% from last year) but because its maintenance revenue isn’t bubbly enough for an investor community that is smoking cloud crack like it’s, well, real crack.

Ironically, Infor would also be a helluva a good buy if the tunnel-vision of the Street were to drive the stock price into the basement, because I’m pretty bullish about Infor’s chances of landing a large chunk of the upgrades its customer base will need sooner rather than later. The Industry Cloud vision is the latest of a number of strategic moves that make Infor look like a good choice: the company has laid out a vision of 13 verticals – ironically, these are the super-verticals that Infor tends to dismiss in favor of supporting a multiplicity of micro-verticals – that will have their own cloud and their own portfolio of cloud capabilities specific to their industry. It’s a pretty obvious list, gleaned from the dozens of customer bases the company inherited over the years: automotive, healthcare, aerospace and defense, HCM, public sector, industrial, distribution, food and beverage, hospitality, fashion, equipment dealers and service, and as well as two more generic offerings, corporate and business.

The plan is that each of these vertical clouds would have the foundational functionality that most if not all companies in the vertical would want, micro-vertical capabilities notwithstanding. Thus, the healthcare vertical cloud is be based on a cloud version of Lawson and offer capabilities from HCM, PLM, asset management, performance management, a supplier exchange, project planning, and others. Likewise the aerospace and defense vertical cloud, based on LM, includes PLM, configuration management, budget planning, partner collaboration, SCM, planning, and a half-dozen more capabilities.

What I love about this vision – seven of these Cloud Suites are currently available, six more to come – is that it acknowledges the reality of a cloud-based future without putting a customer base, one that has already proven not to be the greatest consumers of new technology, into the position of stitching all this functionality together, on premise or in the cloud.

The worst thing a company looking to leapfrog out of a legacy technology base straight from ERP Graveyard could do is buy the dozen or so capabilities in Infor’s vertical clouds as individual cloud apps. I call this death-by-cloud-silo, and it’s a movie playing in all-cloud backoffices across the country. It’s guaranteed that a company that embarks on a cloud silo strategy – even a company that has regular upgrades in its DNA – will fall behind on maintaining the matrix of interfaces and middleware that would be needed to keep this mess on track. Especially in a cloud market where upgrades are delivered automatically at a rapid cadence: imagine keeping track of a dozen cloud apps as they upgrade several times a year at completely different times and cadences. Actually, don’t imagine it, it would make the old 20th century silo problem look like a piece of cake.

Another reason I like this vision is it gives Infor a strong story to tell in competition with pure cloud competitors like Workday, and Salesforce.com – the latter being a former partner with which Infor parted ways over the complexity of integrating a broad set of functions from Infor’s ERP apps to Salesforce.com.

Infor starts strong in taking on Workday and SAP by focusing on the completeness of its new HCM cloud suite: with core HR, talent management, training and education, payroll, health and benefits, retirement, and other capabilities, Infor provides a vision for a suite that integrates a large number of components that otherwise would have to be synched in the cloud á la the death-by-cloud-silo scenario outlined above.

But the icing on the cake – and very much in line with my thinking that beating Workday is all about defining and delivering HCM and talent management as part of a vision of complex, integrated business processes — is Infor’s vertical cloud strategy. As noted above, HCM and talent should be part of a comprehensive, cloud-based offering that slots the HCM and talent into a more complex vision of business process. This is something Workday can’t deliver without trying to kludge non-Workday apps into the process flow and starting its customers down the cloud silo path. Ditto Salesforce.com: it’s going to hard to compete with a pre-integrated vertical cloud like the ones that Infor is bringing to market.

It’s this kind of thinking that is one of the reasons why I think Infor has a chance. Another is cultural – Phillips and his leadership team, as well the rest of the execs I’ve met over the years – clearly have the respect of the customers and partners, and they clearly understand that they can’t force their way into their customers’ wallets by the kind of strong-arm tactics that companies like Oracle deploy (here I’d like to mention that, as far as I can tell, Oracle, by suing the State of Oregon over its failed ACA implementation last month, became the first enterprise software vendor to pre-emptively sue a client for an implementation failure. That’s a first I would definitely think twice about if I were looking across the table at an Oracle rep.)

It’s safe to say that one of the reasons the core of Infor’s customer base hasn’t upgraded or migrated is that many companies in this collection of orphans and cast-offs have seen the ownership of their enterprise software systems change hands multiple times, eventually ending up the wards of a company — Infor’s predecessor — that favored sucking maintenance dollars over delivering innovation. I had a customer put it to me exactly this way at the Executive Forum – when I go to the cloud I want to make sure I won’t be orphaned again, he told. There are no guarantees, I replied, but there’s a strong likelihood that Infor’s going to be around until well after his retirement.

What’s of course problematic for those making decisions today is that a lot of what makes Infor look like a keeper is still a work in progress. But that too may play well for Infor – as long as the vision is both well-designed and credible, the laggards can continue to lag, knowing that they have an easy choice once they’re ready to make it. Heck, they waited this long, what’s a year or two difference going to make? Considering that there’s a big assessment that has to take place before the upgrade – a business blueprint for the post-legacy era – maybe it’s already time for these laggards to get started. By the time the assessment is over, chances are Infor will be fully baked. And then it’s off the races. The enterprise software market will be all the richer for Infor’s success.

 

Even without Larry, Oracle’s Problems Will Continue

The fundamental problems plaguing Oracle won’t go away with Larry moving into an executive chairman role, this is more lipstick on a pig than a serious attempt to get the company back on course. The problem is that shuffling the deck chairs does nothing for dealing with the company’s three fundamental problems. Until these are addressed, I think it’s safe to assume there will be no turnaround any time soon.

Problem #1: Oracle needs to do something about its hardware business — jettison is the verb that comes to mind, or at least it needs to stop putting its iron foot forward (or in its mouth) and start talking about higher margin lines of business and more strategic offerings than more heavy iron. It’s the era of the cloud, and pushing a 12-cylinder gas-guzzler when everyone is moving to electric cars shows the atavistic mindset of a company that desperately needs to respond to market as it exists today, not the market that Oracle wishes existed.

That’s going to be impossible considering who is left in charge: Mark Hurd. Here’s why: The hardware business acquisition came as the result of an agreement between Mark Hurd when he was at HP and Larry to keep IBM from buying Sun and getting the Java brand. The original deal was that Larry would buy Sun, and then immediately spin off the hardware division to HP. This looked like a great deal for all (except IBM), and then Mark had a little problem and had to leave HP. Larry hired him pretty much immediately and gave him the hardware assets they had just bought from Sun as his new bailiwick. And the stage was set for an overemphasis on a moribund hardware market and a de-emphasis on enterprise software and cloud leadership. The numbers speak for themselves.

Problem #2: Oracle needs to do something about its software business. The RDBMS market is dying, and Oracle is much too dependent on this market for its own good. Some financial analysts are waiting for a new release of the flagship DBMS as though that will blunt the challenge from an evolving market more interested in the requirements that are driving a surge in no-SQL, in-memory, and unstructured databases than the traditional transactional world that Oracle still lives and breathes. Meanwhile, Oracle is simply not seen as an enterprise software innovator – Larry sucked the juice out of his software side in order to over-emphasize the hardware side. Both of these problems mean stasis or worse for Oracle in a market that simply won’t tolerate any vendor standing still.

Problem #3: Oracle has to fix its overemphasis on lawyering and under-emphasis on customer satisfaction. Exhibit one is the fact that Oracle pre-emptively sued the State of Oregon for the failure of Oracle Consulting to successfully implement Oregon’s ACA website. This is a first – I can’t find a single case where the vendor, who in this case was also the prime contractor (at its own insistence), went after the client in court before the client got there . Sure, there are always countersuits, but if anyone reading this can think of a time when a vendor drew their legal weapons first, please let me know.

Failure is an orphan – always my favorite JFK quote – but that’s almost never the case in a failed implementation. It takes two parties to screw things up as badly as what happened in Oregon. But one of the parties has the knowledge, the methodology, the experience, and the responsibility to pave the way for success, and that’s the prime contractor. Granted, SIs fail in that requirement all the time. But the hubris of blaming the victim – implicit in a pre-emptive lawsuit – is egregious beyond measure.

Oracle has always made customer-hostile selling and contracting part of its business model, as many customers who came into the Oracle fold due to an acquisition found out when their maintenance contracts were unilaterally changed in Oracle’s favor. This culture won’t change with Larry as executive chairman and Safra and Mark in charge. It’s just going to be business as usual.

So, Larry, thanks for the lipstick. But I’m not impressed. This might fool some investors, but judging by the stock’s performance on the day following the announcement, they’re not buying it either. What’s your next big idea? Cause you’re going to need it soon.

 

 

 

SuccessFactors, Workday, and SAP – Answers and More

SuccessFactors’ user conference, SuccessConnect, has come and gone, and the four questions I posed in my previous post about the challenges facing SuccessFactors and SAP were largely answered. But, as in any good dialectic, one good answer is just the starting point for another good question….. I’ll start with the Workday question/answer in this post, and continue with answers to my other three questions in a subsequent post.

Workday isn’t just SAP’s problem, the cloud maverick is an equal-opportunity problem for a number of big and small vendors in the market. Combating the triple threat of pure cloud, the Dave Duffield effect, and Workday’s position in the heart of Silicon Valley’s cloud keiretsu is hard for everyone. I believe Workday is vulnerable, and SAP/SuccessFactors and other competitors have a good position from which to respond to this triple threat, the question is how to do it well and do it quickly.

It’s important to note, before I opine on what I think SAP can do, that SuccessFactors doesn’t do too badly against Workday, at least according to SAP HR head Mike Ettling. The win/loss record is between 1:1 (win one, lose one) in North America and 2:1 (two wins for every loss) in Europe. Win/loss numbers are tricky – you have to get invited to the dance first before you either get lucky or get rejected – but if we assume Ettling’s numbers are pretty good, the question of why SAP is so worked up about Workday needs to be addressed.

The answer is found deep in the core of SAP’s strategy to be the “Cloud Company Powered by HANA.” SAP CEO Bill McDermott is playing to win in the cloud – Lord knows SAP has spent enough on cloud acquisitions recently – and to McDermott that means ceding nothing to Workday. Or at least trying to cede as little as possible. The goal is to turn the tide on Workday, and become the number one thing that keeps Workday’s execs up at a night, and not vice versa. So, win/loss ratios notwithstanding, there’s no way McDermott isn’t going to try to grind away at Workday until he gets whatever win rate he wants.

Back to what SAP can do about Workday – and others like SAP that have a combination of industry-focused ERP and cloud offerings. The real trick is for SAP to sell a vision that slots SuccessFactors HR and talent management (and contingent labor and training and LMS and everything else in Ettling’s bailiwick) into a set of complex processes that span multiple functional domains, like manufacturing, supply chain, CRM, service delivery, retail, and on and on. That complex process view ties well into SAP’s core strengths as a broad-based vendor of business processes, and provides a somewhat easy way to have a conversation with a prospect that Workday has trouble having outside of its HRMS and finance domains.

That complex process delivery conversation, which is centered around a single vendor providing the processes and the means to integrate and orchestrate them, is one that definitely plays to SAP’s strengths. But it would be misleading, and execs like Ettling know this, to intimate that all the complex processes SAP can enable are well-integrated and orchestrated. One of the key announcements that Ettling and others hammered home at SuccessConnect is that SAP is committed to productizing as many of the SAP to SAP integrations as possible. And, knowing what’s at stake, I’m pretty sure they’re going to push that productization as hard as humanly possible.

But there’s another thing that has to be pushed, and that’s really the hardest nut to crack for SAP and others like. The trick for SAP with respect to Workday, and Salesforce.com as well, is to sell that integrated, complex business process story to the right audience, and therein lies the rub. The right audience, from Ettling’s point of view, involves a sit-down with the chief talent officer or head of HR and the CIO: when SAP presents to both constituencies, the message goes over well.

But that’s easier said than done. Siloed cloud apps like Workday and Salesforce.com have thrived precisely because they are selling to a single process owner who typically has no interest in looking at the integrated, complex process opportunity across their enterprise. These vendors effectively get to the LOB first, and relegate the CIO to trying to make sure the growing cloud back office doesn’t grow out of control (which it all too often does: it’s not uncommon to have dozens of cloud apps in the back office, all running their own code base and all not well-integrated.)

I think SAP is talking about the right conversation, for now, but it needs to broaden its messaging and extend the conversation even further if it’s going blunt the perceived Workday juggernaut (700 customers after nine years in business and not a profit in sight, no particular success in branching out into finance or international markets – believe me, perception is huge part of the game).

The problem is that the complex, integrated process message that SAP needs to articulate was conspicuous at SuccessConnect largely by its absence – it wasn’t totally absent, but it wasn’t exactly front and center either. It was clear that SAP was deliberately tailoring its messaging towards the core processes of HR and talent, without trying to stretch the SuccessConnect audience too much about the complex, integrated process issue. When asked why, the general consensus was that this audience wouldn’t necessarily want to hear the message or even understand it if they could.

That’s where I think SAP has it wrong. The HR/talent LOB could and should be leveled up to talk about this more complex opportunity, and not just because it will help SAP beat Workday. While there are many new and worthy domains in the HR LOB that are more immediate in the minds of those who focus exclusively on HR and talent, the more strategic future of this LOB very much lies in extending its reach into non-LOB domains.

The discussion at SuccessConnect about Fieldglass’ integration with Ariba Procurement is a decent place to start this conversation, and the topic was broached at SuccessConnect in the keynotes and elsewhere. A good start, but SAP needs to keep going. Contingent labor isn’t just an HR issue, it’s a big deal in the supply chain, in warehouse management, in retail, health care and hospitality. Heck, a big part of the rationale for buy Fieldglass is that contingent labor is taking over the entire job market – which means strategic planning and operations across a huge swath of the enterprise will need some integration with what Fieldglass has to offer.

Again, while SAP has a long way to go in productizing all the integrations it needs between the HR side and the rest of the product portfolio, if it can entice the “run of the mill” SuccessConnect attendee – and their counterparts across the industry – to think bigger and more strategically, there will come a time when the CIO doesn’t have to be in the room for SAP to successfully pitch against Workday. The excellent presentation by Edward Cone, the technology practice head at Oxford Economics, of a major study commissioned by SAP had some interesting data on the limited role that HR has at the overall enterprise strategy table. (I think their numbers are actually a little aspirational, representing a somewhat rosier picture than what is really happening, but I’m just one cynical enterprise software guy and Cone works for an organization that has Oxford in its name.)

Regardless, if SAP and any other vendor (like Infor and Microsoft) that can offer a complex, integrated process vision would arm their HR sales and marketing efforts with a bigger strategic picture focusing on the increasingly strategic role of this LOB, I think Cone’s next survey would begin to show a much greater strategic role for HR overall.

I hope this both articulates a littler better why I think Workday is vulnerable, as well as what I think SAP and others in the same boat can do about them. I’m sure there are reasons why SAP or Workday is the better choice in a feature/function bake-off, but continuing to have that discussion with the market is to play the competitive game on Workday’s field, using its rules and referees, and that’s not what any competitor who has more to offer should be striving for.

Talking about complex, integrated processes is something Workday can also do, but only by evoking a cloud middleware strategy that would be hard to manage: integrating a heterogeneous cloud back office alone is a major pain, adding a lot of on-premise  integration is an even bigger pain. Having as much of that integration come from the vendor that owns the biggest piece of an integrated process is a story that we know is music to a CIO’s ear. It needs to be music to the HR LOB’s ears as well.

 

SuccessFactor’s Success Factors: Questions in Search of Answers

I’m heading to the SuccessFactors user conference, SuccessConnect, in Las Vegas this week and, as a prelude to the conference, here’s some of the questions I’m looking to have answered during the course of the conference.

  1. What are you going to do to blunt the market impact of Workday and start earning the revenues and market share gains that SAP is counting on? Workday – a.ka. the second coming of Dave Duffield – is being way too effective in the SAP customer base, particularly with an HRMS audience that loved Duffield at PeopleSoft and are ready to love him all the more at Workday. Oracle is giving both companies a good push by continuing its policy of making the move from PeopleSoft to Fusion expensive, complex, and onerous, but it seems that Workday is the main beneficiary, not SAP. I’m sure the board of SAP was hoping that spending $3.4 billion in 2011 for SuccessFactors would have given it more market share and mindshare against Workday by now. Is it time to shift strategy a little?
  2. How are you going to better define the hybrid cloud opportunity for SAP customers and, in particular, make a sane and reasoned case for HANA to the HRMS/ talent management crowd? We all know that all hands are on deck at SAP trying to push the HANA strategy to the masses, and, like your product line, HANA needs to be a little more successful than it has been to date. It’s a safe bet that you’re going to talk about HANA, I’m looking for those great use cases that help customers get off the fence about HANA.
  3. How well are you really integrated with the rest of SAP? I still see successfactors.com email addresses, and I know from my many SAP briefings that not everyone at SAP knows what SuccessFactors is up to and vice versa. If you go back to the Business Objects acquisition, one that was characterized by a high degree of autonomy being granted to the acquired company (and raising ironic speculation about who had acquired whom), it wasn’t until BobJ was fully integrated into SAP that SAP began to grab consistent top billing in the BI/analytics space. Is this the roadmap for HRMS/talent management and SuccessFactors too?
  4. How well are you going to articulate training and education as a differentiator, and how are you going to make that differentiation stick? I’m a big proponent of this capability as a major component of enterprise success across the board, and the fact the SuccessFactors has been finally coming together with the rest of SAP and its well-designed Learning Hub training and education offering is good, so far. But what’s next in education and training from SuccessFactors is key, and I’m looking forward to see if this could be a way to blunt the WorkDay effect.

There’s lots more questions to ask, this is just a start. The bottom line is that SuccessFactors needs to look and feel more successful, inside SAP and outside, and the time to start is now. I think Workday is vulnerable, and I think SAP and SuccessFactors could do better exploiting those vulnerabilities. I look forward to seeing this week how far they think they can go.

 

Acumatica — Living the Channel Challenge in the Midmarket

I’ve followed the enterprise software market for decades now, and the sad/ironic/bitter truth is that, when it comes to the large enterprise, all the great technology and marketing prowess goes to the field to die. It’s the same story in the midmarket: the best strategy, technology, and products don’t mean a thing if the channel can’t tell a story that connects prospective customers to the software vendor.

This is the essence of the challenge facing Acumatica, a pure cloud, mid-market ERP vendor based in Seattle. (Well, not really pure cloud –there’s an on-premise version as well, more on that issue soon.) I spent two days at Acumatica’s partner conference this week, and the channel problem was in full evidence at every turn. To be fair, building, priming, and maintaining a midmarket channel is a challenge for everyone in the industry: every time I meet with Microsoft Dynamics, Infor, SAP, and the many other vendors servicing this market, the most important story is actually how they’ve tweaked the channel yet again to optimize their sales opportunities and minimize channel conflict, technology and functionality notwithstanding.

Acumatica’s channel problem is actually a two-fer: as a (kind of) pure play, all channel cloud ERP vendor, Acumatica needs mid-market partners who understand not just cloud ERP, but the host of ancillary technologies and next-gen business practices that come with a move to the cloud: the horizontal shifts in e-commerce, mobile, and collaboration, and the more vertical shifts in areas such as advanced supply chain, distribution, manufacturing, and warehouse management. At the same time, those partners need to find mid-market customers who get these shifts in technology and business process and are ready to take the plunge.

This, again, is the innovator’s dilemma across the totality of the vendor community. But, for Acumatica, there’s the added twist of pushing a pure-play cloud imperative. SAP, Microsoft, Infor, and the rest of the on-premise vendors who have moved to the cloud talk a more hybrid story that offers fence-sitters the opportunity to start with good-old on-premise ERP today and move, with varying degrees of ease, to the cloud.

Acumatica has chosen not to emphasize that opportunity for its partners and their customers, eschewing a hybrid approach in favor of pushing a pure-cloud focus and promising never to go direct to a customer like everyone else in the mid-market – adding a pure channel approach to the pure-cloud message. To be sure, the different private and public cloud offerings that Acumatica can provide should be enough to assuage the misgivings of any customer who hasn’t bought into the pure-cloud story. But should be isn’t a strategy – cloud ERP, unlike CRM, time and expense, payroll, marketing, and other well-established cloud domains, is still a relatively hard sell, Netsuite’s relative success notwithstanding.

But moving from should be to must have may not be as hard as it seems for Acumatica and its partners, despite the impression that the manufacturing and distribution mid-market is still wallowing in 20th century sensibilities when it comes to the new technologies and business practices that come with moving to the cloud. In an analyst Q&A panel at the Acumatica partner conference this week, my friend and colleague Brian Sommer asked the audience, with a show of hands, how many had smart phones, cloud storage, and a social account like LinkedIn. Each of the three categories elicited a near unanimous response: The very vast majority of partners in the room raised their hands.

Brian then asked the number one money question of the conference: why, if mobile, social, and cloud are good for you, can’t they be good for your prospects and customers too? Light bulbs went on all over the room.

What my two days with Acumatica brought home to me was that the battleground for cloud ERP, and all that comes with it, is more cultural than technological in nature. In fact, the irony of the painful choice that everyone assumes customers must face when they decide between on-premise and cloud ERP is that, for most mid-market ERP customers, is that it’s not really that painful at all. The phase of the overall implementation process in which an SMB ERP instance is set up and switched on – whether as an on-premise or cloud deployment – is relatively small compared to the rest of the implementation. What’s hard is figuring out the business blueprint and process re-engineering priorities, working on data cleansing and migration strategy, defining the new user experiences and always much-needed e-commerce upgrade, setting testing and training regimes for the new functionality, and on and on. All of these tasks take many more cycles for a typical SMB – and put more risk – than the effort needed to stand up a relatively simple on-premise or cloud ERP instance.

In fact, my conversations with Acumatica partners and customers confirmed what I’ve seen elsewhere in the SMB market: by the time an SMB company has decided to make the move to an Acumatica, its business practices and processes have been stagnant for long enough that a whole pile of problems need to be solved first and foremost. Of which, “do we deploy in the cloud or on-premise?” turns out to be a relatively easy problem to solve.

I don’t want to trivialize the cloud vs. on-prem decision, except to emphasize that it’s really not an if but a when and a what question. But, to put some color into Brian’s point, for partners and customers to agonize over the deployment issues when there are bigger, much bigger, fish to fry is to miss the real opportunity. The mid-market has to change, dramatically so, and that means adopting new ways to do business first, and then diving into the broad technology shift taking place across the entire business landscape that will enable these new practices to see the light of day.

I firmly believe that putting ERP in the cloud is a sound foundation for this shift, and I recommend it to any mid-market company looking to get in the game and stay ahead. But – and I say this to all vendors, resellers, VARs, and SIs serving the midmarket – just being in the cloud isn’t enough, because the SMB market needs more than just a new deployment model. (Note to Netsuite: I said when you started that you’d need another hook for your marketing, because the day when cloud ERP would be a commodity will soon be upon us – and from my perspective that day is here now.)

And with that in mind, maybe the way around the simultaneous need for companies like Acumatica to find partners and customers who understand the cloud is to stop talking about the cloud as a deployment model and talk about it as a business change agent. Acumatica CEO Jon Roskill gets that, and joked from the stage that he had heard of one customer who called a partner and asked “for some of that cloud stuff.” The line got the laugh that it deserved. But the fact is that asking for some of that cloud stuff is a punchline is exactly why it matters less than getting customers to ask for the business change that can be enabled by using modern technology to overhaul a stagnating mid-market company.

In the end, I can’t decide whether Acumatica is more archetype or petri dish for cloud ERP, more bellwether or test bed. But it’s important to remember that going to the cloud isn’t just a matter of what and when, it’s also a matter of how. How companies like Acumatica fare in the dual quest for tech and cloud savvy partners and innovation-hungry customers is worth watching: it’s a battle that’s going to be fought by every mid-market vendor for years to come.

 

 

 

 

SAP, Ariba, and The Future of B2B Networks

Can the Internet of Highly Insecure Things Be Trusted to Run the One True Network?

As the dust settles on the recent changes at SAP, and with SAPPHIRE looming large, it’s worth taking a look at what I think will be one of the most interesting, ambitious, and potentially lucrative bets SAP has made in a long time. The bet is on Ariba and its vision for a global, competitor-crushing, B2B network. At stake is nothing short of a major reconfiguration of the global economy, global trade, global service delivery, and pretty everything else that falls under the rubric of B2B commerce as we know it.

In other words, Ariba wants to change how business conducts business. And the Ariba vision is a good one, so good that the question is not whether the shift that Ariba wants to create will happen. That’s a given. The real question is whether Ariba, and SAP, will have the role they hope to have as the progenitors of a brave new world of B2B networks.

Because lurking behind the scenario of building an all-encompassing, all-knowing one true business network are more than a few reasons why Ariba and SAP have their work cut out for them. And, ironically, the problem starts with the very businesses Ariba envisions will reap the benefits of its vision.

The vision is an old one, dating at least to the days of the Silk Road, by way of the Tower of Babel. If only we could transact business in a many-to-many network, where all business transactions and their documents (important detail, more on this in a moment) are mediated in an electronic exchange that automatically allows all participants to interact regardless of what their internal business systems or business processes look like.

In case you don’t remember, we saw the trailer for this movie in the dotcom era. Fast forward a couple of recessions, and now Ariba wants to create a network that connects the global business community in a hub and spoke topography that would translate and otherwise execute business transactions, provide transparency and visibility, and generate an enormous amount of data about what works, and what doesn’t work – and who works and who doesn’t work – in the global economy.

While this idea came up during the end of the last century, Ariba’s ability to execute on the current version is orders of magnitude better than what was possible back then. First of all, Ariba already has a business network for its procurement functionality that is 1.4 million companies strong and generated $500 million in spend last year. Second, it’s now owned by the largest enterprise software vendor in the world, SAP, which lays claim to the bragging rights that some huge quantity of the world’s economy is “touched” by SAP’s software.

(A side comment about this claim is warranted: In truth the actual number is a little squishy – sometimes SAP execs say 60%, sometimes they say 70%. But the actual role of SAP in this much of the global GDP can be misleading, and the importance of that role is easy to exaggerate. As I wrote in reference to Microsoft CEO Satya Nadella’s similar claim about Microsoft’s being ubiquitous in the global economy, just because a vendor is ubiquitous doesn’t mean it’s strategic. “Touched by” doesn’t necessarily “couldn’t take place without”.)

Regardless, that combination of a strong business network base and a strong “touched by” base gives Ariba a credible shot at pulling this off. A common mantra among new customers to the Ariba Network is that a significant number of their existing business partners were already on the network when the customer signed up. One customer told the audience at this year’s Ariba Live user conference that 50 percent of its suppliers were already part of the network when the customer signed up, another told me in their case it was more like 66 percent of their vendors were in the network. That kind of built-in momentum pretty much guarantees the Ariba Network will be able to ramp up fast and grow rapidly.

In addition to enabling the day-to-day transactions that are the bread and butter of the network, Ariba also has the ability to provide some serious analytical services to its network customers. As I have argued many times in the past, the value of these analytical services and the meta-data they create could in many ways outstrip the value of the transactions themselves.

Part of the secret sauce that Ariba can apply to the network is the 15 years of historical data that it can use for analytical purposes. This combination of real-time transaction data and historical data is a data scientist’s dream – and when the majority of the Ariba Network back-end is running on HANA in a couple of years, the dream will take on a luster that is hard to fathom. Modeling, predictive analytics, sourcing and spend visibility, workforce deployment… the list of uses and capabilities is pretty impressive.

Ariba’s take is that this capability needs to be embedded in a single, global network – not geography-specific or industry-specific networks, but a One True Network that will connect the global economy to itself via Ariba and SAP. I’m not sure I agree with that, but it may be a matter of nomenclature as much as anything else – clearly no single entity on the Ariba Network today expects to transact with all 1.4 million of its fellow members, and almost by dint of the physics of the global economy there are discernible sub-networks that have to emerge around specific industries or supplier categories – direct versus indirect materials, aerospace versus durable goods, etc.

But while I do agree that scale is important, and more scale is better than less scale, I have serious questions about whether a single global network can be run effectively for the benefit of all. Some things, as I have said before, aren’t just too big to fail, they’re too big to succeed.

So what could go wrong? Turns out, lots – most of which originate from forces outside Ariba’s control. Much of this Ariba can, at least in theory, deal with, as long as the millions of businesses it wishes to connect are on board with the solutions.

The major problem can be stated in two words: security and safety. One of the ironies we are facing about our current One True Network, the public Internet, is that it’s becoming obvious that we let the genii out the bottle a little too quickly when it comes to basics like the security and safety of our data, personas, and privacy. Of the many many recent breaches in security and safety, the one that involves an actual security service, OpenSSL, is perhaps the most telling, as this service was designed specifically to prevent data from leaking out of insecure websites.

When we add the problems we’re already seeing when we try to expand our vision of the Internet to the Internet of Things – which IMO is looking more and more like the Internet of Highly Insecure Things – we’re finding that both the technological and philosophical/ethical underpinnings of the Internet are a little too loosey-goosey to protect the things that are important to us: our identities, bank accounts, our children’s safety, our trade secrets, our balance sheets, and our privacy, to name just a few.

So imagine if we took this flakey infrastructure and used it to dramatically up the ante for the $72 trillion global economy by not just interconnecting all the businesses in the world – something the Internet does today – but interconnecting their business processes, and by extension, their back offices in a single, seamless Ariba Network running on one of the world’s most sophisticated analytical and transactional systems. The bigger they come, the harder they fall suddenly takes on a whole new meaning.

The creation of a single point of vulnerability, one that, recent events show us, would be genuinely vulnerable to both economic sabotage and industrial espionage, need not stay Ariba’s vision from being realized. But the problems that I believe lurk in creating an Internet of Things based on our current Internet of Highly Insecure Things are as frightening, if not more frightening, when you look at creating an equally insecure business network.

The prescription for avoiding a global business network pandemic is relatively simple, but as I was just saying, its execution won’t necessarily be a piece of cake. The fundamental insecurity inherent in creating an Internet of Things today rests in the fact that vast majority of those things – controllers, sensors, things that spin, to use GE’s parlance – are running old software and old security systems. And old, in the modern world of security and safety, is measured in months and point releases, not years and full version upgrades.

A similar problem exists in the business software world. Older software prevails, particularly in tier two and beyond companies. Security systems are often second rate, if they exist at all, and relatively little priority is given to making systems security and safety a best practice, particularly in terms of protecting the internal network from the outside world. If ordering takeout food from a website is now a vector for hacking, it’s pretty clear that the majority of internal business systems, even the most up-to-date, aren’t secure enough for the modern world.

So, along with its ambitious plans for a one true network, Ariba has to make sure its ambitions extend to an absolutely state-of-the-art security regime. And that’s where the biggest barrier lies. Ariba can build the most secure network the world has ever known, but if its members haven’t upgraded their security software and practices, then Murphy’s Law pretty much guarantees that somewhere in this global network will be at least one, and probably many more, points of vulnerability that are going to make it way too easy to crash the Ariba network. At which point the devastation to the global economy will make the latest recession look like a bull market.

What’s clear to me is that the B2B network concept is going to become the way to do business, but having a one true network may not be the way to go for both organizational and security reasons: independent of the danger inherent in hacking the global economy, setting up a value-added network at the industry level seems to be a more doable task than trying to boil the ocean – or the entire global economy – in a single, very fell, swoop.

I think rather than a single global network, Ariba/SAP should work on tackling some key industries first, and focus on getting this right on an industry scale before going completely global. My assumption is that doing it right in a handful of key industries will take more effort than is obvious today, and in taking the industry route Ariba/SAP can build a more credible story for its vision than one that gambles an excess of vision against an excess of opportunity, and threatens to fall too far short on both in the process.

A final note: none of this makes sense without discussing the key role that documents play in this B2B transformation. When I met with Ariba executives at the conference they didn’t seem to understand the critical importance of having an advanced document lifecycle management system as part of this B2B network. I’m hoping they’ve seen the light in the ensuing months: there is no business transaction that doesn’t involve documents and supporting data, and no business transformation that doesn’t have to deal with those documents and supporting data as a fundamental component of change. (Italics added to emphasize that I think is really really important.)

One of the fundamental services an Ariba network will provide is mediating, transforming, transferring, and otherwise managing the docs and data that support the global economy – and which are the key targets of hackers and other criminals intent on stealing whatever they can. Providing the services that support the full doc and data lifecycle will be a key value add for Ariba, and keeping docs and data safe will be an important part of those services.

The Ariba vision is exciting because of its ability to define the intersection of business, cloud, analytics, and services in a unique way. It’s ambitious because it will eventually force millions of companies to rethink some of their core business processes, and therein lies the final frontier. The easiest thing in enterprise software is to do the same task – or process – a little faster and a little more cheaply. The hardest thing to do is create and promulgate an entirely different way of working, or improve an existing process to the point of effectively making a net new process. Either way people – those annoying humans that we still rely on to do the real work of the global economy – start to balk at change, and groups of people organized in companies tend to balk en masse at change.

In the end, overcoming this net new process effect will Ariba’s biggest hurdle. But even if it starts, as I believe it should, with the easy path of simply automating what’s already being done in a couple of key industries, the problems inherent in the Internet of Highly Insecure Things will need to be dealt with first. Remediating the problem after the fact will mean putting the genii back in the bottle, and that, I fear, will be too big a risk for the global economy to take.

 

 

Bill McDermott’s First 100 Days: One CEO, One SAP

With so much digital ink spilled, much of it hyperbolically, over the management changes at SAP, and with the prospect of more to come, I’ve decided to weigh in on where SAP is today and where it’s heading. If you don’t want to read the whole post, here’s the take home message: plus ça change, plus c’est la même chose.

Let’s start at the top: Management changes are a normal part of business. With former co-CEO and now solo CEO Bill McDermott in charge, it was inevitable that some execs would have to go. What’s important to remember about SAP is that its structure – an executive, a management board and a supervisory board – means that there’s a pretty deep bench that mitigates the loss of any individual, even one as highly placed as Vishal Sikka. Take a deep breath everyone: SAP will soldier on quite well without Vishal.

Expect a focus on finances. As solo CEO at a time of continuing global economic and geopolitical chaos, McDermott has a lot on his plate, but battening down the financial hatches is clearly at the top of the list. So job number one is tightening up on the excess personnel and inefficient processes that have accumulated over the years. Hence some layoffs last week, and probably more on the way – all of which will clear the way for McDermott to hire people where he needs them, not where they happen to have landed following the last acquisition. And you can be sure that Bill wants to look the Street in the eye following his first quarter as solo CEO and prove he’s running a tight ship and improving margins.

Consolidating power also means making sure acquisitions are really acquisitions. The major acquisitions of late – Sybase, SuccessFactors, and Ariba – have had the tendency to act like autonomous entities that are legally part of SAP but either pretend they’re not or pretend SAP was the one that was acquired. (This is an old problem, dating back to the Business Objects acquisition.) I expect to see more layoffs and management changes to reflect the need for McDermott to make sure that, as solo CEO, he’s running a single, unified company.

And you should expect to see more evidence of a one company, one CEO message at SAPPHIRE as well. There are too many examples – HP and Microsoft to name the biggest – of companies that have suffered from an inability to organize around a single brand and go-to-market strategy. I don’t think Bill wants to start his solo CEO career repeating those kinds of mistakes.

HANA, Fiori, Learning Hub, cloud: the innovator’s dilemma at SAP is not “where’s my innovation”, but “how can I execute on all my innovation?” This is a good problem, a very good problem, to have. Executing on too much innovation beats executing without innovation any day (just ask Oracle.) A further reason to acknowledge the legacy of Vishal without bemoaning his departure – unless you thought of Vishal as a detail-oriented execution guy, which means you didn’t really know him.

SAP’s timing on cloud is spot-on. Finally, SAP has come to a new innovation at just the right time. Standalone cloud for the sake of saving capital is giving way to hybrid clouds that need deeper backoffice connectivity in support of deeper business processes than the first wave of cloud providers can offer. Nothing has been sown up for SAP, but its hybrid cloud messaging is resonating with the masses of customers who now, finally, appreciate the inevitability of cloud.

HANA’s success will continue to evolve. It’s clear that HANA didn’t have a particularly great quarter in Q1 – otherwise we would still be hearing about it six weeks after the quarter closed. That’s fine – Vishal’s main problem/attribute is that his reach exceeded his grasp (and good for Vishal… “or what’s a heaven for”, to finish Browning’s famous line), and that goes in particular for his plans for HANA. But no matter, HANA is set firmly in the mindset of the SAP customer base and understood for what it is. It’ll take time to free the collective budgets of the SAP customer base to create a massive uptake for HANA, but if SAP and McDermott can be patient they will be rewarded.

So, from a customer standpoint, I don’t see a whole lot of impact from Vishal’s departure. Product strategy isn’t changing, and in fact, based on what I’ve seen in my SAPPHIRE pre-briefings, things are going to get better for customers in some important ways. For those who bemoan the loss of Vishal’s frankness and openness – and some customers I respect have made it clear those attributes will be missed – I offer the hope that Hasso Plattner sets the cultural norm in that regard, and a frank and open replacement for Vishal will emerge from the seeming void of today. Every good leader needs a voice of truth – or at least apparent truth – to allow the market to vent some steam. I’m sure McDermott knows he has everything to gain by having someone in a senior position building that kind of trust and credibility. And if he doesn’t know it yet, he’ll hear from me and lots of other people about why he needs a point man or woman for this vital role.

For employees, this was far from a warning shot of “more to come”. Of course there’s more to come – standing still is no longer an option for SAP or any company competing in the global economy today. If you want a stable, boring, predictable life, you need to rethink your decision to work for SAP or the entire tech market, for that matter. I know that’s harsh, and something the German works councils don’t like to hear. And I grant them the point. But change – dynamic, and at times gut-wrenching change – is what our industry is predicated on. So, until the revolution comes to upend the status quo, we’re all going to have our guts wrenched on a regular basis.

And this change was predictable – there’s been tons of speculation over the years that McDermott has been grooming himself for a run at the governorship of Pennsylvania, or some such political post. I now realize he’s been grooming himself for a run at the top spot at SAP – and now that he’s arrived, like all new top execs, he’s going to make his mark. So expect more change, it’s part of the process of ushering in new management, and part of the process of surviving in the vicious world of tech.

But also expect some stability in what needs to be a sensible, stable, predictable execution of a myriad new products and strategies that have been cooking in the SAP kitchen for the past decade. It won’t be easy, it won’t even necessarily be pretty, but the real drama at SAP isn’t in the events of the past two weeks. It’s in the events to come, the new products to be launched, the competitors to beat or be beaten by, the missteps to correct. That’s going to provide enough drama to make the recent past seem boring and uneventful. Which is exactly as it should be.

Security, Privacy, Big Data, and Informatica: Making Data Safe at the Point of Use

It’s hard to find a set of topics more relevant to the interplay of technology and society than security and privacy. From Glenn Greenwald’s new book on NSA leaker Edward Snowden to the recent finding of a European Union court that Google has to drastically alter the persistence of user data in its services, the societal fallout from the Internet as it enters its Big Data phase is everywhere.

So it was with no small amount of interest that I sat through the first day of Informatica’s user conference last week, listening to how this former somewhat boring and still very nerdy data integration company is transforming itself into a front-line player in what has become an all-out war to protect the privacy and security of our companies and persons.

The position of Informatica is simple: for optimal usability and control, manage data at the point of use, not at the point of origin. Companies still get to run their back-end data centers using all those legacy tools and skills the IT department cherishes, but when it comes to managing the multi-petabyte world of wildly disparate data from every conceivable (and a few inconceivable) sources, trying to manage, massage, transform, protect, reject, and otherwise deal with data at the source is a Sisyphean task best left to the realm of mythology.

Of course, it’s still easy to walk out of a presentation like Agile Data Integration for Big Data Analytics at GE Aviation and miss this not-so-hidden message: GE Aviation tried doing data transformation at the source for the dozens of engine types and thousands of engines GE Aviation monitors, and realized after pushing that boulder up the hill that it was better to do the transformation as the data were being loaded in a “data lake” for analysis. Faster, more agile, better results were the key take-aways from GE Aviation’s efforts.

As the conference wore on, the customer stories and the announcements of new capabilities like Project Springbok, the Intelligent Data Platform, and Secure@Source, it became clear that Informatica’s brand is poised to become synonymous with something far removed from the collection of three-letter acronyms – MDM, TDM, ILM, DQ, and others – that characterizes much of Informatica’s messaging today.

The big picture problem that Informatica solves is a not-so-hidden side of the Big Data gold rush now under way. As data grows exponentially in quantity and sources, the ability of companies to manage those data diminishes proportionally. Indeed, what constitutes “managing” data itself is changing at an unmanageable clip.

In the new world of Big Data, data quality has to be managed along five main parameters: is it the right data for the job, is it the right amount of data, is it in the right format to be useful, is its access and use being controlled appropriately, and is it being analyzed and deployed appropriately?

These big, broad parameters in turn beg  a whole set of questions about data and its uses: data has to be safe and secure, it has to be reliable and timely, it has to be  blended and transformed in order to be useful, it has to be moved in and out of the right kind of databases, it has to be analyzed, archived, tested for quality, made as accessible as necessary and hidden from unauthorized use. Data has to journey from an almost infinite number of potential sources and formats to an equally infinite number of targets, pass increasingly rigorous regulatory regimes and controls, and emerge safe, useful, reliable, and defensible.

Our data warehouse legacy treats data like water, and models data management on the central utility model that delivers potable water to our communities: Centralize all the sources of water into a single water treatment plant, treat the water according to the most rigorous drinking water standard,  and send it out to our homes and businesses. There it would move through a single set of pipes to the sinks, tubs, dishwashers, scrubbers, irrigation systems, and the like, where it would be used once and sent on down the drain.

But data isn’t like water in so many ways. Primarily, big data comes from many sources in many many different formats, and desperately requires an enormous quantity of work before it can be useful. And being useful is very different depending on which data is to be used in which way.  Time series data is useful for spotting anomalies, sentiment data has a lot of noise that needs to be filtered, customer data is fraught with error and duplicates, sensor data is voluminous in the extreme, financial and health-related data are highly regulated and controlled. And if you want to develop new apps and services, you’ll need to figure out how to get your hands on a data set for testing purposes that accurately reflects the real data you’ll eventually want to use without actually using real data that might have confidential or regulated information in it.

Trying to deal with these issues as data emerges from its myriad sources isn’t just hard, at times it’s impossible. All too often the data a company uses for mission critical processes like planning and forecasting comes from a third party – a retailer’s POS data or a supply chain partner’s inventory data – over which the user has no control. All the more reason why Informatica’s notion of dealing with data at the point of use makes the most sense.

So where does Informatica go from here? Judging by my conversations with its customers, there’s a huge market demand, though much of it is not necessarily understood in precisely the terms that Informatica is now addressing. Data at the point of use issues abound in the enterprise, the trick for Informatica is to see that its brand is identified as the solution to the problem at all levels of the enterprise.

Right now there are lots of ways in which these problems are solved that don’t involve Informatica – I was just at Anaplan’s user conference listening to yet another example of how a customer is using Anaplan’s planning tool to do basic master data management at the point of use by training business users to spot data anomalies in the analytics they run against their data. Using Anaplan to do this isn’t a bad idea – other users of planning engines like Kinaxis do the same thing – but Informatica can and should make the case that planning is planning and data management is data management.

Doing this level of analysis at the point of use is – back to the water analogy – akin to testing your water for contamination right before you start to cook. Wouldn’t you rather just start the whole cooking process knowing the water was safe in the first place?

Moving Informatica from its secure niche as the  “data integration” company to something a little more innovative and forward looking will take some nerve: It’s not clear that Informatica’s investors get it, but then again the investor community tends to like the status quo if it delivers quarterly numbers even if the long term prospects are dimming (c.f. Hewlett Packard).

This may be a time for a little leadership, and not followship, when it comes to the question of where Informatica has to go next. The customers are ready for this new vision, and the market is too. With so many different vendors vying for the opportunity to solve these problems, the time for Informatica to strike is now. This is one Big Data opportunity that won’t wait.

The Windows Phone Dilemma: Are Crapps All that Matter, or Can Dynamics Help Save Microsoft’s $7 billion Nokia bet?

It’s almost ironic that using a Windows 8 phone is actually a major geek credential – albeit geek more in the mold of driving a DeLorean than tooling around in a state of the art Tesla. But as a Windows 8 phone user for the past five months, I can say that no one notices these days when you have a new iPhone, but running around with a Windows 8 phone certainly draws comment, a good deal of it polite, if not positive. Perceptions aside, my Nokia 928 and its software are a pretty damn good tool for work, and as a business tool it’s pretty much on par with my old iPhone – albeit not a perfect one.  And, if you put the larger form factor of the Nokia product line into the equation, the extra real-estate makes a huge difference in my day to day work and consumer life.

The work side of Windows Phone has some important things working in its favor, but the play side is a different story. In so many important ways, from a dearth of apps to stupid little things like the fact that Windows phones can’t show Amazon Prime movies, Microsoft’s Windows 8 phones just don’t compare to iOS or Android phones. The myriad lacunae in the consumer side make the numbers so dramatically stacked against Windows 8 phone that many pundits are wondering how Microsoft can ever make good on its phone strategy – a strategy that, independent of the $7 billion Ballmer-bucks it took to acquire Nokia, is essential to the ultimate success of the post-Ballmer Microsoft.

The answer isn’t simple, but it’s also clear that nothing simple is going to succeed in overcoming the lead currently enjoyed by Apple and Google (and Samsung, while we’re at it.) But I think there’s a direct, albeit complicated way out of this conundrum: instead of a frontal assault in the consumer market against two very large and dominant players, Microsoft should use a flanking maneuver against the Apple/Google/Samsung axis by establish a solid beachhead in the enterprise and driving its success from there to the consumer market. Granted, it goes against the received wisdom about consumer/enterprise convergence – but that wisdom dates all the way back about to 2010 or so, give or take a few months. So not exactly the best of historical models to follow.

Making good on reversing the tide roiling against Windows Phone is where  Dynamics comes in. Leading the charge in the enterprise is definitely a role that Dynamics is already playing for Microsoft, a role that was in evidence at last week’s Dynamics Convergence conference, and it’s a role for Dynamics that has a lot of important things going for it.

Bucking the current consumer/enterprise convergence story shouldn’t be as heretical as it sounds. The phone market, particularly the smart phone market, is still a very nascent market stuck in its teething phase, and we have no way of knowing whether the enterprise/consumer influence model can be bi-directional or is forever jammed in a forward gear. What we do know is that the history of the mobile market in general is one of rapid turnover and the sudden death – and humiliation – of companies that scant months earlier were sitting exactly where Apple and Google are today. Do the names Blackberry and Palm ring a bell? Got a Symbian phone, anyone? Current market position – regardless of enterprise/consumer tidal flows – is no indicator of future position. In a market in which the future reimagines itself quarterly, that’s saying a lot.

If the flow of influence can go from the enterprise to the consumer, then Microsoft Dynamics can be a major part of the current, a fact that was on broad display at Convergence. Perhaps the best and most interesting example was the demo by Delta Airlines of the flight attendant point-of-sale systems the airline has deployed based on a Windows 8 phone platform. Every time you buy a drink or snack on Delta, your card is swiped on a Windows 8 phone and the transaction is connected via on-board Wi-Fi to a Dynamics AX system that manages credit card authorization, inventory and billing. Delta can also upsell unused premium seats after take-off using the phones, and has plans to eventually sell Broadway tickets and help consumers buy other goods and services on board as well.

This direct from ERP to phone POS connection is the kind of enterprise chops that Microsoft has in spades. Microsoft has been a POS vendor since the early days of Windows,  back when the only Google on the planet  was spelled googol and represented a big number with a hundred zeroes trailing behind it. Microsoft’s ability to offer a single platform for enterprise apps that span the mobile, desktop, and back-office world is second to none, even if the ultimate goal – a single code base for all three deployment models – is still a year away. No other phone vendor can support the holy enterprise trinity of mobile, desktop and back-office as well as Microsoft. The fact that its enterprise back-office can be delivered in the cloud via Azure is an added bonus.

Is this enough to propel Windows Phone to greater prominence? Probably not by itself. Microsoft’s Window Phone strategy is one of the more dramatic legacies of the pre-One Microsoft era. Separate codes bases, separate strategic directions, obvious technical gaps (synching my Windows 8 Phone to Office 365 doesn’t tend to work as seamlessly as it did with my iPhone) and that massive lack of apps are clearly more than a little Dynamic mojo can overcome.

But these and other gaps are being closed rapidly. The one that may be the hardest is the apps gap  — there really is no way to compare what’s available on iOS and Android to the slim pickings available on Windows 8 phone – unless you look at the Microsoft platform as an enterprise-first platform.

In that guise, it’s easy to see much of what iOS is famous for – and I’m just judging from what pops up in the Apple Store and in online “top iOS apps” list – are the kind of apps that from an enterprise perspective are better referred to as call crapps – apps that are more likely to help you pass or waste time than do something productive.

Nothing wrong with wasting time, unless when you’re at work. Crapps at work are the bane of productivity, and half of what I don’t like about BYOD comes from the availability of smart phones to suck productive time from our work lives. (The other half comes from the obvious and as yet unsettled security problems that come  from BYOD policies, particularly for the largely unsecured Android platform.)

This makes the apps gap a bit of a virtue for Microsoft, and when you add a superior sense of security  and an at least theoretical adherence to a much more rigorous privacy model than either Google or Apple ascribe to, Windows Phone starts to make sense in the enterprise. Add to that the mobile-ready enterprise apps and cloud functionality that Dynamics brings to the party, and suddenly Windows Phone starts to look like an enterprise leader in the making.

An interesting detail in the Delta deployment is that the off-the-shelf Nokias they are using have no cellphone contract – they’re Wi-Fi-only devices. That not only saves money, but also places a healthy restriction on their use. This makes a ton of sense for a device that’s transmitting thousands of credit card authorizations on the 5000 flights Delta provides each day. Restricting consumer-like usage patterns in an enterprise device makes sense: In the post-Target data breach era, not having funky personal apps that can leak data on a POS device is hugely important.

The good news for Microsoft is that the smartphone market in the enterprise is still up for grabs: while the iPhone is all over the place in the enterprise, its role as a strategic platform is less well-established (ubiquitous doesn’t equal strategic, it’s important to note). This is particularly true in the enterprise, a place where Microsoft’s biggest smartphone rivals – Google and Apple on the OS side, Samsung and Apple on the hardware side – have traditionally lagged Microsoft.

How much do these rivals lag in the enterprise? My favorite example comes from the embedded OS market. A little known fact is that most hand-held enterprise devices  — RFID readers, warehouse scanners and the like – run an ancient Microsoft OS called Windows CE. As CE – based on Windows XP – aged gracelessly and Window 8 loomed on the horizon, embedded developers clamored for a new OS from Microsoft, largely to no avail. Years literally passed before Microsoft released a Windows 8 Embedded preview in November 2012 that is now part of what is called Windows Compact 2013.

During the gap years, if Apple or Google had wanted to make their own flanking inroads into the enterprise, a concerted effort towards an embedded OS would have been relatively easy. Microsoft pissed off a huge number of developers, ISVs, and VARs with its devil-may-care, we’ll upgrade CE when we get around to it attitude, and pretty much every one I talked during that time would have been happy to consider an Apple or Google alternative. The fact that neither company took the bait shows how limited their enterprise vision really is.

Will a flanking maneuver to the enterprise pay off for Microsoft? I’m certain it will, but the bigger question of whether it will be enough to drive Windows Phone into the consumer space remains hard to answer. But it’s important to remember that the phone market refreshes much more quickly than the PC market ever did (I’m writing this on a laptop – still a top of the line touchscreen, hybrid tablet, Windows 8.1 machine – that I bought three smart phones ago. I’m pretty confident I’ll upgrade my current phone before I upgrade my current laptop) and all those iPhones and Samsung Android in phones in the enterprise today will be ready for an upgrade in a year at most.

Windows Phone, meanwhile, will soon overlap with Windows tablets and desktop machines, and the ability to build apps that span a phone, tablet, desktop, and back-office use case will be uniquely Microsoft’s. Those apps will be unlike anything that can be done with iOS or Android. As these first multi-platform apps and business processes roll out, their functionality, security, and cross-platform usability may help send a standard for consumer apps that Microsoft’s rivals will be hard-pressed to compete with.

As with everything new and different, the answer will boil down to execution – how well Satya Nadella can embrace the vision of a unified platform, how well Microsoft’s infamously siloed operations can continue the One Microsoft momentum and deliver the goods, and how well its partners will continue to build the last mile or yard of functionality and deliver it to the customer – enterprise or consumer.

But the seeds of change are planted, and Dynamics clearly has a role to play that may be more important than just securing the enterprise. It may be an exaggeration to say one day that the battle for the future of Microsoft was won on the playing field of Dynamics. But five years from now that might be more true than anyone will admit today.