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FUD in the House of SaaS – More on Suites

Recently I wrote about the evergreen Best-of-breed vs. Integrated All-in-One Suite debate again, arguing:

Call me “old school”, but I also believe in the value of having one tightly integrated system for most business needs, and I believe it’s true not only for large corporations but much smaller businesses.  I don’t have CIO’s to back it up, but that’s exactly the point: I am talking about small businesses that don’t have CIO’s at all – in fact they  likely don’t even have full time IT stuff ( a good reason for SaaS in the first place), so they clearly lack the bandwidth to deal with integration issues and multiple system providers.

It wasn’t just hypothetical speculation, what really prompted my post ( and hence the reference to CIOs) was a study conducted by Brian Sommer who contacted several large corporate CIOs about SaaS implementations, and found that despite improvements in technology, and easy integration by firms like Boomi, Pervasive ..etc, CIOs still prefer to buy an integrated suite of applications and deal with one vendor for most of their needs.   It’s not what we think, it’s what they do – and they are the customers.  Says Brian:

But, customers will do what customers want to do.

Amen. But my post attracted a detailed comment from a PR professional (a fact that took a little digging to discover):

… the Suite approach requires the business to make compromises in areas of the business, and only works if you can run your whole business on that one suite – as soon as you need some other specialist system, or acquire another operation that you need to integrate, you’re in trouble because Suites, by definition, are not designed to make integration easy…

…Force.com essentially brings cloud apps together as a Suite by offering exactly the combination of tight integration, common interface and flexibility. Many businesses can already find everything they need on the platform, even the last critical element required for a serious business system: enterprise-class finance 😉 Many companies, especially smaller ones, don’t need a full ERP suite. They need a handful of critical applications that can grow with them.

Wow… where do I even start?   Perhaps by the only statement I can agree with:

Many companies, especially smaller ones, don’t need a full ERP suite. They need a handful of critical applications that can grow with them.

Yes, of course I agree.  In fact I am a small business myself, and guess what, not only I don’t need ERP, I don’t even need or use a CRM system, or one for business accounting.  The only lightweight business system I use is invoicing (happens to be Zoho Invoice), but frankly, I could get away without it.  Yes, some small businesses will want Accounting, and Accounting only, others will need CRM and nothing else – there are many good choices for them. And yes, FinancialForce.com (which the commenter represents) is great, and we’ve given it ample coverage @ CloudAve.

But that’s where reality ends, and plain old FUD begins. There’s nothing inherent in the “Suite approach” that would prevent customization, integration with additional systems, extension by third party apps.  In fact the key difference between an integrated Suite or discrete  point applications is just how much of the core business they cover natively before  add-ons are required.

And here’s the ultimate irony: I was reading these “ex-cathedra” statements (that’s nicer words for BS) while sitting at NetSuite’s SuiteCloud conference, that was all about working with development partners, releasing a new version of SuiteCloud, the app development and integration platform along with SuiteFlow, a graphical modeling and customization tool, and a bunch of other  announcements all geared to making and maintaining a thriving partner ecosystem, that builds on the core NetSuite functionality and delivers additional value to customers.

In fact the evening before the conference, CEO Zach Nelson spent an hour busting industry myths.  Now look at the slide above: he did not talk about NetSuite specifically, he was advocating Cloud Computing / SaaS in general.  That’s the somewhat usual formula:  myth spread by defenders of the “old model” busted by the innovators – who would have expected the old-time FUD served up by a PR flak for another SaaS provider… 🙁

At the conference itself I saw several customers presentations, like that of Campus Villages which replaced 38 instances of MYOB + Intuit MRI with NetSuite OneWorld, including extensions like Nolan Fixed Assets and Electronic Payments, Celigo Smartclient, and are currently evaluating Adaptive Planning.   Those are functions not provided by NetSuite, so guess what – they add third party apps, just like they would to Coda or any other system.

The key criteria for any software company trying to penetrate the SMB market will be vertical industry epxerience, and NetSuite has clearly stated their industry experience is Software and Services – everything else is open to the ecosystem.  Case in point is manufacturing:

NetSuite RootStock MRP

Suites are not customizable?  Just look at  Rootstock, a third-party developer house that created an entire MRP system on the  SuiteCloud platform.  If that’s not living proof of the system’s expandability, then I don’t know what is…

A key difference between the Force.com / Appexchange and NetSuite / SuiteCloud approach is that the former facilitates the creation of any product / utility that you can pick up from a marketplace, while programs developed on SuiteCloude all tie into the NetSuite system very closely – not only on the data but also on the UI level – i.e. the additional business functionality becomes available within the NetSuite UI. In other words they run so smoothly, the fact that parts of the system were written by a 3rd party is hardly transparent to the end user – which is just the way it should be.

So in the end, there is no hard rule that says Suites are inflexible, non-expandable: there only well-written and poorly written Suites, just like well-written and poorly-written point applications.  There will be businesses who only need a few point apps, and should not think of a Suite, and others who will benefit from the All-in-One approach.  It’s their choice.  What they need is honest information, not FUD.

(Cross-posted @ CloudAve)

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If it Swims Like a Duck and Quacks Like a Duck, then it Probably is a Duck. The Anti-SAP Duck.

RubberDuck

Two SAP-related conferences will run literally next door to each other in Boston next week.  One, which I am attending is the SAP Influencer Summit where analysts and the media get to meet SAP execs – the other is what some of us quickly dubbed the Anti-SAP Conference.

The Sapience conference  is focused on “Alternatives for leveraging  your investment in SAP”.  Fellow Enterprise Irregulars Vinnie Mirchandani and Ray Wang will both be presenting – no surprise there. Vinnie has long earned the nickname Vinnie Maintenance (well, when he’s not Vinnie Merchantsmile_wink) for his crusade against bloated integration and maintenance costs, which “can make up 70 to 90% of TCO in an SAP shop” and Ray also has a track record of taking the customer side.  No wonder the two are now working together as Enterprise Advocates.

Are enterprise software fees outrageously high?  Probably… see my old post on how SaaS subscription can be half of only the maintenance component of traditional software’s TCO.  Do System Integrators, Consultants overcharge?  Probably … although let’s be real, they charge whatever they can get away with, i.e. whatever the market allows. Hence alternatives are good – SaaS, nimble, less expensive third party providers and even strategic client-side consultants like Vinnie and Ray who can make a decent living on advising customers on how to reduce their ERP TCO.  The market is all about competition and and market players have to take sides, no shame in that.

But then I don’t understand why Vinnie and Dennis Howlett are vehemently denying the anti-SAP nature of Sapience. I prefer to call it what it is – just take a look at the sponsor list:

It’s a who is who of SAP’s competitors – now let’s look at some of the Conference Speakers:

  • Craig Conway, PeopleSoft’s last CEO before getting swallowed by Oracle
  • Jan Baan, Founder of Baan, a “hot” SAP competitor in the 90’s
  • Paul Wahl who left SAP for Siebel, and took the creme of SAP’s leadership at the time with him

golden oldiesThey share one thing in common: all former SAP competitors but also representative of the very same “fat” business model they will no doubt speak out against.  They are joined by several former SAP Execs and current service providers.

Zach Nelson, CEO of NetSuite is a great competitor and one who does not miss a chance SAP’s fumbling with their own SMB SaaS offering, BYD offers him.

It’s hard to not see what the conference organizer, Helmuth Gumbel assembled here: the Anti-SAP All Star Band.  Oh, and let’s not forget how Dennis Howlett had introduced Helmuth: SAP’s feet put to the fire.

How about the timing?  If you believe it’s pure coincidence that Sapience coincides with the SAP Influencer Summit both in time and location, I have a bridge to sell you.  It’s just as “accidental” as Netsuite’s SAP for the Rest of Us Party was during SAPPHIRE 2006, right across the Convention Center.   Nothing wrong about guerilla marketing, but why be shy about it?

A conference designed to steal some thunder from SAP’s Summit, at the same time and place, sponsored and keynoted by SAP’s competitors, and it’s not “anti-SAP”?  C’mon… you know the quacks and all.smile_wink But don’t get me wrong: Sapience may very well be a healthy contribution to the SAP ecosystem – it just does not need any whitewashing.

You may also want to read the healthy debate that developed in the comments to Vinnie’s post.

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(Cross-posted @ CloudAve )

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Startups: Challenge the Market Leader, or Ride With It?

“A new spam blocker called Defensio is attempting to improve on the standard set by Automattic’s Akismet, the default blocker for WordPress” – reports TechCrunch.

But they are planning to do more than improve… they want to replace Akismet. From Defensio’s FAQ:

  • Is Defensio a replacement for Akismet?
    Yes…
  • Will Defensio outperform Akismet?
    -We can’t make any promises (sorry), but our early testing suggests that Defensio’s performance is very, very good. As with any adaptive filter, it will only improve with time.
  • My accuracy is not satisfactory. Why?
    -If you have recently installed Defensio, then try to be patient. The filter’s learning algorithms take some time (usually no more than a couple weeks) to become very effective…
  • Does Defensio work in conjunction with other spam filtering plugins?
    Not really. We highly recommend that you use Defensio as your stand alone spam filtering solution.

And therein lies the rub. Other plugins, like Spam Karma 2 may also outperform Akismet at times, but they don’t replace it; instead, they work together quite well. A status change in either takes effect in the other. Now, I don’t know how good Defensio will be, but it takes a huge leap of faith to give up the proven standard (i.e. Akismet) and replace it with something that may need weeks of learning, as we’re warned by the FAQ. They lost me as an early user right away.

The bigger question here, for software startups: should you start challenging the market leader right at launch, or ride with it, grow as part of the “ecosystem”, then perhaps declare you’re better and no longer need them after you got traction?

Related posts: Weblog Tools Collection

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Enterprise Bloggers, Openness and a Thriving Ecosystem

I started this post a week ago, than canned it, not wanting to be part of the “storm in a teacup“, created by Oracle’s announcement that they would open up their annual OpenWorld conference to bloggers for the first time. The software giant also actively reached out to 30 or so bloggers, including several of my fellow Enterprise Irregulars.

It appears that most EI’s will not attend, partly since Oracle does not pay for expenses, partly because there is no word about access to Executives. More important than the expense issue was the reasoning:

“We’re not picking up travel costs or expenses, sorry. This will keep you impartial. If you see me, I’ll give you a pat on the back, how’s that instead?

Ahhh…the enterprise bloggers must be a bunch of prima donnas, used to getting their full expenses paid at SAP’s annual conference and other events.. SAP “bought them” and they are biased, right? Wrong.

The reality is that unlike the press and analysts, the group bloggers are often lumped into, may of us are independents or are in small businesses, don’t have corporate expense accounts to lean on, and simply can’t afford to travel to conferences on our own. Even on a fully reimbursed trip, taking 3-4 days off business is a significant sacrifice. Of course that’s the bloggers’ side, why should Oracle care? Whose loss is it anyway?

What does SAP get for the not-so-negligible travel budget they spend on enterprise bloggers? The one thing they don’t get is bias, “loyal”, positive reviews.
Fellow irregular and ex-Gartner Vinnie Mirchandani can hardly get more critical, regularly beating up SAP on issues like pricing, maintenance, innovation (or lack of) – yet he is invited back to all SAP events. Fund Manager, former SAP investor and blogger Jason Wood is also a regular at SAP events, which certainly does not prevent him from expressing his doubts / concerns. Dennis Howlett is no exception, and the list could go on.
SAP’s recent announcement of their new hosted SMB solution, Business ByDesign is another good example. While most of the media reprinted SAP’s press release, you won’t find it anywhere in the “enterprisey” blogs: what you will find instead is independent thinking, analysis (right or wrong) and dialogue. The bloggers’ verdict was generally positive, mostly about the feature set/ technology, but several of us expressed doubt regarding execution: SAP’s market segmentation, potential self-cannibalization, ability to create mobilize a new, agile ecosystem capable to profitably execute in the new high volume/low price model, and help SAP reach their market goals.

Not exactly paid-off, loyal PR if you ask me… could it be that SAP knows something about the value of dialogue, in fact outright debate? They go the extra mile to provide bloggers with information, engage them actively. Round-table discussions with Hasso Plattner, Henning Kagermann, Leo Apotheker, Peter Zencke (did it all start with Niel’s chance encounter with SAP’s CEO?) and several other executives are highly appreciated, and believe me, it’s not one way PR-style briefing either. James ‘Redmonk” Governor says it best:

“As I have said before, you can buy my thinking, but you can’t buy my opinion.””

At SAP’s Teched 07 Conference James publicly disagreed with Peter Zencke about market segmentation, and the world did not come to an end; in fact the SAP Board Member happily continued the debate at the bloggers chat afterwards. Two weeks after the “incident” James moderated several sessions at Teched Europe, on SAP’s invitation. Don’t we all know companies where such behavior is the sure way to lose access and get yourself uninvited forever?

Bloggers are critical, opinionated, sometimes right, sometimes wrong, but never dull. But there’s a bigger picture here, other than external communication. I believe it’s not coincidental that the company that understands the power of dialogue has the most thriving online community I’ve seen in enterprise software.

Two years ago, when the external “Bloggers Corner” program started the SAP Developer Network (SDN) counted close to 600K members – today it’s 900K. It’s younger sibling, the Business Process Expert (BPX) network counts 200 thousand members. Between the two, discounting overlaps, it’s fair to say 1 million members participate in SAP’s online communities. This includes blogs, forums, wikis, videos..etc. SDN+BPX is a thriving support system: over 5,500 issues are posted daily, and the average response time is 20 minutes.

I think SAP has discovered something unique: they don’t have to give the code away yet they enjoy the benefits of “Open Source-like community“. The highest rated contributors don’t have to look for projects any more, they are in high demand. SAP Ecosystem Becomes a Booming Economy – declares research firm IDC.

The Ecosystem has become an organic part of how SAP conducts business, and there is no turning back. SAP Executives are quite aware that competitors comb through the SDN / BPX entries daily, and they certainly lose some competitive edge – but there is no other way to “run” the ecosystem. The Genie is out of the bottle, and they don’t want to send him back.

The role of the ecosystem will become even more important now that SAP is more aggressively pushing into the mid-market. This is a high-volume, low-margin market, sales, deployment, support all different from what SAP traditionally knows. Successful partnering will make or break it, and apparently SAP understands it.

I’ve come a long way from the original issue of blogger participation at Oracle’s OpenWorld, and not without reason. This issue has sparked a debate, stirred up some emotions, and I don’t want people to think it’s all about greedy (or hungry) bloggers whining about not getting their expenses paid. Nor is it a SAP Good Guy, Oracle Bad Guy issue. Both companies have their own culture and will continue conducting business their own ways.

I believe Oracle’s first approach to bloggers (late or mistaken as it is) is a welcome move, and it’s good to see they are open to learn and improve:

“This is new territory for a lot of us, and personally, I’d like to hear a lot more opinions and suggestions before I support one path or another.”

Some people in Oracle had to fight for this and they should not be given a (verysmile_wink) hard time. I certainly hope the initiative will not get shut down due to the initial negative feedback. I also hope Oracle management will realize how one step leads to another and that openness actually improves business in the long run. I used SAP as the positive example, because that’s the best showcase I know, and they are pioneering in this field – but if you know any other examples for actively embracing community, please share it in comments below.

Oh, and if you happen to be in the San Francisco Bay Area, by all means, check out Lunch 2.0 @ Oracle tomorrow.

Update (10/24): …and not a happy update, for that matter. Just as I praised SAP for “getting” social media, here’s this disturbing post from Steve Mann, VP at SAP’s Global Marketing. Apparently SAP HR wants him to remove the link to his personal blog from his corporate signature. I guess I should correct my statement: SAP gets social media … just not everyone, all the time smile_sad