Connecting the dots ...
Today’s big news is that HP is dropping Siebel CRM now owned by Oracle in favor of Salesforce.com.
It’s a bit unfortunate that this is presented in the context of personal ego wars – unfortunate, but understandable, considering that Oracle has been on a warpath with HP ever since former CEO Hurd got ousted, in fact they launched a global manhunt for incoming HP CEO Leo Apotheker. But ego clashes make good stories. 
That said, the real story …
(Cross-posted @ CloudAve » Zoli Erdos)
Twitter is abuzz this morning with MySQL news:
What these messages refer to is that Oracle dropped InnoDB from the free Classic Edition, it is now only available starting with the $2,000 Standard Edition. A few days ago we heard support prices were increased – none of this should come as a surprise, the writing had been on the wall ever since Sun’s acquisition by Oracle. And of course it’s not only MySQL, all Open Source products are on uncertain grounds – there’s a reason why many of the OpenOffice folks split off and are now supporting the new fork, LibreOffice.
I don’t pretend to be the Open Source expert, thankfully we have one, Krish, who recently chimed in on the issue. What I want to do this morning is to take this opportunity to publish an internal email from a smart software CEO who instructed his teams to migrate away from MySQL several months ago. While he wishes to remain anonymous, this is not a leak, I am publishing it with his permission. (Yeah, I know, a leak would have made this story a lot juicier…). Here’s the email:
I posted this internally to an employee question why I am asking our company to move away from MySQL towards Postgres (instead of Ingres).
I would answer the “Why not Ingres” with one word: GPL.
Let’s step back and think about the “People are angry with what Oracle is doing with MySQL” statement. Actually why could Oracle do this with MySQL? How was it possible for Oracle to do this? After all MySQL is “open source” and could be “forked” right?
To be honest, I had long anticipated this move on the part of Oracle…
(Cross-posted @ CloudAve)
I envy software marketing types. They get to stay kids forever: pull pranks and even get paid for it.:-)
Today’s example comes courtesy of TechCrunch: PayPal competitor WePay dropped a 600lbs ice block at the entrance of the Paypal developer conference. They got chased away and Moscone security removed the ice block. My question: who gets the money? Those are real dollar bills in the ice…
But don’t for a minute think it’s only at startup-land where 20-somethings rule.. the enterprise gray-hairs like pranks, too. Below are some gems from the past.
NetSuite raining on Sage‘s parade conference:
NetSuite is quite a regular at competitor conferences, see their trucks at SAP’s annual SAPPHIRE conference:
(Cross-posted @ CloudAve » Zoli Erdos)
Image via Wikipedia
Are Open Source and Cloud Computing anachronistic enemies? You’d think so, if you read GNU creator Richard Stallman’s interview in The Guardian:
Cloud computing was simply a trap aimed at forcing more people to buy into locked, proprietary systems that would cost them more and more over time.
"It’s stupidity. It’s worse than stupidity: it’s a marketing hype campaign,"
Sure, there’s a lot of marketing hype as it is typical with any major technological advancement, especially as it reaches the peak of its hype cycle. But I think Stallman loses sight of who the “enemy” is.
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Image by wicho via Flickr
The Enterprise Irregulars took over CloudAve… well, sort of, forcing us to release an article early. Eran Kampf had a post lined up for Monday morning about Larry Ellison’s Cloud Envy, when all of a sudden fellow Irregular Anshu Sharma had a humor attack and came out with a hilarious post. All he did was replace Cloud Computing with Fusion in Larry’s famous rant, and voila!:
"The interesting thing about Fusion is that we’ve redefined Fusion to include everything that we already do. I can’t think of anything that isn’t Fusion with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?"
"We’ll make Fusion announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of Fusion other than change the wording of some of our ads. That’s my view."
Wow. This variant of Ellison’s speech makes a lot of sense, referring to his own elusive Fusion applications. Even Vinnie Agrees. 
I had already spent half a decade implementing SAP solutions in the 90’s when I finally got enlightened, learning the “proper term” for what I was doing: ERP, as in Enterprise Resource Planning. The term was coined by then Gartner Analyst, now Enterprise Irregular Erik Keller. Now another fellow Enterprise Irregular, Sig Rinde introduces a new interpretation of ERP: Easily Repeatable Process. Of course he contrasts that with his new acronym, BRP (not to be confused with BPR, another 90’s favorite), which means Barely Repeatable Process. BRP is what Thingamy, Sig’s lightweight, extremely adoptable system attempts to address. But it’s a very-very tough sell…
ERP traditionally addresses the core, standard, and as such repeatable business processes. Whatever it can’t handle are the exceptions: processes to be handled by knowledge workers outside the realm of ERP, by traditional means: phone calls, spreadsheets, creative thinking and a lot of emailing back and forth. Exceptions may be a fraction of business volume, but they are what corporate employees spend most of their time resolving. If that’s the case, knowledge workers who come up with innovative solutions may consider it a good practice to document them just in case the “exception” ever occurs again… and if it does a few times, well then it’s no longer an exception, but a (Barely) Repeatable Process.
Wikis in the Enterprise are a simple yet effective solution to manage such BRPs: they facilitate collaboration of all knowledge workers involved, allow some structure (structure is helpful when not pre-imposed but flexibly created) to organize data and finally, as a by-product they serve as documentation of the solution for future re-use.
Neither process-driven heavyweight systems like ERP, nor innovative, lightweight collaboration tools like wikis are the one and only mantra for most businesses (see my previous rant on “you can’t run your supply chain on a wiki“), they have their own place and should complement each other. Standard business processes and exceptions are not black-and-white opposites either: it’s a continuum, and halfway is BRP. If ERP (in the traditional meaning) tries to address to many of theses BRPs, it gets overly complex (it already is!), hard to configure and use.
This is the dilemma Sig’s system, Thingamy addresses. It’s neither free-form collaboration, nor ERP: it’s a business system framework, that allows you to model and define business processes: a tool to create your own custom-made ERP, if you like.
And therein lies the rub. Most business users don’t want to create software. They want to use it. This was the problem that caused the demise of Teqlo: the unfunded, unproven belief, that users actually want to interactively create their tools. No, they want to deal with the urgent business problems (the BRP), using whatever tools are readily available.
Thingamy’s dilemma is finding the customer: it certainly won’t be the business user. A modeling tool, simple it may be has a learning curve, dealing with it is a distraction to say the least. Thingamy’s likely “owner” would be corporate IT which would have to create processes on demand. But we all know what happens if you need to call IT to create a “program” for you.
Thingamy could possibly be a handy tool for consultants, system integrator firms – but they all have their own army of programmers, toolsets..etc, which makes it an awfully hard sell, IMHO.
Thingamy is no doubt an elegant solution, I just don’t see the mass market need for it, because it does not solve a mass market problem. Or I should say, it does, but there’s a mismatch between whose problems it solves and who can use it. Sig himself defines collaboration as a workaround for the Barely Repeatable Processes in the Enterprise: my bet is that this “workaround” is here to stay for a long time.
Update (3/18): CIO Magazine interviews Ross Mayfield, Founder and Chairman of Socialtext, an enterprise wiki company:
Most employees don’t spend their time executing business process. That’s a myth. They spend most of their time handling exceptions to business process.
… the greatest source of sustainable innovation is how you’re handling these exceptions to business process.
… So I’ve always looked at it as we’re doing the other half of enterprise software: making this unstructured information transparent.
As they say, a picture is worth a thousand words.. so I’ll save you the agony of reading through 3000 words, let the photos speak for themselves:
The Enterprise Irregulars with SAP Board Member Peter Zencke
The Enterprise Irregulars with SAP CEO Henning Kagermann
The Enterprise Irregulars with Oracle President Charles Phillips
Do you see what I see? Is there a trend here? I defer further analysis to our in-house fashionistas. 
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 (very) 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 
(Updated)
Phil Wainewright at ZDNet is running a poll on whether NetSuite will have a chance to go ahead with the long-awaited IPO or it will get folded back into the Empire.
I’m somewhat surprised by the above results, but since this is an early snapshot, please check the live poll for the current vote count.
Surprise or not, acquisition by Oracle is a realistic scenario, considering Larry Ellison’s close to 60% stake in NetSuite. This is certainly fellow Enterprise Irregular Jason Wood’s take.
I tend to believe that NetSuite is better off being an independent business; there are just too many differences for a merger to work well, and I don’t mean only technical, product-related differences. NetSuite is still largely a small business (SMB) player, and that’s a market that requires an entirely different Sales and Marketing approach, amongst others, and Oracle with it’s current “legacy” salesforce just can’t reach this market profitably. If your products are different, your target market is different, your organization, corporate culture are different, where’s the synergy? Big behemoth Oracle would kill NetSuite – Larry is better off with a portfolio approach, cashing in a 10-digit return
Talk about the SMB market – there really is no such thing. “SMB” was sufficient to describe the market to avoid, but now that the software industry is getting ready to actually address the needs of this segment, it’s too heterogeneous to be lumped together.A $100M business is just as different from a ten-person startup as it is from a Fortune 1000 company. When analysts talk about SMB, they really have the mid-market in mind; when SAP is announcing new SMB initiatives, it targets $100-$200M companies.
The forgotten “long tail” represents a huge untapped opportunity: millions of (very) small businesses that can now directly be reached, sold to, serviced inexpensively over the Net – classic SaaS style. Different markets require different organizations – NetSuite serves this segment much better than Oracle (or SAP, for that matter) ever could. In fact SAP would be wise to copy this chapter from Ellison’s book: it should get it’s own “NetSuite” by investing in (not acquiring) an up-and-coming small-business focused All-in-One SaaS provider, like European 24SevenOffice. The next NetSuite.
Update (12/11): NetSuite Gets Ready For Its Close-Up by BusinessWeek.
Update (12/19): TechCrunch is running a story titled NetSuite’s Going Public, Looking for $1 Billion Valuation. I don’t know if it’s based on new information or …. (?)
(Updated)
This post is a continuation of Web 2.0 in the Enterprise – Round 2 in which I reflected on some thoughts brought up by Stephen Bryant in Five Reasons Web 2.0 and Enterprises Don’t Mix.
The Web 2.0 in the Enterprise TIE event I previously referred to was hectic, trying to cover way too many subjects in 90 minutes, with one common underlying assumption: Enterprise means large corporations. The theme of the night was how these Web 2.0 technologies and business/communication approaches will “seep in” to the large enterprise from the bottom up.
What is then Enterprise Software? Typically SAP, Oracle et al come to mind, and I can hear the roar “Enterprise Software is Dead” – well, is it?
If we define Enterprise Software as the traditional heavyweight, expensive, pay-huge-license-fees-upfront, then try-to-implement-forever model it is certainly challenged from two ends, by Open Source and the SaaS model. But there is another definition that is largely being overlooked:
Software that allows a company to conduct it’s everyday business, supporting most of the core, fairly standard business processes any company performs repeatedly.
With this definition, Enterprise Software has a whole new, largely unpenetrated market to enter: that of small businesses, referred to as the SMB or SME segment. Such enterprise functionality has traditionally been beyond reach for a typical small business, for two major reasons:
SaaS is the right answer for both, since it allows the SMB user to start using the functionality without an upfront investment, does not require implementation, upgrades, maintenance, worrying about backups and security ..etc.
Of course several Open Source packages are available completely free, which is a perfect solution for the cost problem, but I think most of these packages are by geeks for geeks; i.e. you really have to be quite IT-savy to implement, integrate, upgrade them, and as we stated most small businesses simply do not have that type of resource. Yes, that means the Silicon Valley tech-startups are not a true representation of the SMB world 
Likewise, I don’t believe SOA, best-of-breed packages working together are an option for the SMB market, for the same reason. They will play an increasingly critical role in larger enterprises with a professional IT organization, but for a few more years SMB’s are far better off with integrated, All-In-One type On-Demand solutions.
Of the Web 2.0 companies Stephen mentions in Five Reasons Web 2.0 and Enterprises Don’t Mix two are offering Integrated On-Demand solutions:
Back to the economics: if SMB’s could not in the past afford Enterprise Software, the same held true for the Software Industry: they could not afford SMB’s, since there was just no way to make the numbers work. The cost of customer acquisition vs. the very low license fees made it an uneconomical model, whether via direct or channel sales.
Once again, technology comes to the rescue: the Internet, and largely Search Engine Marketing changes everything. Joe Kraus, Founder of JotSpot and previously Excite sums it up:
“ Ten years ago to reach the market, we had to do expensive distribution deals. We advertised on television and radio and print. We spent a crap-load of money. There’s an old adage in television advertising “I know half my money is wasted. Trouble is, I don’t know what half”. That was us. It’s an obvious statement to say that search engine marketing changes everything. But the real revolution is the ability to affordably reach small markets. You can know what works and what doesn’t. And, search not only allows niche marketing, it’s global popularity allows mass marketing as well (if you can buy enough keywords). “
Another benefit of SEM is that while traditional advertising can pick the right demographic groups, it cannot pick the right time, only a fraction of the target audience is in “change mode”, looking for a solution. That’s the beauty of Search Engine Marketing: obviously if you are searching, you have a problem and are looking for a solution, which is half a win from the vendor’s point of view.
Small Business Trends recently published a survey on “Selling to Small Businesses”, which supports the increasing importance of SEM: “A full 73% of vendors attract small business customers through search engine results”
Finally a quote from Ziff Davis again: “Products for the long tail and SMB market, where 72 million businesses spend $5k or less each year, are a much easier play” Wow, I don’t know where those numbers come from, but if I were a SMB-focused software vendor, I’d certainly like them … there’s a goldmine out there. 
Update (2/22): Perfect timing for this report to come out just now: U.S. SMBs to Spend $2.2 Billion on Software in 2006, Says AMI-Partners
Update (4/17): Interprise Suite (recently debuted at Demo 2006) claims to be “The FIRST Accounting / ERP / CRM Solution to Bring the Power of the Internet to Small and Mid-sized Business“. While I take issue withe the claim to be “first”, considering the breadth of functionality it’s definitely an option to consider for SMB’s .
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