Tuesday, June 29, 2004
Microsoft: selling enterprise software is a "humbling experience"
PeopleSoft's antitrust lawyer Dan Reback summarizes the videotaped testimony of Microsoft senior VP Orlando Ayala, regarding Microsoft's experience in selling enterprise applications, such as Great Plains and Axapta.
Orlando's testimony hammered home the points the Government has made about Microsoft's effect on the high-function software market for HR and financial services. The witness testified:
- Non-established vendors have no sales opportunities with the largest customers, as it takes many years and substantial investment to enter the up-market, even if the vendor has a technically capable product;
- On the other hand, Oracle, SAP, and PeopleSoft, which are established in the up-market, have substantial opportunities;
- Microsoft's Axapta product is not capable of meeting the needs of multinational customers;
- Microsoft has scaled back its marketing messages in order to avoid overselling its product and producing failed implementations;
- While Microsoft may occasionally get a large customer, Microsoft's offerings are not suitable for all such customers;
- Microsoft has over-emphasized its business software, and its real-life experience in trying to break into even the mid-market as an application vendor has been "a humbling experience."
Over two years ago, I first begain writing about the difficulty Microsoft would face in selling major enterprise applications (see related posts below). It's interesting to see this now confirmed directly by Microsoft.
The DoJ lawsuit to block Oracle's takeover of PeopleSoft is bringing out all sorts of interesting information about the dynamics of the enterprise systems marketplace--stuff that you won't read in vendor press releases. I'll write more shortly, if I can find time to dig through all the documents.
Microsoft Business Solutions is setting the stage for big-time channel conflict among resellers
Microsoft’s move into enterprise applications may have unintended consequences
First look at Microsoft's Axapta ERP system
Thursday, June 24, 2004
Well, maybe the press is
noticing. The Wall Street Journal today
(subscription required) is reporting on documents unearthed in the Oracle trial that call into question the independence of consulting firms in recommending software products to clients. Once again, Accenture is involved, this time in an engagement to assist Cox Communications in justifying a new financial reporting system.
In September, documents in the case show, an Oracle sales representative asked his superiors to approve a payment to Accenture "for their assistance and influence." He suggested a payment of $125,000, if Oracle signed Cox to a deal for such software of at least $1.5 million by November, or $100,000 if the deal closed by May 2004. "We need Accenture's continued support and influence to secure this win and they expect to be compensated for this help," the sales rep wrote in his request.
Chuck Phillips, Oracle's co-president, adds in an interview that "paying an influence fee is customary in the industry." If a consulting firm is "the contractor and we are the subcontractor, you have to pay to play."
Hmm..."paying an influence fee." So, would it be too much to say that some consulting firms are involved in influence peddling? Well, according to this definition
, that's exactly what it is.
When choosing a consultant to help with a software selection, executives should rule out any firm that peddles its influence to software vendors. Related postsConsulting firm bias toward software vendors
Wednesday, June 23, 2004
Consulting firm bias toward software vendors
There's an aspect to the DoJ antitrust lawsuit against Oracle that's not getting any attention--that is, the explicit relationships between major consulting firms and major software vendors.
Generally, when a company hires a consulting firm to advise them on a software acquisition, they assume that the consulting firm is on their side, serving their best interests. But check out this e-mail from Craig Conway
, CEO of PeopleSoft, which was introduced as evidence in the DoJ's antitrust suit against Oracle (underlining mine).
From: Craig Conway, 11/02/2003 09:23 PM
To: [various executives at IBM]
Subject: Accenture and SAP
Friday I spoke with Steve James, President/COO of Accenture, and learned some disturbing news.
You may recall a few weeks ago that Accenture announced a relationship with SAP directed at the financial service industries. At the time, Steve indicated that the agreement related only to vertical applications. Specifically, Accenture had a number of "transactional applications" directed at banks and insurance companies, and SAP also has some newly developed applications. The announcement was that both companies would fund further development of these applications and promote a joint solution to the market. Steve assured me that agreement did not extend to ERP.
However, Friday Steve called to let me know that the agreement was in fact much broader. Accenture will recommend SAP to the financial service industries for both vertical applications and ERP applications. In return, SAP will recommend Accenture to FSI [the financial services industry] for ALL enterprise software implementations. It is quite a wholesale endorsement.
We should discuss what this agreement means to IBM and PeopleSoft. Clearly it does not bode well for our relationship with Accenture and should not bode well for your relationship with SAP. On the other hand, both PeopleSoft and IBM are stronger in the financial service industry so there should be an opportunity for both of us.
This is a clear example, in writing, of what insiders have known for years: major consulting firms partner directly with software vendors to promote their products in return for those vendors endorsing the services of the consulting firm. We're not talking about subtle biases here. This is a direct conflict between the interest of the client and the interest of the consulting firm toward its software vendor partners.
Tuesday, June 22, 2004
Oracle slams PeopleSoft by comparing it to...
At the DoJ trial against Oracle, the government introduced into evidence an Oracle sales training presentation on how to compete against PeopleSoft...
"PeopleSoft has no magical product, they have bugs, product deficiencies, demo disasters, resource and morale issues, account losses, and horror stories in the press to deal with," the presentation said. "Just like we do."
That's from a San Jose Mercury News article
on the trial, which has been also revealing how deeply the major software vendors will discount a deal when they really want the win.
A Wall Street Journal article
(subscription required) has a lot more about the cutthroat tactics that have been revealed so far in the trial
Software vendor secrets finally revealed
Monday, June 21, 2004
Software vendor secrets finally revealed
Here's some interesting stuff. PeopleSoft has publicly released a white paper that it previously submitted in response to a DoJ request earlier this year. Since this document, which PeopleSoft originally considered highly confidential, has been referred to in the DoJ's antitrust lawsuit against Oracle, PeopleSoft has now decided it can be made public.
On his blog, Gary Reback, an antitrust lawyer for PeopleSoft, introduces the white paper, in part, as follows:
The white paper begins by quoting from an internal Oracle email about how "proud" the Oracle executive was when they first announced the tender offer, because they had "certainly wounded" PeopleSoft. The first part of the white paper goes on to explain our belief that Oracle is using the hostile takeover process to hurt a competitor that they are having trouble competing against. The white paper quotes speeches made by the Oracle CEO, as well as hard questions industry analysts have asked Oracle, and customer complaints about Oracle.
In addition, the white paper gives many details of deals where Oracle, PeopleSoft, SAP, Lawson, or Microsoft have been in head-to-head competition. If you work in the enterprise systems business, you ought to take a look at it.
The PeopleSoft white paper
is on the NASDAQ website.
Blogger in the court
Sunday, June 20, 2004
EDI alive and well
on the recent UConnect Conference in Anaheim, sponsored by Uniform Code Council (UCC).
Don't believe reports you might hear about the death of electronic data interchange. Not only is EDI alive more than 20 years after its birth, it's also thriving at companies that use it to exchange purchase orders, invoices and other information with trading partners.
The article points out that contrary to popular belief, adoption of EDI is not declining in favor of XML or web services. Actually, "...EDI represents 80% to 90% of the total business-to-business traffic, and the number of EDI transactions is growing 3% to 5% every year."
Wal-mart suppliers face October deadline for Internet-based EDI
Buzzword alert: Web services
Walmart still pushing its suppliers to Internet EDI
What exactly is AS2?
Friday, June 18, 2004
Second thoughts on Geac and Intentia
Last month, I wrote about Intentia's new CEO, Bertrand Sciard, who came from Geac and speculated that Geac might be an acquisition target for Intentia. However, one reader, who is familiar with Sciard from his days at Geac, wrote to me with a different perspective,
I came across your website because I was looking for information about Bertrand Sciard's move from Geac to Intentia....From what I know of Bertrand, I think Intentia have got themselves a good CEO.
However, I am puzzled by your suggestion that Intentia might buy Geac. Surely Geac is much stronger financially than Intentia, and if there was any deal between the two companies it would be the other way around. I am sure that Geac has looked at Intentia in the past, but after the way that the JBA deal turned out I think they started to be more careful. These days they are using S21 and the old Dun & Bradstreet software as "cash cows" to finance investment in Business Intelligence and related software.
I suppose there is a small chance that Geac could sell the System21 business to someone, but I doubt that Intentia could afford it. Bertrand will also know that one of the things that brought down JBA was an over-ambitious strategy in the States, and I don't think that he would want to make the same mistakes again!
I'm not sure that an acquisition by Intentia is out of the question from the financial perspective. Both companies are in the $400M USD revenue range, although Geac is currently profitable and Intentia is not. However, because the writer is closer to the situation at Geac, I'll give some weight to his opinion and say that an acquisition by Intentia is probably a long shot, at least until Sciard can accomplish a turnaround at Intentia.
Intentia, MAPICS, SSA, and Geac--what's the deal?
Thursday, June 17, 2004
Blogger in the court
PeopleSoft's antitrust lawyer Gary Reback is sitting as an observer in the courtroom during the DOJ's lawsuit against Oracle. No surprise there. But he's also writing up his observations, day by day, and posting them to a blog on the PeopleSoft website
There is a decided slant toward PeopleSoft's interests in Reback's writing. But it provides a level of detail that is missing in the business press. For example, on June 16th proceedings he writes:
Yesterday, the government presented evidence about Greyhound's procurement to show a situation in which a complex enterprise customer actually tried to consider a bid from Lawson, only to find that Lawson's product was inadequate for a complex enterprise. Today was a rerun, but featuring Microsoft rather than Lawson. North Dakota tried to solicit a bid from Microsoft, only to find, after careful examination, that the Microsoft product met only 20 percent of the state's technology needs. Indeed, during the bidding process, Oracle itself complained in writing that Microsoft's product was inadequate for a large, complex enterprise. Nowhere did Microsoft dispute the point; one of the Microsoft executives jointly signed a letter with a state official, agreeing that the Microsoft product was inadequate. Of course, none of this has stopped Oracle's lawyers from telling the press in the hallway outside the courtroom that Microsoft is a competitor in the market.
Once Microsoft was disqualified, the North Dakota procurement turned into a bidding war between Oracle and PeopleSoft. The original bids were between $35 and $40 million, but faced with direct competition from PeopleSoft, Oracle eventually dropped its bid to $18 million. PeopleSoft won with a bid of $21 million because it scored better in other categories.
Check out Reback's blog on PeopleSoft's web site
Tuesday, June 08, 2004
Microsoft and SAP: the merger that didn't happen
Talk about an industry restructuring! Based on pretrial discovery in the Oracle antitrust lawsuit, it's now come out that SAP and Microsoft discussed a possible merger late in 2003. According to Microsoft, the talks were called off because of the complexity of the transaction and subsequent integration. SAP has confirmed the story.
It's not clear that the deal would have passed antitrust scrutiny. But if it had, and the deal had gone through, it would have made Oracle's pitch for PeopleSoft look like a used car offer. A Microsoft/SAP combination would have married the world's largest software developer, with a virtual monopoly on desktop operating systems, with the world's largest provider of enterprise systems to large organizations. The merger would have immediately turned Microsoft's applications group from a provider of business systems to small companies (with its Great Plains and Navision acquisitions) into the premier provider of complex enterprise-wide systems to the Global 1000.
Although merger talks ended, Microsoft and SAP later formed an agreement regarding integration of products via Web services and an agreement for cross-licensing of certain patents. These agreements were announced in May at SAP's SAPPHIRE conference in New Orleans.
It always intrigues me that technology companies like Microsoft and SAP can compete fiercely at one level and cooperate with each other on another level. For example, as I wrote earlier this year, SAP has been developing a deeper relationship with Sybase to provide an alternative to Microsoft's SQL Server database. At the same time, apparently, they were talking to Microsoft about a merger.
has more on the story.
An intriguing analysis of SAP's partnership with Sybase
Clash of the titans
SAP looks to Sybase as alternative to Microsoft
Monday, June 07, 2004
SSA promotes extended enterprise apps, files for IPO
SSA is tweaking its organizational structure to create a "strategic solutions team" to give more focus to so-called "extended enterprise" products. "Extended enterprise" is an amorphous term, but it generally refers to enterprise applications that provide major chunks of functionality outside of the core ERP focus. SSA is using the term as an umbrella to include its offerings for supply chain management (SCM), customer relationship management (CRM), product lifecycle management (PLM), supplier relationship management (SRM), and business intelligence. As I've written previously, SSA has picked up some world class products in these areas, such as EXE's warehouse management products and Baan's SCM, PDM, and CRM products. Without some additional focus on these products they are likely to get lost in the jumble of ERP systems that SSA now owns, such as BPCS, PRMS, Infinium, and a bunch of others.
As far as I can tell from the press release, the extended enterprise products will still be sold by the field sales organization but the "strategic solutions team" will most likely provide product expertise to help sales reps on individual opportunities. The new team will be headed up by Jim Handy, with the title of President Strategic Solutions, reporting to Graeme Cooksley, EVP, who is responsible for SSA's worldwide field operations, marketing, support, and product management.
Interestingly, Handy came to SSA last year from Geac, where he was responsible for the Smartstream and Enterprise ERP businesses. (For more on Geac, see the link at the bottom).
Separately, SSA announced that it has filed with the SEC for a proposed initial public offering. According to the registration statement, SSA would like to raise up to $200M from the offering, with proceeds to be used to repay debt, fund general operations, and provide money for more acquisitions. Also revealed in the filing: for the year ended July 2003, SSA had earnings of $51.9M on revenues of over $294M.
Intentia, MAPICS, SSA, and Geac--what's the deal?
Baan users flock to SSA road show
SSA Global lays out its future in warehouse management systems
SSA's obituary was a bit premature
SSA's strategy: acquire customers and technology on the cheap
Saturday, June 05, 2004
Tightwad tech spenders can't hold out much longer
In an Internet News article
, Laura DiDio at Yankee Group points out that many companies have been putting off major IT expenditures since the late 1990s, when they were doing upgrades for 2K remediation. Now, many of these companies can't put off major investments much longer.
"In terms of IT spending, we really hit rock bottom last year, so our polls indicate an average increase of 7 percent to 8 percent over the next 12 to 18 months," DiDio said. "But some are ramping up spending as high as 25 percent; not because they want to, but because they have to. They simply can't afford to put off these major upgrades for much longer. Their infrastructure is porous, exposing them to security threats, and their hardware is just not adequate to support today's applications."Related posts
ERP market on the rebound
High tech job market perking up
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Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.
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