Monday, October 31, 2005

Bad idea: Microsoft bid for Siebel

Forrester has an interesting angle on Oracle's bid for Siebel. The research firm thinks that Microsoft should step in and make a counter offer. Interesting, but wrong. I think that a Microsoft acquisition of Siebel would be a disaster for both parties.

But first, Forrester's idea. The article is entitled, "Memo to Microsoft: Why Not Buy Siebel?" The abstract reads:
Microsoft: You have a unique opportunity to change the dynamic in the enterprise applications market. With Siebel's strong enterprise customer base, domain expertise in verticals, integration with existing Microsoft technologies, and interoperability with .NET and J2EE, this is a unique opportunity to bring much-needed CRM credibility to the Microsoft Business Solutions Group. If Microsoft does not make the offer to purchase Siebel, you will lose a unique opportunity to Oracle, leave only two tier one players in the applications market, and make a later entry into the market more costly and more risky.
A Microsoft acquisition of Siebel would be foolish because Siebel's client base requires a significant amount of professional services, something that is foreign to Microsoft's business model.

Interestingly, a Spectator reader and I had some correspondence on this very subject last week. He wrote,
IBM/HP-like consulting does not fit the Microsoft model. Microsoft is more about delivering packaged software to a customer through a product management process (exaggerating -- in its worst incarnation -- throwing a half ready app to the customer). In a consulting business you need to listen to the customer and understand the problem in order to find a solution--if necessary, pushing it through as a side product, and enhancing the product over time.

What is meant by consulting at Microsoft is way different from the definition at IBM.
Microsoft's foray into business applications, with its purchase of Great Plains and Navision, has already been a humbling experience (Microsoft's words, not mine). Its business applications are sold entirely through VARs and resellers. Siebel's products are sold largely through a direct sales force, something Microsoft Business Solutions has never really done. So, even though Siebel's technology is Microsoft-friendly, I think that Siebel is a bad fit for Microsoft's business model.

Now, on the other hand, if IBM, HP, CSC, or any other number of large service organizations wanted to step in and make a counter-offer for Siebel--now that would be an interesting proposition.

Related posts
Another false start for Microsoft's business apps
Reorg highlights troubles at Microsoft Business Solutions
Microsoft: selling enterprise software is a "humbling experience"
Big eyes, big stomach: Oracle buying Siebel

Thursday, October 27, 2005

Latest JDE service pack spells trouble for Oracle

Today a Spectator reader has emailed me with news about the latest service pack for J.D. Edwards EnterpriseOne, 8.11 (SP1), indicating that there are serious problems with it, and that the problems are so severe that it represents a significant setback in the company's implementation schedule.

JDE customers have been waiting to see whether Oracle can deliver on its promise of "lifetime support" for JDE customers. If the service pack problems are as serious as my reader indicates, Oracle needs to take corrective action immediately. Otherwise, Oracle's relationship with the JDE installed base is in trouble.

If you have better, or different, or confirming information about this latest service pack, please email me, or leave a comment on this post.

Update, Oct. 31. Word from this new JDE customer in the field indicates that the Enterprise One 8.11 SP1 problems are finally getting some attention at the senior executive level at Oracle and that there is a SWAT team of three people dedicated to fixing them. That's good news. But, one has to ask, why did it take Oracle so long to get on top of this, and why was the service pack released in the first place if it wasn't adequately tested?

Update, Nov. 4. Oracle is working on the service pack problems, but they are not yet out of the woods. The customer's system is still unusable, hence the JDE implementation has ground to a halt.

Update, Nov. 28. Oracle appears to be making progress resolving problems with 8.11 SP1. Also, there are indications that the service pack has not been widely distributed, which may explain why I have been unable to locate anyone else that has implemented it or is reporting problems with it.

Update, Dec. 9. The customer's problems are getting high level attention within Oracle. Oracle has resolved a number of the outstanding issues and is making good progress on the rest.

Update, Mar. 8, 2006. For the sake of those that come across this post from search engines, I want to close the loop and report the final outcome of this case study. The client went live on JDE earlier this week.

The go-live went flawlessly with very few post-implementation problems. The implementation was a "large footprint" (i.e. quite a bit of functionality), and it took 11 months, four of which were due to the problems with service pack 1 (SP1) outlined earlier in this post. Implementation costs exceeded budget, but to the credit of Oracle and the implementation partner, much of the expense for correcting the problems was covered under Oracle's maintenance agreement.

Bottom line: the ultimate outcome of this implementation for the client is a success, and it is evidence that Oracle intends to make JDE a successful and viable choice for companies going forward.

Sunday, October 23, 2005

Another false start for Microsoft's business apps

Microsoft just can't seem to finish anything related to business applications these days.

The latest case in point is the Microsoft Business Framework (MBF). Microsoft appears to have all but given up on building the MBF, sending half of the 200-plus development team back to Microsoft Business Solutions (MBS), the unit responsible for business applications, and half remaining with the Platform and Tools division, where they've been working for the past two years.

MBF was to be a set of lower level software application components to provide core business functionality upon which higher level applications and systems could be constructed. The original plan was for MBF to be the underlayer for Project Green, the successor to Microsoft's current disparate business applications, such as Great Plains, Axapta, Solomon, and Navision. MBF would be an open platform that would also allow third-party developers to build industry specific applications that would easily interoperate with Microsoft's own business apps.

Microsoft, of course, is claiming that the break up of the MBF development team really doesn't mean anything, and that MBF will still be delivered, but just in a different way, with bits and pieces showing up in other products, etc., etc. Mary Jo Foley at Microsoft Watch has a good summary of the history of fits and starts with MBF.

One Spectator reader has given me some interesting insights into the history of MBF and the current situation with Microsoft Business Solutions. Note that my editorial comments are in [brackets].

The pre-history of MBF originates from then independent Great Plains where they worked on the next generation Business Apps Platform. One of the reasons that Microsoft bought Great Plains was some promising ideas from the Great Plains R&D team.

However, the release of even bits of the new generation technology was characterized by constant delays and problems. At Stampede 2002 the MBS people even joked that every year since 1999 a new and better thing was promised but either was not delivered or when it was launched the result was a failure. Mostly it was related to portal technology and it was more related to Solomon than Great Plains.

The first working commercial piece [for MBF] was Business Portal 1.0 - now in C# sitting on top of MS Portal technologies....

Surprisingly, the [MBF] development environment for the entity persistence model was Rational Rose. Microsoft distributed a MBS Great Plains branded Rational Rose trial as THE development environment for MBF, but alas, IBM bought Rational Rose. Then the big issue was to tweak MS Visual Studio to accommodate all that was lost when they had to abandon use of Rational Rose.

There was a big undertaking by the MBF team and the Navision team in Denmark to port Axapta to .NET-MBF, but that effort was soon abandoned.

Part of delay for MBF may be associated with the delays and stripped down functionality for Longhorn [the next generation of MS operating systems], but I do not believe that this is the core reason. The most important reason for the delay of MBF is the delay of WinFS [the next generation Windows file system]. In the entity persistence model, the integrated security model is actually the core function related to MBF.
My source goes on to provide some insights into MBS product development in general.
In the meanwhile in 2002-2003, project Magellan was started....The outcome was MS Office Small Business Accounting, which was a total re-write in C# and MSDE. The database layer for this product is very heavy, with hundreds of stored procedures, functions, and triggers. It is really more like Great Plains, not like Axapta and Navision. The database layer is so heavy and the database normalization structure is so far thinking that it makes me think that this is the way the next generation unified business applications will be developed.

The packaged software thinking of Microsoft was reflected in many product policies over time. Now they have finally switched back to developing all products independently and trying to rescue Project Green by releasing it in waves.

Surprisingly, Navision is not a friend of MS SQL Server at all. There is big degradation at 30 users and a plateau at approximately 100 users. Furthermore, Axapta scales better on Oracle than on MS SQL Server, and it does not support SQL Server 2005 up till 4.0 or even later.
He also speculates on potential acquisitions and the situation among the MBS VARs.
It is possible that Microsoft will start buying market share. Epicor may be the prime candidate, but there may be others.

Just as there are problems with MBS being profitable, the MBS VARs also have been in trouble, especially the large ones. Some have been running at huge losses for several years before being bought by someone. At least so far this has not resulted in Microsoft buying some of its big VARs--that would definitely upset the community. But watch out for hidden support measures, such as more discriminatory margin structures or industry builder initiative financing.
Although this entire post paints a pretty bleak picture concerning Microsoft's development efforts in business software, I am not by any means suggesting that software buyers stay away from Microsoft's offerings. I continue to short list Microsoft's business solutions where they appear to be a good functional fit. Microsoft may be having difficulties, but it has the resources to deliver--something that can't be said for many of its competitors in the small and mid-sized business market these days. But first, it needs to get its act together and start delivering stuff.

If you have different information, or an opinion on anything in this post, please feel free to email me or use the comments section of this post.

Related posts
Reorg highlights troubles at Microsoft Business Solutions
Microsoft to put enterprise applications on the auction block?
Is Microsoft dying?
Microsoft wants PeopleSoft customers but doesn't have much to offer
Microsoft eats more humble pie in enterprise software business
Microsoft: selling enterprise software is a "humbling experience"

Wednesday, October 19, 2005 set to strike out with AppExchange?

Josh Greenbaum thinks that is going to fail with its strategy of allowing software developers to use as a platform to sell add-on components. Josh takes issue in particular with CEO Marc Benioff's analogy of AppExchange as the "eBay for enterprise applications" that will be "as easy as buying music on iTunes and playing it on your iPod."

Josh writes,
eBay is many things, but a secure and safe place to buy reliable products it isn’t...Even more significantly, as Marc most certainly knows, enterprise software is not like a three-minute song, however well-produced it may be, and an iPod is no enterprise software platform, however high-tech they now are.
Although certainly has its work cut out for it, I think Josh is being a bit harsh. I agree that the eBay analogy is not the best, but no analogy is perfect. What is attempting with AppExchange--allowing customers to build and share extensions on top of an on-demand offering--has never been done before. If this works, it breaks one of the major objections to software on-demand: the inability to customize and extend it.

But if AppExchange works, it would be a powerful example of how commercial software might be built and deployed in the future--sort of a combination of software on-demand and open source that is extremely scaleable.

My main concern at this point is whether there will be any sort of quality control over the extensions written for AppExchange. If the first apps deployed are junk, it will sour users toward the whole idea, and AppExchange might not recover. I suspect that is aware of this problem and will be working hard to ensure that early adopters are satisfied.

Josh concludes,
Ironically, Marc is finding himself in the same situation that Tom Siebel found himself in: Too focused on standalone CRM functionality in a market that is increasingly interested in linking CRM to everything else in the enterprise. It was this requirement, Siebel acknowledged in his concession speech, that prompted his retreat from the field and into the arms of his rival, Oracle. And this is a requirement that has even less ability to meet than Siebel did.
I don't agree that is another Siebel. Yes, both are focused on standalone CRM functionality. But Siebel was competing with Oracle and SAP on the same turf--big deals for traditional license sales. As SAP and Oracle filled out their CRM functionality, Siebel was unable to compete effectively. Its functionality might still be marginally better, but it didn't make up for the need to integrate it with the rest of the enterprise., for the most part, is competing on different turf. It offers an a low-cost, quick-to-implement, alternative to the traditional license model of SAP and Oracle. For small or mid-sized firms, or for large companies that have two to three years of projects backed up in their IT department, it's an attractive alternative.

It's too early to say whether will be successful with its AppExchange program. But at least it has a strategy.

Computerworld has a summary of AppExchange.

Related posts looks to hook Siebel staff struggling at Cisco
Software on demand: attacking the cost structure of business systems

Sunday, October 16, 2005

Oracle bid for Innobase a threat to MySQL?

Reader Alan Rein has called my attention to Oracle's recent acquisition of Innobase Oy, an open source developer in Finland. Why is this a big deal? Because Innobase is the primary development organization for InnoDB, which is used as a free component for the open source MySQL database by users that want high concurrency, row-level locking, and transactions in MySQL.

In other words, if you are running MySQL--an increasingly popular choice for database applications--and you need it for higher end applications, you use InnoDB as the storage engine.

And Oracle, which has been watching MySQL move up the food chain over the past few years, just bought InnoDB.

The open source community is not quite sure how to interpret Oracle's move. Is it a further endorsement of the open source movement? Oracle has been a huge supporter of Linux, an open source operating system. But Oracle doesn't sell operating systems. Oracle sells databases, among other things. And InnoDB is at the heart of the open source database movement.

The more cynical view is that Oracle is buying InnoDB in order to divert its five (yes, just five) developers away from supporting open source development and the MySQL relationship. The InnoDB/MySQL agreement is up for renewal next year, and Oracle's press release says they expect to see it continue. But who knows?

Jeremy Zawodny has a good summary of the situation on his blog. ZDNet also has a good analysis of Oracle's move. As expected, there's a (ahem) lively debate over on Slashdot as well.

Related posts
Software buyers turn cheap

Friday, October 14, 2005

U.S. Department of Justice visits the Spectator

No, I'm not in trouble--at least I don't think so.

I just noticed that a visitor from the US DoJ hit this website today and read five articles, the first of which was "SOX insanity takes hold in the IT department," and the last of which was "Sarbanes-Oxley compliance too often a wasted effort."

Hopefully, this is a good sign that someone at DoJ is paying attention to the enormous waste of time, money, and effort going on in the U.S. economy under the name of Sarbanes-Oxley.

Thursday, October 13, 2005

The secondary market for computer hardware

We've put up a new quickpoll up on the Computer Economics website:

How often does your company purchase computer equipment on the secondary (used) hardware market?
Hop over to the Computer Economics home page (right column) and take the poll now. It will take about five seconds.

After the poll closes at the end of the month, we'll use the data as part of our analysis of trends in this market.

Tuesday, October 11, 2005

Business brightens for Lawson

Things are looking up for Lawson lately. A week or so ago it announced quarterly results that were better than expected, with revenue rising over six percent from a year earlier.

Then today, Lawson announced that it closed a big deal with Mervyns, a major U.S. department store chain. Mervyns will implement Lawson Financials, Procurement, Budgeting and Planning, and Reporting suites to replace business applications that it was using prior to being spin off as an independent firm. Mervyns plans to complete its implementation of Lawson by August 2006--a pretty aggressive timeframe, for a company with 250 locations in 13 U.S. states.

Lawson has been targeting the retail industry for many years. According to its press release, its customers include "five of the top 10 U.S.-based retailers, eight of the top 20 apparel retailers, seven of the top 25 grocery chains, 23 of the top 100 restaurant chains, and 20 of the top 100 specialty chains."

Lawson's win at Mervyns shows that a strategy of intense industry focus can be successful in competing against larger vendors, namely SAP and Oracle, that are increasingly dominating the ERP market.

What other vendors are executing such a strategy? Mincom is an example in the mining industry, as seen in its win over SAP at Newmont Mines, which I mentioned in the previous post. QAD's success among automotive suppliers is another example. IFS has success in aerospace, transportation, and others. And Intentia, which Lawson is acquiring, has a similar track record in the apparel industry as well as food and beverage.

Related posts
SAP loses big deal to...Mincom?
Lawson acquiring Intentia

Monday, October 10, 2005

SAP loses big deal to...Mincom?

The deal is Newmont Mines in Australia, and the winner is Mincom. Both SAP and Mincom were incumbent vendors, with Mincom installed at Newmont, and SAP installed at Normandy Gold, which Newmont recently acquired.

Mincom, which is a vendor of enterprise asset management (EAM) systems, is not usually thought of as a competitor to SAP. But in capital intensive industries, such as mining, EAM systems are effectively the equivalent of ERP systems.

The mining industry in Australia, which is undergoing an economic boom, is currently a battleground for SAP and other vendors. Although SAP lost the deal at Mincom, it is gaining additional sales at BHP Billiton, another natural resources firm with market capitalization of $90 billion U.S.

Mincom's win at Newmont shows that there is still plenty of competition for Tier I vendors such as SAP and Oracle, even at the top end of large enterprises. The key is for vendors to pick the verticals in which they can win.

Thursday, October 06, 2005

Dave Duffield's next thing: bigger than the White House

Apparently, after helping stray cats and dogs and unemployed ex-PeopleSoft employees, David Duffield still has money left over from Oracle's buy-out of PeopleSoft.

The Contra Costa Times is reporting that Duffield is planning to build a new home in Alamo, CA that will comprise a 72,000 square foot main house, plus 25,000 square feet of outbuildings that include a stable, swimming pool, and 20-car underground garage.

According to the Times, Duffield's main house alone will be bigger than the Notre Dame Cathedral in Paris (64,108 square feet), Hearst Castle (60,645), and the White House (55,000).

By comparison, Oracle CEO Larry Ellison looks positively thrifty. His house in Atherton is only 8,000 square feet.

Update, Jan. 23, 2006: It appears that in December, Duffield scaled back his footage by 70%. He's now planning to build a home of only 21,461 square feet.

Related posts
Duffield comes to aid of former PeopleSoft employees