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Wednesday, December 21, 2005

Salesforce.com's credibility suffering from service outages

This week, Salesforce.com--everyone's favorite example of software on-demand--suffered an outage of something like three to six hours, knocking out service for possibly thousands of customers. According to the vendor,
On Tuesday December 20th, some salesforce.com users experienced intermittent access (between approximately 9:30 am and 12:41 pm ET & 2:00 pm and 4:45 pm ET) on one of the companyÂ?s four global nodes. The root cause of the intermittent access was an error in the database cluster. Salesforce.com addressed the issue with the database vendor. By Tuesday afternoon EST, the system was running normally for all users.
What concerns me though, is not this single outage. It's that this is just the worst case incident in what is apparently a less-than-rare occurance for Salesforce.com customers. According to CNet:
Salesforce touts an "uptime" rate of greater than 99 percent. Outages are "a rare occasion," according to [Salesforce.com spokesperson Bruce] Francis. He said Salesforce's systems are as reliable or more reliable than other comparable systems, including the type that companies run on their own servers.

Yet several Salesforce customers that contacted CNET News.com about Tuesday's glitch said outages happen more frequently than they had expected. About once a month, Mission Research experiences Salesforce outages that typically last an hour or so, [Charlie] Crystle, [CEO of Salesforce.com customer Mission Research] said. Another customer, an East Coast consulting firm, has been struck by outages about a half a dozen times over the past year, according to the firm's vice president, who requested anonymity. Frustration levels are rising.

"I'm really, really angry about this because (Salesforce is) out there marketing themselves as something they're just not living up to," Crystle said.
It doesn't need to be this way. A large part of what Google and Yahoo provide is really software on-demand--little applications. When was the last time you went to Google or Yahoo and found service unavailable for more than a few seconds?

Readers of the Spectator know that I'm actually a proponent of the trend toward software on-demand. I like its promise to simplify system implementation and maintenance, especially for small and mid-size businesses, relieving the customer of having to worry about things like backups, recovery, disaster planning, and service level maintenance.

But the trend toward software on-demand is going to be set back several years if on-demand vendors can't maintain the service levels they promise and that customers expect.

Are the problems of Salesforce.com typical of other software on-demand vendors, or is Salesforce.com an anomaly? If you have insights, post a comment to this post or email me.

Update, Dec. 22. There's further discussion going on in the comments section for this post.

Related posts
Software on demand: attacking the cost structure of business systems
Salesforce.com offers development sandbox
Salesforce.com set to strike out with AppExchange?
Salesforce.com looks to hook Siebel staff
Salesforce.com struggling at Cisco

by Frank Scavo, 12/21/2005 05:47:00 PM | permalink | e-mail this!

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Monday, December 19, 2005

JDE users want Oracle's Fusion to support IBM technology

A recent survey conducted by Quest, the J.D. Edwards user group, highlights the a strategic problem for Oracle relative to its JDE installed base.

The survey, which polled 300 JDE user companies, indicates that a significant number of them will not take Oracle's Project Fusion upgrade path if that path does not provide support for IBM technologies. The bulk of JDE users--and all of them running JDE's World Software product--are running on IBM's iSeries (formerly AS/400) hardware, and IBM's DB2 database.

According to Computerworld,
Keeping the iSeries as a platform of choice for Fusion was more important than pricing or functionality, Quest said, citing its survey. If support for the server is dropped, 29% of those surveyed wouldn't migrate to the Fusion architecture, while 50% said they weren't sure if they'd upgrade under those conditions. Moreover, 35% of the World customers surveyed said they'd stick with their existing applications. Software could also be a key element -- 85% said they use IBM's DB2 database, and 67% use it exclusively.
The results are not surprising, and it does put Oracle in a difficult position. If it puts iSeries and DB2 support into Project Fusion, it risks not getting the operational efficiencies and simplicity of supporting a single technology stack. It also risks losing the cross-sell of its database and tools. But, as the survey shows, if it does not support IBM technologies, it risks losing a significant number of JDE users for the long run.

I'll go out on a limb and suggest, as I have in the past, that Oracle will and should go with a single technology stack--its own--for Project Fusion. It will continue to provide strong incentives for JDE users to make the migration from IBM technologies. Ultimately, it will then sell off the JDE World product to someone else--maybe SSA, maybe Lawson, maybe even Infor--realizing some value for those customers that refuse to upgrade.

Update, Dec. 23.
Be sure to check the discussion on this post in the Comments.

Related posts
Oracle mulls support for competitor databases
Oracle, IBM, Microsoft battle for technology infrastructure of PeopleSoft customers
IBM is a loser in Oracle/PeopleSoft deal
Oracle to steer new customers away from PeopleSoft products
Oracle: no plan to spin off JDE product lines

by Frank Scavo, 12/19/2005 10:43:00 AM | permalink | e-mail this!

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Friday, December 16, 2005

Microsoft lags in offering CRM on-demand

Last week, Microsoft announced delivery of version 3.0 of its Dynamics CRM 3.0. It also announced a change in its licensing to allow partners to offer the CRM package on a hosted subscription basis.

Microsoft's move with CRM is consistent with its recent push into software as a service, but its announcements show how difficult it will be for Microsoft to make the transition to services. Microsoft's whole business model is built around selling software licenses.

The first problem is that Microsoft CRM has not been, to this point, a strong offering. Earlier versions had limited functionality, and Microsoft was slow to enhance the product. Computerworld describes the problems that one company faced with the product:
Door maker Designer Doors Inc. bought and deployed Microsoft CRM several years ago but put the software back on the shelf after running into a host of problems. The most painful were synchronization glitches that kept the software's features from being available to remote workers.

"We had put a lot of effort into making this our centerpiece for sales and marketing," said Michael Kruger, information systems manager at the River Falls, Wis.-based company. "It's been expensive for us to find work-arounds."
Not a great foundation for Microsoft's push into business software delivered as a service.

The second problem is that Microsoft does not host its CRM system, as on-demand leaders Salesforce.com and RightNow do. Consistent with its business model generally, Microsoft depends on partners to sell and host its CRM offering. But its hard to see how Microsoft will be able to scale its on-demand services if it has to depend on partners, most of which are small regional players.

Third, Microsoft's partners appear to be pricing the CRM offering at over $100 per user per month. The last time I checked, Salesforce.com was offering seats for well under $100. On that basis alone, Microsoft's offering is a non-starter.

The reason that Microsoft's offering is not price competitive is that it is built with a single tenant architecture. Each new customer needs a separate installation of the system, on a separate server, with a separate database, adding significantly to the cost. A multi-tenant architecture, as offered by the most successful on-demand providers, has a radically lower cost structure, allowing the vendor to on-board new customers quickly.

Furthermore, its hard to see how a Microsoft partner can afford to sell CRM on-demand to under 10 users, if it has to build a separate server for each sale. Microsoft's natural sweet spot is small businesses. But if partners can't afford to sell to the smallest prospects, how will they be successful? In contrast, Salesforce.com and RightNow can sell a five user deal as cost-effectively as they can sell as 50 or 100 user deal.

Microsoft does plan to rebuild its CRM offering around a multi-tenant architecture, but its projected ship date is sometime in 2007. Microsoft is already late to the software on-demand dance, and its product development schedule shows just how far behind it is.

Computerworld has more.

Related posts
Bill Gates pushing Microsoft toward software-as-a-service
Another false start for Microsoft's business apps
Burgum pushed aside as head of Microsoft Business Solutions
Reorg highlights troubles at Microsoft Business Solutions
Is Microsoft dying?
Microsoft eats more humble pie in enterprise software business
Microsoft: selling enterprise software is a "humbling experience"
Software on demand: attacking the cost structure of business systems

by Frank Scavo, 12/16/2005 05:34:00 PM | permalink | e-mail this!

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Monday, December 12, 2005

Salesforce.com offers development sandbox

As part of its AppExchange service, Salesforce.com is now offering users the ability to run test, development, or training copies of their applications, including any custom or third-party applications that the user is running on top of Salesforce.com. CNET has a summary.

Of course, in-house application development organizations have been maintaining testing environments since the early days of corporate computing in the 1950s. But for software on-demand, this is an important step in increasing adoption of hosted applications. Software on-demand is often hamstrung by difficulty in creating custom modifications or generally doing anything outside of running the production environment.

On-demand providers such as Oracle that install a separate instance of the application for each customer can offer multiple environments without much difficulty. But, to my knowledge, Salesforce.com is the first provider operating under a multi-tenant architecture--once system instance supporting multiple customers--to offer such a capability.

If you can read past the marketing fluff, there's more info on the Salesforce.com website.

Related posts
Salesforce.com set to strike out with AppExchange?
Software on demand: attacking the cost structure of business systems

by Frank Scavo, 12/12/2005 02:34:00 PM | permalink | e-mail this!

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Wednesday, December 07, 2005

How is your IT compensation shaping up?

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

How will your total IT compensation in 2005
compare with last year?

Hop over to Computer Economics, and take the poll now, in the righthand column. We'll write up our analysis of the results next month, after the poll is closed.

by Frank Scavo, 12/07/2005 08:36:00 AM | permalink | e-mail this!

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Sunday, December 04, 2005

SAP responds to Oracle's move into pricing optimization

Retail industry systems have been one of the latest battlegrounds between Oracle and SAP. Earlier this year, Oracle outbid SAP for Retek, a specialist vendor of retail management software. Then in June, Oracle added to its retail functionality by acquiring ProfitLogic, a niche vendor of pricing and profit optimization software. At the time, I predicted that Oracle's bid for ProfitLogic might lead to other acquisitions in this space.

Sure enough, late last month SAP announced its acquisition of Khimetrics, one of the other key vendors generally lumped together with ProfitLogic. The area of pricing, profit, and demand optimization is highly fragmented, with various players focusing on different aspects of the problem, in different industries. For example, ProfitLogic has strength in specialty goods and apparel, whereas Khimetrics has special expertise in grocery and general merchandise and has recently been pushing into financial services.

DemandTec, Manugistics, Spotlight, Connect3, and Vendavo are other vendors offering solutions in this space. Expect further consolidation as Oracle and SAP look to fill out their offerings in this area.

Update, 7:00 p.m. Read Jason Wood's comment on this post, which raises some insightful questions on this deal and why SAP didn't choose DemandTec over Khimetrics. Also, on his own blog, he writes,
Khimetrics is, by most accounts, a fine company [it's my understanding they are running at approximately $30mm annually and growing], but as an investor I have to wonder what this means for DemandTec? DemandTec has been SAP's partner in demand-driven price optimization and its solutions are already integrated into NetWeaver [unlike KhiDEMAND]. Furthermore, DemandTec is considered the market leader both in terms of revenue market share and technology footprint. So what led to SAP acquiring Khimetrics instead? Was DemandTec unwilling to sell? Was their asking price too high? Were there issues with the partnership that are beyond our purview?
I'm thinking maybe the story isn't over yet.

Related posts
Oracle beefs up retail offerings with ProfitLogic bid
SAP walks away from Retek deal
Manugistics V7 seeks to deliver profit optimization in small bites

by Frank Scavo, 12/04/2005 09:13:00 AM | permalink | e-mail this!

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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.

About the Enterprise System Spectator.

Frank Scavo Send tips, rumors, gossip, and feedback to Frank Scavo, at .

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

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