Dell acquires SaaS platform Everdream

Dell is making an interesting move into services by acquiring an on-demand provider of desktop management services, Everdream.

Everdream's business is aimed at the SMB market, to provide services such as desktop asset management, software distribution, license compliance, antivirus management, backup, remote access, and remote support--all delivered on a hosted, on-demand platform. Everdream has taken a partner-approach. All of the services mentioned above are provided through partners, such as Symantec, Webex, Iron Mountain, and Microsoft. Everdream provides the SaaS (software as a service) platform that allows all of these partner-services to be provided on-demand.

The benefits are clear: small businesses are relieved from having to build and maintain an IT infrastructure and support organization internally. SMBs also are generally too small to outsource desktop support as traditionally provided--most service providers do not even consider a contract for less than 5,000 desktops. Everdream's services, on the other hand, could be set up for a handful of machines.

So why is Dell interested in Everdream? Clearly, acquisition of its SaaS platform moves Dell more strongly into the services business, where margins are higher than in shipping commodity desktops. Dell already offers significant professional services, but more along the lines of traditional outsourcing contracts. Everdream's business model is disruptive to that business and gives Dell a new way to compete with H-P, which has been beating Dell recently in desktop sales.

According to Hoovers, Everdream currently has less than 200 employees--still a small business itself. With the acquisition by Dell, expect this business to grow significantly. As a SaaS provider, it scales easily.

SaaS, in theory, is disruptive to traditional licensed software sales and traditional professional services. Although many companies have deployed SaaS solutions on limited basis, the model has still not taken over in a big way. If Dell is successful in taking Everdream to the next level, it may validate SaaS as an option for a greater number of businesses and really encourage greater adoption.

Dell's press release gives details on the Everdream acquisition.

Josh Greenbaum has an interesting piece outlining why he thinks Everdream's approach using partners is better than that of Salesforce.com.

Update, 10:21 a.m. Greenbaum and Dan Farber, both bloggers on ZDnet, are having now gotten into a bit of a debate about the relative merits of the platforms of Salesforce.com and Everdream. Read Farber's rebuttal to Greenbaum, and Greenbaum's response.

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Reading the fine print on ERP contracts

Josh Greenbaum has a good story on why it's important to read, question, and challenge the terms and conditions in ERP license agreements, or any vendor contract for that matter.

The case involves an IBM customer who, eight or nine years ago, signed a contract for PeopleSoft software running on an IBM mainframe. The problem? A clause in the contract stated that the mainframe computer had been discounted as part of the PeopleSoft deal and that if the customer ever moved PeopleSoft off the mainframe, IBM was entitled to raise maintenance fees on the mainframe.

Recently the customer decided to migrate the PeopleSoft application to Microsoft SQL Server. IBM responded by pointing out the migration clause in the long-forgotten contract.

Josh explains the impact:

This tripling of the mainframe price tag effectively wiped out any possible savings for the database migration, not to mention good will and trust. You can imagine how happy this customer is with its long-term “partner.” And how eager this customer is to do any more business with IBM.

The takeaway is, read those contracts before signing them and don't just count on your corporate attorney to do the contract review. Many lawyers read technology contracts from a purely legal perspective and do not have the subject-matter knowledge to see the implications of what the vendor is asking for.

Furthermore, never accept that line that the vendor's salesperson is unable to get changes to terms and conditions because they are part of the vendor's "standard contract." In reviewing vendor contracts on behalf of clients, I've learned: everything is negotiable.

When you are committing your organization to a system and a relationship that may last ten years or more, you need to know what you are signing.

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SAP considering sale of TomorrowNow

TomorrowNow, which offers third-party support for several of Oracle's products (PeopleSoft, J.D. Edwards, and Siebel) has been under much scrutiny since Oracle sued SAP and TomorrowNow for massive theft of Oracle's intellectual property.

Back in July, as part of its response to the suit, SAP appointed former SAP Americas COO Mark White to oversee TN, with founder and CEO Andrew Nelson reporting to White. The news this week is that Andrew Nelson is leaving TomorrowNow altogether.

In a press release, SAP said that it is "considering several options for the future of the TomorrowNow business, including possible sale."

What's going on? It would appear that SAP is coming to the conclusion that acquisition of TomorrowNow was a mistake in the first place. Taking maintenance and support business away from Oracle, getting involved so closely with Oracle's customers, and handling Oracle's intellectual property--even if all done within the law--is simply too difficult for Oracle's main competitor to manage. Whatever benefits SAP might gain by facilitating customers' migration away from Oracle are probably not worth the difficulty in avoiding the potential legal risk.

It's too bad, because the nascent third-party support model has a lot to offer as an alternative to direct vendor support. It gives customers choices and puts the primary vendor on notice that it cannot take its maintenance and support business for granted. Unfortunately, SAP's misstep with TomorrowNow has been a setback for the model.

Update, Nov. 23. The Financial Times is reporting that Rimini Street may be interested in taking Tomorrownow off the hands of SAP. Rimini Street is the main competitor to Tomorrownow as a third-party support provider to Oracle clients. If a deal materializes, it would be full circle for Seth Ravin, CEO of Rimini Street. Seth was co-founder of Tomorrownow and was with the firm until it was sold to SAP.

Seth is quoted, "We are interested, but we are proceeding cautiously and need to analyse it first." He also declined to say whether he was talking to SAP about a deal.

Update, Nov. 27. Datamation has more on the possibility of Rimini Street taking Tomorrownow off the hands of SAP. It reports that Rimini Street's business has "quadrupled" since Oracle filed suit against SAP, according to Dave Rowe at Rimini Street.

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ERP support staffing ratios

The cost of supporting an ERP system goes far beyond the vendor's maintenance fees. The largest part of ERP total cost of ownership is the cost of internal resources, such as applications folks, DBAs, business analysts, ERP administrative personnel, and help desk. Yet, there is remarkably little data available to benchmark these costs.

Therefore, over at Computer Economics, we've launched a new survey to determine typical staffing levels in various categories required for ongoing support of ERP systems.

If you complete the 10-minute survey, we'll send you a free summary of the results.

Take the survey now.

Layoffs coming at Epicor?

A reader informs me that employees at Epicor are "expecting a layoff at any time." Speculation is that layoffs will come in smaller territories, which would then be serviced from larger metropolitan offices. The reader's source is an insider at Epicor, and the reader--whom I know--has no ax to grind.

I should emphasize that there is no confirmation for a pending layoff at Epicor. However, it would not be surprising in light of the revenue shortfall that Epicor warned about in late October.

Update, Aug. 15, 2008: See the new post on Epicor layoffs.

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IBM buying Cognos

The last large independent vendor of business intelligence solutions is about to fall: Cognos has agreed to be acquired by IBM. The price values Cognos at nearly $5 billion. IBM's move follows similar moves by competitors earlier this year, when SAP's agreed to buy Business Objects for $7 billion and Oracle bought Hyperion for $3.3 billion.

The Wall Street Journal is reporting this morning:

...The head of IBM's software group, Steve Mills, said acquiring Cognos -- which already had a business partnership with IBM -- was not inspired by those previous deals. IBM has been on an acquisition tear in recent years to build out its software portfolio and improve the company's overall profit margins.

"We never do acquisitions on defensive moves or based on what others are doing,'' Mr. Mills said.

Like Hyperion and Business Objects, Cognos is used by organizations with a variety of enterprise systems. In fact, many smaller ERP vendors have partnered with Cognos in the past to provide data warehouse and business intelligence functionality for their solutions. For example, QAD, Epicor, MAPICS (now part of Infor), and ROI (now part of Infor) both use Cognos as part of their total solution. Even SAP has a partnership with Cognos as part of its business warehouse offering.

From this perspective, IBM--which for the most part does not compete with business application software providers0--is a good home for Cognos. IBM is more of an infrastructure and tools provider for other software vendors. I would expect, therefore, that IBM would continue and even expand these partnerships.

[Updated Nov. 14 to correct list of ERP vendors partnering with Cognos.]

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i2 forms committee for possible sellout

i2 announced today that it has formed a committee of independent directors to explore options for increasing shareholder value.

The market is reacting favorably to the news of i2's exploration of a possible sale. Share price is up over 5% from yesterday's close as of this writing. i2 also announced an increase in its Q3 earnings, which may have something to do with the market's reaction.

I would note however, that the earnings increase is from a 9% decline in expenses which more than offset a 7% decline in revenue--not a good sign for i2's business.

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