i2 layoffs underway, March 2009

I just got word from a Spectator reader, who is known to me, that layoffs are underway at i2. There's no news on the i2 website, no news on the wire, nothing on the blogs or Twitter. But the reader is in a position to know.

He reports that layoffs have hit "lots of senior talent" over the past few weeks.

i2 has been in a tough position since December, when JDA called off the merger it announced with i2 back in August 2008. At the time JDA did not disclose any information about why it canceled the deal. However, it did announce in November that it needed more time to secure financing, leading to speculation that the global credit crunch might force JDA to pull out.

I have attempted to contact i2 by phone and email to get confirmation and further insight but have not yet heard back. I will update this post if and when I do learn more.

In the meantime, if you have information please feel free to leave a comment or to contact me by email.

Update, Mar. 30. No response to an email and a voice message to i2's public relations representative.

Related posts
JDA calls off merger with i2
JDA to acquire i2, creating major SCM player
i2 forms committee for possible sellout
Pro-sellout shareholder of i2 elects second board member
Major i2 shareholder calls for sale of i2
i2 seeks patent license shake-down fees
Former i2 CEO learns crime does not pay
i2 innovates with hosted vendor-managed inventory services
SAP: If you can't beat 'em, sue 'em
i2 kills off its SRM business
i2 fires 300, struggles to refocus

Infor's opportunity: value in maintenance and support

Infor's Dennis Michalis stopped by my office yesterday for a chat. Dennis is Senior VP, Global Partners, in charge of all of Infor's partners worldwide. Not that my firm is interested in becoming a partner of course (we maintain strict independence from vendors). But he lives down the street here in Orange County, so it was an opportunity to speak with an Infor executive face-to-face.

During the discussion, I pointed out the opportunity that I see for Infor and other vendors to differentiate themselves in terms of value and flexibility in maintenance and support offerings.

Dennis responded that Infor, in fact, has been working to increase the value of its support offerings. He pointed to Infor's quarterly survey of customer satisfaction with its support services that has been showing consistent improvement. In December, Infor won a customer service award from MarketTools, an online market research company. I normally don't put much stock in such "awards" as I'm never sure of the basis on which they are granted. But let's stipulate for a moment that Infor has in fact been making improvements in the quality of its service and support offerings.

In a time when major players such as SAP and Oracle are charging 22% of license cost for maintenance programs of dubious value and attempting to stifle third-party maintenance, now is the time for other vendors to step up and do things differently. Here is where I see the opportunity for Infor to become the "good guys."

• Become known for quality of service and customer satisfaction. It doesn't lend itself to big-splash press releases, but it leads to installed base retention and an annuity business. It also leads to good customer references, which should allow Infor to scoop some new sales around the margins.
  
  
• Offer tiered pricing for different levels of service. Some customers want platinum level support, with rapid response help desk access and full rights to future versions. Other customers have highly-modified or very old products. They never use the help desk and don't plan to upgrade. But they would like regulatory updates and access to new products on a selective basis. They only need brass-level support. There are probably two or three other levels of support that should be offered in between. Why force everyone into one level of service as SAP is now attempting to do?
  
  
• Have a reasonable accommodation for third-party maintenance. This goes with the tiered pricing. There's no need for a vendor to take every last penny off the table. Some customers may want to buy brass-level service from Infor but contract with a local partner for help desk and contract maintenance. Allow Infor's business partners to be certified to offer such services. The partners provide a local presence, and it gives them another way to make money and keeps them in the Infor fold. It is a win/win/win all the way around.
  
  
• Provide SOA capabilities under maintenance at no extra charge. Dennis Howlett wrote about this recently. Infor is in the midst of SOA-enabling many of its products, which should allow piecemeal upgrades of older products and easy integration with Infor's complementary products as well as those of other vendors. If this capability is included for all customers under some level of maintenance it represents a huge potential increase in value for Infor's customers.
  

All of this is especially valuable to a vendor such as Infor, with a huge installed base of customers on legacy products. Infor's customers are a big target for SAP, Oracle, and other vendors that want to migrate such customers to their own offerings. But installed customers are always looking for reasons not to migrate. Doing everything possible to make it cost-effective and easy for them to stay put is the key for Infor to retain these customers and keep them on maintenance.

This strategy could be adopted by any enterprise vendor with a significant installed base. I hope many of them will do so.

Related posts
Infor using SOA to breath new life into old apps
Infor chases customer for fees on 20-year old software
Infor reassures customers of financial viability
Infor layoffs, Dec. 2008

Clamping down on employee misuse of IT

Over at Computer Economics, we've published the first of two reports on insider threats, based on a special survey we ran late last year. The first report, Insider Misuse of Computing Resources, deals with the extent of the problem of employee and other insiders misusing their computer and network access.

It's not just a matter of time-wasting:

The threat of insider misuse goes beyond loss of productivity. Some forms of misuse also expose the organizations to more sinister threats. For example, surfing the web can bring users to websites that contain malicious code, opening the user’s desktop and network to infection. Participating in peer-to-peer file sharing networks can do the same. Storage of pirated music, video, or unlicensed software exposes the organization to copyright violation liabilities. There are many other examples of the threats to security that can directly result from failure to reign in insider misuse of computing resources. While many organizations are sensitive to the need to defend against information security threats originating from outside the organization, the threat posed by insiders misusing computing resources can be just as great or greater.

Our website has an extensive free executive summary. The full report is also available for sale.

Oracle Fusion completion date slips

This is too good not to mention. Vinnie Mirchandani listened in on Oracle's Q3 conference call yesterday and picked up on Larry Ellison's comment about Oracle's next generation Fusion apps being scheduled for delivery in 2010.

Vinnie points out that in 2005, Oracle had slotted Fusion to be delivered in 2008. So, there has now been an unacknowledged two year slip in delivery of Fusion.

I also recall a post I wrote in January 2006, noting Oracle President Charles Phillips' claim that Oracle was already "half-way to Fusion."

So, in one year (Jan. 2005 to Jan 2006) Oracle completed 50% of the work. Assuming now that the 2010 reschedule date is good, it now means that it have taken another four years to complete the second 50%.

To me it sounds like the old project management joke about the project that is 90% complete for 90% of the time.

Update, Mar. 24: A Spectator reader who actually listened to Oracle's conference call points out that Ellison said that Oracle would begin to deliver Fusion apps "around the end of this year," 2009, not 2010. This doesn't change my main point, though, that Oracle was clearly exaggerating in January 2006 when it said that it was "half way to Fusion" after one year of work.

Related posts
Mr. Fusion leaving Oracle
Oracle's secrecy on Fusion specifics
More on Oracle's Fusion strategy
Oracle's Fusion strategy: clear as mud
Fusion to build on Oracle's E-Business Suite
Oracle going dark
Is Oracle's Fusion really half complete?
SAP slams Oracle's strategy as, Project Confusion

Spinnaker offering third-party maintenance for JD Edwards clients

Vinnie Mirchandani has a new post today, calling attention to another third-party maintenance firm, Spinnaker, which provides an alternative to JDE support directly from Oracle.

Read Vinnie's entire post for the details. In addition, Spinnaker's FAQ page has a good FAQ, which outlines the support services it offers, along with its perspective on how its services are different from those offered directly by Oracle.

I expect to see more firms like Spinnaker rising up these days, for two reasons:

• Customers are growing tired of escalating costs of enterprise software maintenance and support contracts. For too long, these services have been dominated almost exclusively by the software developers themselves. This has created an unhealthy, anti-competitive, situation where the cost of maintenance often far exceeds the value delivered. A backlash has been brewing now for several years, especially among customers of Oracle and SAP, which have escalated their support costs to the neighborhood of 22% of the original software license cost. Do the math: in less than five years, you will have paid twice for your system.
  
  
• The current economic recession is causing consulting firms, VARs, and other services providers to look for ways to diversify their businesses. The project-based nature of implementation and version upgrade services is difficult to manage: in boom times, they never have enough people, and in lean years, as today, they can't keep people busy. The contract maintenance business, in contrast, is a subscription business, with regular recurring revenues--something that sounds particularly attractive in today's economy. In addition, these firms often have personnel with many years of experience in particular software packages, sometimes much more than those staffing the vendor's support desk. So, why not go into the contract maintenance business?
  

For those consulting firms that are partners with major vendors, such a move will not be viewed kindly. On the other hand, some of these vendors have not been such great partners themselves in the current economy, in many cases competing with their partners for services business. So, what will the partners really lose by competing for the maintenance business?

I want to see firms like Spinnaker thrive. In the long run, a robust third-party support industry will be good for customers and good for enterprise systems overall.

If you know of other third-party support providers, whether for Oracle, SAP, or other vendors, let me know, and I'll be glad to call attention to them.

Related posts
SAP and third-party maintenance: good for me but not for thee
SAP maintenance fees: where is the value?
SAP under the spotlight for "broken promises"
Mad as hell: backlash brewing against SAP maintenance fee hike
Oracle increases accusations in SAP lawsuit
SAP puts TomorrowNow out of its misery
Legal basis for third-party ERP support industry
Oracle wants to broaden lawsuit against SAP and TomorrowNow

Infor using SOA to breath new life into old apps

Dennis Howlett has been spending some time in briefings with Info coming up to speed on the vendor's efforts to "SOA enable" some of its many acquired products. He writes:

It turns out that Infor is roughly half way through a six year program to service enable all of its applications at a budgeted cost of some $350 million. That’s over and above the 12% of revenues it allocates to R&D. Eighteen teams in nine locations are working their way through the process which will see Infor offering interoperability across old favorites like Baan, System 21, Sun Systems, XPPS, iSeries (Infinium) and MSA.
....
The idea is that customers should be able to take upgrades and enhancements at their own pace rather than go through a technical forced march. It also means that products like Baan 4.c.4, last sold in 1998 according to Infor will be just as capable of enhancement as later versions 5 and 6. This has to be good news for customers, especially as the SOA components are included as part of the company’s maintenance arrangements.

My take: From time to time I get calls from Wall Street analysts looking for insights into Infor's competitive position. I generally tell them that Infor has some truly best-of-breed products in its portfolio, in particular some of the complementary product offerings such as those for warehouse management, logistics, and product data management. In addition, some of its resellers, such as the Lilly Visual guys, have seen success selling into the smaller end of the ERP market.

Infor is one of those vendors that is easy to dismiss. As Dennis writes, "Rolling up a rag bag of distressed software vendors is not my idea of innovation but of financial engineering where you usually have to carefully watch the bang per buck coming out of the maintenance stream." Recent observations of Infor's sales performance --or, lack thereof--in new deals lends credence to this view.

Nevertheless, Infor does have considerable strengths, if it could just leverage them better.

• It has an enormous installed base that gives it a natural market to sell into.
  
• It has some truly best-of-breed products in its portfolio, in particular some of the complementary product offerings such as those for warehouse management, logistics, and product data management.
  
• It has some very good resellers, such as those selling its Lilly Visual and Syteline product lines.

Infor's work to SOA-enable its applications may provide that leverage.

• Infor can position itself as adding value by extending the life of its customers installed applications.
  
• It can offer an easy path to adding complementary functionality if it successfully SOA-enables its best-of-breed products.
  
• It can provide more opportunities to its resellers if its SOA strategy allows them to offer a bigger bag of products to sell to their customers.
  

Then, if it can combine all this with maintenance programs that don't cost an arm and a leg, it will have a real winner.

Infor's business model may not make headlines, but it can make money if it delivers value. For the sake of its many customers running its many products, I'm hoping it succeeds.

Related posts
Infor chases customer for fees on 20-year old software
Infor reassures customers of financial viability
Infor layoffs, Dec. 2008

SAP layoffs, March 2009

SAP appears to be executing its layoff plan this week, which it announced back in January. In an open letter then to employees, SAP co-CEOs Henning Kagermann and Leo Apotheker announced that the workforce reduction would impact 3000 employees, or 5.8% of SAP's workforce.

Although a small number of SAP folks were let go in January, the remaining number appear to coming in waves, one of which is occuring this week. I first noticed an increasing number of hits to the Spectator from Google, under keywords "SAP layoffs" earlier this week. The only confirmation seems to be coming from Twitter.

At a minimum, based on Twitter status updates, layoffs appear to be taking place in Palo Alto yesterday and today. There also appear to be some layoffs that took place in Israel last week, and in Australia the week before.

Again, if you have more information, feel free to leave a comment or send me an email.

Update, Mar. 16. Chris Kanaracus at IDG News Service made a few phone calls and has a few more details.

Related posts
SAP focusing on smaller deals, business intelligence
SAP Business Suite 7: selling value in tough times
SAP layoffs, January, 2009

SAP focusing on smaller deals, business intelligence

SAP held a West Coast partner summit this week, and a Spectator reader in attendance gave me some feedback on the session.

According to my source, SAP is recognizing the challenge of selling under current economic conditions. Without revealing the actual numbers shared in the summit, let's just say that SAP is appropriately lowering its expectations for the coming year. It recognizes that the days of the mega-deal are over and will focus this year on selling a higher volume of smaller deals as well as sales of Business Objects and other complementary products into its installed base. It will look to target competitors' (e.g. Oracle's) customers with these products also.

My take: SAP’s tactics are consistent with what many other observers have noted: large deals have for the most part dried up. Yet smaller companies are still buying new ERP systems, and larger companies still appear willing to make investments in specific areas, such as business intelligence (BI), where they can show value. Everyone—buyers, vendors, implementers, advisers—need to adjust their expectations accordingly.

Related posts
SAP Business Suite 7: selling value in tough times
SAP layoffs, January, 2009
SAP's Leo Apotheker on Charlie Rose