Tuesday, June 25, 2013
Oracle and Salesforce.com: The Great Detente
Salesforce.com and Oracle today announced a "new strategic partnership." For their mutual customers, the announcement represents a welcome thawing of relations between the two companies. But it remains to be seen whether it represents a strategic change of direction for Salesforce.com.
Not a Radical Departure for Salesforce.com
The press release
is quite short, just five paragraphs, outlining five points of partnership:
- SFDC will standardize on Oracle Linux.
- SFDC will deploy Oracle's Exadata engineered systems in its data centers.
- SFDC will deploy the Oracle Database and Java Middleware Platform as part of its cloud infrastructure.
- Oracle will integrate salesforce.com's cloud apps with Oracle’s Fusion HCM and Financial Cloud.
- Salesforce.com will also implement Oracle’s Fusion HCM and Financial cloud apps for its own internal use.
So, what exactly in this announcement represents a fundamental change in direction for Salesforce?
- SFDC's infrastructure is already based on Linux, so standardizing on Oracle Linux is a minor change.
- SFDC's applications already make use of Oracle's database as the lower-level physical data store.
- The press release provides no detail on how SFDC will make use of Oracle's Exadata boxes. If they are merely used to replace commodity storage devices, there would not be any change to the basic architectural design of SFDC's infrastructure.
- Oracle's integration of Fusion HCM and financial system with SFDC is merely an application integration initiative.
- SFDC's implementation of Oracle Fusion HCM and financial applications is a routine "win" announcement.
The second bullet could potentially be the most radical departure for SFDC. Oracle's new database release, 12c, could provide the
capability for SFDC to run multiple pluggable databases (one for each
customer) within a single container database. This would represent a fundamental shift for SFDC away from its single multi-tenant database architecture in favor of Oracle's pluggable database approach.
Nevertheless, the fact that there is no mention of 12c or pluggable databases in the press release makes
me seriously doubt that SFDC intends to fundamentally change its platform architecture. I have a question pending with SFDC on this point and will update this post if and when more information becomes available. [Update: SFDC is not willing to provide details beyond what was in the original announcement and subsequent conference call with Ellison and Benioff.]
Thawing of Relations
What I do find significant in this announcement is that Oracle and Salesforce.com have apparently buried the hatchet, at least for now. For their mutual customers, now and in the future, this is good news.
Customers are not well-served by vendors sniping at each other, and the verbal tiffs between Benioff and Ellison over the past few years, frankly, have become annoying. Hundreds of customers have interfaced Oracle Applications with Salesforce.com's cloud apps. But until now they have done so without the explicit support of Oracle. Customers will be pleased if the two companies can cooperate in providing standard integration. Hopefully, both parties will start acting like adults and
doing what is in their joint customers' best interest.
Workday Is Odd Man Out
If there is a competitive target in this announcement, it has to be Workday. SFDC will implement Oracle’s HCM and will integrate its Sales Cloud with Oracle’s HCM and also with its Fusion Financials product. This puts Workday in an awkward spot in that Workday leverages Force.com for its platform-as-a-service capabilities. It will be interesting to see how Workday reacts to this détente between Oracle and Salesforce.com.
While the use of Oracle Fusion within SFDC doesn’t mean much to SFDC customers, it does give bragging rights to Larry Ellison against Workday. Interestingly, NetSuite's CEO Zach Nelson was recently taking pot-shots on stage at Workday during NetSuite's Suiteworld conference. At the time, I took it as a sign of Workday's competition with NetSuite in financial applications. Now I see it as part of a wider competitive alignment. Both Zach Nelson and Marc Benioff are Oracle alumni and both have close ties to Larry Ellison. The three now seem to be joining in solidarity against Workday and validating that Workday is a threat to all three.
Regardless of the competitive posturing by these major enterprise technology providers, the Oracle/Salesforce detente is welcome news for customers.
Update, 11:30 a.m. PDT. Dennis Howlett spoke with Aneel Bhusri, co-CEO Workday, who says that he doesn't anticipate any impact from the Oracle/SFDC announcement.
Update, 12:15 a.m. Salesforce.com replied to my inquiry indicating they are unable to provide additional details at this time on the announcement.
Oracle Fusion Runs Into Oracle Apps Unlimited
Oracle's Behavior Undercuts Its Own Cloud Accomplishments
Labels: Fusion, Oracle, Salesforce.com, SFDC, Workday
Wednesday, June 05, 2013
Plex Software and Its Mandate for Growth
As the first cloud-only manufacturing ERP system, Plex Systems has a wide footprint of functionality, going beyond what is offered by newer cloud vendors.
Nevertheless, after more than a decade of development, Plex has fewer than 1000 customers and its presence is limited mostly to smaller manufacturing companies in a few sub-sectors.
As evidence, there were about 700 attendees at last year's PowerPlex conference. This year's PowerPlex, which I attended this week in Columbus, Ohio, saw about 750 Plex users in attendance. Granted, overall, these are highly satisfied and enthusiastic customers. There just needs to be more of them.
On the one hand, Plex claims a compound annual growth rate of nearly 30% over the past three years--an impressive number. But as the first fully multi-tenant manufacturing cloud vendor
, Plex could have, and should have, been growing at a faster pace. Now, there are several other cloud vendors taking aim at Plex's market, such as NetSuite
, and Kenandy
Plex must grow more aggressively, for two reasons. First, the company was acquired last year by two private equity firms. Private equity is not known for patience. Second, as CEO Jason Blessing pointed out in his keynote, growth protects the investments of existing Plex customers. Software companies that do not grow do not have the resources for continued innovation. Eventually, they only provide enough support to keep current customers--at best. They become, in effect, "zombie vendors," to use Blessing's term.
So, what does Plex need to do to grow at a more substantial pace in the coming years? I see six mandates. Some of these are fully embraced by Plex, while others, in my view, could use more emphasis.
1. Get Noticed
If some cloud vendors need to tone down their marketing hype, Plex needs to kick it up a notch. Plex was not only the first truly multi-tenant cloud manufacturing systems, it was also one of the first cloud providers period. Yet still the majority of manufacturing systems buyers have not heard of Plex. Reflecting Plex's home turf in Michigan, discussions with Plex insiders about this often includes the phrase, "midwestern values"--in other words, not blowing one's own horn. However admirable this humility may be on a personal basis, it is not useful from a business perspective.
Hopefully, this is about to change with the hiring of Heidi Melin
as Chief Marketing Officer. Melin worked with CEO Blessing at Taleo, and more recently she was CMO at Eloqua, which was acquired by Oracle. In my one-on-one interview, Blessing was high on Melin's arrival, and indicated that she would be especially focused on digital marketing to reach the many thousands of companies in Plex's target market.
2. Put More Feet on the Street
Blessing also indicated that he intends to beef up Plex's sales efforts, which to date have been concentrated largely in the Great
Lakes region. This has left many sales opportunities poorly supported in
other US geographies, such as the southern states (home to many
automotive suppliers), Southern California (home to many aerospace
suppliers), and other parts of the country that are home to many food
and beverage companies. Increased sales presence in international
markets is also needed.
This is a step long overdue. When my firm Strativa short lists Plex in ERP selection
deals, Plex is often flying in resources from across the country, which does not sit well with most prospects. Opening regional sales offices, like Plex has now done in Southern California, will help put more feet on the streets of prospects.
3. Move Up-Market
Historically, Plex's system architecture is oriented toward single-plant operations. There is some logic to this approach. As Jim Shepherd, VP of Strategy, points out, most of the information needed by a user is local to the plant he or she is working in. However, even small manufacturers often have needs that include multiple plants, cross-plant dependencies, and central shared services. Plex does have some multi-billion dollar customers, but these are
primarily companies with collections of plants that are relatively
independent of one another.
In response, Plex is building out its cross-site and multi-site capabilities while keeping its primary orientation around the single plant. In my view, this will be a key requirement in Plex moving up-market and serving larger organizations.
4. Build Out the International Footprint
The bulk of Plex's sales are to US companies, but if Plex is to grow more aggressively it will need to better support the international operations of these companies. It will also need to sell directly to companies outside of the US.
In his keynote, Shepherd pointed to the new ability for Plex to print reports on A4-size paper, commonly used in parts of the world outside North America. The fact that Plex is just now getting around to formatting reports on A4-sized paper shows just how US-centric Plex has been. To be fair, Plex does support multiple currencies and has support some international tax requirements, such as in Brazil, India and China, although some of this is done through partners. Nevertheless, Plex has much it could do to improve its appeal to multinational businesses. In this day and age, even small companies--like those Plex targets today--have international operations. Building out its international footprint is another prerequisite for Plex to achieve more rapid growth.
5. Venture Outside of Traditional Subsectors
Plex sees its current customer base primarly as three manufacturing subsectors today: motor vehicle suppliers, aerospace and defense, and food and beverage. Blessing indicates that by Plex's calculations, these three sub-sectors account for about 25-30% of the manufacturing ERP market. Surprisingly, however, Plex currently has no plans to expand outside of these sub-sectors. Blessing believes that simply by increasing Plex's sales execution in its current markets it can continue its compound annual growth rate of nearly 30% for the next several years.
Count me skeptical. First, as indicated above, Plex no longer has exclusive claim to the cloud manufacturing ERP market. Plex is going to have to fight a lot harder than it has in the past for new customers. Second, why is 30% growth the benchmark? I understand that there are risks in more aggressive growth. But aiming higher might be needed in order to meet the 30% goal.
In my view, Plex is not far off from being able to address the needs of manufacturers that are adjacent to its existing markets. These would include industrial electronics, medical devices, and industrial equipment. Plex already has some customers in these sub-sectors, so it's not like the company is starting from scratch. Hopefully Plex will formally target these industries, sooner rather than later.
6. Target the Customers You Want Not Just Those You Have
Over the past 10+ years , Plex has let customer requests drive its
product roadmap. In fact, much of Plex's development has been funded
directly by customers or groups of customers who desired certain new
features. This worked well to minimize Plex's up-front costs of new
development and also led to high levels of customer satisfaction.
However, it had one major drawback: if you only have customer-driven
development, everything you build will by definition only be of
interest to the type of customers you have today. In addition, a single
customer or group of customers are not able to fund major new
development that are more strategic in nature.
Here Plex is on the right track. Recognizing this need,
Plex is now allocating product development funds for strategic
initiatives, including a revamp of its user interface, cross-browser
access, business intelligence and reporting capabilities (Inteliplex),
as well as other major initiatives. In conversations with customers at PowerPlex they expressed these as welcome developments, although they have, apparently, diverted Plex resources from some of the customer-requested enhancements they also wanted.
The Way Forward
There's plenty that I admire about Plex: its zero-upgrades approach
, its broad functionality, and the fact that it proves manufacturing companies have been ready for cloud computing for many years, contrary to the claims of on-premise ERP providers. Most of all, Plex allows me to roam around its user conference and speak informally with customers. Nearly without exception, everything I hear is positive. Not a single customer has told me they made the wrong choice with Plex, although with any ERP implementation there are always bumps in the road.
But none of this guarantees that Plex will thrive in the future. Like proverbial sharks
, software vendors must continue to move forward, lest they die. The management team at Plex has some new blood, including the CEO, and a new perspective. They understand the opportunities ahead, but will they fully rise to the challenges? We'll be watching.
Note: Plex Software covered some of my travel expenses to their annual user conference.
The Simplicity and Agility of Zero-Upgrades in Cloud ERP
Plex Online: Pure SaaS for Manufacturing
Labels: Acumatica, cloud, ERP, Kenandy, NetSuite, Plex, Rootstock, SaaS
Sunday, June 02, 2013
Moving Outside the Box of Enterprise IT
Information technology goes far beyond the realm of enterprise IT. New technologies, such as big data, mobile applications, and cloud computing hold promise in addressing many of the world's great problems, while at the same time offering strategic advantage for businesses. Corporate IT leaders, therefore, need to reach outside their narrow focus on ongoing support to incorporate these new technologies to deliver business value.
This was my main takeaway from the Future in Review 2013 (FiRe2013)
conference down the road last month in Laguna Beach, CA. FiRe bills itself as "the leading global conference on the intersection of technology and the economy." It is an annual conference of the Strategic News Service
, which publishes research under this broad theme.
Beyond Enterprise IT
Although FiRe is focused on technology, it is largely outside the boundaries of what is typically considered "enterprise IT," or even "consumer IT." It even goes beyond "line of business IT." It is about future-oriented issues involving the impact of technology on economic and societal interests. Under this year's theme, Digitizing the Planet,
the agenda covered a wide range of focus channels, including computing and communications, economics and finance, education, energy, healthcare, environment, global initiatives, and pure science. Presenters included big names, such as Vint Cert, the "father of the Internet," who is now Chief Evangelist at Google, as well as a host of visionary thinkers from a variety of disciplines in the private and public sectors.
For me, it was a chance to get outside my usual track of user
and vendor conferences in the enterprise software market. It was also a great opportunity during the breaks to speak one-on-one with professionals outside of my usual circle, for example, David Engle
, Superintendent of the Port Townsend public school district and a panelist in the education channel, Nick Vitalari, author of the book, The Elastic Enterprise,
and Greg Ness
, who moderated a panel on hybrid cloud.
Here are some of the big ideas that caught my attention and what they mean for enterprise IT.
- Move from Data Analysis to Data Visualization. One eye-opener was the session on data visualization with Chris
Johnson, University of Utah, and Bob
Bishop, Founder of the International Centre for Earth Simulation (ICES) Foundation. The aim of ICES is to integrate all the sciences that pertain to planet Earth. The panelists showed one such visualization: a huge simulation of earth's thermohaline conveyor belt: a single worldwide ocean current that has a large impact on Earth's climate. Another showed the earth's magnetosphere.
How does this apply to enterprise IT? Organizations are swimming in data, both internal and externally sourced
data, both structured and unstructured. To go from analyzing the data,
to discovery of useful information, to decision support requires some
sort of visualization. If data analysis is on your IT strategic roadmap, data visualization should be there also.
- Social Collaboration around Data. There was more on the big data theme. Stanford and NASA engineers have come together to form Intelesense Technologies, with its collaborate.org website. The site provides an interactive 3-D globe, dubbed InteleView, with over two million layers of geospatial data (which users can supplement with their own data) along with forums, blogs, shared calendars, video conferencing, and other tools to facilitate group collaboration worldwide around data. To provide a hands-on experience, Intelesense gave trial system access to all FiRe attendees.
How does this apply to enterprise IT? It's not enough for just one person to visualize large data sets. We also need tools that promote collaboration around data. Collaborators may include individuals within and outside the enterprise, and they often include participants worldwide. Many so-called "social business" tools today only provide the mechanism for collaboration (e.g. threaded discussion) but do not include the content (i.e. data) for collaboration. The real need is to combine big data with social collaboration. The collaborate.org website is an excellent case-study in what this looks like.
- Business Opportunities and Threats in Big Data. John Hagel and Eric Openshaw from Deloitte posed the question: will massive increases in data lead to increased fragmentation of industries, or will it lead to consolidation of businesses in the hands of a few who can support these massive data platforms? Their answer: it depends on the industry and the business function. Fragmentation will occur mostly in product innovation and commercialization businesses, such as digital media, media businesses, and even in physical products that can be disrupted by 3D printing. On the other hand, consolidation may take place with infrastructure providers, such as digital platform providers. With big oil, the question was always, who owns the resource? But with big data, the question is, who can create the value from it?
How does this apply to enterprise IT? In the view of Hagel and Openshaw, most large companies are vulnerable, because they are largely focused on
their products, which is the part of their business that is threatened
by fragmentation. CIOs, need to look beyond systems to support their organizations' current business to capabilities and business models that can allow their organizations to compete in the era of big data platforms. It may not even be your data, but if you can create value from it, your organization will succeed in the marketplace.
- Protecting IP More Important Now than Ever. Although so much of FiRe was visionary, there was a significant focus on security, with four tracks on "Achieving Zero Loss of Crown-Jewel Intellectual Property." Vint Cerf, now Chief Evangelist at Google, used his time to talk about network security. Cerf and other presenters offered a number of potential solutions. Some are technical, such as increased use of two-factor authentication and software security measures integrated with hardware at the chip level. Others go beyond technology, such as the use of economic sanctions and import tariffs against companies that are found to have stolen intellectual property.
What does this mean for enterprise IT? As the world becomes increasingly connected and much of the organization's IP is digitized, the opportunities and rewards for IP theft increase. As CIOs facilitate new technology-enabled business models, they must also increase their focus on security.
- Simplification of IT Environments Key to Big Data Challenges. The conference was not without an enterprise IT focus. Mark Hurd, Oracle's co-President and a regular speaker at FiRe, was on hand for a wide-ranging conversation. He pointed out that twice as much data will be created worldwide this year than has been created in the entire history of the planet. Much of this is machine- or sensor-generated data, such as data coming from sensors positioned on deep sea drilling rigs. Drilling companies collect all of this data--much of which is uninteresting--so that they have access to that one piece of information that turns out to be critical when there is a failure deep beneath the sea floor. Storing, managing, and analyzing that much data is a challenge, and technologies such as virtualization and data compression are key to success. Yet many businesses are shackled by legacy systems and infrastructure that do not scale to meet the demand. Simplification of the IT environment, including use of public and private clouds, is essential to meet these challenges.
What does this mean for enterprise IT? CIOs have two responsbilities that are somewhat in conflict. They must maintain current systems while investing for the future. With limited IT budgets, IT organizations must simplify and optimize their existing systems and infrastructure so that they have the bandwidth to make these strategic investments.
A Challenge to Enterprise IT Vendors
The expanding role of technology is not only a challenge for enterprise IT leaders, it is also a challenge for IT vendors. Nearly every major enterprise IT vendor has its visionary initiatives. SAP has HANA, Oracle has its Exa-boxes, IBM has Watson and its Smarter Planet initiatives, and so forth. At the same time, these vendors have enormous revenues in legacy technologies: SAP in its Business Suite, Oracle in its collection of acquired software and hardware technologies, IBM in its legacy hardware and systems integration business lines, and so forth. If IT organizations are challenged to rise above their legacy system support requirements, so too are IT product and services providers. Can the major IT vendors meet the challenge, or will a new generation of big data and cloud providers take their place?
One note on the conference format itself. In contrast to most technology conferences, which feature highly scripted keynotes and breakout sessions with single speakers, the format of at FiRe is nearly all panel discussions or one-on-one interviews. This format promotes a much more conversational and spontaneous style. The moderators or interviewers take a minimalist approach, guiding the discussion where needed but not becoming a center of attention themselves. Mark Anderson
, the FiRe conference chair, and Ed Butler
from the BBC hosted a number of sessions in this style. Other conferences could learn from FiRe's format.
The registration page for the FiRe 2014 conference
, May 20-23, 2014 in Laguna Beach, CA, is now open.
Labels: big data, cloud, FiRe2013, Future in Review, IBM, Oracle, SAP
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