Earlier this month, I noticed that the Spectator was getting hits from Google with search terms "Ellison" and "APICS" and sometimes "Las Vegas." Yesterday I found out why. It seems that Oracle's CEO Larry Ellison gave a keynote speech at the APICS International Conference in Las Vegas earlier this month, and people have been trying to find details on what happened. There doesn't seem to be anything in the business press about Ellison's speech. So I checked with two individuals that I knew were in the audience. Their reports to me were consistent with each other.
According to my sources, Ellison appeared "unprepared" and gave a 20 minute "meandering, off-the-cuff," promotion of Oracle's view of a single, centralized, universal database for the entire enterprise. One source said the points were virtually identical to those that Ellison gave to an Oracle user conference in the UK several weeks ago. "People were walking out in the middle of the presentation in droves," he said.
Those that stayed were not much friendlier. During the question period, one audience member, who claimed he had been speaking at APICS international conferences for over 20 years, chided Ellison for turning his keynote presentation into an Oracle sales pitch, something prohibited by APICS rules for speakers. (APICS's position, which is similar to that of other professional societies, is that if you want to make a sales pitch, buy a booth.)
According to one source, the general consensus after Ellison's performance was that--compared to other keynote speakers such as former Burger King CEO Barry Gibbons, Steelcase SVP Mark Baker, and Hilton Hotel's Anthony Nieves--Ellison looked "amateurish."
Friday, October 24, 2003
Friday, October 17, 2003
Siebel loses $59M and responds by going on a shopping spree
During the same week that Siebel reports a loss of over $59M it also announces that it is buying two other software companies: Upshot, a hosted CRM provider, and Motiva, an incentive compensation software vendor.
The loss of over 18% of revenue is especially troubling as business is definitely picking up among other major software vendors, such as SAP, which just announced increased positive earnings in the most recent quarter and a jump of 35% in revenue in the U.S. market.
Siebel evidently sees the hosted CRM market as a threat to its CRM franchise, especially at the low end of the market, where most of the real opportunities are today. CRM, and especially the sales force automation (SFA) part of CRM, is one of those applications that is natural for the Application Service Provider (ASP), or hosted, model. Users are mostly sales people in the field and the Internet based architecture works well for them. Siebel was already moving in this direction with its CRM OnDemand offering. Siebel's grab for Upshot just moves things along quicker.
Siebel's acquisition of Motiva is a smaller deal ($3M) that just fills out functionality for Siebel's offerings.
InfoWorld has an article on Siebel's weak financial performance. eWeek has details on Siebel's latest acquisitions. Information Week has a report on SAP's continued strong performance.
The loss of over 18% of revenue is especially troubling as business is definitely picking up among other major software vendors, such as SAP, which just announced increased positive earnings in the most recent quarter and a jump of 35% in revenue in the U.S. market.
Siebel evidently sees the hosted CRM market as a threat to its CRM franchise, especially at the low end of the market, where most of the real opportunities are today. CRM, and especially the sales force automation (SFA) part of CRM, is one of those applications that is natural for the Application Service Provider (ASP), or hosted, model. Users are mostly sales people in the field and the Internet based architecture works well for them. Siebel was already moving in this direction with its CRM OnDemand offering. Siebel's grab for Upshot just moves things along quicker.
Siebel's acquisition of Motiva is a smaller deal ($3M) that just fills out functionality for Siebel's offerings.
InfoWorld has an article on Siebel's weak financial performance. eWeek has details on Siebel's latest acquisitions. Information Week has a report on SAP's continued strong performance.
Wednesday, October 15, 2003
Beware the baffling bump in license revenue
I got a little insight recently into why the quarterly revenue of one well-known mid-market software vendor has been increasing lately, for no apparent reason. My source says that the vendor has been putting the squeeze on its existing clients for additional license revenue.
Here's how it's done. Several years ago, this vendor introduced a license audit program into its software distribution and began phasing out support for previous versions of its package. Now, according to the terms of its license agreements, it is ordering clients to run the audit program and report back usage statistics. Invariably, the vendor can find a few unpaid user seats here and there as grounds to declare the client in violation of its agreed terms and condition and demanding that they pay for those extra seats.
To be fair, most software vendor license agreements contain a clause giving the vendor the right to audit compliance. As new customers have become more difficult to acquire these past few years, vendors are tempted to enforce such rights in order to squeeze as much marginal revenue as possible from their existing customers. Although this approach will bump revenue in the short run, the strong-arm tactics can't be going over well with customers. And certainly, the revenue lift is not sustainable.
Here's how it's done. Several years ago, this vendor introduced a license audit program into its software distribution and began phasing out support for previous versions of its package. Now, according to the terms of its license agreements, it is ordering clients to run the audit program and report back usage statistics. Invariably, the vendor can find a few unpaid user seats here and there as grounds to declare the client in violation of its agreed terms and condition and demanding that they pay for those extra seats.
To be fair, most software vendor license agreements contain a clause giving the vendor the right to audit compliance. As new customers have become more difficult to acquire these past few years, vendors are tempted to enforce such rights in order to squeeze as much marginal revenue as possible from their existing customers. Although this approach will bump revenue in the short run, the strong-arm tactics can't be going over well with customers. And certainly, the revenue lift is not sustainable.
Tuesday, October 14, 2003
Yet another update on Project Green
A Spectator subscriber attended the Microsoft Business Solutions (MBS) partner conference in New Orleans last week and sent me some additional information on Microsoft's Project Green (formerly known as NextGen):
Frank, here is what I learned in New Orleans last week (not as much as I hoped but something). Microsoft announced that they will support and enhance Axapta through 2012. I was told that the NextGen product IS being built to Axapta functional specs, and that it's a fair statement to say that an Axapta user of today would readily recognize the software. And Microsoft is developing a bridge to ease the implementation of NextGen in an Axapta site.My earlier posts on Project Green (on Sep. 29, Oct. 2, and Oct. 6) generated a lot of traffic to the Spectator, especially after someone on a Microsoft Navision user message board linked to them. Clearly MBS users and even the resellers are not as well informed about future directions as they would like to be. Microsoft needs to put out a white paper or something regarding Project Green.
Saturday, October 11, 2003
U.S. DoD mandates supplier adoption of RFID
The U.S. Department of Defense (DoD) has ordered its entire supply base to begin use of radio frequency identification tags (RFID), effective January 2005. DoD's mandate follows a similar mandate by Wal-Mart on its largest 100 suppliers. Since these two mandates are going to drive rapid adoption of RFID technology over the next few years, let's take a quick look at RFID and what it means for manufacturers and distributors.
What is RFID? RFID technology allows products to be identified at a distance, by means of a tag that, when energized by radio waves, responds with identification information. You've probably already seen RFID in another application. It's the same basic technology used in proximity access control cards, which unlock a door when waved in the general area of a card reader. RFID tags in supply chain applications are similar except that the RF signal is stronger, allowing goods to be identified at a greater distance. The RFID standard being adopted by DoD is the same as that being adopted by Walmart, so there will be only one standard for suppliers to comply with. The new standard is called the Electronic Product Code (EPC), which is under development by the Uniform Code Council (UCC) and EPCglobal, a new organization under UCC.
Benefits of RFID. Once the RFID tag is affixed to the product, case, or pallet, any participant in the supply chain can use RFID readers to automatically identify and track them, untouched by human hands. The ultimate benefits are huge for productivity savings, increased data accuracy, timeliness, and visibility. At the risk of over-simplification, shipments into a warehouse could essentially announce their arrival and trigger matching against advance ship notices or purchase orders. Likewise, shipments out of a warehouse could identify themselves and trigger pick confirmation and advanced ship notice to the consignee. Manual effort in taking physical inventory would be greatly reduced. Think of it as bar-code data collection on steroids.
Costs of RFID. RFID isn't cheap. The DoD and Walmart mandates will require large investments in RFID infrastructure by suppliers. Since the infrastructure must be in place before applications can be developed to take advantage of it, suppliers themselves will see little immediate return on this investment, other than being able to continue to do business with DoD and Walmart. According to one estimate, fitting out a single warehouse for RFID could run $100,000, not counting the cost of integrating RFID readers into existing warehouse management systems to complement bar-code readers or manual transaction entry.
Furthermore, early adopters--those who are under DoD and Walmart mandates--are going to pay the most. Suppliers who can wait will save, as the cost of the technology drops with economies of scale. Walmart is shooting for a price of $0.05 per tag, but even that price will probably drop as volume increases. Tags today reportedly have a failure rate of 20%, which tells me that chip manufacturing processes are not yet mature. Still, as with any electronic component, yields will improve dramatically as volume increases, and tag costs eventually will fall. The cost of readers should fall as well.
What's the impact? DoD's mandate covers nearly everything purchased by the military, from munitions to commissary items, estimated at a whopping 45 million items supplied by over 20,000 suppliers. DoD's deadline is less than 16 months away, in January 2005. (Coincidentally, Walmart's first deadline is the same date.) Most observers doubt that DoD's deadline can be met, so there may be some extensions granted. However, because the benefits are so great, the mandate will not go away.
Despite the high implementation costs, the mandates by DoD and Wal-Mart are a huge endorsement of RFID and likely to trigger widespread adoption of this technology over the next several years. So, even if your firm is not a supplier to DoD or Wal-mart, you should still begin to research RFID technology. It is likely that in the not-to-distant future, someone downstream in your supply chain is going to start asking for RFID, and if your competition is ready to deliver, and you are not, you could be at a serious disadvantage.
Computerworld has a short article on the DoD's mandate. InternetWorld has a recent article on Walmart's mandate. For more in-depth material, check out the RFID Journal's extensive site.
What is RFID? RFID technology allows products to be identified at a distance, by means of a tag that, when energized by radio waves, responds with identification information. You've probably already seen RFID in another application. It's the same basic technology used in proximity access control cards, which unlock a door when waved in the general area of a card reader. RFID tags in supply chain applications are similar except that the RF signal is stronger, allowing goods to be identified at a greater distance. The RFID standard being adopted by DoD is the same as that being adopted by Walmart, so there will be only one standard for suppliers to comply with. The new standard is called the Electronic Product Code (EPC), which is under development by the Uniform Code Council (UCC) and EPCglobal, a new organization under UCC.
Benefits of RFID. Once the RFID tag is affixed to the product, case, or pallet, any participant in the supply chain can use RFID readers to automatically identify and track them, untouched by human hands. The ultimate benefits are huge for productivity savings, increased data accuracy, timeliness, and visibility. At the risk of over-simplification, shipments into a warehouse could essentially announce their arrival and trigger matching against advance ship notices or purchase orders. Likewise, shipments out of a warehouse could identify themselves and trigger pick confirmation and advanced ship notice to the consignee. Manual effort in taking physical inventory would be greatly reduced. Think of it as bar-code data collection on steroids.
Costs of RFID. RFID isn't cheap. The DoD and Walmart mandates will require large investments in RFID infrastructure by suppliers. Since the infrastructure must be in place before applications can be developed to take advantage of it, suppliers themselves will see little immediate return on this investment, other than being able to continue to do business with DoD and Walmart. According to one estimate, fitting out a single warehouse for RFID could run $100,000, not counting the cost of integrating RFID readers into existing warehouse management systems to complement bar-code readers or manual transaction entry.
Furthermore, early adopters--those who are under DoD and Walmart mandates--are going to pay the most. Suppliers who can wait will save, as the cost of the technology drops with economies of scale. Walmart is shooting for a price of $0.05 per tag, but even that price will probably drop as volume increases. Tags today reportedly have a failure rate of 20%, which tells me that chip manufacturing processes are not yet mature. Still, as with any electronic component, yields will improve dramatically as volume increases, and tag costs eventually will fall. The cost of readers should fall as well.
What's the impact? DoD's mandate covers nearly everything purchased by the military, from munitions to commissary items, estimated at a whopping 45 million items supplied by over 20,000 suppliers. DoD's deadline is less than 16 months away, in January 2005. (Coincidentally, Walmart's first deadline is the same date.) Most observers doubt that DoD's deadline can be met, so there may be some extensions granted. However, because the benefits are so great, the mandate will not go away.
Despite the high implementation costs, the mandates by DoD and Wal-Mart are a huge endorsement of RFID and likely to trigger widespread adoption of this technology over the next several years. So, even if your firm is not a supplier to DoD or Wal-mart, you should still begin to research RFID technology. It is likely that in the not-to-distant future, someone downstream in your supply chain is going to start asking for RFID, and if your competition is ready to deliver, and you are not, you could be at a serious disadvantage.
Computerworld has a short article on the DoD's mandate. InternetWorld has a recent article on Walmart's mandate. For more in-depth material, check out the RFID Journal's extensive site.
Thursday, October 09, 2003
Friends in Southern California...
If you're in the area next Tuesday afternoon, October 14, come over to the Crowne Plaza Hotel in Irvine. I'm giving a pre-dinner clinic at the American Society for Quality (ASQ) meeting on the subject, "Enterprise Systems in an FDA Regulated Environment." You can't beat the price: ASQ clinics are free to the public. If you want to stay for dinner, though, you'll need to pay.
Details are on the flyer at the ASQ Orange Empire web site.
Details are on the flyer at the ASQ Orange Empire web site.
Wednesday, October 08, 2003
PeopleSoft strengthens its manufacturing offerings by acquiring Demand Flow
At the APICS International conference this week, PeopleSoft (PSFT) announced it has acquired JCIT's patented Demand Flow software, a product based on lean manufacturing concepts. PeopleSoft will integrate Demand Flow with PeopleSoft's supply chain offerings. The acquisition is consistent with PeopleSoft's intent over the past year to become a serious player in manufacturing and supply chain management, by hiring industry experts such as Patrick Quirk out of i2 and Carol Ptak, past president and CEO of APICS. Ptak in particular has been positioning PeopleSoft's manufacturing offerings in the larger context of demand-driven planning and execution. She says, "Companies that focus internally on inventory and cost can no longer compete. Manufacturers must become demand-driven to survive." Acquiring Demand Flow puts more muscle behind that message.
PeopleSoft's press release does not indicate whether that means Demand Flow will be integrated with the J.D. Edwards products as well as with PeopleSoft Enterprise, but that would surely make a lot of sense. JDE has more current clients in the manufacturing sector, which would provide quicker cross selling opportunities for the Demand Flow offering.
PeopleSoft's press release does not indicate whether that means Demand Flow will be integrated with the J.D. Edwards products as well as with PeopleSoft Enterprise, but that would surely make a lot of sense. JDE has more current clients in the manufacturing sector, which would provide quicker cross selling opportunities for the Demand Flow offering.
Monday, October 06, 2003
Microsoft Project Green details emerging
Doug Burgum, head of Microsoft Business Solutions (MBS), has been giving out more details on Project Green lately. In a nutshell:
The Microsoft Momentum partner conference is in New Orleans this week, and discussion of Project Green is on the agenda. One Spectator reader plans to be there and indicates that he will brief me on details.
- Project Green is an entire new code base that will replace current code for Great Plains, Navision, and Solomon (I'm assuming Axapta is in meant to be in that list). It will be released along with Microsoft's new OS version, dubbed Longhorn.
- Burgum admits that MBS has not wanted to talk much about Project Green in order not to upset current customers and partners. This explains why, until now, not many customers knew about it. In an interview last week, Burgum said, ""We have large installed bases of happy customers who continue to buy add-on modules." He also said that MBS will continue to sell and support the current-generation applications for years.
- Project Green will be built on top of a new integration and tools layer that Microsoft is developing, called Microsoft Business Framework (MBF). The next-gen applications will sit on top of MBF, which will sit on top of Microsoft's .NET. Details on MBF are sketchy to me at this point, but it appears that MBF will provide integration and perhaps even some core functionality that is common between the applications. The platform will be open in the sense that Microsoft business partners will be able to write additional applications on top of MBF.
The Microsoft Momentum partner conference is in New Orleans this week, and discussion of Project Green is on the agenda. One Spectator reader plans to be there and indicates that he will brief me on details.
Thursday, October 02, 2003
Feedback regarding Microsoft's Project Green
I've been getting feedback regarding my post earlier this week on Project Green. Readers are making four main points:
- Microsoft Business Solutions (MBS) resellers have known about Project Green (formerly known as "NextGen") for at least a year now, so it's old news.
- Customers of Great Plains, Navision, and Axapta are not at risk from Project Green because Microsoft is planning to offer free upgrades to existing customers, as long as they are current on maintenance payments.
- Microsoft plans to use the functionality of Axapta as a starting point for requirements for Project Green.
- Microsoft will offer conversion routines to make it easy to upgrade from existing products to Project Green, so that it will not be like implementing a whole new system.
Wednesday, October 01, 2003
Where does Oracle go from here?
Joshua Greenbaum has an interesting piece in Datamation regarding Oracle's future, where its greatest threat is IBM:
In Josh's view, an acquisition of PeopleSoft by Oracle does nothing to solve the IBM problem. Many or most PeopleSoft clients are already running Oracle's database, so the cross-selling opportunities are not so great.
The blowing wind that Ellison worries about most, in my opinion, comes from IBM. Sure, Microsoft is out there too, but IBM is the one that understands the enterprise market and can give Oracle a genuine run for its money. The triple threat that IBM presents -- high-end business consulting, database and systems software, loss-leader hardware sales -- has to keep Ellison up at night. Other companies, like SAP, compete directly with Oracle. But only IBM threatens to dominate.In response, Greenbaum expects Oracle to attempt an acquisition of a high end services business, similar to IBM's acquisition of PriceWaterhouseCoopers, and even an acquisition of a weakened Sun Microsystems, to answer IBM's hardware bundling.
In Josh's view, an acquisition of PeopleSoft by Oracle does nothing to solve the IBM problem. Many or most PeopleSoft clients are already running Oracle's database, so the cross-selling opportunities are not so great.
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