More on Oracle's Fusion strategy

The venerable Bruce Richardson at AMR had a meeting and e-mail correspondence with John Wookey, head of application development at Oracle, regarding Oracle's strategy for Fusion. Richardson summed up his correspondence with Wookey in an AMR alert.

The main takeaway, in my opinion, is that Oracle intends to continue major investment in its existing products (E-Business Suite, JDE, PeopleSoft, Siebel, etc.) at the same time that it is investing major resources in its next generation Fusion product. This approach is meant to give (the big word here) "choice" to customers as to when to upgrade/migrate to Fusion.

Wookey says,

The key is choice. We expect people to embrace Fusion, but we want them to move to Fusion based on when it makes the most business sense for them. We are not taking the traditional vendor approach that pushes customers to move based on vendor timelines.

But can Oracle really afford to do two things--to fully invest in its multiple existing products at the same time it is investing in an entirely new product? Wookey says yes, though he doesn't say how doing both will affect Oracle's financial performance as a publicly held company:

Typically, a vendor only has enough resources to re-platform applications and put the existing technology into maintenance mode (i.e., bug fixes); this means that customers don’t have the luxury of figuring out when it is right for them to move to the next technology. They are forced to go when their vendor releases its next product.

Our strategy is different. We are giving our customers a choice … true choice because we will continue to make the current products better and we will deliver a next generation application suite that customers will move to when they see the business value.

Oracle's strategy is clearly aimed at keeping its existing customers from jumping ship while it makes the transition to Fusion. In this regard, I think Oracle is smart.

But what Richardson did not probe is Oracle's apparent decision to base Fusion on the E-Business Suite (EBS) data model and business rules. From Oracle's perspective, this decision is logical--Oracle has to start somewhere with Fusion. But as I pointed out previously, this decision has huge implications for existing and prospective Oracle customers. For existing customers, it means that while EBS customers will face something like a major upgrade to go from EBS to Fusion, customers running JDE or PeopleSoft will face something like a complete migration to a new product. This is why Oracle has to commit to investing in its existing products.

But the implications for prospective Oracle customers are also serious: if you are shopping for a major ERP system today, and you are considering Oracle, you should only consider EBS. There is no point in buying JDE or PeopleSoft (the situation is less clear with Siebel), no matter how much money Oracle sinks into these products today, because they do not represent the easiest path to Fusion.

That's the line of questioning that I wish Richardson had pursued.

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RFID adoption stalling?

Radio frequency identification (RFID) systems have been touted as a breakthrough enabling technology for supply chain management, asset management, IT security, patient tracking, and a host of other applications.

However, some preliminary analysis of statistics from our work at Computer Economics, coupled with some reports I'm hearing from clients, indicates that rollout of RFID in several different industry applications may be hitting a flat spot. Although companies have launched RFID pilot projects, or have implemented RFID in a limited way, it seems many of them are not extending their use of RFID, at least for now.

It's hard to say whether the problem is with RFID technology itself, or the perceived cost/benefits, but I'd like to understand more in order to write an analysis of this issue.

If you've got insights into the current state of adoption of RFID, please drop me an email, or leave a comment directly on this post.

Salesforce.com's AppExchange proving its viability for developers

Bruce Richardson at AMR Research notes the rapid growth and adoption of new applications available on Salesforce.com's AppExchange platform.

By way of review, AppExchange is the software-as-a-service (SaaS) infrastructure and application development platform on which Salesforce.com runs. Salesforce.com has also made this platform available for software developers to write, market, and sell new applications that can be integrated by means of SOA with Salesforce.com itself, with other apps on AppExchange, or even with external applications that comply with SOA standards.

Richardson writes,

When [AppExchange] went live [in January 2006], there were more than 150 applications available. More than 1,500 applications were installed in the first week, and customers took more than 75,000 test drives to try them all out.

By April 20th, AppExchange had grown to 188 applications, with 7,100 installations and more than 100,000 test drives. The current numbers are 317 applications, nearly 14,000 installations, and more than 143,000 test drives. One executive said that the Kieden deal has focused a lot of eyes on AppExchange, providing a sharp boost to downloads and test drives.

The AppExchange site maintains a list of the five most popular applications. Maybe it's the free price, but four of the most popular are provided gratis by salesforce.com. These include dashboards to track user adoption, project and issue management, sales quote support, and advanced call scripting.

Are all these new products built on AppExchange just toys? It doesn't appear so. According to another AMR research note, by Robert Bois, a start-up called Kieden launched a search marketing application earlier this year on AppExchange, which "allows users to buy Google ad words directly from within the CRM application and then track the closed-loop process for identifying productivity of leads from the campaign, all the way down to account level."

Kieden started in development in January, funded entirely by the founders own cash. This month the firm was acquired by none other than Salesforce.com. Whatever the price, which was not disclosed, going nine months from start up to acquisition sounds like a pretty good deal and it would seem to be a proof case for SaaS as a new route to value for enterprise software developers.

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Oracle's Fusion strategy: clear as mud

Earlier this month, I wrote a post regarding Oracle's intention to build its next-generation Fusion applications on the Oracle E-Business Suite data model and business processes. My conclusion: for JDE and PeopleSoft customers, Fusion will not be like an upgrade to a new version but a migration to a whole new product.

Since then, Josh Greenbaum had the opportunity to sit down with Oracle's John Wookey to understand "the details of where Fusion 1.0 planning is today." Josh writes for Datamation, "I will say that Oracle’s strategy is now starting to make some sense."

Really?

Josh sums up Oracle's new Fusion story as this:

Fusion 1.0, instead of being a superset of the functionality available from the different stand-alone products that Oracle now owns, will be a subset culled from Oracle’s many product lines. That subset will appeal mostly to companies that think technology innovation along the lines of web services and business modeling is more important than functional innovation along vertical industry lines.

This means that Fusion 1.0 is not E-Business Suite 13, though many of the EBS data models will be part of Fusion 1.0. Nor is this a "SAP-killer" by any stretch of the imagination. The reality is that Fusion 1.0 is an alternative path toward web services, modeling, and other next generation functionality.

Well that certainly clears things up now, doesn't it?

Josh indicates that Oracle is about to launch "a road show designed in part to clear the air about what Fusion Applications are all about."

If Oracle's interview with Josh is any indication of what they will be presenting to customers, they might want to practice in front of the mirror a bit more before hitting the road.

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Privacy threat: another PC missing with VA data

Apparently, the Veterans Administration doesn't get it. In May, the VA reported that a laptop, containing personal information on 26.5 million individuals was stolen from a VA employee's home. That laptop has since been recovered and the thieves arrested.

But now desktop computer, containing personal information on an estimated 36,000 individuals, is missing from a VA subcontractor, Unisys. Unisys notified VA last week.

According to Computerworld, "the desktop computer may have contained patients' names, addresses, Social Security numbers, dates of birth, insurance carriers and billing information, dates of military service, as well as claims data that may include some medical information."

After the May incident involving the stolen laptop, VA officials testified before Congress several times concerning plans to revamp security as part of an agency-wide reorganization of its distributed IT environment. But apparently, VA is not moving fast enough.

I'm not privvy to what work Unisys was doing with the personal data, but it is hard to believe there was no way that some of that data couldn't have been de-personalized. For example, did Unisys really need to have the actual social security numbers of those individuals?

One solution: the VA needs a sensible data classification policy, or if it does have one, it needs to be enforced.

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IBM compromising its partner strategy with bid for MRO Software

IBM has reached agreement with MRO Software to acquire this vendor of enterprise asset management systems. The deal is for $740 million. IBM plans to incorporate MRO's products into its Tivoli systems management software.

While IBM's Tivoli products current provide asset management functionality for IT assets, MRO's functionality embraces all assets of the enterprise, including IT. In fact, MRO could be considered one of the leaders in EAM systems, if not the leader.
Its Maximo product line targets manufacturers, utilities, government, universities, and hospitality industries, among others. It is strong in advanced planning and scheduling for maintenance activities, and it accommodates complex condition-based preventative maintenance planning. It even has its own e-procurement solution and plays well with various online marketplaces for maintenance, repair, and operating supplies.

MRO's strategy in the past has been to partner with major ERP vendors to provide integration with financials and other back-office systems. This works well with IBM's strategy of providing consulting and implementation services across a wide range of technology providers.

Still, one must ask, does the acquisition of MRO Software represent a shift in IBM's strategy of not competing with its independent software vendor (ISV) partners? Yes, software sales are the most profitable segment of IBM's business these days. But, over the past decade, IBM's strategy has been to provide infrastructure software, such as databases and development tools to its ISV partners and also to provide implementation and integration services to customers of those ISVs. It avoided competing head-to-head with those ISVs for their core business. IBM has is doing a lot of acquisitions these days, but to my knowledge, this is its first major bid for a true business application vendor.

By own suspicion is that this is not a change of direction for IBM, but an exception. MRO was available, the technology match was good. Unfortunately, however, MRO comes with a lot more than is needed to fill out Tivoli's product lines. I'm guessing that IBM just compromised a bit with its partner strategy.

The test will come when IBM starts going up against SAP or Oracle for major EAM sales.

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Fusion to build on Oracle's E-Business Suite

It's now clear that Oracle's next generation application suite, dubbed Fusion, will be built on Oracle's flagship E-Business Suite (EBS) data model and business rules. Where Oracle does not have functionality that exists in JDE or PeopleSoft, Oracle will treat these as new requirements for Fusion. But in satisfying those requirements, there is no guarantee that the business process flow of Fusion will match that of today's JDE or PeopleSoft.

Oracle is not saying any of this publicly, not wanting to commit to this direction, but in response to questions along this line it is pointing to a Gartner report that says basically what I've stated in the first paragraph.

The implications for J.D. Edwards and PeopleSoft users are important. While Oracle has promised "lifetime support" for JDE and PeopleSoft products, it is not promising to continue to enhance these products as the rate it is doing so today. Essentially, this means that if JDE or PeopleSoft customers want to upgrade, at some point, they will be looking at a migration to Fusion. The fact that there will not be a merging of code from JDE and PeopleSoft into Fusion means that customers will need to evaluate Fusion just as they would a completely new ERP system.

In other words, for Oracle users, a move to Fusion will be like a major upgrade. For JDE and PeopleSoft users, it will be a completely new package.

The implications for prospects considering a new ERP system are also clear. In my opinion, there are very few, if any, cases where a company should consider JDE or PeopleSoft, knowing that these products are slated for retirement. Lifetime support is a good insurance policy for existing JDE and PeopleSoft customers--those that have already made their investment in these systems. But why would a company, not yet committed, make an investment in products that are not the basis for Fusion? As one CIO told me recently, it would be like making a strategic decision today to buy IBM's Informix database. Sure, IBM still supports Informix, but that's not where it's making its major investments.

The JDE resellers may argue. But the fact is that many of them are already selling EBS along with JDE or are planning to do so. There will be a lot of work going forward to support JDE customers--even more work, perhaps, to support those that want to migrate to Fusion. But I expect that new sales for JDE are already tapering off and the resellers know this.

Do you have a different opinion? Leave a comment on this post or email me.

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Infor's support for Lilly Visual customers

A source inside Infor contacted me regarding a post I wrote earlier this month on open source ERP gaining adherents. His issue is not so much with the main point regarding the growing attraction of open source ERP. Rather, he believes that the eWeek article I referenced misrepresents the experience of Lilly Visual customers since Lilly was acquired last year by Infor.

He writes,

The idea that customers are leaving VISUAL software in droves is absolutely inaccurate. In our fourth quarter in the U.S. alone we sold 50+ new sites of VISUAL. It was an all-time best quarter for us at Infor in general. We still support our VISUAL customers as always through our affiliate channel. That has not changed one bit. The core organizational structure in Hampton, the former headquarters of Lilly, is still intact.

The eWeek article references the opinion of one customer leaving VISUAL. It should also be noted that we came out with release 6.51 in January, and 6.5.2 is coming out September 1st. So those who say that there have been no core enhancements have not looked at the two previous releases. We also continue to add integration for point solutions from other products in the Infor line.

I have not had any recent first hand contact with Visual customers to check their experience with Infor's support since acquiring Lilly Software. I've noted in the past that Visual had built out some nice functionality for lean manufacturing and constraint-based scheduling. I would love to hear first hand reports from customers of Infor's continued support and enhancements to the product.

If you're a Visual customer, feel free to email me or add a comment directly to this post.

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Made2Manage marks sixth acquisition with bid for Intuitive

Made2Manage is adding to its portfolio of discrete ERP systems with its acquisition of Intuitive Manufacturing Systems, announced today. The deal is the sixth for M2M since it went private in August 2003.

Although Intuitive is an old name in small and mid-size ERP, it has been rewritten recently and claims to be now 95% based on Microsoft's .NET framework. It has been on a small acquisition binge of its own, having acquired SupplyWorks, a supply chain management vendor, in March, and Relevant, a specialist in aerospace, engineer-to-order, and MRO businesses, which Intuitive picked up in April.

I'm generally skeptical about the value of a vendor rollup to customers of the target vendor. Too often the new parent either scales back enhancements to improve profitability of the maintenance stream or puts customers on a migration path to some successor system. Made2Manage gets a pass, though, in my opinion. They appear to be running each of these acquisitions as a separate organization, for the most part, but introducing some economies of scale and best practices in sales and support processes.

One source of mine, inside Intuitive, is quite positive about the deal, and I don't think he's spinning me on it.

There's more in the press release on M2M's website.

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Open source ERP gaining adherents

Open source ERP systems--thus far a small slice of the market--are becoming more attractive in light of the rapid vendor consolidation of commercial ERP packages.

At least that's what this eWeek article claims.

The director of operations at Marena Group, a manufacturer for post-surgical garments, [John] Rogelstad had a Lilly Software Associates ERP system in place, but after Lilly was acquired by Infor Global Solutions, he found a dramatic decrease in support. With several big IT initiatives in the pipeline, Marena started to feel uneasy with Infor as a partner. "We felt like since Infor acquired Lilly, they were getting very bureaucratic and disorganized. Our sense was they were more interested in acquisitions than working on their core product or developing a new core," said Rogelstad in Lawrenceville, Ga.

Rogelstad chose OpenMFG, a quasi-open-source system, as a replacement for Infor's Lilly.

The article also highlights implementations of another open source ERP system, Compiere, at Pertronix, in San Dimas, CA, and at e-BuckMail.com, in Hudson, WI.

Although open source applications, especially enterprise systems such as ERP, are not as widely implemented as open source infrastructure software, such as Linux and Apache, the trend does seem to be increasing. Clients used to point to the assurance that commercial software vendors stood behind their products, promising support and investment in R&D. But with the acceleration of vendor consolidation and the sunsetting of products, those assurances aren't what they used to be.

The continuity of support for open source systems, which depend on a network of interested parties, starts to look like a more attractive model.

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