IT project management lessons learned, and re-learned

Liam Durbin, CIO at GE Fanuc Automation, writes in CIO Magazine about one of the most important lessons learned in IT project management--the need for strong leadership from the business side.

I took my current position on the heels of such a hard lesson. Our software business was the scene of the crime for our disastrous CRM implementation. Inside sales team was bleeding badly from several deep wounds and a thousand paper cuts. Channel partners were revolting. Activities that used to take minutes, like placing an order or checking availability, now could take half an hour. The system was bouncing frequently. The IT team was releasing a Siebel recompile every other day.

The root cause of the problems? A lack of strong functional leadership on the project. To emphasize this lesson, Durbin points out five scenarios where IT projects fail from lack of functional business leadership (in my words):

1. Trying to make the new system work just like the old system
2. Rushing the implementation to satisfy unrealistic schedule expectations
3. Expecting the IT project manager to represent business users as well as IT
   
4. Underestimating the complexity of data warehouse projects
   
5. Having multiple functional leaders instead of a single commander
   

It's not that IT executives don't realize the need for engagement by functional leaders--it's that they too often forgot or compromise "just this one time." They know what's right, but they don't stay strong in the face of false assumptions or unrealistic expectations.

Read the whole article.

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Update on Lawson's strategy

I interviewed Barry Wilderman, VP Business Strategy at Lawson Software, yesterday. I haven't written much about Lawson recently, so I thought it would be good to get the story from Barry, apart from the usual press releases and announcements.

Barry was named to his post this past January. Previously, he was a senior VP at META Group, where he was an ERP market analyst. I've met Barry in the past and have appreciated the analysis he did at META on the total cost of ownership (TCO) of ERP systems. He was a good catch for Lawson.

Some of the key points from our phone discussion.

1. We discussed Lawson's SOA framework, Landmark. Introduced over two years ago, Landmark incorporates pattern, or domain-specific language, to allow business analysts to build applications without knowledge of programming. So far, Lawson's human capital management (HCM) offering is built on Landmark as well as its new strategic sourcing application. Eventually, all of Lawson's products will transition to this new technology environment.
   
   
2. Landmark is built entirely on IBM technology, such as Websphere. I've long felt that application software vendors have no business building application development tools, so I agree with this strategy. At the same time, however, doesn't this reliance on IBM pose a problem to Lawson customers who do not use IBM technology? Barry agreed that this could be a problem to a customer that has standardized, say, on Microsoft's competing .NET technology. However, if Lawson is a key component of the customer's application portfolio, it should justify the transition.
   
   
3. I pointed out that many other software vendors have stumbled when they tried to make a major technology transition. Witness all the vendors from the host-based era who tried to make the transition to client-server. For example, the former System Software Associates (SSA) went into bankruptcy as the result of its attempt to move its AS/400 host-based product, BPCS, to a client-server architecture. J.D. Edwards had problems for several years in its transition from its host-based World product to its client-server and web-based offering, One World.
   
   
4. Barry didn't agree with my analogy, however, indicating that Lawson had already made the transition to Websphere for its entire product line, and that the move to Landmark was more of an evolution than a wholesale technology overhaul. So, the introduction of SOA and workflow should be less disruptive and can be accomplished in stages.
   
   
5. How does Lawson compete with SAP and Oracle? These days I'm hearing of many cases where prospects are not considering other vendors and when they do, SAP and Oracle are difficult to beat. Barry indicated that Lawson competes by focusing on key verticals, such as healthcare and retail. When they compete in their sweet spot, they do not lose many deals.
   
   
6. Lawson made a major acquisition two years ago when it merged with Intentia, a Swedish-based vendor that is strong in manufacturing and asset-based businesses, especially in Europe. Has this merger been successful, and how much cross-selling is taking place between customers of Lawson and Intentia. Barry indicated that there have been a handful of cross-sales of M3 (the former Intentia product) to Lawson customers, mostly of Intentia's enterprise asset management (EAM) offerings. There have also been a few sales of M3 in total into Lawson's installed base in the U.S. There have not yet been a lot of sales of Lawson's HCM into Intentia's customer base in Europe, however, largely because of the need to provide compliance with European regulations.
   
   
7. Finally, Barry said that he wants to communicate a more sophisticated message concerning Lawson's total cost of ownership, that Lawson delivers more value per dollar invested. In his view, Lawson installs faster, is easier to understand, and takes less time to implement. Of course, these are claims that are put forth by nearly all enterprise system vendors. Barry's previous work at Meta did show that Lawson (along with QAD) had the lowest TCO of seven or so major ERP vendors. Whether those results still hold true now, five or six years later, are unclear.
   
   
8. All of the major vendors are making significant efforts to simplify and speed implementation, and there is anecdotal evidence that those efforts are bearing fruit. At the same time, much of the cost of implementation is outside of the control of the vendor. A client that is well-organized for the effort, who has a well-trained project team and understands the need for business process improvement and change management will realize a much lower TCO than the client that expects the vendor to do all the work.

Still, Lawson continues to be one of the largest enterprise system vendors that has managed to show enough success to remain independent during this period of software vendor consolidation. Its share price is at its highest point since 2002, which vindicate Lawson's CEO Harry Debes and his email to me earlier this year.

Comparing Lawson's share performance over the past six months with SAP and Oracle (see below), it would appears that the market agrees.


Update, 9:36 a.m.: This morning, Computerworld has an interview with Lawson CEO Harry Debes, where he talks at length about competing with SAP and Oracle.

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SAP sales jump, defying Oracle's PR campaign

Following Oracle's outstanding quarterly results last month, SAP has posted its own preliminary results for its most recent quarter. SAP reports an 18% jump in software revenue over the same quarter last year, and a 10% rise in revenue overall.

Furthermore, SAP indicated that it is gaining market share against its rivals. According to unnamed industry analyst research, SAP's share of the worldwide market for "core enterprise applications" increased over the past year by three percentage points to 26%.

In nearly every public announcement of its financial results, Oracle has been comparing itself to SAP. SAP's most recent results show that Oracle's success doesn't mean it is triumphing over SAP. It just means that there's a robust market for enterprise software this year.

A rising tide lifts all boats.

SAP's quarterly results can be found on its web site.

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IT budgets are lagging behind corporate revenues

Over at Computer Economics, we've just published our 2007/2008 IT Spending, Staffing, and Technology Trends study.

One of the key findings is that the median IT budget growth rate in the U.S. and Canada is accelerating to 5.0% this year, from 4.1% reported in 2006. At the same time, the median IT budget as a percentage of revenue is falling to 1.8%, from 2.0% last year. The only way to interpret these two statistics is to understand that IT spending is lagging behind corporate revenues.

This is not bad news. What it means is that IT managers generally are able to support the growth of the business without corresponding increases in IT spending. Our study shows that the large majority of companies are increasing their IT spending--but they are doing it at a pace that is less than the growth of the business.

In the last part of the 1990s, IT budgets grew at much greater rates because of Y2K and the dot-com boom. Then, during the recession in the early part of this decade, IT spending actually fell in a significant number of companies. From 1997 through 2003, IT budgets were a story of boom-and-bust.

What I like about today is that these major disruptions in IT spending appear to be over--at least for now. We seem to have entered a period where most companies are expanding their IT budgets in a restrained but consistent way. This is a far easier environment in which to plan IT investments.

On the staffing side, increases in headcount are somewhat more restrained, but most companies are adding IT staff members this year. And, there's still no end to the increase in the level of outsourcing.

These findings and more are presented in the study. There's a complete description on the Computer Economics website. There's also a press release.

SAP admits wrongdoing in Oracle lawsuit

SAP filed its response to Oracle's complaint last night, admitting that its TomorrowNow subsidiary engaged in some inappropriate downloads of Oracle intellectual property.

SAP reasserts the rights of its TN unit to download materials on behalf of Oracle customers who have the rights to those materials. It points out that "Oracle’s complaint does not challenge the basic propriety of third party support, nor do its factual allegations support the inflammatory statements" of Oracle's complaint.

At the same time, SAP claimed that the Oracle materials did not leave TN's internal systems, which are separate from the rest of SAP's network. SAP's response says,

Upon acquiring TN, SAP AG and SAP America put in place extensive policies to assure that no allegedly confidential material of Oracle obtained by TN on behalf of its customers would reach SAP AG or SAP America. Defendants are unaware of any breach of these policies, and believe that none has occurred.

It continues,

Oracle’s allegation that TN’s downloading conduct was “corporate theft” or involved SAP AG or SAP America is simply untrue.

SAP also announced that it is installing a new head over its TN unit. Former SAP Americas COO Mark White will now oversee TN, with founder and CEO Andrew Nelson reporting to White.

I think SAP is smart to admit any wrongdoing at this point. Any such activities would eventually be exposed anyway during Oracle's discovery process, leading to a drip by drip release of negative information about SAP. At this point, the issue would is to what extent TN or SAP benefited from the downloaded materials and what damages should be awarded.

SAP takes its turn at throwing punches at Oracle:

Oracle professes surprise and confusion about how TN can provide services more cost-effectively than Oracle. The answer is simple – TN does not force its service customers to pay artificially inflated prices for service to fund Oracle’s future acquisition and integration of products that customers do not want or need.

Of course, SAP does not mention that its own maintenance fees for customers of SAP software are pretty much in line with Oracle's. So, SAP should be careful about continuing this line of reasoning.

More seriously, in my opinion, SAP indicated that the U.S. Department of Justice is investigating SAP and TN. I speculated earlier that this lawsuit could lead to criminal charges against SAP, TN, or individuals implicated in the illicit activities.

SAP's response to Oracle's complaint is available here. SAP has also issued a press release on this matter.

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Oracle's Q4 beats estimates

It looks like I was wrong.

When Oracle exceeded Wall Street expectations at the end of its third quarter, I speculated that Oracle might have done so by draining its sales pipeline for Q4. I based that on word I had heard of some extremely generous discounts that Oracle was granting to prospects that signed by the end of Q3. Such a move would deliver superior results for Q3 but risked pulling in sales that might have otherwise closed in Q4.

At the time I wrote that readers should check back in three months to see if I was right. Well, now it's three months later and Oracle has announced Q4 new license sales that are 17% higher than the same quarter last year. That's well above Oracle's forecast of a 5-15% increase. Revenue overall rose 20%, and net profit jumped 23%. Impressive results all around.

So, what's going on? Catz attributed Oracle's success to execution, which is no doubt true. But it also confirms Oracle's strategy, in which it has been able to integrate a string of software acquisitions into its operations without losing customers. It also is showing momentum against its chief rival, SAP--a fact which it continues to promote on its website.

Oracle is now forecasting a whopping 20-30% increase in new license sales in its for its first quarter, which would include revenues from new acquisitions Hyperion and Agile Software.

The Wall Street Journal has more on Oracle's Q4 results.

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Malware damages fall to $13.3 billion annually

Over at Computer Economics, we've just released our latest annual Malware Report. Included in the report, is our estimate of annual worldwide direct cost to business of malware attacks, where we report that such damages fell to $13.3 billion last year, from $14.2 billion in 2005.

We attribute the drop in direct cost damages to two factors, one good, one bad.

• The good factor is that, in our estimation, the antivirus vendors do a pretty good job of thwarting malware attacks before they can become the massive worldwide storms that organizations experience in previous years. It's been some time since we've seen an attack like the Love Bug in 2000, or even MyDoom, Netsky, or Sasser in 2004.

• The bad factor is that much of the drop in direct damages has to do with the changing nature of malware. Malware authors these days aren't writing viruses, worms, and trojans primarily to cause damage, but to make money. To make money, you don't damage the host computer--you keep it running to serve as a spam proxy, or to perpetuate click-fraud, or to steal confidential information, for example.

Therefore, direct cost damages may be declining but indirect and secondary damages are increasing. Follow the links below for further discussion of the implications of this point.

The full report, entitled, 2007 Malware Report: The Economic Impact of Viruses, Spyware, Adware, Botnets, and Other Malicious Code analyzes the cost of malware at the worldwide, organization, and event level.

An extended description of the report is available, as well as a more complete excerpt, on the Computer Economics website.

Oracle now charges SAP with copyright violation

Right on schedule, Oracle has amended its complaint against SAP and its third-party support unit, TomorrowNow (TN). (You can read the background on this case in my original post on the subject, and also developments prior to today in my post earlier this week.)

In its amended complaint, Oracle is adding copyright violation to its previous charges of theft of intellectual property. At the time of the original filing, Oracle had not registered the copyright for many of the support materials. It has since done so and is now suing for additional damages under U.S. copyright law.

In its amended filing, Oracle gives one interesting example of TN's copyright violations.

86. The DST Solution. In at least one instance, SAP TN has also, publicly displayed, distributed, and thereby profited from Oracle’s copyrighted Software and Support Materials. In December 2006, Oracle developed a knowledge solution related to the recent early change to Daylight Savings Time (the “DST Solution”). The DST Solution is a narrative document with specific instructions for how to conform certain Oracle software to the new Daylight Savings Time change. Oracle fielded more than a thousand service requests from its customers related to the Daylight Savings Time change, and its DST Solution helped resolve more than 750 of them.

87. Oracle traced downloads of the DST Solution to SAP TN’s IP address on January 8, 2007 and January 15, 2007. Oracle also noticed that SAP TN posted a “PeopleSoft Daylight Savings Time solution” on its website. SAP TN’s “solution” is substantially similar in total–and in large part appears to be copied identically from–Oracle’s DST Solution. SAP TN’s copied version even includes minor errors in the original DST Solution that Oracle later corrected. SAP TN’s version also substitutes an SAP TN logo in place of the original Oracle logo and copyright notice.

88. Oracle has registered the downloaded version of its DST Solution that SAP TN copied and created derivative works from, and later distributed and publicly displayed, as well as a later version that SAP TN also downloaded shortly before Oracle filed its original Complaint, Registration Nos. TX 6-541-019 and TX 6-541-018. No customer is licensed to create derivative works from, distribute or publicly display Oracle’s Software and Support Materials, and neither is SAP.

If this case involved anyone other than SAP, it is likely that upon discovering this activity, Oracle would have notified the offending party to cease-and-desist.

As I noted previously, Oracle's earlier allegations of excessive and improper downloads might be explained by a TN consultant simply trying to work efficiently, using a single customer's user credentials to download materials for multiple customers.

The copyright infringement allegation, though, is harder to explain--essentially republishing an Oracle document, including errors, with an SAP logo. If true, TN has really handed Oracle a big club to use against SAP.

SAP denies any wrongdoing and promises to vigorously defend itself. It has until July 2 to respond.

Oracle has a special SAP lawsuit webpage with all related documents.

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Latest on the Oracle/SAP lawsuit

It's time for an update on Oracle's lawsuit against SAP alleging theft of intellectual property by SAP's TomorrowNow unit, which provides third-party support for some Oracle products.
Here's the latest:

1. On April 30, Oracle asked for a court order to force SAP to preserve electronic records that Oracle might want as evidence. In its filing, Oracle complained that SAP has not responded to a proposed "stipulation order" concerning such records, such as server logs. (As a side note, this is a good example of how new federal eDiscovery rules are coming into play in litigation.)
   
   
2. On May 9, the judge in the case resigned after finding herself disqualified and requested that the case be reassigned to a different judge. She did not give a reason for her resignation. The news means that a trial will be delayed, however. Her filing noted that "all pending dates of motions, pretrial conferences and trial are hereby vacated and are to be reset by the newly assigned judge."
   
   
3. On May 10, SAP CEO Henning Kagermann said in a speech to shareholders that SAP would put up a "massive fight against the accusations" that Oracle has made. "SAP respects the protection of intellectual property," he said. "At the moment we are investigating every single claim in the lawsuit and composing the defense that we will file with the court."
   
   He also positioned the lawsuit as an attempt to kill the third-party Oracle support business. "Even if Oracle portrays it differently in its petition, we believe what this is about is an attempt to make it more difficult for third parties to provide service and support for Oracle software," he said.
   
   
4. One week later, Oracle and SAP agreed to extend the deadline to June 1 for Oracle to file an amended complaint, with SAP's response now pushed back to July 2.
   
   
5. Then, yesterday, TomorrowNow CEO Andrew Nelson began to speak up, not so much about the lawsuit directly, but about the value of his firm's services relative to Oracle's. In an interview with CNET's silicon.com, he questioned the value to customers of paying maintenance fees so Oracle could invest in future products, such as Fusion. He said,
   

   Oracle customers no longer value pre-funding a Fusion application that they no longer understand, that's uncertain to them and that they're not sure they will ever use.
   
   Oracle has to respond to that. The challenges they've created through their M&A strategy... they've really dug a hole for themselves.

In the meantime, TomorrowNow continues to sell new business, though it's not clear how much of it is for Oracle support. Last week it announced that it expects to sell support contracts for 10 clients of Baan (now Infor's ERP ln).

Not to be left out of the action, TomorrowNow competitor Rimini Street sends word that it has picked up a new deal to support a Siebel implementation at medical products manufacturer Beekley Corporation. Rimini Street claims a savings for Beekley of 50% in support costs, while stabilizing the system and improving Beekley's service to its customers.

Expect more news next week when Oracle amends its complaint, and then July 2 when SAP is due to respond.

Update, Jun. 2: Oracle has amended its complaint to include copyright infringement. Read more in my post for June 2.

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More on Microsoft's attempted patent shakedown of open source users

There's a good overview on the battle between Microsoft and open source developers/users/distributors--of all places, on CNN's Money website. The lengthy article goes into the history of software patents, an overview of open source licenses, a biopic on Richard Stallman, the father of the GPL open source license, and the latest chess moves in the Microsoft/Novell agreement regarding Linux.

The good news is that the U.S. Supreme Court recently raised the bar for the types of patents that Microsoft is using to threaten open source. The bad news is that large corporate customers of open source are more likely to be cowed by the threat of lawsuits than they are to fight Microsoft's shake-down attempts on principle.

Read more on the CNNMoney.com website.

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