Friday, April 28, 2006

Securing the Global Supply Chain (AMR)

The fallout from Dubai Ports World’s takeover of several U.S. port operating companies thrust international supply chain security into the global spotlight, making it front of mind for U.S. politicians.

Thursday, April 27, 2006

Kinaxis Goes On Demand (Line56)

Continuing to address a supply chain problem for which ERP is not optimally suited

Wednesday, April 26, 2006

JDA Acquires Manugistics (Line56)

Supply chain software pioneer goes for $211 million; transportation prospects solid, discrete and process manufacturing less certain, says analyst

Monday, April 24, 2006

The People Side of ERP (Line56)

Green Beacon explains why enterprise resource planning (ERP) implementation is about more than technology

Thursday, April 20, 2006

Strong growth in the US boosts SAP (FT)

SAP, the world’s biggest maker of business software, on Thursday said software sales rose 22 per cent in the first quarter, thanks to strong growth in the US and a solid performance in Germany.

SAP Starts 2006 With a Strong First Quarter (AMR Research)

SAP posted a very strong first quarter (ending March 31, 2006), with software revenue up 22% from 1Q05 and total revenue up 18%. The results were generally in line with financial analyst expectations, reflecting excellent execution by SAP and a continued improvement in the market for business applications.

SAP Update; To Go; Rapt, Pricing, and PLM (AMR)

SAP’s first quarter earnings were the big news this week. As you can see from Jim Shepherd’s write-up in this week’s Alert, the company had another very strong quarter. Needless to say, there will be plenty of press coverage devoted to the topic.

SAP: Full Speed Ahead (Line56)

In wake of Q1 2006 results, enterprise apps giant has no true weakness, notes analyst; but margins cause passing concern

Wednesday, April 19, 2006

mySAP ERP & Enterprise Services Architecture: Delivering Operational Excellence

Enterprises are burdened with complex IT landscapes, driving up the cost of innovation and slowing down the pace of change. With rapidly shifting business conditions such as mergers and acquisitions, business consolidations, new partnerships and changing market dynamics -- enterprises must find a better way to effect change and employ innovation. Read this white paper to learn how to overcome these challenges using an Enterprise Services Architecture (ESA) approach to SOA to achieve:
- Greater efficiency
- Reduce IT complexity
- Lower TCO
- Increase agility to change

ERP Market Tops $16.6 Billion and Still Growing Strong (ARC Advisory Group)

Enterprise Resource Planning (ERP) continues to be an amazing market that has evolved and grown over the past three decades. While consolidation abounds in this segment of enterprise applications, the market continues to grow in spite of itself. As many industry leaders attempt to encroach on SAP’s dominant market share through aggressive acquisition strategies, they face challenges of the post-acquisition phase such as defining a forward strategy for integrating various products and the installed base.

Tuesday, April 18, 2006

Invensys Launches 'Sensor-to-Boardroom' Asset Controls (Gartner)

Invensys' new enterprise endeavor, InFusion, aims to improve manufacturing asset performance by rationalizing plant systems in an ERP infrastructure. SAP users will benefit most from joint technology developments.

The Formula for Product Success: Focus on Flexibility and Cooperation (TEC)

This is Part Two of the series Jeeves—Thriving Organically as a Humble Servant.

One pillar of the success of Jeeves Information Systems AB (JIS) is the way it has developed its main product from scratch. While most competitors work painstakingly to rewrite or merge their many (often recently acquired) complex and rigid systems, Jeeves has always had a product with built-in open and flexible architecture. Recent studies by an independent market research company, DPU Research, show that Jeeves Enterprise repeatedly receives the highest rating among European users in terms of ease of use, value for money, functional breadth and depth, and so on. Jeeves Enterprise tries to emulate the user thought process, and to accommodate multiple ways of building systems, according to needs. It is modular, flexible, and customizable, with an integrated, broad-scoped, functional footprint catering to many business processes and industries.

Oracle fires a shot across Red Hat’s bows (FT)

For long-time watchers of Larry Ellison, the revelation that Oracle is looking at launching its own version of the Linux open source operating system has aroused a suspicion: is the software industry’s most acquisitive CEO stalking his next target?

Mr Ellison made the comments in an interview with the Financial Times this week, laying out strong reasons why the database software company should embed a version of Linux into its existing software.

Such a move would make life far harder for Red Hat, which has emerged as the leading Linux company so far – particularly if, as Mr Ellison suggested, IBM decided to follow suit.

As a shot across Red Hat’s bows, the comments have had an immediate impact. The Linux company’s shares have dropped 8 per cent this week – although at $5bn, the company is still worth around three times what it was a year ago. “We want them to be successful, because Red Hat is to some degree our way of competing with Microsoft down at the core level,” the Oracle chief executive officer said. “But they’re a small company and they’re not supporting the customers very well.”

One answer, he suggested, was to launch a new version of Linux, or simply embed the Red Hat version in Oracle’s products and offer support from its own service organisation.

Simply offering the Red Hat version of Linux to its own customers could create a legal dispute, according to Rick Sherlund, software analyst at Goldman Sachs.

But Oracle would still be free to create its own version from the free component programs available over the internet.

For now, Mr Ellison has advanced two reasons for not buying Red Hat or Novell, which became the second biggest distributor of Linux after its acquisition of the German company SuSe two years ago. One is price. Open source companies have started to attract fancy valuations, as evidenced by Red Hat’s purchase last week of JBoss – a company that Oracle had itself tried to buy. Without control of their own intellectual property, these companies are not as valuable as Wall Street thinks, according to Mr Ellison.

“If an open source product gets good enough, we’ll simply take it,” he said. “We can do that, IBM can do that, HP can do that – anyone with a large support organisation is free to take that intellectual property and embed it in their own products.

“I believe JBoss is a $16m company breaking even, MySQL is a $30m company breaking even,” said Mr Ellison.

“You can build a sustainable business [in open source], you just can’t charge a lot for it. There’s brand value – there’s real brand – there’s people, and that’s it.”

The second reason for not buying a Linux company, according to Mr Ellison, is the risk that other big technology companies would abandon it.

“I don’t see how we could possibly buy Red Hat – IBM would just say, ‘Larry, congratulations, we’re going our own way’,” he said.

Despite that, Red Hat’s growing dominance of the Linux business, and its decision to acquire JBoss and start building out a fuller “stack” of software that competes with companies like Oracle and IBM, could alter the balance of partnerships in the software world and prompt a more drastic response.

Transcript: FT interview with Larry Ellison (FT)

April 18 2006 05:01
Richard Waters of the Financial Times interviewed Larry Ellison, the chief executive officer of Oracle. The following are excerpts from the interview:

FT: In an interview with the FT four years ago, you predicted an end to the period of disruptive innovation from small technology companies and said that, in a maturing industry, there would be slower growth and a consolidation of power in the hands of the market leaders. However, the software world seems to be awash with disruptive innovation again, in the form of open source software, software-as-a-service, and the Web 2.0 movement. What has changed?

LE: I still think that to tackle the big jobs, the consolidation will continue. Take software-as-a-service. [The stand-alone software-as-a-service ventures] are tiny companies. I do believe in it, Oracle has offered software-as-a-service for some time. I own 5 per cent of, I was a founding investor. It’s a delivery mechanism for software. I believe, over time, more and more software will be delivered as a service – I totally believe that. I would argue I started the first big software-as-a-service company, [Netsuite]. I think you’ll see SAP and Oracle simply adapting to that.

FT: Mark Benioff of would say, though, that the multi-tenanted architecture of a true software-as-a-service company is a very different business to the kind of hosted software Oracle sells.

LE: It wasn’t his idea. And it’s sheer nonsense: most companies don’t want multi-tenant. It’s a convenience for a supplier. Most companies don’t want their data co-mingled with other customers. Small companies will tolerate it.

We make more money selling software-as-a-service than we make just selling software. I’d much rather be in the monthly service charge business, I’ve said this repeatedly. [At present] a huge percentage of our sales are done in the last week of the quarter: all of that goes away, it’s a much better business model.

FT: But would Wall Street appreciate it? The stock market doesn’t seem to value Oracle’s recurring maintenance revenues as highly as your new licence sales.

LE: I guess they don’t think recurring revenue at 90 per cent margins is very valuable. But then, Wall Street thought that Ariba was worth more than Daimler Benz [during the dotcom bubble.] All I can say is, our profit margins are now north of 40 per cent and will continue to grow past 50 [per cent] because more and more of our business will be in this recurring form, the form of subscription renewals rather than software sales.

FT: But won’t your profit margins fall?

LE: We make more margin dollars. In the end, the only thing that really matters is how many billions we make this year. I’d much rather make $10bn at 40 per cent margins than $8bn at 50 per cent margins. I want to make $10bn. Our margin dollars will increase at a higher rate with software-as-a-service. Plus there’s no piracy, and no need to maintain old versions. There are huge advantages to the model.

FT: Will there be a difficult transition from new licence sales to regular recurring subscriptions?

LE: If all people measure is our licence sales, they’re going to be really disappointed in our open source acquisitions, because I can tell them exactly what the open source new licence sales will be next year - it will be zero. On the one hand, people say open source and software-as-a-service are really hot – on the other hand, all they look at is our new licence sales. It’s the kind of absurdity that you find in the world at times.

All I care about is that we keep growing our profits every year. We have a five-year plan to grow our profits at 20 per cent a year. Last year we overshot, we grew at 28 per cent. This year we will grow at 20. We’re growing our profits very, very rapidly.

FT: Is open source going to be disruptive to Oracle?

LE: No. If an open source product gets good enough, we’ll simply take it. Take [the web server software] Apache: once Apache got better than our own web server, we threw it away and took Apache. So the great thing about open source is nobody owns it – a company like Oracle is free to take it for nothing, include it in our products and charge for support, and that’s what we’ll do. So it is not disruptive at all – you have to find places to add value. Once open source gets good enough, competing with it would be insane. Keep in mind it’s not that good in most places yet. We’re a big supporter of Linux. At some point we may embed Linux in all of our products and provide support.

Just like software-as-a-service, we have to be good at it. We don’t have to fight open source, we have to exploit open source. At some point we could very well choose to have Linux as part of the Oracle database server. We certify it, we test it. We could have JBoss as part of our middleware. It costs us nothing. We can do that, IBM can do that, HP can do that – anyone with a large support organisation is free to take that intellectual property and embed it in their own products.

I’ve had this discussion with the CEOs of open source companies. We’ve looked at buying some, some with very high price tags – but since we already have access to all the intellectual property, why wouldn’t we just embed this technology in our technology and provide support.

FT: Yet you have bought an open source database company – what did you buy it for?

LE: The people. If the price is reasonable, and you’re getting a high quality development team – we love the Berkeley DB guys. It’s a great team.

The way open source companies are valued now is interesting. Wall Street looks back at the historic growth rate and extrapolates it out forever, that’s the way it works. It’s kind of funny.

What if IBM were to decide to support Red Hat Linux – what does that do to Red Hat? One of the big problems we have with Red Hat today is, they’re not very good at supporting the customers, so we help them a lot – we want them to be successful, because Red Hat is to some degree our way of competing with Microsoft down at the core level. But they’re a small company and they’re not supporting the customers very well.

FT: What are the arguments against Oracle distributing its own Linux version?

LE: They’re not very strong – now that Red Hat has bought JBoss and competes with us in middleware, we have to relook at the relationship – so does IBM. If Oracle were to have its own Linux distribution, or just provide paid support for Red Hat, that’s one thing – if Oracle and IBM both did it, it’s a whole new world. I don’t think Oracle and IBM want to create a second Microsoft in Red Hat. But you can’t – because Red Hat doesn’t own anything, they own nothing. They couldn’t [become the next Microsoft], they own nothing.

FT: How well has Novell done in becoming a viable competitor to Red Hat? [Encouraged by large technology companies like Oracle and IBM, Novell bought German Linux company SuSe two years ago.]

LE: I would say, not very well. Several of our big customers have switched to Novell because they get better service from Novell. But still, Red Hat competing with a Novell is one thing – Red Hat competing with IBM or Oracle is quite different.

FT: Why didn’t you buy JBoss?

LE: JBoss wanted to sell the company to us. Clearly if we wanted to buy JBoss we’d have bought JBoss. Why didn’t we buy JBoss? Because we don’t have to – if it ever got good enough we’d just take the intellectual property – just like Apache – embed it in our fusion middleware suite, and we’re done. We always have that option available to us – IBM always has that option available to them.

The reason I have a hard time writing checks for billions or hundreds of millions of dollars for things that are open source is that if we could do this, other people could do this too. I don’t see how we could possibly buy Red Hat – IBM would just say, Larry, congratulations, we’re going our own way. They could hire Red Hat people and they’d be in business straight away. So I don’t see how anyone can buy Red Hat, not at anything near these prices, because anyone who feels like taking the code – they have no intellectual property.

We see in China and India, all that stuff is freely available and Red Hat is just cut completely out of the market. I’m not gong to spend $5bn, or $6bn, for something that can just be so completely wiped off the map. They take all the Red Hat code, have their own equivalent of the Red Hat network, and Red Hat gets zero.

So its all very interesting. You can build a sustainable business [in open source], you just can’t charge a lot for it. There’s brand value – there’s real brand – there’s people, and that’s it.

Sunday, April 16, 2006

Jeeves—Thriving Organically as a Humble Servant (TEC)

The maturing enterprise applications market should not overlook the lesser-known vendors which deliver the requirements users are increasingly demanding, such as interoperability, or intuitive interfaces.Prominent among these small specialist providers is Jeeves Information Systems AB (JIS), based in Sweden. In essence, Jeeves develops and supplies flexible and technologically advanced business systems. This is meant to enable smarter business practices (bringing to mind the "Jeeves knows the answer before you know the question" motto) for enterprises in the manufacturing, wholesale and retail, and service and maintenance sectors...

Prophet of Oracle’s evolving future (FT)

Sitting in a sparse Japanese pavilion beside a private lake hidden among the wooded hills of northern California, the software industry's second-richest man seems fully in command of his domain.

This is Larry Ellison's personal Xanadu. Designed, he says, to resemble a Japanese village with structures from different parts of the country's history, it has taken five years to plan and 10 to build.

Thursday, April 13, 2006

Enterprise Resource Planning for Services, and Professional Services Automation: Where Do You Draw the Line? (TEC)

Since the late nineties, it has been evident that the enterprise resource planning (ERP) vendors that originally serviced the needs of manufacturing organizations have slowly extended their functionality to service the needs of non-manufacturing industries also. By the year 2000, when many of the major ERP implementations for the manufacturing industry had tapered off, tier one ERP vendors, such as SAP and Oracle, had refocused efforts to market their integrated solutions in the greener pastures of service-oriented vertical markets, such as the health care sector, the public sector, and service based businesses. Simultaneously, professional services automation (PSA) solutions appeared, and best-of-breed vendors such as Changepoint (today Compuware) and Evolve (now part of Primavera’s PSA offering) were developing project- and service-oriented functionality. These PSA solutions were aimed at providing the missing pieces linking back-office solutions (typically provided by ERP or accounting vendors) to project management systems, which remain the heart of most professional services organizations (PSOs).

Wednesday, April 12, 2006

Enterprise Resource Planning (ERP) Market to Exceed $21 Billion (ARC Advisory Group)

Dedham, Massachusetts; April 12, 2006: The worldwide market for Enterprise Resource Planning (ERP) solutions continues to grow on the plethora of acquisitions and will exceed $21 billion in 2010. The worldwide market for ERP is expected to grow at a Compounded Annual Growth Rate (CAGR) of 4.8 percent over the next five years. The market was $16.67 billion in 2005 and is forecasted to be over $21 billion in 2010, according to a new ARC Advisory Group study.

Wednesday, April 05, 2006

SAP Fills Its Compliance Gap With Virsa Acquisition Deal (Gartner)

SAP's planned purchase of Virsa Systems will help put compliance at the center of its strategy. But Virsa customers not using SAP products should re-evaluate how Virsa fits in their environments as their contracts expire.

More ERP Consolidation: Intuitive Makes Two Acquisitions (AMR)

The flurry of merger and acquisition activity in the midmarket continues with Intuitive Manufacturing Systems making two recent acquisitions: SupplyWorks and Relevant Business Systems. For those of you unfamiliar with Intuitive, it is a private, .NET-based ERP vendor primarily targeting discrete markets.

Tuesday, April 04, 2006

SAP Acquires Virsa (Line56)

Getting compliant by bringing aboard controls software from partner; building on a good fit, say analysts

Monday, April 03, 2006

SAP Snaps Up Virsa Systems To Enhance Compliance Story (AMR)

Virsa Systems, the business controls compliance vendor that made its name untangling segregation of duties (SOD) issues for SAP customers, is soon to join SAP permanently. The acquisition is set to close in May; financial terms were not disclosed. In our compliance profiles research in 2005, we estimated that Virsa’s FY05 revenue would be approximately $40M.

SAP Buys Compliance Firm (Red Herring)

SAP said Monday it bought Virsa Systems, which provides governance, risk, and compliance management software, underscoring compliance software as the latest acquisition trend among larger business software companies.