AMR Research Study Finds Supply Chain Technology Market Will Grow 7% Annually to $9.2B in 2012
Thursday, November 20, 2008
Kevin Reilly
AMR Research today released a study that estimates the supply chain management (SCM) applications market will grow 7% annually for the next five years, despite the gloomy economic conditions of 2008. Now a $6.5B market, AMR Research forecasts steady growth will bring the SCM applications market close to $9.2B in 2012.
Based on its analysis, AMR Research predicts there is a high likelihood the economic challenges of the coming years will offer much greater opportunity for supply chain technology adoption.
“The supply chain, and the technologies that support it, will play an important role in helping companies deal and thrive in an economy that is going to be quite unlike anything we’ve seen in the post-war era,” said John Fontanella, vice president of research at AMR Research.
The study named five major forces that will be at work in the economy and society in the foreseeable future, and how the supply chain and the technologies that support it will help companies in the next five years.
- High inflation – Inflation will force supply chain managers to play an important role in protecting product and company margins through cost control and increased efficiencies in their operations.
- Rising commodity prices – Pressure from higher commodity prices will bring supply more in line with demand and reduce inventory levels from raw materials to the finished product.
- Threats to brand security – Counterfeiting, the gray market, and questionable quality standards will make brand protection a top priority. Companies will look to adopt risk mitigation and global trade technologies as well as analytics to monitor distribution channel buy-and-sell patterns.
- Sustainability becomes a component of corporate decision making – Public sentiment will force substantive measures by industry to become more environmentally friendly. This will present opportunities to more directly connect product development efforts with supply chain management to minimize waste and material usage.
- Cash is king – Capital spending will come under great scrutiny as companies preserve cash. Technologies that increase the velocity of cash collection, including B2B e-commerce, will become a critical component of future initiatives.
The report also found that SAP, Oracle, and Manhattan Associates were the three largest SCM vendors by revenue in 2007, with a market share of 13%, 10%, and 5% respectively.
For more information about this report, please visit www.amrresearch.com or call (617) 542-6600.
About AMR Research:
Bold Ideas. Compelling Research. Pragmatic Advice. AMR Research is the No. 1 research firm focused on the intersection of business processes with value chain and enterprise technologies. Founded in 1986, AMR Research provides subscription advisory services and peer networking opportunities to operations and IT executives in the consumer products, life sciences, manufacturing, and retail sectors. To learn more about our research and services, visit www.amrresearch.com.
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© Copyright by AMR Research, Inc.
Thursday, November 20, 2008
Wednesday, November 19, 2008
What’s new: SAP sees opportunity (FT.com)
What’s new: SAP sees opportunity
By Geoff Nairn
Published: November 19 2008 10:50 | Last updated: November 19 2008 10:50
Times are hard and while some vendors see only challenges, SAP sees opportunities. The German giant has designed a new range of software to help cash-strapped businesses shore up their bottom line through greater operational efficiencies and cost savings.
Called Best-Run Now, these offerings cover areas such as energy management, procurement, cash and risk management, workforce management and business planning. Rounding out the range is a business intelligence ”accelerator” and a package for reducing IT operational costs.
Office productivity
Another product for today’s cost-conscious times: IBM is pushing Lotus Symphony, its reborn office productivity suite, as a free and open source alternative to Microsoft Office.
IBM is particularly keen to win over businesses with lots of ”task users”, who perhaps do not need the sprawling functionality of Office. Unlike Lotus SmartSuite, its predecessor, Symphony is free and is based on OpenOffice, so it is compatible with Microsoft Office. IBM also released a beta version of Symphony for the Apple Mac.
Fujitsu foothold
Fujitsu may not be a household name to enterprise customers outside Japan. But that could change with Siemens’ decision to sell Fujitsu its half share in their long-running joint venture, Fujitsu Siemens Computers. Fujitsu hopes the move will gain it a bigger foothold in Europe for its high-end hardware, the latest being the Sparc Enterprise M2000, an entry-level server based on the quad-core Sparc64 VII processor, which Sun also uses. Pricing starts at $15,000 for an M2000 running Sun Solaris 10.
Audit automated
Compliance can be a real headache for IT departments. Sun claims to have the remedy in Sun Identity Compliance Manager, which seeks to automate the time-consuming tasks associated with controlling, reporting and auditing who has access to what data and applications inside an organisation. Pricing starts $75,000 plus an undisclosed small fee for each user.
Configuration automated
More on the compliance front, this time from storage giant EMC. Its Server Configuration Manager product lets IT departments automatically discover and maintain detailed server configuration data, and includes pre-packaged compliance toolkits for regulations such as Sox, Hipaa and others. Companion product, EMC Configuration Analytics Manager, turns this raw data into useful business information on compliance and IT service levels.
Offer of protection
Sprint Nextel is offering US businesses protection from network-borne threats. As well as standard services such as web filtering, antivirus and malware scanning, Sprint’s Secure Web Protection also includes web application control, so allowing business to monitor suspect peer-to-peer or instant messaging traffic. Businesses can sign up for a network-based service or a premises-based option, which uses hardware and software from Blue Coat Systems.
Google SLA extended
It’s not quite five nines reliability, but what do you expect for $50? Google has extended the service level agreement its offers to paying users of its Gmail webmail service to cover its other hosted applications – Google Calendar, Google Docs, Google Sites and Google Talk. The SLA covers businesses and organisations that sign up for Google Apps Premier Edition, which costs $50 a year for each user. If uptime falls below 99.9 per cent, extra days are credited to the account. The free version of Google Apps does not come with an SLA.
Copyright The Financial Times Limited 2008
By Geoff Nairn
Published: November 19 2008 10:50 | Last updated: November 19 2008 10:50
Times are hard and while some vendors see only challenges, SAP sees opportunities. The German giant has designed a new range of software to help cash-strapped businesses shore up their bottom line through greater operational efficiencies and cost savings.
Called Best-Run Now, these offerings cover areas such as energy management, procurement, cash and risk management, workforce management and business planning. Rounding out the range is a business intelligence ”accelerator” and a package for reducing IT operational costs.
Office productivity
Another product for today’s cost-conscious times: IBM is pushing Lotus Symphony, its reborn office productivity suite, as a free and open source alternative to Microsoft Office.
IBM is particularly keen to win over businesses with lots of ”task users”, who perhaps do not need the sprawling functionality of Office. Unlike Lotus SmartSuite, its predecessor, Symphony is free and is based on OpenOffice, so it is compatible with Microsoft Office. IBM also released a beta version of Symphony for the Apple Mac.
Fujitsu foothold
Fujitsu may not be a household name to enterprise customers outside Japan. But that could change with Siemens’ decision to sell Fujitsu its half share in their long-running joint venture, Fujitsu Siemens Computers. Fujitsu hopes the move will gain it a bigger foothold in Europe for its high-end hardware, the latest being the Sparc Enterprise M2000, an entry-level server based on the quad-core Sparc64 VII processor, which Sun also uses. Pricing starts at $15,000 for an M2000 running Sun Solaris 10.
Audit automated
Compliance can be a real headache for IT departments. Sun claims to have the remedy in Sun Identity Compliance Manager, which seeks to automate the time-consuming tasks associated with controlling, reporting and auditing who has access to what data and applications inside an organisation. Pricing starts $75,000 plus an undisclosed small fee for each user.
Configuration automated
More on the compliance front, this time from storage giant EMC. Its Server Configuration Manager product lets IT departments automatically discover and maintain detailed server configuration data, and includes pre-packaged compliance toolkits for regulations such as Sox, Hipaa and others. Companion product, EMC Configuration Analytics Manager, turns this raw data into useful business information on compliance and IT service levels.
Offer of protection
Sprint Nextel is offering US businesses protection from network-borne threats. As well as standard services such as web filtering, antivirus and malware scanning, Sprint’s Secure Web Protection also includes web application control, so allowing business to monitor suspect peer-to-peer or instant messaging traffic. Businesses can sign up for a network-based service or a premises-based option, which uses hardware and software from Blue Coat Systems.
Google SLA extended
It’s not quite five nines reliability, but what do you expect for $50? Google has extended the service level agreement its offers to paying users of its Gmail webmail service to cover its other hosted applications – Google Calendar, Google Docs, Google Sites and Google Talk. The SLA covers businesses and organisations that sign up for Google Apps Premier Edition, which costs $50 a year for each user. If uptime falls below 99.9 per cent, extra days are credited to the account. The free version of Google Apps does not come with an SLA.
Copyright The Financial Times Limited 2008
Tuesday, November 04, 2008
Epicor(R) Announces Epicor 9 Redefines the Enterprise Application Software Experience
Epicor(R) Announces Epicor 9 Redefines the Enterprise Application Software Experience
Next-Generation Enterprise Resource Planning Solution Featuring Epicor True SOA(TM), Uniquely Configurable Global Engines, and Far-Reaching Functionality
LAS VEGAS--(BUSINESS WIRE)--
Epicor Software Corporation (NASDAQ: EPIC), a leading provider of enterprise business software for the midmarket and divisions of Global 1000 companies, unveiled today to nearly 2,000 attendees at its annual customer conference, a unique solution for business with the launch of its next-generation enterprise resource planning (ERP) solution Epicor 9. Leveraging more than 20 years of experience designing and implementing ERP solutions, Epicor is introducing a new approach to the way ERP systems are designed, built, and used.
Expected to be generally available before the end of the year, Epicor 9 will virtually put "ERP everywhere," utilizing Web 2.0 concepts to provide users with a truly collaborative and dynamic enterprise business application experience. Epicor 9 raises technology to a level that delivers unprecedented business management and supports continuous performance improvement through real-time, in-context business insight. At the core of Epicor 9 is an adaptable and collaborative business architecture that satisfies the needs of any enterprise regardless of country, industry, or access device, enabling business anywhere -- business without barriers.
"With Epicor 9, Epicor continues its proven history of innovation with Microsoft technology by working to redefine the enterprise application software experience," said Walid Abu-Hadba, CVP, Developer & Platform Evangelism for Microsoft Corp. "We applaud Epicor for its deep utilization of the Microsoft platform to deliver its next-generation service-based business solutions. These applications offer users tremendous choice for interacting with their enterprise information - through the 2007 Microsoft(R) Office system (Office Outlook(R) 2007, Office Word 2007, and Office Excel(R) 2007), Microsoft Office SharePoint(R) Server 2007, Microsoft Office PerformancePoint Server 2007, Windows Mobile and more. We expect that the combination of Epicor and Microsoft software will enable companies to drive greater efficiencies and create new business value as users are empowered to work smarter and faster."
Business Management
With proven success in developing and delivering service-oriented enterprise applications used by thousands of companies around the world today, Epicor has converged the best of its offerings into this next-generation superset release. Encompassing the robust functionality, global footprint and industry expertise of Epicor's existing ERP suites, the release takes business management and control to the next level by extending reach, synergy, and visibility to the organization and its trading partners.
Specifically, Epicor features numerous essential embedded capabilities that manage the flow of processes right across the enterprise. This approach to core functionality, typically provided in other systems through after-the-fact integration or third party add-ons, includes customer relationship management (CRM), supplier relationship management (SRM), advanced planning and scheduling (APS), business process management (BPM), governance, risk and compliance (GRC), product configuration, field service and more. Additionally, integral support for master data management (MDM) and what Epicor terms Global Business Management lets businesses virtualize their enterprise across plants, warehouses, sites, trading partners, companies, countries, and hardware, keeping everything synchronized in real time.
Business Insight
Epicor has responded to the needs of today's businesses, who finding that it is no longer enough to respond retroactively to trends uncovered by complex business intelligence tools all too often removed from the point of decision and managed and used by a select few, are seeking better solutions.
Today's information workers require decision support in real time, and they want it deployed in the tools they already use, day in and day out. Epicor Enterprise Performance Management (EPM) removes the barriers to better business insight through a combination of intuitive enterprise search-based user experiences, user-driven key performance indicators (KPIs), role-based interactive dashboards, and pre-packaged analytics delivered in context that have real meaning to the user and add real value to the business.
Business Architecture
Epicor's breakthrough enterprise business solution has been designed for growing companies in domestic and global markets, and is built on a second-generation service-oriented architecture (SOA) which Epicor announced earlier this year, Epicor Internet Component Environment (ICE) 2.0. The backbone of Epicor's next-generation ERP solutions, Epicor ICE, fuses modern Web 2.0 technologies with Epicor True SOA(TM) to deliver an enabling business architecture that offers new levels of flexibility, usability, and agility in support of application-to-application integration and business-to-business collaboration.
What makes Epicor True SOA(TM) different is the way that all client code, as well as application business logic, is delivered as self-describing business services, offering a tremendous step forward in the creation of productive user experiences. Part of Epicor True SOA(TM) is the Epicor Everywhere(TM) Framework, a unique technology that stores all user interface attributes as XML metadata. This permits Epicor applications to run as smart clients or Web clients or on mobile devices, all from the same source code. Because it all starts from the same metadata, customization and user personalization remains intact, whatever the user interface.
Business Anywhere
The tools that people use to conduct business today have changed. Business is everywhere, business is real-time, and business is always online. Epicor understands that the Internet and ubiquitous mobility play an essential part in the daily lives of the information-hungry global economy. The world has changed and with Epicor 9, ERP has too.
Featuring a unique global engine design approach, Epicor 9 offers a comprehensive configurable ERP platform and global footprint that's ready for deployment anywhere. The initial release is expected to support over 20 languages and countries, with rapid expansion planned to the world's principle markets in more than 40 countries in the Americas, EMEA, and the Asia Pacific Rim.
Enabled by the Epicor Everywhere(TM) Framework and targeted use of modern consumer Web concepts, Epicor next-generation applications can be accessed via a range of mobile devices, such as Windows Mobile(R), Symbian, BlackBerry(R), and the Apple iPhone(TM) for wireless business. Additionally, Epicor Enterprise Performance Management (EPM) can also be deployed direct to mobile devices and includes full search capabilities to rapidly find and drill down to applicable data.
Securing IT Investments - Protect, Extend, Converge
For both existing and prospective customers, this is just the next step in Epicor's "protect, extend, and converge" strategy, enabling them to leverage the latest technology at their own pace. The next generation will expand on the Epicor solutions that customers have trusted to run and grow their businesses for many years. Because Epicor next-generation solutions are based on componentized business architecture, Epicor ICE, customers are able to leverage extended applications like Epicor Information Worker, Epicor Portal, and Epicor Service Connect today with their existing Epicor solution, enabling them to start taking advantage of service-oriented applications before they move up to the next-generation release.
Epicor 9 is the culmination of a well-defined strategy, which at the same time supports current customer investments while keeping the technology moving forward. Bruce Richardson, chief research officer of AMR Research, commented in a recent article that "getting to one brand obviously offers the potential for greater efficiencies in sales, marketing, consulting and services, and product development."(1)
Keeping Pace with Business Requirements
Epicor will empower companies to select the fundamental options that are right for their business--choosing whether to deploy on-premise, single-tenant hosted, or multi-tenant Software as a Service (SaaS), Windows-based or Web-based, centralized or decentralized, end-to-end or individual suites. Customers can also choose how to configure the application suites to best fit and improve business processes. End users can choose several options for interacting with their ERP system: using the standard application forms, through Microsoft(R) Office applications, through Internet and intranet portal pages or composite applications, using a search engine, taking RSS feeds, and from mobile devices.
"Epicor next-generation enterprise applications represent a game-changing opportunity for business," said Thomas Kelly, president and CEO of Epicor. "Epicor 9 is unparalleled because it is designed for the way people work today, is built for business, and is ready for change. Our strategy is to provide both new and existing customers with unprecedented flexibility and choice. It's about delivering business without barriers."
About Epicor Software Corporation
Epicor is a global leader dedicated to providing integrated enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM) and professional services automation (PSA) software solutions to the midmarket and divisions of Global 1000 companies. Founded in 1984, Epicor serves over 20,000 customers in more than 140 countries, providing solutions in over 30 languages. Employing innovative service-oriented architecture (SOA) and Web services technology, Epicor delivers end-to-end, industry-specific solutions for manufacturing, distribution, retail, hospitality and services that enable companies to drive increased efficiency, improve performance and build competitive advantage. Epicor solutions provide the scalability and flexibility to meet today's business challenges, while empowering enterprises for even greater success tomorrow. Epicor offers a comprehensive range of services with its solutions, providing a single point of accountability to promote rapid return on investment and low total cost of ownership. Epicor's worldwide headquarters are located in Irvine, California with offices and affiliates around the world. For more information, visit www.epicor.com.
Epicor is a registered trademark of Epicor Software Corporation. Other trademarks referenced are the property of their respective owners. The product and service offerings depicted in this document are produced by Epicor Software Corporation.
FORWARD LOOKING STATEMENTS: This document includes descriptions of product functionality that is not presently available. This press release contains certain statements which may constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding future product releases, revenues, cash flows, growth prospects, installed base of customers, the launch of Epicor 9 and other statements that are not historical fact. These forward-looking statements are based on currently available competitive, financial and economic data together with management's views and assumptions regarding future events and business performance at the time the statements are made and are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements. Such risks and uncertainties include but are not limited to changes in the demand for Epicor's products; the timely availability and market acceptance of new products and upgrades; the impact of competitive products and pricing; the discovery of undetected software errors; changes in the financial condition of Epicor's customers; and other factors discussed in Epicor's annual report on Form 10-K for the year ended December 31, 2007 and quarterly report on Form 10-Q for the quarter ended June 30, 2008. As a result of these factors the business or prospects expected by Epicor as part of this announcement may not occur. Epicor undertakes no obligation to revise or update publicly any forward-looking statements.
(1) Source: AMR Research, First Thing Monday: "Epicor 9: The Accomplishment that Eluded Microsoft and Oracle" (Sept. 8, 2008)
Source: Epicor Software Corporation
Next-Generation Enterprise Resource Planning Solution Featuring Epicor True SOA(TM), Uniquely Configurable Global Engines, and Far-Reaching Functionality
LAS VEGAS--(BUSINESS WIRE)--
Epicor Software Corporation (NASDAQ: EPIC), a leading provider of enterprise business software for the midmarket and divisions of Global 1000 companies, unveiled today to nearly 2,000 attendees at its annual customer conference, a unique solution for business with the launch of its next-generation enterprise resource planning (ERP) solution Epicor 9. Leveraging more than 20 years of experience designing and implementing ERP solutions, Epicor is introducing a new approach to the way ERP systems are designed, built, and used.
Expected to be generally available before the end of the year, Epicor 9 will virtually put "ERP everywhere," utilizing Web 2.0 concepts to provide users with a truly collaborative and dynamic enterprise business application experience. Epicor 9 raises technology to a level that delivers unprecedented business management and supports continuous performance improvement through real-time, in-context business insight. At the core of Epicor 9 is an adaptable and collaborative business architecture that satisfies the needs of any enterprise regardless of country, industry, or access device, enabling business anywhere -- business without barriers.
"With Epicor 9, Epicor continues its proven history of innovation with Microsoft technology by working to redefine the enterprise application software experience," said Walid Abu-Hadba, CVP, Developer & Platform Evangelism for Microsoft Corp. "We applaud Epicor for its deep utilization of the Microsoft platform to deliver its next-generation service-based business solutions. These applications offer users tremendous choice for interacting with their enterprise information - through the 2007 Microsoft(R) Office system (Office Outlook(R) 2007, Office Word 2007, and Office Excel(R) 2007), Microsoft Office SharePoint(R) Server 2007, Microsoft Office PerformancePoint Server 2007, Windows Mobile and more. We expect that the combination of Epicor and Microsoft software will enable companies to drive greater efficiencies and create new business value as users are empowered to work smarter and faster."
Business Management
With proven success in developing and delivering service-oriented enterprise applications used by thousands of companies around the world today, Epicor has converged the best of its offerings into this next-generation superset release. Encompassing the robust functionality, global footprint and industry expertise of Epicor's existing ERP suites, the release takes business management and control to the next level by extending reach, synergy, and visibility to the organization and its trading partners.
Specifically, Epicor features numerous essential embedded capabilities that manage the flow of processes right across the enterprise. This approach to core functionality, typically provided in other systems through after-the-fact integration or third party add-ons, includes customer relationship management (CRM), supplier relationship management (SRM), advanced planning and scheduling (APS), business process management (BPM), governance, risk and compliance (GRC), product configuration, field service and more. Additionally, integral support for master data management (MDM) and what Epicor terms Global Business Management lets businesses virtualize their enterprise across plants, warehouses, sites, trading partners, companies, countries, and hardware, keeping everything synchronized in real time.
Business Insight
Epicor has responded to the needs of today's businesses, who finding that it is no longer enough to respond retroactively to trends uncovered by complex business intelligence tools all too often removed from the point of decision and managed and used by a select few, are seeking better solutions.
Today's information workers require decision support in real time, and they want it deployed in the tools they already use, day in and day out. Epicor Enterprise Performance Management (EPM) removes the barriers to better business insight through a combination of intuitive enterprise search-based user experiences, user-driven key performance indicators (KPIs), role-based interactive dashboards, and pre-packaged analytics delivered in context that have real meaning to the user and add real value to the business.
Business Architecture
Epicor's breakthrough enterprise business solution has been designed for growing companies in domestic and global markets, and is built on a second-generation service-oriented architecture (SOA) which Epicor announced earlier this year, Epicor Internet Component Environment (ICE) 2.0. The backbone of Epicor's next-generation ERP solutions, Epicor ICE, fuses modern Web 2.0 technologies with Epicor True SOA(TM) to deliver an enabling business architecture that offers new levels of flexibility, usability, and agility in support of application-to-application integration and business-to-business collaboration.
What makes Epicor True SOA(TM) different is the way that all client code, as well as application business logic, is delivered as self-describing business services, offering a tremendous step forward in the creation of productive user experiences. Part of Epicor True SOA(TM) is the Epicor Everywhere(TM) Framework, a unique technology that stores all user interface attributes as XML metadata. This permits Epicor applications to run as smart clients or Web clients or on mobile devices, all from the same source code. Because it all starts from the same metadata, customization and user personalization remains intact, whatever the user interface.
Business Anywhere
The tools that people use to conduct business today have changed. Business is everywhere, business is real-time, and business is always online. Epicor understands that the Internet and ubiquitous mobility play an essential part in the daily lives of the information-hungry global economy. The world has changed and with Epicor 9, ERP has too.
Featuring a unique global engine design approach, Epicor 9 offers a comprehensive configurable ERP platform and global footprint that's ready for deployment anywhere. The initial release is expected to support over 20 languages and countries, with rapid expansion planned to the world's principle markets in more than 40 countries in the Americas, EMEA, and the Asia Pacific Rim.
Enabled by the Epicor Everywhere(TM) Framework and targeted use of modern consumer Web concepts, Epicor next-generation applications can be accessed via a range of mobile devices, such as Windows Mobile(R), Symbian, BlackBerry(R), and the Apple iPhone(TM) for wireless business. Additionally, Epicor Enterprise Performance Management (EPM) can also be deployed direct to mobile devices and includes full search capabilities to rapidly find and drill down to applicable data.
Securing IT Investments - Protect, Extend, Converge
For both existing and prospective customers, this is just the next step in Epicor's "protect, extend, and converge" strategy, enabling them to leverage the latest technology at their own pace. The next generation will expand on the Epicor solutions that customers have trusted to run and grow their businesses for many years. Because Epicor next-generation solutions are based on componentized business architecture, Epicor ICE, customers are able to leverage extended applications like Epicor Information Worker, Epicor Portal, and Epicor Service Connect today with their existing Epicor solution, enabling them to start taking advantage of service-oriented applications before they move up to the next-generation release.
Epicor 9 is the culmination of a well-defined strategy, which at the same time supports current customer investments while keeping the technology moving forward. Bruce Richardson, chief research officer of AMR Research, commented in a recent article that "getting to one brand obviously offers the potential for greater efficiencies in sales, marketing, consulting and services, and product development."(1)
Keeping Pace with Business Requirements
Epicor will empower companies to select the fundamental options that are right for their business--choosing whether to deploy on-premise, single-tenant hosted, or multi-tenant Software as a Service (SaaS), Windows-based or Web-based, centralized or decentralized, end-to-end or individual suites. Customers can also choose how to configure the application suites to best fit and improve business processes. End users can choose several options for interacting with their ERP system: using the standard application forms, through Microsoft(R) Office applications, through Internet and intranet portal pages or composite applications, using a search engine, taking RSS feeds, and from mobile devices.
"Epicor next-generation enterprise applications represent a game-changing opportunity for business," said Thomas Kelly, president and CEO of Epicor. "Epicor 9 is unparalleled because it is designed for the way people work today, is built for business, and is ready for change. Our strategy is to provide both new and existing customers with unprecedented flexibility and choice. It's about delivering business without barriers."
About Epicor Software Corporation
Epicor is a global leader dedicated to providing integrated enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM) and professional services automation (PSA) software solutions to the midmarket and divisions of Global 1000 companies. Founded in 1984, Epicor serves over 20,000 customers in more than 140 countries, providing solutions in over 30 languages. Employing innovative service-oriented architecture (SOA) and Web services technology, Epicor delivers end-to-end, industry-specific solutions for manufacturing, distribution, retail, hospitality and services that enable companies to drive increased efficiency, improve performance and build competitive advantage. Epicor solutions provide the scalability and flexibility to meet today's business challenges, while empowering enterprises for even greater success tomorrow. Epicor offers a comprehensive range of services with its solutions, providing a single point of accountability to promote rapid return on investment and low total cost of ownership. Epicor's worldwide headquarters are located in Irvine, California with offices and affiliates around the world. For more information, visit www.epicor.com.
Epicor is a registered trademark of Epicor Software Corporation. Other trademarks referenced are the property of their respective owners. The product and service offerings depicted in this document are produced by Epicor Software Corporation.
FORWARD LOOKING STATEMENTS: This document includes descriptions of product functionality that is not presently available. This press release contains certain statements which may constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding future product releases, revenues, cash flows, growth prospects, installed base of customers, the launch of Epicor 9 and other statements that are not historical fact. These forward-looking statements are based on currently available competitive, financial and economic data together with management's views and assumptions regarding future events and business performance at the time the statements are made and are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements. Such risks and uncertainties include but are not limited to changes in the demand for Epicor's products; the timely availability and market acceptance of new products and upgrades; the impact of competitive products and pricing; the discovery of undetected software errors; changes in the financial condition of Epicor's customers; and other factors discussed in Epicor's annual report on Form 10-K for the year ended December 31, 2007 and quarterly report on Form 10-Q for the quarter ended June 30, 2008. As a result of these factors the business or prospects expected by Epicor as part of this announcement may not occur. Epicor undertakes no obligation to revise or update publicly any forward-looking statements.
(1) Source: AMR Research, First Thing Monday: "Epicor 9: The Accomplishment that Eluded Microsoft and Oracle" (Sept. 8, 2008)
Source: Epicor Software Corporation
Monday, November 03, 2008
Infor extends its menu
Infor extends its menu
By Geoff Nairn
Published: November 3 2008 17:13 | Last updated: November 3 2008 17:13
Infor, the US enterprise software company, has launched new software-as-a-service offerings and a novel hybrid pricing model. Infor ERP SyteLine, its ERP suite for discrete manufacturers, can now be hosted remotely by Infor for a monthly subscription of $149 for each user.
In addition, there is a hybrid ”hosted licence” option for businesses that like the traditional licence model but do not have the resources to run SyteLine on site. It costs $65 a month for each user. These new pricing options are also offered on Infor Enterprise Asset Management and Infor Expense Management.
By Geoff Nairn
Published: November 3 2008 17:13 | Last updated: November 3 2008 17:13
Infor, the US enterprise software company, has launched new software-as-a-service offerings and a novel hybrid pricing model. Infor ERP SyteLine, its ERP suite for discrete manufacturers, can now be hosted remotely by Infor for a monthly subscription of $149 for each user.
In addition, there is a hybrid ”hosted licence” option for businesses that like the traditional licence model but do not have the resources to run SyteLine on site. It costs $65 a month for each user. These new pricing options are also offered on Infor Enterprise Asset Management and Infor Expense Management.
Friday, October 31, 2008
Epicor(R) Announces Support for Microsoft(R) Cloud Services Initiatives
Epicor ’s Next Generation Business Applications to Take Full Advantage of Microsoft Cloud Computing
ERP Update: Epicor, QAD, and SAP
It was a busy week for Epicor. The company posted earnings, turned down a takeover bid, and became the first ERP vendor to support Microsoft’s new Azure cloud-computing system. Here’s a look at all that news, plus an update on the Epicor 9 beta program, highlights from our briefing with QAD’s CEO Pam Lopker, and insights on a new set of products from SAP.
Friday, October 10, 2008
The Shrinking Software Middle Class
When Oracle acquired Primavera, it not only picked up a leading project management software firm with 5,000 customers, but it also eliminated one more application vendor from the “software middle class,” those vendors with annual revenue between $100M and $500M and valuations ranging from $500M to $1.5B. That latter category is arbitrary given the wild gyrations on Wall Street, but is a good place to start examining what’s happened to the software middle class. But first, we have to look at where it was…
Sherman, set the Wayback Machine to 1998
If we go back a decade or so, the ERP market was led by SAP and Oracle, followed by Baan, Great Plains, Intentia, JD Edwards, Lawson, MAPICS, QAD, SSA, and a host of others.
At the same time, there was a brisk best-of-breed market. PeopleSoft rode the human resources market (now renamed human capital management). Siebel capitalized on sales force automation and played a pivotal role in the expanded customer relationship management space. On the supply chain planning front, i2 Technologies and Manugistics competed for the lead, with Red Pepper determined to overtake both, while Manhattan Associates challenged a host of contenders in warehouse and transportation management.
On the product lifecycle management front, Agile Software and MatrixOne were newbies, and Dassault, PTC, and UGS were looking to move to product data management and PLM from their CAD roots. Speaking of Agile, remember when Ariba announced its plans to acquire Agile? At the time, Ariba was battling Commerce One, FreeMarkets, PurchasePro, and a host of others for the top spot in sourcing and procurement.
At the same time, Business Objects, Cognos, Hyperion, SAS, and others battled to create a market broader than their niches. Now, the first three are part of SAP, IBM, and Oracle, respectively, while privately-held SAS remains independent.
Sherman, take us back to 2008…after the elections, please
As we traveled back, were you surprised by the number of companies that have been acquired? I don’t think it’s over yet.
Look at the software middle class. Ariba is the lone large publicly traded company in sourcing, procurement, and spend management. I’ve already written about its attractiveness as a takeover target.
Once JDA completes the i2 deal, the supply chain market will consist of three middle class vendors: Manhattan, JDA, and privately-held Red Prairie. Does Oracle buy one and SAP purchases a second, a la the business intelligence and performance management market?
Who’s next in CRM? salesforce.com may be too large to buy unless Cisco, EMC, or IBM wants to make a bold bet on CRM-in-the-cloud. I don’t see it. Chordiant or RightNow (or both) may be more likely pick ups.
What about HCM? The middle class includes private-equity-owned Kronos and publicly traded SuccessFactors and Taleo as well as others. Again, does Oracle buy one and SAP another? The HCM space may be attractive to Cisco, too, as part of its plans to build out a collaboration suite that started with the WebEx buy.
What about the remaining ERP vendors? Intuit and Infor may be too big to buy, but if you look at the high cost of customer acquisition, do Oracle and SAP buy Deltek, Lawson, QAD, or any of the others for their customer bases and recurring maintenance revenue streams?
Will we move from five tiers to three or two?
If you look at today’s vendors in terms of market valuations, there are five tiers. At the upper crust are Cisco, EMC, Google, HP, IBM, Microsoft, Oracle, SAP, and others. Until the meltdown, all had market valuations north of $50B.
Well below this is a small, upper middle class of application vendors, which are limited to Dassault, Intuit, PTC, salesforce.com, and others with market caps in the $1B to $10B range. One could argue that it could include divisions of larger companies, such as AT&T’s Sterling Commerce and Siemens’ UGS, which could be active acquirers, too. Until the last seven trading days, Ariba could have been considered in this class, too. Are they predators or prey?
Slightly below this are the application vendors with valuations between $100M and $1B. These include many of the best-of-breed vendors and midsize ERP companies we’ve already discussed.
Then there is the fourth tier, consisting of dozens of companies with annual revenue in the $35M to $100M range. With a couple of exceptions, most are private, venture-backed firms, and many are struggling with elongated sales cycles, shrinking license fees, and nervous investors laser-focused on liquidity. They don’t enjoy the same recurring maintenance streams as the large vendors to help sustain product development or sales and market expansion.
At the bottom of the food chain are the smaller vendors. They may find themselves in the perpetual funding chase. You may have seen Sarah Lacy’s references to Jason Calacanis’s “Startup Depression” in her blog and in her Valley Girl column on BusinessWeek’s site. Mr. Calacanis posits that half to three-fifths of venture-backed firms will cease operations or be reduced to a skeletal crew within the next year and a half.
Real question: Where will future innovation come from?
I’m sure you can see where I’m going. My bet is that the rich will eventually buy most of the middle class, mortally wounding the viability of best of breed.
This puts more pressure on vendors in the fourth tier. Can they offer a unique enough product or service that can get them in front of potential buyers? Or, should the smart ones be positioning themselves to be bought, too? I suspect that many are thinking about the latter.
So, if the vendor universe gets sharply reduced, where will innovation come from in the future? Not from the giants that usually have to buy their way in.
The good news is that there are a lot of interesting software companies out there. Whether they can remain independent or viable is another story.
To help introduce you to some of them, we will be starting a new series, “Software Innovators from A to Z.” Look for our analysis of two new startups, Amitive and Zuora, as well as continuing coverage of vendors ranging from Accruent and Aegis to Zyme.
New at the Blog: How low can the stock market go?
We’re following the stock market sink closely at the First Thing Monday blog. Be sure to check back frequently for our updates and speculations on how low the stock slide can go.
What do you think?
Will it come down to two tiers? If so, will this slow or kill innovation? Will VCs abandon the enterprise market once and for all? What does this mean for buyers? Where is the bottom of the stock market slide? I welcome your feedback and ideas, leave a comment on our blog. As always, brichardson@amrresearch.com.
--------------------------------------------------------------------------------
© Copyright by AMR Research, Inc.
Sherman, set the Wayback Machine to 1998
If we go back a decade or so, the ERP market was led by SAP and Oracle, followed by Baan, Great Plains, Intentia, JD Edwards, Lawson, MAPICS, QAD, SSA, and a host of others.
At the same time, there was a brisk best-of-breed market. PeopleSoft rode the human resources market (now renamed human capital management). Siebel capitalized on sales force automation and played a pivotal role in the expanded customer relationship management space. On the supply chain planning front, i2 Technologies and Manugistics competed for the lead, with Red Pepper determined to overtake both, while Manhattan Associates challenged a host of contenders in warehouse and transportation management.
On the product lifecycle management front, Agile Software and MatrixOne were newbies, and Dassault, PTC, and UGS were looking to move to product data management and PLM from their CAD roots. Speaking of Agile, remember when Ariba announced its plans to acquire Agile? At the time, Ariba was battling Commerce One, FreeMarkets, PurchasePro, and a host of others for the top spot in sourcing and procurement.
At the same time, Business Objects, Cognos, Hyperion, SAS, and others battled to create a market broader than their niches. Now, the first three are part of SAP, IBM, and Oracle, respectively, while privately-held SAS remains independent.
Sherman, take us back to 2008…after the elections, please
As we traveled back, were you surprised by the number of companies that have been acquired? I don’t think it’s over yet.
Look at the software middle class. Ariba is the lone large publicly traded company in sourcing, procurement, and spend management. I’ve already written about its attractiveness as a takeover target.
Once JDA completes the i2 deal, the supply chain market will consist of three middle class vendors: Manhattan, JDA, and privately-held Red Prairie. Does Oracle buy one and SAP purchases a second, a la the business intelligence and performance management market?
Who’s next in CRM? salesforce.com may be too large to buy unless Cisco, EMC, or IBM wants to make a bold bet on CRM-in-the-cloud. I don’t see it. Chordiant or RightNow (or both) may be more likely pick ups.
What about HCM? The middle class includes private-equity-owned Kronos and publicly traded SuccessFactors and Taleo as well as others. Again, does Oracle buy one and SAP another? The HCM space may be attractive to Cisco, too, as part of its plans to build out a collaboration suite that started with the WebEx buy.
What about the remaining ERP vendors? Intuit and Infor may be too big to buy, but if you look at the high cost of customer acquisition, do Oracle and SAP buy Deltek, Lawson, QAD, or any of the others for their customer bases and recurring maintenance revenue streams?
Will we move from five tiers to three or two?
If you look at today’s vendors in terms of market valuations, there are five tiers. At the upper crust are Cisco, EMC, Google, HP, IBM, Microsoft, Oracle, SAP, and others. Until the meltdown, all had market valuations north of $50B.
Well below this is a small, upper middle class of application vendors, which are limited to Dassault, Intuit, PTC, salesforce.com, and others with market caps in the $1B to $10B range. One could argue that it could include divisions of larger companies, such as AT&T’s Sterling Commerce and Siemens’ UGS, which could be active acquirers, too. Until the last seven trading days, Ariba could have been considered in this class, too. Are they predators or prey?
Slightly below this are the application vendors with valuations between $100M and $1B. These include many of the best-of-breed vendors and midsize ERP companies we’ve already discussed.
Then there is the fourth tier, consisting of dozens of companies with annual revenue in the $35M to $100M range. With a couple of exceptions, most are private, venture-backed firms, and many are struggling with elongated sales cycles, shrinking license fees, and nervous investors laser-focused on liquidity. They don’t enjoy the same recurring maintenance streams as the large vendors to help sustain product development or sales and market expansion.
At the bottom of the food chain are the smaller vendors. They may find themselves in the perpetual funding chase. You may have seen Sarah Lacy’s references to Jason Calacanis’s “Startup Depression” in her blog and in her Valley Girl column on BusinessWeek’s site. Mr. Calacanis posits that half to three-fifths of venture-backed firms will cease operations or be reduced to a skeletal crew within the next year and a half.
Real question: Where will future innovation come from?
I’m sure you can see where I’m going. My bet is that the rich will eventually buy most of the middle class, mortally wounding the viability of best of breed.
This puts more pressure on vendors in the fourth tier. Can they offer a unique enough product or service that can get them in front of potential buyers? Or, should the smart ones be positioning themselves to be bought, too? I suspect that many are thinking about the latter.
So, if the vendor universe gets sharply reduced, where will innovation come from in the future? Not from the giants that usually have to buy their way in.
The good news is that there are a lot of interesting software companies out there. Whether they can remain independent or viable is another story.
To help introduce you to some of them, we will be starting a new series, “Software Innovators from A to Z.” Look for our analysis of two new startups, Amitive and Zuora, as well as continuing coverage of vendors ranging from Accruent and Aegis to Zyme.
New at the Blog: How low can the stock market go?
We’re following the stock market sink closely at the First Thing Monday blog. Be sure to check back frequently for our updates and speculations on how low the stock slide can go.
What do you think?
Will it come down to two tiers? If so, will this slow or kill innovation? Will VCs abandon the enterprise market once and for all? What does this mean for buyers? Where is the bottom of the stock market slide? I welcome your feedback and ideas, leave a comment on our blog. As always, brichardson@amrresearch.com.
--------------------------------------------------------------------------------
© Copyright by AMR Research, Inc.
Tuesday, October 07, 2008
A Closer Look at Ariba’s Very Quiet Transformation
A Closer Look at Ariba’s Very Quiet Transformation
Friday, October 03, 2008
Bruce Richardson
Back in the late 1990s, in the go-go days of Internet commerce, Ariba, Commerce One, and i2 Technologies were three of the most-watched stocks. Their share prices would leap and fall in dramatic fashion, as the trio competed to be the transaction and content hubs of the then red-hot world of industry trading exchanges.
Fast forward a decade. Commerce One filed for Chapter 11 bankruptcy in October 2004 and was later acquired by Perfect Commerce in February 2006. Assuming the deal gets completed, i2 will soon be part of JDA Software. As for Ariba, it has done quite well, despite the repeated attempts by Oracle and SAP to extend their ERP dominance into sourcing and procurement, supplier relationship management, and spend management.
Friday, October 03, 2008
Bruce Richardson
Back in the late 1990s, in the go-go days of Internet commerce, Ariba, Commerce One, and i2 Technologies were three of the most-watched stocks. Their share prices would leap and fall in dramatic fashion, as the trio competed to be the transaction and content hubs of the then red-hot world of industry trading exchanges.
Fast forward a decade. Commerce One filed for Chapter 11 bankruptcy in October 2004 and was later acquired by Perfect Commerce in February 2006. Assuming the deal gets completed, i2 will soon be part of JDA Software. As for Ariba, it has done quite well, despite the repeated attempts by Oracle and SAP to extend their ERP dominance into sourcing and procurement, supplier relationship management, and spend management.
Tuesday, September 16, 2008
Take your partners, please (FT.com)
Take your partners, please
By Alan Cane
Published: September 16 2008 16:50 | Last updated: September 16 2008 16:50
Cost reduction has become the watchword in the information technology department and there are certainly bargains to be had as far as hardware, software and services go. However, the cheapest deal is unlikely to prove the best.
This is the view of vendors and customers alike, as the triple whammy of the credit crunch, rising energy costs and the threat of recession distorts world markets and puts the survival of some suppliers in question.
Nonetheless, the overall picture is patchy with certain market sectors enjoying exuberant growth. Alastair Sorbie, chief executive of the enterprise resource planning software vendor IFS, says he has yet to feel pressure for better deals from customers: “Contrary to the general mood of doom and gloom which hangs over the economy at the moment, some markets outside of the consumer and financial areas are doing well.
“Our customers in the oil, gas and defence manufacturing industries are booming and keen for business software which supports their operation.”
Globally, the situation is even more complex. Duncan Tait, managing director for Unisys’ Europe, Middle East and Africa (EMEA) operations, describes a two-speed market, with the MEA part of his title streaking ahead of Europe and the US: “There are three big things going on that fundamentally affect how organisations like ours take advantage of the market place.
“First, in Europe companies have neither cash nor capital to spend and this has a huge impact on the way IT companies have to sell. In the past, hardware companies have resorted to massive discounting but when customers have no upfront cash, things have to change.
“Second, input prices are going up across the economy – inflation in certain sectors is higher than broadcast and this is causing chief executives to pull hard on that big red lever in their offices titled ‘save money’. And third, citizens are worried about their personal and financial security.”
He argues that cash is moving eastwards and finding its way to African states such as Angola, as governments invest ahead of the end of the oil boom: “We are seeing substantial growth in police forces, transportation, ID cards and transborder security. Finance and cost-cutting there is not a problem because they have cash which turns up from the east, quite often from the Chinese. It’s a very different picture from the UK.”
In the west, there is substantial movement in the market with competition increasing and margins tightening: “These are tough times. It is getting difficult. There are some good deals to be had out there but you have to be smart to get them,” says Peter Stroud, managing director of Panacea, the computing services group. He suggests, as an example, that purchasers look for discounts on, say, support for desktop computers, which form a much larger part of the overall cost of a system than the hardware alone.
Scott Petty, global head of services for the IT group Dimension Data, offers another instance of smart rather than aggressive bargain-hunting: “We were looking for new software for our management platform and there were a couple of vendors who could do the job. We decided to create a win-win situation for our preferred vendor. We knew it wanted to close the order in a particular quarter and we knew that asking for a deeper discount was unlikely to work.
“So we decided to build the foundation of the platform we wanted to buy, with 75 per cent of the functionality. As we approached the end of the quarter, rather than asking for discounts, we asked for free software – software that had not been part of the negotiation but which we were keen to have. The vendor was very excited about this. Our request for new software modules was evidence of our long-term commitment to it and it was willing to give away quite a bit of software. The vendor was happy and we saved about 25 per cent on the cost.”
Most industry experts believe that establishing long-term relationships between suppliers and supplied are more important than simply forcing down the price, especially when the business environment is unstable. David Elton of PA Consulting Group says there are more influential factors affecting the price of hardware and software than a particular point in the economic cycle, pointing out that the price of hardware continues to come down and the availability of open source software offers alternatives at a lower initial price: “which doesn’t mean it is not a good time to have a negotiation or a conversation with a supplier about factors which affect the total cost of ownership”, he says.
“I don’t think we’ve been in a faster-moving situation for a decade or more. Given this rate of change, most of the clients I’m working with are exercising extreme caution. What they are looking for is value from the relationship.
“So a conversation around ‘How much can you take off the price?’ will not go very far because the supplier is not interested in it. A conversation around ‘What can we do to benchmark the price in years two and five of the agreement’, say, allows the customer to have some confidence that they are going to get good value right through the agreement and it gives the supplier the opportunity to say ‘I’ve got the potential for a five-year engagement here and that is worth quite a lot to me’ – particularly when you consider the costs of winning some of these deals.”
Customers such as Jos Creese, head of IT for Hampshire county council in the UK, who spends £30m a year on hardware and software with companies including IBM, Microsoft and SAP is concerned that as competition increases and margins tighten, some suppliers will be in trouble – and that could adversely affect their customers: “I think we are going to see quite a lot of shake-out in the market place.
“A number of niche suppliers will struggle. There will be good deals to be had but buyers should be wary because some of those deals could be built on sand. Customers want to work with suppliers in which they have confidence to survive the downturn.”
He said most suppliers are locked into a business model which is rapidly becoming obsolete: “As the industry wakes up to the fact that value in IT does not come from the acquisition of the product, but from its application in the business, so you need a longer term relationship with suppliers that helps you to carry out that exploitation.
“That requires different thinking around the contracts, a different business model from the suppliers and a different approach to risk management because, if you are going to build in that kind of flexibility then the standard, ‘We have a product, it costs this much, we will charge this much and we will make our money over 18 months,’ no longer works because you have to be able to flex and respond to the unexpected – to new competitors, for example, or customers who want to use your product in a different way.”
Mr Creese said he was increasingly looking for relationships with vendors based on a standard catalogue of products and prices but incorporating an ability to respond to unpredictable change to ensure that the organisation remains competitive – in the “top quartile” of IT users.
But according to Mark Nutt of the strategy experts Morse Group, many businesses are wasting money on a grand scale by inept purchasing behaviour. The problem, he explains, is that individual departments frequently buy equipment and services on an ad hoc basis, without looking to see what the rest of the organisation already has.
“To address this challenge,” he says, “businesses need to eradicate the old siloed buying approach and instead implement centralised purchasing through the IT department. By bringing purchasing back under the control of the IT department, businesses can better prepare when approaching vendors to get the best price.”
In the end, however, if cost reduction is the watchword, then value from IT must be the rallying cry and this is difficult to factor into vendor negotiations.
Mr Elton of PA says: “I think there are miles to go before businesses really get the value that they are looking for from IT. It is more about the people and the change you are seeking to achieve in the business that drives the value, rather than the IT itself.”
Copyright The Financial Times Limited 2008
By Alan Cane
Published: September 16 2008 16:50 | Last updated: September 16 2008 16:50
Cost reduction has become the watchword in the information technology department and there are certainly bargains to be had as far as hardware, software and services go. However, the cheapest deal is unlikely to prove the best.
This is the view of vendors and customers alike, as the triple whammy of the credit crunch, rising energy costs and the threat of recession distorts world markets and puts the survival of some suppliers in question.
Nonetheless, the overall picture is patchy with certain market sectors enjoying exuberant growth. Alastair Sorbie, chief executive of the enterprise resource planning software vendor IFS, says he has yet to feel pressure for better deals from customers: “Contrary to the general mood of doom and gloom which hangs over the economy at the moment, some markets outside of the consumer and financial areas are doing well.
“Our customers in the oil, gas and defence manufacturing industries are booming and keen for business software which supports their operation.”
Globally, the situation is even more complex. Duncan Tait, managing director for Unisys’ Europe, Middle East and Africa (EMEA) operations, describes a two-speed market, with the MEA part of his title streaking ahead of Europe and the US: “There are three big things going on that fundamentally affect how organisations like ours take advantage of the market place.
“First, in Europe companies have neither cash nor capital to spend and this has a huge impact on the way IT companies have to sell. In the past, hardware companies have resorted to massive discounting but when customers have no upfront cash, things have to change.
“Second, input prices are going up across the economy – inflation in certain sectors is higher than broadcast and this is causing chief executives to pull hard on that big red lever in their offices titled ‘save money’. And third, citizens are worried about their personal and financial security.”
He argues that cash is moving eastwards and finding its way to African states such as Angola, as governments invest ahead of the end of the oil boom: “We are seeing substantial growth in police forces, transportation, ID cards and transborder security. Finance and cost-cutting there is not a problem because they have cash which turns up from the east, quite often from the Chinese. It’s a very different picture from the UK.”
In the west, there is substantial movement in the market with competition increasing and margins tightening: “These are tough times. It is getting difficult. There are some good deals to be had out there but you have to be smart to get them,” says Peter Stroud, managing director of Panacea, the computing services group. He suggests, as an example, that purchasers look for discounts on, say, support for desktop computers, which form a much larger part of the overall cost of a system than the hardware alone.
Scott Petty, global head of services for the IT group Dimension Data, offers another instance of smart rather than aggressive bargain-hunting: “We were looking for new software for our management platform and there were a couple of vendors who could do the job. We decided to create a win-win situation for our preferred vendor. We knew it wanted to close the order in a particular quarter and we knew that asking for a deeper discount was unlikely to work.
“So we decided to build the foundation of the platform we wanted to buy, with 75 per cent of the functionality. As we approached the end of the quarter, rather than asking for discounts, we asked for free software – software that had not been part of the negotiation but which we were keen to have. The vendor was very excited about this. Our request for new software modules was evidence of our long-term commitment to it and it was willing to give away quite a bit of software. The vendor was happy and we saved about 25 per cent on the cost.”
Most industry experts believe that establishing long-term relationships between suppliers and supplied are more important than simply forcing down the price, especially when the business environment is unstable. David Elton of PA Consulting Group says there are more influential factors affecting the price of hardware and software than a particular point in the economic cycle, pointing out that the price of hardware continues to come down and the availability of open source software offers alternatives at a lower initial price: “which doesn’t mean it is not a good time to have a negotiation or a conversation with a supplier about factors which affect the total cost of ownership”, he says.
“I don’t think we’ve been in a faster-moving situation for a decade or more. Given this rate of change, most of the clients I’m working with are exercising extreme caution. What they are looking for is value from the relationship.
“So a conversation around ‘How much can you take off the price?’ will not go very far because the supplier is not interested in it. A conversation around ‘What can we do to benchmark the price in years two and five of the agreement’, say, allows the customer to have some confidence that they are going to get good value right through the agreement and it gives the supplier the opportunity to say ‘I’ve got the potential for a five-year engagement here and that is worth quite a lot to me’ – particularly when you consider the costs of winning some of these deals.”
Customers such as Jos Creese, head of IT for Hampshire county council in the UK, who spends £30m a year on hardware and software with companies including IBM, Microsoft and SAP is concerned that as competition increases and margins tighten, some suppliers will be in trouble – and that could adversely affect their customers: “I think we are going to see quite a lot of shake-out in the market place.
“A number of niche suppliers will struggle. There will be good deals to be had but buyers should be wary because some of those deals could be built on sand. Customers want to work with suppliers in which they have confidence to survive the downturn.”
He said most suppliers are locked into a business model which is rapidly becoming obsolete: “As the industry wakes up to the fact that value in IT does not come from the acquisition of the product, but from its application in the business, so you need a longer term relationship with suppliers that helps you to carry out that exploitation.
“That requires different thinking around the contracts, a different business model from the suppliers and a different approach to risk management because, if you are going to build in that kind of flexibility then the standard, ‘We have a product, it costs this much, we will charge this much and we will make our money over 18 months,’ no longer works because you have to be able to flex and respond to the unexpected – to new competitors, for example, or customers who want to use your product in a different way.”
Mr Creese said he was increasingly looking for relationships with vendors based on a standard catalogue of products and prices but incorporating an ability to respond to unpredictable change to ensure that the organisation remains competitive – in the “top quartile” of IT users.
But according to Mark Nutt of the strategy experts Morse Group, many businesses are wasting money on a grand scale by inept purchasing behaviour. The problem, he explains, is that individual departments frequently buy equipment and services on an ad hoc basis, without looking to see what the rest of the organisation already has.
“To address this challenge,” he says, “businesses need to eradicate the old siloed buying approach and instead implement centralised purchasing through the IT department. By bringing purchasing back under the control of the IT department, businesses can better prepare when approaching vendors to get the best price.”
In the end, however, if cost reduction is the watchword, then value from IT must be the rallying cry and this is difficult to factor into vendor negotiations.
Mr Elton of PA says: “I think there are miles to go before businesses really get the value that they are looking for from IT. It is more about the people and the change you are seeking to achieve in the business that drives the value, rather than the IT itself.”
Copyright The Financial Times Limited 2008
Wednesday, September 10, 2008
One on One With the CEOs of Business Objects and Epicor | AMR Research
One on One With the CEOs of Business Objects and Epicor | AMR Research
One on One With the CEOs of Business Objects and Epicor
by Bruce Richardson
I recently spent a few days traversing the Golden State of California. While there, I met with the CEOs of Business Objects, E2open, Epicor, and Intellicorp as well as executives from four other interesting software and technology firms. Because of time and space limitations, our analysis will be distributed over the next few weeks.
During the meeting with Business Objects’ John Schwarz, my first question was: “What’s it like to be part of SAP?” My last question was a request for a sneak preview of his product plans for the next 12 months. You can read his answers and get all of our analysis at the First Thing Monday blog: Life With SAP: My Conversation With Business Object’s John Schwarz.
As for Epicor, this was my first meeting with Tom Kelly. He was named president and CEO of this midsize ERP vendor last February. Our meeting focused primarily on the impending release of Epicor 9. In my view, his company has done what Microsoft and Oracle once dreamed of: melding the best of their multiple offerings into a single, brand-new code base. For a closer look, we have the full story on our blog: Epicor 9: The Accomplishment That Eluded Microsoft and Oracle.
One on One With the CEOs of Business Objects and Epicor
by Bruce Richardson
I recently spent a few days traversing the Golden State of California. While there, I met with the CEOs of Business Objects, E2open, Epicor, and Intellicorp as well as executives from four other interesting software and technology firms. Because of time and space limitations, our analysis will be distributed over the next few weeks.
During the meeting with Business Objects’ John Schwarz, my first question was: “What’s it like to be part of SAP?” My last question was a request for a sneak preview of his product plans for the next 12 months. You can read his answers and get all of our analysis at the First Thing Monday blog: Life With SAP: My Conversation With Business Object’s John Schwarz.
As for Epicor, this was my first meeting with Tom Kelly. He was named president and CEO of this midsize ERP vendor last February. Our meeting focused primarily on the impending release of Epicor 9. In my view, his company has done what Microsoft and Oracle once dreamed of: melding the best of their multiple offerings into a single, brand-new code base. For a closer look, we have the full story on our blog: Epicor 9: The Accomplishment That Eluded Microsoft and Oracle.
One on One With the CEOs of Business Objects and Epicor | AMR Research
One on One With the CEOs of Business Objects and Epicor | AMR Research
One on One With the CEOs of Business Objects and Epicor
by Bruce Richardson
I recently spent a few days traversing the Golden State of California. While there, I met with the CEOs of Business Objects, E2open, Epicor, and Intellicorp as well as executives from four other interesting software and technology firms. Because of time and space limitations, our analysis will be distributed over the next few weeks.
During the meeting with Business Objects’ John Schwarz, my first question was: “What’s it like to be part of SAP?” My last question was a request for a sneak preview of his product plans for the next 12 months. You can read his answers and get all of our analysis at the First Thing Monday blog: Life With SAP: My Conversation With Business Object’s John Schwarz.
As for Epicor, this was my first meeting with Tom Kelly. He was named president and CEO of this midsize ERP vendor last February. Our meeting focused primarily on the impending release of Epicor 9. In my view, his company has done what Microsoft and Oracle once dreamed of: melding the best of their multiple offerings into a single, brand-new code base. For a closer look, we have the full story on our blog: Epicor 9: The Accomplishment That Eluded Microsoft and Oracle.
One on One With the CEOs of Business Objects and Epicor
by Bruce Richardson
I recently spent a few days traversing the Golden State of California. While there, I met with the CEOs of Business Objects, E2open, Epicor, and Intellicorp as well as executives from four other interesting software and technology firms. Because of time and space limitations, our analysis will be distributed over the next few weeks.
During the meeting with Business Objects’ John Schwarz, my first question was: “What’s it like to be part of SAP?” My last question was a request for a sneak preview of his product plans for the next 12 months. You can read his answers and get all of our analysis at the First Thing Monday blog: Life With SAP: My Conversation With Business Object’s John Schwarz.
As for Epicor, this was my first meeting with Tom Kelly. He was named president and CEO of this midsize ERP vendor last February. Our meeting focused primarily on the impending release of Epicor 9. In my view, his company has done what Microsoft and Oracle once dreamed of: melding the best of their multiple offerings into a single, brand-new code base. For a closer look, we have the full story on our blog: Epicor 9: The Accomplishment That Eluded Microsoft and Oracle.
Saturday, August 30, 2008
Infosys to Acquire Axon Global: Combined SAP Practice Will Be in Top Five | AMR Research
Infosys to Acquire Axon Global: Combined SAP Practice Will Be in Top Five | AMR Research
Infosys got the jump this week on potentially becoming the first Indian tech company to join the ranks of global ERP consultancies. Upon the acquisition of Axon Global, which would close in November, Infosys will become a top 10 ERP service provider and a top 5 SAP consultant and integrator. If the two companies can reach agreement on the right branding, go-to-market strategy, and delivery structure, they will be well positioned to compete with top global ERP players IBM, Accenture, Capgemini, and Deloitte.
Infosys got the jump this week on potentially becoming the first Indian tech company to join the ranks of global ERP consultancies. Upon the acquisition of Axon Global, which would close in November, Infosys will become a top 10 ERP service provider and a top 5 SAP consultant and integrator. If the two companies can reach agreement on the right branding, go-to-market strategy, and delivery structure, they will be well positioned to compete with top global ERP players IBM, Accenture, Capgemini, and Deloitte.
Friday, August 22, 2008
Awakening a Sleeping Giant: Inside Microsoft Business Solutions’ ERP Strategy | AMR Research
Awakening a Sleeping Giant: Inside Microsoft Business Solutions’ ERP Strategy | AMR Research
Awakening a Sleeping Giant: Inside Microsoft Business Solutions’ ERP Strategy
Friday, August 22, 2008
Simon Jacobson, Miles Prescott
Today's brave new world of value chains and multi-enterprise collaboration is impacting how midsize organizations choose and leverage business applications. With IT budgets primed for growth and expansion, a perfect storm is brewing for Microsoft to capitalize on this opportunity with its technologies and Dynamics ERP product family. In this Report, AMR Research reviews the current progress of Microsoft Business Solutions’ products and partners as well as what’s necessary for the company to increase its market share in the ERP segment.
Awakening a Sleeping Giant: Inside Microsoft Business Solutions’ ERP Strategy
Friday, August 22, 2008
Simon Jacobson, Miles Prescott
Today's brave new world of value chains and multi-enterprise collaboration is impacting how midsize organizations choose and leverage business applications. With IT budgets primed for growth and expansion, a perfect storm is brewing for Microsoft to capitalize on this opportunity with its technologies and Dynamics ERP product family. In this Report, AMR Research reviews the current progress of Microsoft Business Solutions’ products and partners as well as what’s necessary for the company to increase its market share in the ERP segment.
Saturday, August 02, 2008
SAP Enterprise Support Contracts: Counting the Real Costs | AMR Research
SAP Enterprise Support Contracts: Counting the Real Costs | AMR Research
SAP Enterprise Support Contracts: Counting the Real Costs
Saturday, August 02, 2008
Derek Prior, Jim Shepherd
To a chorus of disapproval, SAP unveiled on July 16 that all existing customers will have to pay more for their maintenance and support contracts. But what impact will SAP Enterprise Support really have on loyal SAP customers?
SAP Enterprise Support Contracts: Counting the Real Costs
Saturday, August 02, 2008
Derek Prior, Jim Shepherd
To a chorus of disapproval, SAP unveiled on July 16 that all existing customers will have to pay more for their maintenance and support contracts. But what impact will SAP Enterprise Support really have on loyal SAP customers?
Tuesday, July 08, 2008
FT.com / Technology / Digital Business - Adding IT to the SME toolkit
FT.com / Technology / Digital Business - Adding IT to the SME toolkit
Adding IT to the SME toolkit
By Alan Cane
Published: July 8 2008 16:33 | Last updated: July 8 2008 16:33
The past few years have seen a marked change in the marketing of software and services. Vendors such as SAP and Oracle, which had previously confined their attention to the giants of the business world, have begun to court small and medium-sized enterprises (SMEs) with a cornucopia of new products.
“So many companies that have traditionally focused on large enterprises are now going into the SME market. It is amazing. Everything is about SMEs,” says Joslyn Faust, principal analyst specialising in the SME market for Gartner, the consultancy.
But, she warns, it is not necessarily to everyone’s benefit. “Many of these vendors do not understand that it is a totally different business model. Service, support and pricing are all very different. The products need to be very simple and they all need to work together. SMEs are worried that the IT they are offered will prove to be too complicated, too costly or that the vendor will consider them too small for proper support,” she says.
Buying consumer-grade technology is one answer for very small firms.
Eilert Hanoa, chief executive of Mamut, a European provider of integrated software and internet services for SMEs, shares Ms Faust’s concerns: “There is a misconception within the SME sector that technology is expensive and that it is a luxury a small business cannot afford. Most SMEs have few people to turn to for technology advice and this has led to an abundance of fear, uncertainty and doubt when buying IT.
“This sorry state of affairs has been compounded, and in some cases encouraged, by an IT sector that has done the SME sector a disservice by downsizing enterprise applications for the SME market without addressing their need for less complexity.”
SAP, however, one of the world’s largest software groups, has seen a significant change in its mix of customers over the past 10 to 20 years. At one time it was a provider of enterprise resource planning (ERP) software only to large corporates, it now estimates that 70 per cent of its customers – about 35,000 globally – are SMEs.
Simon Etherington, head of the SME division for SAP in the UK, says the sector is covered by a three-product family: Business One, an out-of-the-box business management system for companies with less than £30m-£40m in turnover; Business by Design for larger groups; and Business-all-in-One for vertical industries. These products are generally marketed to customers via channel partners who can offer technical help and business advice.
Are there any companies too small for an SAP offering? “If there are, we haven’t found them yet,” says Mr Etherington.
But he warns that IT is no magic bullet. The customer, he says, must have a clear vision of what it wants to do, where it wants to go and how it thinks IT can support its objectives.
He says that SMEs may have an advantage because they see their business processes – essentially what the business does – more clearly than bigger enterprises. And any IT investment must be treated as a business project rather than an IT initiative, he counsels.
Dawn Baker, head of marketing for the small business division of Sage, the UK accounting software group, concurs: “Small businesses have to make monthly decisions based on cash flow. So an owner may be faced with the dilemma of whether to take £100 ($197) extra as a bonus or use it to buy a piece of software.
“Another option, especially for businesses at the upper end of the SME sector is to look into hosted versus on-premises software solutions, as this might provide a higher degree of flexibility with less up-front investment. Either way, any investment in IT should be linked to a business plan.”
Big-ticket technologies such as ERP are not alone in being reconfigured to fit a smaller customer. Virtualisation – running a number of operating systems and application packages on the same server – is becoming increasingly attractive to small companies, not simply because of savings on the cost of servers but because of disaster recovery and business continuity.
Martin Niemer of VMware, a leading vendor of virtualisation software, says that companies with only four or five servers and fewer than a dozen staff are virtualising their servers as a protection against downtime, “which could cost them a huge amount of money”.
Typically, VMware consolidates applications from 10 machines on to a single server. The latest servers can run as many as 30 virtual machines.
So how do we define an SME or SMB (small and medium-sized business)? Definitions vary geographically. In Europe, a small company might have 10-49 employees and a medium-sized one, 50-250. In some regions, 5,000 people might still constitute a medium-sized company.
Smaller concerns are generally seen as more flexible and agile than their larger competitors. Simon Devonshire, head of SME marketing for O2, the mobile operator, says small businesses are typically quicker to adopt new technologies than large corporates.
“This is largely the consequence of a difference in the attitude towards technology in small versus larger businesses. In large corporations, new technologies such as the latest handheld mobile device and laptops are often viewed as a privilege, restricted to senior management.
“Small businesses are more likely to recognise the business benefit that a new technology will bring as opposed to seeing it as a status symbol.”
Again, the technology cannot be deployed unthinkingly.
Michel Robert, managing director of the European hosting group Claranet warns that SMEs must be sure their investments will move the business on. “Most SMEs don’t care if the technology is the newest or the fanciest or the quickest. They care about reliability and about whether it will take them in the right direction. SMEs cannot afford to experiment and get it wrong.”
He points to the dangers of growing complexity, which SMEs may be ill-prepared to deal with. He recommends outsourcing the bread-and-butter operations: “This will allow you to focus the technical resources you have on the future and on innovation and on aligning IT with the business.”
The impact of the internet on SMEs has been particularly strong. While a couple of decades ago, an SME might be considering what accounting package to buy, today it is chiefly concerned with connectivity.
Chris Stening of Easynet, part of the BSkyB group, says the company has seen an exponential demand for broadband from SMEs driven by e-mail, web traffic and online applications.
“The internet has changed the way small businesses think about themselves,” he says.
A company can use a cleverly designed website to make it seem larger than it really is: equally, a failed internet connection can quickly cost a small company more than it can afford.
A survey carried out among UK SMEs by Quocirca, the consultancy, for Easynet Connect, the company’s SME network, says connection has become vital for many: “While a quarter of companies could work for days with no internet connection, most companies require failures to be fixed inside a day. For one in four, time to fix is even tighter at less than an hour and for some no break is acceptable.
“In such critical situations, a second redundant connection has to be worth considering,” Quocirca recommends. The survey shows that from a simple web presence and e-mail, SMEs are selling online, using internet protocol telephony and networked video. Almost half use the network for remote back-up and disaster recovery.
Are there simple guidelines that SMEs should follow in their adoption of IT? Joslyn Faust of Gartner suggests that potential buyers should not focus on price too strongly. “Free or almost free does not mean stress-free,” she says, adding that new additions must work with existing equipment if the company is not to have problems as it grows.
She also says it is important to make sure that the vendor understands the customer’s business. “Too many do not understand these vertical markets, which leads to frustration for their customers as they get up to speed.”
There are heartening signs, she says, that vendors are working towards the idea of “one-stop shopping” for SMEs. “That is what SMEs have always wanted but what they have not been able to have because of the state of the market. It takes a few years for vendors to get it right.”
Copyright The Financial Times Limited 2008
Adding IT to the SME toolkit
By Alan Cane
Published: July 8 2008 16:33 | Last updated: July 8 2008 16:33
The past few years have seen a marked change in the marketing of software and services. Vendors such as SAP and Oracle, which had previously confined their attention to the giants of the business world, have begun to court small and medium-sized enterprises (SMEs) with a cornucopia of new products.
“So many companies that have traditionally focused on large enterprises are now going into the SME market. It is amazing. Everything is about SMEs,” says Joslyn Faust, principal analyst specialising in the SME market for Gartner, the consultancy.
But, she warns, it is not necessarily to everyone’s benefit. “Many of these vendors do not understand that it is a totally different business model. Service, support and pricing are all very different. The products need to be very simple and they all need to work together. SMEs are worried that the IT they are offered will prove to be too complicated, too costly or that the vendor will consider them too small for proper support,” she says.
Buying consumer-grade technology is one answer for very small firms.
Eilert Hanoa, chief executive of Mamut, a European provider of integrated software and internet services for SMEs, shares Ms Faust’s concerns: “There is a misconception within the SME sector that technology is expensive and that it is a luxury a small business cannot afford. Most SMEs have few people to turn to for technology advice and this has led to an abundance of fear, uncertainty and doubt when buying IT.
“This sorry state of affairs has been compounded, and in some cases encouraged, by an IT sector that has done the SME sector a disservice by downsizing enterprise applications for the SME market without addressing their need for less complexity.”
SAP, however, one of the world’s largest software groups, has seen a significant change in its mix of customers over the past 10 to 20 years. At one time it was a provider of enterprise resource planning (ERP) software only to large corporates, it now estimates that 70 per cent of its customers – about 35,000 globally – are SMEs.
Simon Etherington, head of the SME division for SAP in the UK, says the sector is covered by a three-product family: Business One, an out-of-the-box business management system for companies with less than £30m-£40m in turnover; Business by Design for larger groups; and Business-all-in-One for vertical industries. These products are generally marketed to customers via channel partners who can offer technical help and business advice.
Are there any companies too small for an SAP offering? “If there are, we haven’t found them yet,” says Mr Etherington.
But he warns that IT is no magic bullet. The customer, he says, must have a clear vision of what it wants to do, where it wants to go and how it thinks IT can support its objectives.
He says that SMEs may have an advantage because they see their business processes – essentially what the business does – more clearly than bigger enterprises. And any IT investment must be treated as a business project rather than an IT initiative, he counsels.
Dawn Baker, head of marketing for the small business division of Sage, the UK accounting software group, concurs: “Small businesses have to make monthly decisions based on cash flow. So an owner may be faced with the dilemma of whether to take £100 ($197) extra as a bonus or use it to buy a piece of software.
“Another option, especially for businesses at the upper end of the SME sector is to look into hosted versus on-premises software solutions, as this might provide a higher degree of flexibility with less up-front investment. Either way, any investment in IT should be linked to a business plan.”
Big-ticket technologies such as ERP are not alone in being reconfigured to fit a smaller customer. Virtualisation – running a number of operating systems and application packages on the same server – is becoming increasingly attractive to small companies, not simply because of savings on the cost of servers but because of disaster recovery and business continuity.
Martin Niemer of VMware, a leading vendor of virtualisation software, says that companies with only four or five servers and fewer than a dozen staff are virtualising their servers as a protection against downtime, “which could cost them a huge amount of money”.
Typically, VMware consolidates applications from 10 machines on to a single server. The latest servers can run as many as 30 virtual machines.
So how do we define an SME or SMB (small and medium-sized business)? Definitions vary geographically. In Europe, a small company might have 10-49 employees and a medium-sized one, 50-250. In some regions, 5,000 people might still constitute a medium-sized company.
Smaller concerns are generally seen as more flexible and agile than their larger competitors. Simon Devonshire, head of SME marketing for O2, the mobile operator, says small businesses are typically quicker to adopt new technologies than large corporates.
“This is largely the consequence of a difference in the attitude towards technology in small versus larger businesses. In large corporations, new technologies such as the latest handheld mobile device and laptops are often viewed as a privilege, restricted to senior management.
“Small businesses are more likely to recognise the business benefit that a new technology will bring as opposed to seeing it as a status symbol.”
Again, the technology cannot be deployed unthinkingly.
Michel Robert, managing director of the European hosting group Claranet warns that SMEs must be sure their investments will move the business on. “Most SMEs don’t care if the technology is the newest or the fanciest or the quickest. They care about reliability and about whether it will take them in the right direction. SMEs cannot afford to experiment and get it wrong.”
He points to the dangers of growing complexity, which SMEs may be ill-prepared to deal with. He recommends outsourcing the bread-and-butter operations: “This will allow you to focus the technical resources you have on the future and on innovation and on aligning IT with the business.”
The impact of the internet on SMEs has been particularly strong. While a couple of decades ago, an SME might be considering what accounting package to buy, today it is chiefly concerned with connectivity.
Chris Stening of Easynet, part of the BSkyB group, says the company has seen an exponential demand for broadband from SMEs driven by e-mail, web traffic and online applications.
“The internet has changed the way small businesses think about themselves,” he says.
A company can use a cleverly designed website to make it seem larger than it really is: equally, a failed internet connection can quickly cost a small company more than it can afford.
A survey carried out among UK SMEs by Quocirca, the consultancy, for Easynet Connect, the company’s SME network, says connection has become vital for many: “While a quarter of companies could work for days with no internet connection, most companies require failures to be fixed inside a day. For one in four, time to fix is even tighter at less than an hour and for some no break is acceptable.
“In such critical situations, a second redundant connection has to be worth considering,” Quocirca recommends. The survey shows that from a simple web presence and e-mail, SMEs are selling online, using internet protocol telephony and networked video. Almost half use the network for remote back-up and disaster recovery.
Are there simple guidelines that SMEs should follow in their adoption of IT? Joslyn Faust of Gartner suggests that potential buyers should not focus on price too strongly. “Free or almost free does not mean stress-free,” she says, adding that new additions must work with existing equipment if the company is not to have problems as it grows.
She also says it is important to make sure that the vendor understands the customer’s business. “Too many do not understand these vertical markets, which leads to frustration for their customers as they get up to speed.”
There are heartening signs, she says, that vendors are working towards the idea of “one-stop shopping” for SMEs. “That is what SMEs have always wanted but what they have not been able to have because of the state of the market. It takes a few years for vendors to get it right.”
Copyright The Financial Times Limited 2008
Tuesday, June 24, 2008
FT.com / Technology / Digital Business - How should organisations react to social networking tools? Embrace them, ban them, or …?
FT.com / Technology / Digital Business - How should organisations react to social networking tools? Embrace them, ban them, or …?
How should organisations react to social networking tools? Embrace them, ban them, or …?
By Dick Eve, Change Portfolio Director, for Atkins Group
Published: June 23 2008 14:02 | Last updated: June 23 2008 14:02
A truck driver approaches a bridge that has a weight limit of 5,000kg. He and his truck weigh 4,950kg so he would be able to cross it were it not for his 100kg cargo; a flock of pigeons loose in the back of the truck. He has the bright idea of banging on the side of the truck to scare all the birds into taking flight and then he quickly drives across the bridge. Does it work?
After long debate in the New Scientist one reader said: “The practical engineer’s answer is yes, of course the driver could cross! The surplus weight of 50kg translates to a 1 per cent excess over the bridge’s specified load maximum. An additional impulse force due to the truck bumping over a small stone in the road would be much greater than this 1 per cent, and any civil engineer who designs a structure of any sort with a safety margin anywhere near as small as 1 per cent deserves all the professional liability lawsuits he or she gets.”
Why do I raise this? Because it describes nicely two things about engineers: they are practical and they are (or have to be) risk averse. We are the UK’s largest engineering consultancy, and are involved in some of the world’s most high profile building, infrastructure and transport projects. The culture engendered by this – by taking on board every possible eventuality to ensure the products of our endeavours stand the test of time – inevitably puts safety and risk aversion at the heart of what we do.
What has that got to do with social networking? Well, the adoption (or not) of any software technology is more about the culture of the business than the technology itself. You cannot introduce new technology alone and expect it to be successfully adopted in any business, especially one that is resistant to change and risks.
As an example, Microsoft’s Communicator can be installed on everyone’s computer but without education and a business change programme this generates many mixed views, ranging from “I don’t know anything about it” through, “I already get too much e-mail – I am not using that too!” to users like myself who really embrace it. So I use this for communication with a small community of like-minded individuals but not the whole network. This is strengthening strong ties within my network. The next question is how far should that network extend, should I be allowed to communicate with customers or partners or should communication be restricted to internal users only?
So why would a business restrict this powerful tool to being an internal capability when more and more business is done with one or many partners?
It is probably the uncertainty of the outcome. Could it have a negative effect on the business either through someone spending all day chatting with their personal partner rather than their business partner? Maybe the risk of litigation when someone commits something to their business partner they shouldn’t. Written documents are much more formal: they are reviewed, rewritten and are clear records of events; conversations are transient and normally decisions are confirmed in writing. Social networking today sits in between. There is no real audit. What about records management? Decisions could be made with no record.
Of course, Communicator is just the tip of the iceberg. If we consider a wider range of social networking software (SNS) such as Facebook or MySpace, where I can publish a wide variety of information about my background, interests, skills and activities, there is an opportunity for even more abuse. Innocent or otherwise, the lack of regulation regarding such content could have legal ramifications. So maybe the risk outweighs the benefits.
But there seems to be evidence that weak ties and bridges between networks are increasingly important for innovation and knowledge sharing. A social networking approach can really help to develop these weak ties which will bridge the strong networks and spawn new innovations and approaches.
Our business works largely on the strong networks built over years. If you need advice or a resource you can call on a contact you worked with several years ago and be confident they will share their experience to your advantage. But are we missing a trick here? We will always get the same answers – can we use the weak ties and maybe get some new ideas and innovations, maybe SNS is a quick way to involve the new upcoming stars and help them shape the business.
And last but not least, doesn’t the next generation expect to use these tools in work as well as at home? There will come a day when new stars will not join dinosaurs who don’t offer these techniques.
So, when the business is ready and the culture is right, businesses will have to embrace social networking. Yes, of course we need to be prudent and put in the checks and balances for protection. Social Networking Solutions are now available that have been hybridised for business use which should take some of the pain away but when we do embrace it, let’s not get paranoid; too much restriction will stifle the advantages it can deliver.
Copyright The Financial Times Limited 2008
How should organisations react to social networking tools? Embrace them, ban them, or …?
By Dick Eve, Change Portfolio Director, for Atkins Group
Published: June 23 2008 14:02 | Last updated: June 23 2008 14:02
A truck driver approaches a bridge that has a weight limit of 5,000kg. He and his truck weigh 4,950kg so he would be able to cross it were it not for his 100kg cargo; a flock of pigeons loose in the back of the truck. He has the bright idea of banging on the side of the truck to scare all the birds into taking flight and then he quickly drives across the bridge. Does it work?
After long debate in the New Scientist one reader said: “The practical engineer’s answer is yes, of course the driver could cross! The surplus weight of 50kg translates to a 1 per cent excess over the bridge’s specified load maximum. An additional impulse force due to the truck bumping over a small stone in the road would be much greater than this 1 per cent, and any civil engineer who designs a structure of any sort with a safety margin anywhere near as small as 1 per cent deserves all the professional liability lawsuits he or she gets.”
Why do I raise this? Because it describes nicely two things about engineers: they are practical and they are (or have to be) risk averse. We are the UK’s largest engineering consultancy, and are involved in some of the world’s most high profile building, infrastructure and transport projects. The culture engendered by this – by taking on board every possible eventuality to ensure the products of our endeavours stand the test of time – inevitably puts safety and risk aversion at the heart of what we do.
What has that got to do with social networking? Well, the adoption (or not) of any software technology is more about the culture of the business than the technology itself. You cannot introduce new technology alone and expect it to be successfully adopted in any business, especially one that is resistant to change and risks.
As an example, Microsoft’s Communicator can be installed on everyone’s computer but without education and a business change programme this generates many mixed views, ranging from “I don’t know anything about it” through, “I already get too much e-mail – I am not using that too!” to users like myself who really embrace it. So I use this for communication with a small community of like-minded individuals but not the whole network. This is strengthening strong ties within my network. The next question is how far should that network extend, should I be allowed to communicate with customers or partners or should communication be restricted to internal users only?
So why would a business restrict this powerful tool to being an internal capability when more and more business is done with one or many partners?
It is probably the uncertainty of the outcome. Could it have a negative effect on the business either through someone spending all day chatting with their personal partner rather than their business partner? Maybe the risk of litigation when someone commits something to their business partner they shouldn’t. Written documents are much more formal: they are reviewed, rewritten and are clear records of events; conversations are transient and normally decisions are confirmed in writing. Social networking today sits in between. There is no real audit. What about records management? Decisions could be made with no record.
Of course, Communicator is just the tip of the iceberg. If we consider a wider range of social networking software (SNS) such as Facebook or MySpace, where I can publish a wide variety of information about my background, interests, skills and activities, there is an opportunity for even more abuse. Innocent or otherwise, the lack of regulation regarding such content could have legal ramifications. So maybe the risk outweighs the benefits.
But there seems to be evidence that weak ties and bridges between networks are increasingly important for innovation and knowledge sharing. A social networking approach can really help to develop these weak ties which will bridge the strong networks and spawn new innovations and approaches.
Our business works largely on the strong networks built over years. If you need advice or a resource you can call on a contact you worked with several years ago and be confident they will share their experience to your advantage. But are we missing a trick here? We will always get the same answers – can we use the weak ties and maybe get some new ideas and innovations, maybe SNS is a quick way to involve the new upcoming stars and help them shape the business.
And last but not least, doesn’t the next generation expect to use these tools in work as well as at home? There will come a day when new stars will not join dinosaurs who don’t offer these techniques.
So, when the business is ready and the culture is right, businesses will have to embrace social networking. Yes, of course we need to be prudent and put in the checks and balances for protection. Social Networking Solutions are now available that have been hybridised for business use which should take some of the pain away but when we do embrace it, let’s not get paranoid; too much restriction will stifle the advantages it can deliver.
Copyright The Financial Times Limited 2008
Friday, June 13, 2008
Can NetSuite Surge While SAP Decelerates?
NetSuite executives stopped by our offices a few days ago to brief us on the new NetSuite for Manufacturers product. This release adds new functionality for product assembly, inventory management, bill of materials, and work orders. While not going deep into manufacturing operations or planning, it is a logical extension to the platform offered for wholesalers and distributors that also do some final assembly or kitting.
During our briefing, NetSuite executives made it clear that they were going to be more aggressive in the positioning against SAP Business ByDesign, a competing software-as-a-service (SaaS) product that also features applications for manufacturing, finance, and customer management. Earlier this year, SAP said it would "reduce its accelerated investments around SAP Business ByDesign in 2008." While SAP is still selling the product, it has tempered its plans to sell to 10,000 new customers annually. This won't happen until 2010 or so.
If you looked at the NetSuite press release, there was little subtlety: The headline read: "NetSuite Enters SAP's Core Market," a reference to the fact that most of SAP's 47,800 ERP customers are manufacturers. In the first paragraph, there were references to NetSuite's plans "to exploit the prolonged delay" of the competitor's products. The theme also carried over to the company's website: "NetSuite Takes on SAP with Manufacturing Solutions."
Smart to provoke Goliath?
While I was surprised by the boldness of the headline, press release, and website, I think this is a smart bit of positioning if NetSuite's marketing people can get the press to bite. Essentially, NetSuite wants to turn the broader SaaS application space into a two-horse race. If it is successful, any article on SAP Business ByDesign should also include an update on or quote from NetSuite. Marc Benioff did this brilliantly when he turned any CRM coverage into a Siebel versus salesforce.com debate.
I’ll bet at least one of my colleagues and several of our competitors will dismiss NetSuite's move as a gimmick. That argument is too simplistic.
Look at some of the company's recent moves. In early June, NetSuite made its first acquisition with the purchase of OpenAir for $26M in cash. OpenAir develops SaaS software for professional services automation and project portfolio management for project and time-based firms such as professional services, consulting, legal, accounting, and government contracting. OpenAir's 300 customers bring NetSuite's professional services base over the 1,000 customer mark.
OpenAir adds another entry point to new customers
This acquisition gives NetSuite a broader footprint as well as a new entry point. Like the SAP Business ByDesign team, NetSuite customers always start with a single pain point: financials, CRM, or e-commerce. Using the classic land-and-expand strategy, NetSuite will add more seats and modules in the next 12 months as customers come to see the benefits from having a single integrated system and set of dashboards as opposed to operating a spider's web of piece parts.
In April, the company launched NetSuite OneWorld, which allows customers to consolidate all global financial and customer data on a single platform. This includes support for all things multi, such as multicurrency financial consolidation, quotas, and forecasts; multilanguage; multicountry; and multibrand websites.
Ecosystem expands to 60 third-party applications and 21 industries/micro-verticals
In February, NetSuite introduced NS-BOS (NetSuite-Business Operating System), its unique entry into the platform-as-a-service market. In just four months, more than 1,000 software companies have inquired about building software on top of the NetSuite platform or creating their own micro-vertical systems based on NetSuite. To date, there are 60 third-party applications, including 4 unveiled as part of the NetSuite for Manufacturers launch.
More impressive has been the company's success in attracting third parties interested in using NetSuite's whole product line to create their own industry-specific systems. So far, developers have begun offering software across 15 sectors, including agriculture equipment dealerships, commercial floor cleaning, deep seaport marinas, government contractors, insurance, and pharmaceutical distribution.
For its part, NetSuite is targeting six core verticals that it plans to tackle on its own. These include software firms, wholesalers and distributors, services companies, IT value-added resellers (VARs), media and publishing entities, and e-commerce providers. This is a different approach from SAP which has vowed to stick with a vanilla solution - no customization, no vertical versions - at least for the near term.
Next target: HCM? SAP integration?
On the competitive front, Plexus Systems has successfully sold SaaS into hardcore discrete manufacturing sites for awhile, particularly in automotive, A&D, and other industrial firms. Lately, its success in these environments has pulled it into adjacent manufacturing environments such as food and beverage and medical device. While other vendors are fine-tuning their SaaS models, Plexus Systems has truly capitalized on SaaS ERP, leading with manufacturing execution and quality management modules and then extending that footprint into more traditional ERP functionality, including financials and HR. For its part, I'm not sure NetSuite will go much deeper than light manufacturing.
As for SAP, if you look at the SAP Business ByDesign product map, there are eight wedges in the diagram: financials, compliance, supplier relationship management, project management, supply chain management, executive management, CRM, and human capital management (HCM). Looking at the SAP wheel, NetSuite's moves would eliminate the need for most, if not all, of supply chain management and supplier management. That leaves HCM as the one major obvious gap between NetSuite and SAP. That’s the next likely acquisition or partner area.
While SAP has made it clear that it does not intend to sell SAP Business ByDesign back into its high-end base, that might make an interesting market for NetSuite. Can it position its products as a replacement for some of the aging MRP II, ERP, and/or CRM applications at smaller plants, distribution sites, or sales offices? While it would likely result in expensive and often futile sales cycles, it is intriguing nonetheless. Companies like Cast Iron Systems already provide integration appliances that link SaaS vendors like salesforce.com to SAP backbones.
Will NetSuite get to 10,000 SaaS customers before SAP?
Right now, NetSuite has about 6,000 customers, compared to just over 150 for SAP Business ByDesign. On the other hand, it is far smaller than its rival. The company expects 2008 revenue to be in the range of $156M to $159M. This compares to analyst estimates of $18.81B for SAP (source: my.yahoo).
NetSuite should get to 10,000 SaaS customers first. Given that it added 430 new customers in 4Q07 and another 400 in 1Q08, it could take two or more years to get there. SAP has opened a window, but it's unclear how long NetSuite will benefit from the breeze.
What do you think? Are manufacturers ready for SaaS, or should NetSuite focus exclusively on service industries? Is the comparison to SAP a smart marketing tactic or just a gimmick? Will NetSuite make it to 10,000 customers, or will Oracle acquire it before Zach Nelson gets his company there?
As always, I welcome your feedback and ideas. You can comment on my blog—firsthingmonday.net—or contact me at brichardson@amrresearch.com.
During our briefing, NetSuite executives made it clear that they were going to be more aggressive in the positioning against SAP Business ByDesign, a competing software-as-a-service (SaaS) product that also features applications for manufacturing, finance, and customer management. Earlier this year, SAP said it would "reduce its accelerated investments around SAP Business ByDesign in 2008." While SAP is still selling the product, it has tempered its plans to sell to 10,000 new customers annually. This won't happen until 2010 or so.
If you looked at the NetSuite press release, there was little subtlety: The headline read: "NetSuite Enters SAP's Core Market," a reference to the fact that most of SAP's 47,800 ERP customers are manufacturers. In the first paragraph, there were references to NetSuite's plans "to exploit the prolonged delay" of the competitor's products. The theme also carried over to the company's website: "NetSuite Takes on SAP with Manufacturing Solutions."
Smart to provoke Goliath?
While I was surprised by the boldness of the headline, press release, and website, I think this is a smart bit of positioning if NetSuite's marketing people can get the press to bite. Essentially, NetSuite wants to turn the broader SaaS application space into a two-horse race. If it is successful, any article on SAP Business ByDesign should also include an update on or quote from NetSuite. Marc Benioff did this brilliantly when he turned any CRM coverage into a Siebel versus salesforce.com debate.
I’ll bet at least one of my colleagues and several of our competitors will dismiss NetSuite's move as a gimmick. That argument is too simplistic.
Look at some of the company's recent moves. In early June, NetSuite made its first acquisition with the purchase of OpenAir for $26M in cash. OpenAir develops SaaS software for professional services automation and project portfolio management for project and time-based firms such as professional services, consulting, legal, accounting, and government contracting. OpenAir's 300 customers bring NetSuite's professional services base over the 1,000 customer mark.
OpenAir adds another entry point to new customers
This acquisition gives NetSuite a broader footprint as well as a new entry point. Like the SAP Business ByDesign team, NetSuite customers always start with a single pain point: financials, CRM, or e-commerce. Using the classic land-and-expand strategy, NetSuite will add more seats and modules in the next 12 months as customers come to see the benefits from having a single integrated system and set of dashboards as opposed to operating a spider's web of piece parts.
In April, the company launched NetSuite OneWorld, which allows customers to consolidate all global financial and customer data on a single platform. This includes support for all things multi, such as multicurrency financial consolidation, quotas, and forecasts; multilanguage; multicountry; and multibrand websites.
Ecosystem expands to 60 third-party applications and 21 industries/micro-verticals
In February, NetSuite introduced NS-BOS (NetSuite-Business Operating System), its unique entry into the platform-as-a-service market. In just four months, more than 1,000 software companies have inquired about building software on top of the NetSuite platform or creating their own micro-vertical systems based on NetSuite. To date, there are 60 third-party applications, including 4 unveiled as part of the NetSuite for Manufacturers launch.
More impressive has been the company's success in attracting third parties interested in using NetSuite's whole product line to create their own industry-specific systems. So far, developers have begun offering software across 15 sectors, including agriculture equipment dealerships, commercial floor cleaning, deep seaport marinas, government contractors, insurance, and pharmaceutical distribution.
For its part, NetSuite is targeting six core verticals that it plans to tackle on its own. These include software firms, wholesalers and distributors, services companies, IT value-added resellers (VARs), media and publishing entities, and e-commerce providers. This is a different approach from SAP which has vowed to stick with a vanilla solution - no customization, no vertical versions - at least for the near term.
Next target: HCM? SAP integration?
On the competitive front, Plexus Systems has successfully sold SaaS into hardcore discrete manufacturing sites for awhile, particularly in automotive, A&D, and other industrial firms. Lately, its success in these environments has pulled it into adjacent manufacturing environments such as food and beverage and medical device. While other vendors are fine-tuning their SaaS models, Plexus Systems has truly capitalized on SaaS ERP, leading with manufacturing execution and quality management modules and then extending that footprint into more traditional ERP functionality, including financials and HR. For its part, I'm not sure NetSuite will go much deeper than light manufacturing.
As for SAP, if you look at the SAP Business ByDesign product map, there are eight wedges in the diagram: financials, compliance, supplier relationship management, project management, supply chain management, executive management, CRM, and human capital management (HCM). Looking at the SAP wheel, NetSuite's moves would eliminate the need for most, if not all, of supply chain management and supplier management. That leaves HCM as the one major obvious gap between NetSuite and SAP. That’s the next likely acquisition or partner area.
While SAP has made it clear that it does not intend to sell SAP Business ByDesign back into its high-end base, that might make an interesting market for NetSuite. Can it position its products as a replacement for some of the aging MRP II, ERP, and/or CRM applications at smaller plants, distribution sites, or sales offices? While it would likely result in expensive and often futile sales cycles, it is intriguing nonetheless. Companies like Cast Iron Systems already provide integration appliances that link SaaS vendors like salesforce.com to SAP backbones.
Will NetSuite get to 10,000 SaaS customers before SAP?
Right now, NetSuite has about 6,000 customers, compared to just over 150 for SAP Business ByDesign. On the other hand, it is far smaller than its rival. The company expects 2008 revenue to be in the range of $156M to $159M. This compares to analyst estimates of $18.81B for SAP (source: my.yahoo).
NetSuite should get to 10,000 SaaS customers first. Given that it added 430 new customers in 4Q07 and another 400 in 1Q08, it could take two or more years to get there. SAP has opened a window, but it's unclear how long NetSuite will benefit from the breeze.
What do you think? Are manufacturers ready for SaaS, or should NetSuite focus exclusively on service industries? Is the comparison to SAP a smart marketing tactic or just a gimmick? Will NetSuite make it to 10,000 customers, or will Oracle acquire it before Zach Nelson gets his company there?
As always, I welcome your feedback and ideas. You can comment on my blog—firsthingmonday.net—or contact me at brichardson@amrresearch.com.
Thursday, May 01, 2008
FT.com / Lex / Technology, media & telecoms - Slowdown at SAP
FT.com / Lex / Technology, media & telecoms - Slowdown at SAP
Slowdown at SAP
Published: April 30 2008 09:38 | Last updated: April 30 2008 19:22
The prospect of implementing an SAP program for the first time tends to bring managers out in a sweat. Investors anticipating the software company’s results have learnt to feel the same way. On Wednesday SAP shares dropped 3 per cent after its first-quarter numbers missed expectations.
Sales of new licences, which contribute about half of sales, were weak. Because these should generate follow-up maintenance contracts, they are a good signal about future growth. The Americas were particularly weak: excluding the impact of recently acquired Business Objects, licence sales fell almost 10 per cent year on year. An exceptional first-quarter performance in 2007 does offer some mitigation but a tougher market fits the darkening picture painted by US competitor Oracle at the end of March. It is taking longer for software customers to sign contracts and deal sizes are down.
SAP has stuck confidently to full-year guidance for overall sales growth (excluding Business Objects) of 12 per cent to 14 per cent. With the first quarter at the bottom of the range, that looks optimistic. SAP sells software with claimed strategic benefits for businesses, which provides some protection from the cycle. But, if the economic outlook worsens, SAP will feel the impact of sweeping cuts to capital expenditure budgets.
The group has another problem in that it still largely relies on selling software to big companies. SAP is targeting smaller businesses with its first foray into an online, on-demand service called Business ByDesign. But the move is proving harder than expected. SAP had hoped to have 10,000 mid-market customers by 2010 but it is, by its own admission, 12 to 18 months behind target. The roll-out has been reduced to just six countries this year. It makes sense to proceed slowly in order to get the product right but continued difficulties in this competitive segment will raise concerns over SAP’s long-term growth prospects.
Post and read comments on this Lex
Copyright The Financial Times Limited 2008
Slowdown at SAP
Published: April 30 2008 09:38 | Last updated: April 30 2008 19:22
The prospect of implementing an SAP program for the first time tends to bring managers out in a sweat. Investors anticipating the software company’s results have learnt to feel the same way. On Wednesday SAP shares dropped 3 per cent after its first-quarter numbers missed expectations.
Sales of new licences, which contribute about half of sales, were weak. Because these should generate follow-up maintenance contracts, they are a good signal about future growth. The Americas were particularly weak: excluding the impact of recently acquired Business Objects, licence sales fell almost 10 per cent year on year. An exceptional first-quarter performance in 2007 does offer some mitigation but a tougher market fits the darkening picture painted by US competitor Oracle at the end of March. It is taking longer for software customers to sign contracts and deal sizes are down.
SAP has stuck confidently to full-year guidance for overall sales growth (excluding Business Objects) of 12 per cent to 14 per cent. With the first quarter at the bottom of the range, that looks optimistic. SAP sells software with claimed strategic benefits for businesses, which provides some protection from the cycle. But, if the economic outlook worsens, SAP will feel the impact of sweeping cuts to capital expenditure budgets.
The group has another problem in that it still largely relies on selling software to big companies. SAP is targeting smaller businesses with its first foray into an online, on-demand service called Business ByDesign. But the move is proving harder than expected. SAP had hoped to have 10,000 mid-market customers by 2010 but it is, by its own admission, 12 to 18 months behind target. The roll-out has been reduced to just six countries this year. It makes sense to proceed slowly in order to get the product right but continued difficulties in this competitive segment will raise concerns over SAP’s long-term growth prospects.
Post and read comments on this Lex
Copyright The Financial Times Limited 2008
FT.com / Companies / IT - SAP delays software rollout
FT.com / Companies / IT - SAP delays software rollout
SAP delays software rollout
By Maija Palmer
Published: April 30 2008 10:08 | Last updated: April 30 2008 18:22
SAP on Wednesday delayed the roll-out of its new online software for medium-sized businesses – a crucial part of its growth plans – and reported a steep fall in first-quarter profits.
The German group had hoped to generate €1bn from supplying its internet-based Business ByDesign software to 10,000 small to medium-sized customers by 2010. However, it said that it would take 12-18 months longer than expected to reach this target.
Business ByDesign is the company’s first foray into web-hosted software for the mid-market. Companies such as SAP and IBM are trying to cater for smaller customers as orders from big enterprises slow. The small business IT market is estimated to be worth about $400bn, but potential suppliers face stiff competition from entrenched competitors such as Microsoft.
Henning Kagermann, chief executive, said SAP was slowing down the roll-out as it looked for ways to reduce the cost of running the internet services. “We need to automate the running of the services, otherwise the cost base will be too high and the profit will not be good enough,” he said.
Mr Kagermann has promised that margins from the internet business will be the same as those of SAP’s other businesses. “I want to prove to the market that this way of selling software will not lead to a margin decline.”
While the company looks for ways to cut running costs, it will limit roll-out of Business ByDesign to just six countries and fewer than 1,000 customers.
SAP missed analysts’ estimates for its results for the three months to the end of March, reporting a 15 per cent increase in software and services revenues to €1.74bn, against expectations of around €1.8bn.
The weak results echo a disappointing performance by US rival Oracle last month, and compound fears that the software market may be slowing in the uncertain economic climate.
Mr Kagermann said the US remained a tough market, with customers spending less on software deals. He saw no signs of a slowdown spreading to Europe.
US sales, which account for a quarter of revenues, fell by 1 per cent, while European sales, which account for half of SAP’s business, rose 22 per cent.
Total revenues were €2.46bn ($3.8bn), up 14 per cent from a year ago. But net income fell 22 per cent to €242m, as SAP was hit by €130m in charges related to its acquisition of Business Objects last year, and a €40m investment in the Business ByDesign service.
Earnings per share fell 19 per cent to €0.21.
SAP reiterated forecasts that software and services revenues would grow 24 to 27 per cent at constant currencies this year, and said operating margins, excluding costs related to Business Objects, would be higher than expected because it was cutting back investment in Business ByDesign.
Copyright The Financial Times Limited 2008
SAP delays software rollout
By Maija Palmer
Published: April 30 2008 10:08 | Last updated: April 30 2008 18:22
SAP on Wednesday delayed the roll-out of its new online software for medium-sized businesses – a crucial part of its growth plans – and reported a steep fall in first-quarter profits.
The German group had hoped to generate €1bn from supplying its internet-based Business ByDesign software to 10,000 small to medium-sized customers by 2010. However, it said that it would take 12-18 months longer than expected to reach this target.
Business ByDesign is the company’s first foray into web-hosted software for the mid-market. Companies such as SAP and IBM are trying to cater for smaller customers as orders from big enterprises slow. The small business IT market is estimated to be worth about $400bn, but potential suppliers face stiff competition from entrenched competitors such as Microsoft.
Henning Kagermann, chief executive, said SAP was slowing down the roll-out as it looked for ways to reduce the cost of running the internet services. “We need to automate the running of the services, otherwise the cost base will be too high and the profit will not be good enough,” he said.
Mr Kagermann has promised that margins from the internet business will be the same as those of SAP’s other businesses. “I want to prove to the market that this way of selling software will not lead to a margin decline.”
While the company looks for ways to cut running costs, it will limit roll-out of Business ByDesign to just six countries and fewer than 1,000 customers.
SAP missed analysts’ estimates for its results for the three months to the end of March, reporting a 15 per cent increase in software and services revenues to €1.74bn, against expectations of around €1.8bn.
The weak results echo a disappointing performance by US rival Oracle last month, and compound fears that the software market may be slowing in the uncertain economic climate.
Mr Kagermann said the US remained a tough market, with customers spending less on software deals. He saw no signs of a slowdown spreading to Europe.
US sales, which account for a quarter of revenues, fell by 1 per cent, while European sales, which account for half of SAP’s business, rose 22 per cent.
Total revenues were €2.46bn ($3.8bn), up 14 per cent from a year ago. But net income fell 22 per cent to €242m, as SAP was hit by €130m in charges related to its acquisition of Business Objects last year, and a €40m investment in the Business ByDesign service.
Earnings per share fell 19 per cent to €0.21.
SAP reiterated forecasts that software and services revenues would grow 24 to 27 per cent at constant currencies this year, and said operating margins, excluding costs related to Business Objects, would be higher than expected because it was cutting back investment in Business ByDesign.
Copyright The Financial Times Limited 2008
Friday, April 18, 2008
SAP Sets Virtualization Coalition - Data Center Central
SAP Sets Virtualization Coalition - Data Center Central
Major software and hardware vendors are starting to work together, hoping to overcome some of the disconnects that arise between the two worlds during times of rapid technological change.
SAP has begun taking steps to forge a coalition to smooth out some of the rough edges of virtualization. The company has gathered the likes of AMD, Intel, HP, Sun, EMC, Cisco, Citrix, VMware and NetApp, as well as Linux providers Novel and Red Hat, to enhance process-driven virtualization platforms for business users.
The group is part of the Enterprise Services Community, a worldwide organization designed to help vendors and users overcome issues surrounding the development and deployment of business productivity software.
One key goal of the group is to help business-process professionals design their own processes to run in virtualized environments using standard modeling techniques regardless of their knowledge of virtualized environments.
Major software and hardware vendors are starting to work together, hoping to overcome some of the disconnects that arise between the two worlds during times of rapid technological change.
SAP has begun taking steps to forge a coalition to smooth out some of the rough edges of virtualization. The company has gathered the likes of AMD, Intel, HP, Sun, EMC, Cisco, Citrix, VMware and NetApp, as well as Linux providers Novel and Red Hat, to enhance process-driven virtualization platforms for business users.
The group is part of the Enterprise Services Community, a worldwide organization designed to help vendors and users overcome issues surrounding the development and deployment of business productivity software.
One key goal of the group is to help business-process professionals design their own processes to run in virtualized environments using standard modeling techniques regardless of their knowledge of virtualized environments.
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