Friday, December 22, 2006
Thursday, December 14, 2006
Wednesday, December 13, 2006
Tuesday, December 12, 2006
Thursday, November 16, 2006
Wednesday, November 15, 2006
Tuesday, November 14, 2006
Monday, November 13, 2006
Thursday, November 09, 2006
Monday, November 06, 2006
Friday, November 03, 2006
Dave Duffield’s Workday Ushers in New Era of Apps (AMR)
After 18 months in startup mode, Workday is finally ready to launch. This is an event that press, analysts, and former PeopleSoft employees have been waiting for since the mysterious appearance of davesnextmove.com on the web.
Thursday, November 02, 2006
Tuesday, October 31, 2006
ERP Blind Spot (Line56)
BHP Billiton Petroleum uses Quadrem to supplement SAP; addressing complex services
Monday, October 30, 2006
Oracle's 'Unbreakable Linux' Will Threaten Red Hat (Gartner)
Oracle's Linux support offering is a more complete solution than Red Hat's. Oracle aims to assert more influence on Linux adoption, accelerate Oracle DBMS acceptance and bolster Linux against Windows.
Wednesday, October 25, 2006
Oracle enters the Linux arena (FT)
Oracle on Wednesday carried through on recent intimations that it might move fully into the Linux business, a step analysts said would change the dynamics of one of the fastest-growing parts of the software world.
The US company said it would make available its own version of the open-source operating system under the new “Unbreakable Linux” brand. It also said it would offer bug fixes and full support for the software at a lower price than that charged by Red Hat, the biggest Linux company.
The US company said it would make available its own version of the open-source operating system under the new “Unbreakable Linux” brand. It also said it would offer bug fixes and full support for the software at a lower price than that charged by Red Hat, the biggest Linux company.
Friday, October 20, 2006
Inside SAP’s 3Q Results with Bill McDermott (AMR)
Last Thursday, SAP released its financial results for the 3Q06, ending September 30. As usual, the numbers were closely watched, especially given the recent stronger-than-expected results from rival Oracle for its most recent quarter.
Thursday, October 19, 2006
SAP (FT)
Ker-pow! With its latest set of results, SAP has delivered an uppercut to claims by Oracle, its US rival and critic-in-chief, that the German software group has lost its way. Investors at the ringside were less impressed, however: SAP’s shares fell 3 per cent on Thursday in a flat German equity market. Yet SAP’s numbers were solid in almost every respect. In terms of quarter-on-quarter growth in software licence sales, it was SAP’s best summer since the 1990s. All regions turned in a good performance.
SAP’s cautious outlook disappoints (FT)
SAP, the world’s largest maker of business software, on Thursday beat investor expectations about its performance in the third quarter but disappointed by putting a cautious gloss on an otherwise unchanged forecast for the year.
Wednesday, October 18, 2006
SMEs: How Oracle and SAP are moving down ‘the tail’ (FT)
Directors of small and mid-sized businesses can expect to be feted by two of the world’s largest software vendors in coming months – if they have not already received their invitations.
For enterprise software giants Oracle and SAP, the mid-sized and smaller company is not just the next sales opportunity. It is set to be the greatest driver of their growth.
In June, SAP booked the 10,000th customer for its Business One package for smaller companies. It says sales to small and medium companies are contributing to its double-digit growth in turnover. Oracle has set itself tough targets for increasing sales to SMEs, executives say.
Both software companies want to win custom for their enterprise resource planning, financial, supply chain, customer relationship management and other business- critical software.
They are hoping to draw smaller companies away from specialist local software vendors or away from business systems that might have been written in-house, in favour of highly functional software suites.
To add appeal to smaller companies with specialist industry needs and limited in-house IT skills, both Oracle and SAP are investing heavily in their channel and partner networks, and in providing modules tailored for smaller companies that just want to install the software and go, without much customisation.
Oracle has identified 48 industry sub-sectors for its “business accelerators” for the E-Business Suite. SAP says it has 550 “micro-vertical solutions” for its mid-market All in One software application and 300 industry-specific add-ons for its Business One offering.
These, the two companies argue, remove much of the need for custom coding but also make them far more competitive against smaller software vendors that have focused on niche markets, especially in ERP.
Both companies have been investing significant resources over the past few years in bolstering their products and technologies for the small and mid-sized business. So far, industry observers suggest that SAP has the edge, but it is an increasingly close-run race.
“SAP has spent more time focusing on developing software for the needs of the small and mid-sized business market. They have had more of an opportunity to refine their strategy,” says Bob Anderson, Gartner’s vice- president for research covering the SME market. “The comeback from Oracle would be that they have sold successfully into that market for years and years.”
SAP’s head start reflects the company’s focus on its core software product, ERP. Oracle has long sold technology, especially its database, to smaller companies. The challenge for the US software company is to persuade those customers to buy its business applications too.
Oracle’s software offering is undoubtedly broader than SAP’s, following Oracle’s acquisitions of Peoplesoft, JD Edwards and Siebel. But the gap is narrowing between the two companies. Most mid-sized businesses will find most of the software they are likely to need from either supplier.
This puts the head of IT or managing director of a small or mid-sized company in a stronger position than ever before. Not only are smaller companies being courted by both Oracle and SAP, allowing them to play one off against the other, but they have also attracted the attention of Microsoft.
Analysts say that Microsoft has a strong proposition for small and mid-sized companies, not least because it can provide the operating system, the database and the business applications all from its own stable.
Microsoft cannot, however, point to the same roster of large enterprise companies for its business applications. Microsoft is positioning itself in the mid market, whereas SAP and Oracle argue that they are providing enterprise capabilities at a small business price.
“Small businesses are not necessarily less complex than larger companies; it is about the complexity of their business processes,” says Donna Troy, SAP’s executive vice-president for the global SME market.
“Something as simple as a small winery – which is one of our customers – has complex processes,” she says. She argues that buying from SAP, rather than a niche vendor, also gives companies more room for growth, especially if they want to enter into export markets.
“Just because a company is smaller doesn’t mean that it doesn’t need the complexity of our product. It is a question of simplifying the implementation,” says Tony Kender, Oracle’s senior vice-president for application sales support. “We allow them to have the best industry solutions.”
It is a compelling argument. But in the case of both vendors, SMEs need to take two critical factors into account: the strength of the vendor’s local channel and whether they buy into Oracle and SAP’s approach of selling software as all-singing, all-dancing suites.
“One of the downsides [of Oracle and SAP] is that you have to commit to the idea of a large, integrated suite,” says Jim Shepherd, senior vice-president of research and a specialist in enter- prise applications at AMR Research. “You can no longer really buy applications such as inventory control or order management or purchasing one by one.”
Although Oracle and SAP both say that they do sell applications on an individual basis, in effect they turn on or off modules in a larger suite of applications rather than licensing stand-alone code. This could make the application hard for the company to manage.
Both companies are trying to address this through closer collaboration with their reseller channel. Channel partners are closer to local markets and should be better able to deal with the needs of smaller companies.
The risk is that a business might find its local channel partner falls short of expectations. CIOs face a double challenge: picking the right vendor and the right reseller. This is a point smaller companies should not neglect, however appealing the software on offer, says Gartner’s Bob Anderson.
“If there is a partner involved, then you should do your due diligence on them as well as on the software vendor,” he advises.
Copyright The Financial Times Limited 2006
For enterprise software giants Oracle and SAP, the mid-sized and smaller company is not just the next sales opportunity. It is set to be the greatest driver of their growth.
In June, SAP booked the 10,000th customer for its Business One package for smaller companies. It says sales to small and medium companies are contributing to its double-digit growth in turnover. Oracle has set itself tough targets for increasing sales to SMEs, executives say.
Both software companies want to win custom for their enterprise resource planning, financial, supply chain, customer relationship management and other business- critical software.
They are hoping to draw smaller companies away from specialist local software vendors or away from business systems that might have been written in-house, in favour of highly functional software suites.
To add appeal to smaller companies with specialist industry needs and limited in-house IT skills, both Oracle and SAP are investing heavily in their channel and partner networks, and in providing modules tailored for smaller companies that just want to install the software and go, without much customisation.
Oracle has identified 48 industry sub-sectors for its “business accelerators” for the E-Business Suite. SAP says it has 550 “micro-vertical solutions” for its mid-market All in One software application and 300 industry-specific add-ons for its Business One offering.
These, the two companies argue, remove much of the need for custom coding but also make them far more competitive against smaller software vendors that have focused on niche markets, especially in ERP.
Both companies have been investing significant resources over the past few years in bolstering their products and technologies for the small and mid-sized business. So far, industry observers suggest that SAP has the edge, but it is an increasingly close-run race.
“SAP has spent more time focusing on developing software for the needs of the small and mid-sized business market. They have had more of an opportunity to refine their strategy,” says Bob Anderson, Gartner’s vice- president for research covering the SME market. “The comeback from Oracle would be that they have sold successfully into that market for years and years.”
SAP’s head start reflects the company’s focus on its core software product, ERP. Oracle has long sold technology, especially its database, to smaller companies. The challenge for the US software company is to persuade those customers to buy its business applications too.
Oracle’s software offering is undoubtedly broader than SAP’s, following Oracle’s acquisitions of Peoplesoft, JD Edwards and Siebel. But the gap is narrowing between the two companies. Most mid-sized businesses will find most of the software they are likely to need from either supplier.
This puts the head of IT or managing director of a small or mid-sized company in a stronger position than ever before. Not only are smaller companies being courted by both Oracle and SAP, allowing them to play one off against the other, but they have also attracted the attention of Microsoft.
Analysts say that Microsoft has a strong proposition for small and mid-sized companies, not least because it can provide the operating system, the database and the business applications all from its own stable.
Microsoft cannot, however, point to the same roster of large enterprise companies for its business applications. Microsoft is positioning itself in the mid market, whereas SAP and Oracle argue that they are providing enterprise capabilities at a small business price.
“Small businesses are not necessarily less complex than larger companies; it is about the complexity of their business processes,” says Donna Troy, SAP’s executive vice-president for the global SME market.
“Something as simple as a small winery – which is one of our customers – has complex processes,” she says. She argues that buying from SAP, rather than a niche vendor, also gives companies more room for growth, especially if they want to enter into export markets.
“Just because a company is smaller doesn’t mean that it doesn’t need the complexity of our product. It is a question of simplifying the implementation,” says Tony Kender, Oracle’s senior vice-president for application sales support. “We allow them to have the best industry solutions.”
It is a compelling argument. But in the case of both vendors, SMEs need to take two critical factors into account: the strength of the vendor’s local channel and whether they buy into Oracle and SAP’s approach of selling software as all-singing, all-dancing suites.
“One of the downsides [of Oracle and SAP] is that you have to commit to the idea of a large, integrated suite,” says Jim Shepherd, senior vice-president of research and a specialist in enter- prise applications at AMR Research. “You can no longer really buy applications such as inventory control or order management or purchasing one by one.”
Although Oracle and SAP both say that they do sell applications on an individual basis, in effect they turn on or off modules in a larger suite of applications rather than licensing stand-alone code. This could make the application hard for the company to manage.
Both companies are trying to address this through closer collaboration with their reseller channel. Channel partners are closer to local markets and should be better able to deal with the needs of smaller companies.
The risk is that a business might find its local channel partner falls short of expectations. CIOs face a double challenge: picking the right vendor and the right reseller. This is a point smaller companies should not neglect, however appealing the software on offer, says Gartner’s Bob Anderson.
“If there is a partner involved, then you should do your due diligence on them as well as on the software vendor,” he advises.
Copyright The Financial Times Limited 2006
Thursday, October 12, 2006
Monday, October 09, 2006
The AMR Research Interview: SAP’s Henning Kagermann on the Future of Software (AMR)
Last week we had the opportunity to sit down with SAP’s Henning Kagermann in a conference room outside his office at company headquarters in Walldorf. Our meeting occurred during the closing days of the third quarter, a time when many software executives are completely distracted by pending deals. Not Mr. Kagermann, he appeared calm and serene.
Thursday, October 05, 2006
SAP Announces Java EE 5 Compatibility Ahead of Main Rivals (Gartner)
SAP's achievement of Java EE 5 compatibility demonstrates its renewed commitment to standards and reinforces the industry's commitment to Java. It also supports SAP's strategy to develop its ecosystem.
Friday, September 29, 2006
Dateline Berlin: On the Road With Agile Software (AMR)
This week’s travels took us to Germany, specifically Berlin, Walldorf, and Munich. We started at AGILITY Berlin 2006, Agile Software’s annual European customer conference, then flew to Mannheim to meet with SAP executives, and ended in Munich for a PLM conference hosted by Siemens Business Services. It was strictly a coincidence that the Siemens event occurred during Oktoberfest.
Wednesday, September 27, 2006
Making sense of Oracle's acquisition spree (SearchOracle.com)
Oracle has been on an acquisition tear in recent years, picking up more than 20 companies and upping its ownership stake in several others. In the midst of this buying spree -- which included the purchase of customer relationship management (CRM) giant Siebel Systems, a bloody battle for CRM mainstay PeopleSoft, and the purchases of a host of smaller applications companies that opened Oracle up to new industry verticals -- Oracle announced Project Fusion, a bold plan to enable all the spoils of its acquisitions to run seamlessly on the Oracle Fusion Middleware platform.
QAD Aims to Strengthen Its Position in the ERP Midmarket
QAD's purchase of Precision Software demonstrates its goal to strengthen its position in the global enterprise-resource-planning midmarket by offering more functionality in support of some global supply chain processes.
Thursday, September 21, 2006
Oracle’s resurgence boosts shares (FT)
Oracle’s shares soared more than 11 per cent in early trading in New York on Wednesday after the US business software company continued to show a resurgence of growth in its core database business and a recovery in applications software.
Wednesday, September 20, 2006
SAP dämpft Oracles Euphorie (FTD)
Der US-Softwarekonzern Oracle hat Gewinn und Umsatz im ersten Geschäftsquartal deutlich gesteigert. Der schärfste Konkurrent SAP sieht trotzdem seine Marktführerschaft nicht in Gefahr.
"SAP hat gezeigt, dass seine Wachstumsstrategie aufgeht", teilte der Walldorfer Konzern mit. "Wir sehen keine Veränderung in der Wettbewerbslandschaft." SAP habe in den vergangenen zehn Quartalen vorrangig aus eigener Kraft jeweils Zuwächse beim Software-Lizenz-Verkauf um zweistellige Prozentsätze realisiert und keine kostspieligen Übernahmen getätigt.
Der Branchenprimus reagierte damit auf die unerwartet guten Geschäftsergebnisse des US-Konzerns Oracle, der sich in den vergangenen Jahren mit milliardenschweren Übernahmen zu einem ernsthaften Konkurrenten von SAP aufgeschwungen hat.
Das Unternehmen gab am Dienstag nach US-Börsenschluss einen Nettogewinn von 670 Mio. $ oder 13 Cent pro Aktie bekannt. Das entspricht einem Anstieg von 29 Prozent zum Vorjahr. Der Umsatz kletterte ebenfalls um fast 30 Prozent auf 3,59 Mrd. $. Vor Sonderposten wies das in Redwood Shores in Kalifornien ansässige Unternehmen einen Gewinn je Aktie von 18 Cent aus. Von Reuters befragte Analysten hatten hier im Schnitt mit 16 Cent gerechnet. Oracle-Aktien sprangen nachbörslich um fast 13 Prozent nach oben auf 18,20 $.
Oracle wirbt für Einkaufsstrategie
Oracle-Chef Larry Ellison sagte, durch die gut 20 Mrd. $ schweren Zukäufe habe sein Unternehmen SAP in einigen Branchen überholt. Oracle erwarb unter anderem Peoplesoft, Siebel und JD Edwards und wächst nun kräftig. Der Großteil der Oracle-Erlöse stammt jedoch weiterhin aus dem angestammten Datenbank-Geschäft. Auf den Verkauf neuer Software-Lizenzen für Geschäftsprozesse - die Domäne von SAP - entfielen im jüngsten Quartal 228 Mio. $. Dies entspricht einem Zuwachs von 80 Prozent zum Vorjahresquartal.
SAP hat in den vergangenen Monaten immer wieder seine überlegene Marktstellung unterstrichen. Allein für die Monate April bis Juni reklamierte SAP für sich, 70 Kunden von Oracle gewonnen zu haben. Kundenabwanderungen zu Oracle habe es dagegen nicht gegeben. Der Marktanteil von SAP am rund 16 Mrd. $ schweren Geschäft mit Unternehmenssoftware sei daher bis Ende Juni um 0,3 Prozentpunkte auf weltweit 21,7 Prozent gewachsen.
Oracle habe mit einem Plus von 1,2 Prozentpunkten zwar mehr Marktanteile gewonnen, verkaufe jedoch nur knapp halb so viel Software wie SAP, teilte SAP mit. SAP-Aktien legten in einem freundlichen Markttrend um 1,4 Prozent auf 153,31 Euro zu.
"SAP hat gezeigt, dass seine Wachstumsstrategie aufgeht", teilte der Walldorfer Konzern mit. "Wir sehen keine Veränderung in der Wettbewerbslandschaft." SAP habe in den vergangenen zehn Quartalen vorrangig aus eigener Kraft jeweils Zuwächse beim Software-Lizenz-Verkauf um zweistellige Prozentsätze realisiert und keine kostspieligen Übernahmen getätigt.
Der Branchenprimus reagierte damit auf die unerwartet guten Geschäftsergebnisse des US-Konzerns Oracle, der sich in den vergangenen Jahren mit milliardenschweren Übernahmen zu einem ernsthaften Konkurrenten von SAP aufgeschwungen hat.
Das Unternehmen gab am Dienstag nach US-Börsenschluss einen Nettogewinn von 670 Mio. $ oder 13 Cent pro Aktie bekannt. Das entspricht einem Anstieg von 29 Prozent zum Vorjahr. Der Umsatz kletterte ebenfalls um fast 30 Prozent auf 3,59 Mrd. $. Vor Sonderposten wies das in Redwood Shores in Kalifornien ansässige Unternehmen einen Gewinn je Aktie von 18 Cent aus. Von Reuters befragte Analysten hatten hier im Schnitt mit 16 Cent gerechnet. Oracle-Aktien sprangen nachbörslich um fast 13 Prozent nach oben auf 18,20 $.
Oracle wirbt für Einkaufsstrategie
Oracle-Chef Larry Ellison sagte, durch die gut 20 Mrd. $ schweren Zukäufe habe sein Unternehmen SAP in einigen Branchen überholt. Oracle erwarb unter anderem Peoplesoft, Siebel und JD Edwards und wächst nun kräftig. Der Großteil der Oracle-Erlöse stammt jedoch weiterhin aus dem angestammten Datenbank-Geschäft. Auf den Verkauf neuer Software-Lizenzen für Geschäftsprozesse - die Domäne von SAP - entfielen im jüngsten Quartal 228 Mio. $. Dies entspricht einem Zuwachs von 80 Prozent zum Vorjahresquartal.
SAP hat in den vergangenen Monaten immer wieder seine überlegene Marktstellung unterstrichen. Allein für die Monate April bis Juni reklamierte SAP für sich, 70 Kunden von Oracle gewonnen zu haben. Kundenabwanderungen zu Oracle habe es dagegen nicht gegeben. Der Marktanteil von SAP am rund 16 Mrd. $ schweren Geschäft mit Unternehmenssoftware sei daher bis Ende Juni um 0,3 Prozentpunkte auf weltweit 21,7 Prozent gewachsen.
Oracle habe mit einem Plus von 1,2 Prozentpunkten zwar mehr Marktanteile gewonnen, verkaufe jedoch nur knapp halb so viel Software wie SAP, teilte SAP mit. SAP-Aktien legten in einem freundlichen Markttrend um 1,4 Prozent auf 153,31 Euro zu.
Oracle/SAP (FT)
Don King, the uniquely coiffured boxing promoter, may want to consider turning his skills to an area he has previously overlooked: enterprise software. An industry more famed for its jargon is letting rip with the rhetoric. Oracle’s latest quarterly results announcement came with a pointed attack on arch-rival SAP’s performance and strategy. Shai Agassi, SAP’s president of products and technology, was quoted in Forbes recently comparing software acquisitions, Oracle’s strategic hallmark in recent years, to tying a dying horse to another dead horse to “see if it’ll go anywhere”.
Oracle Posts Its Best First Quarter in Years (AMR)
Oracle posted outstanding results for its first fiscal quarter, which ended August 31, 2006. All software segments of Oracle’s business, including database, middleware, and applications, reported very strong growth. The total revenue for the quarter increased 30% to $3.6B, and net income and software revenue each grew 29% over the prior year.
Monday, September 18, 2006
Top 10 Free Enterprise Apps (Line56)
Here are links to the most downloaded free enterprise applications on Sourceforge
Friday, September 15, 2006
Procurement and Sourcing Technology Celebrates a Decade of Growth (AMR)
In the decade since Ariba first launched, procurement and sourcing technologies have matured from point products offering business process enhancements to suites of integrated supply management functionality. And Ariba was the early mover and market leader in this procurement and sourcing market. Here we look at the market evolution, the current state, and the future direction of the supply management market.
Thursday, September 14, 2006
New mySAP Plans Enhance SAP Strategy but May Add Complexity (Gartner)
SAP will stabilize mySAP ERP at the 2005 version and limit changes to smaller releases. This helps validate SAP's service-oriented-architecture plans, but may increase users' need to govern their environments diligently.
SAP Fleshes Out Its GRC Position (AMR)
When SAP acquired its partner Virsa Systems in 2Q06, we knew it was more than just a tactical purchase (see, “SAP Snaps Up Virsa Systems To Enhance Compliance Story”). Starting at SAPPHIRE 2006 in Orlando, the company made introductory rumblings about its plans for Virsa and the role it would play in a broader story of governance, risk management, and compliance (GRC) for enterprises of all sizes in all industries in all geographies.
Tuesday, September 12, 2006
Cisco Partnership Shows SAP's GRC Plans Are Still Evolving (Gartner)
SAP will offer more governance, risk and compliance solutions and will partner with Cisco to manage IT infrastructure risks. The SAP-Cisco offering is conceptually innovative, but it won't add any new capabilities to the market.
Monday, September 11, 2006
SAP targets business process experts (InfoWorld)
Emerging worker category act as bridge between IT and business sides of organizations
SAP AG is taking its Business Process Expert (BPX) Community initiative mainstream after several months of more limited operations with the aim of creating an online forum for business analysts and consultants to exchange information and access software from SAP and some third parties.
SAP AG is taking its Business Process Expert (BPX) Community initiative mainstream after several months of more limited operations with the aim of creating an online forum for business analysts and consultants to exchange information and access software from SAP and some third parties.
SAP's New Expert Blog (InternetNews)_
SAP (Quote, Chart) is launching a community site that it hopes will extend its footprint in the enterprise.
The new business-process expert community is geared to relatively non-technical users and reflects the growing importance of business process management and business process optimization within enterprises.
The new business-process expert community is geared to relatively non-technical users and reflects the growing importance of business process management and business process optimization within enterprises.
Thursday, September 07, 2006
Enterprise DRM: Have Your IP and Collaborate on It, Too (AMR)
You’ve got to collaborate more effectively to foster innovation for your business. You’ve got to create an environment that makes it easy for you and partners to freely share ideas. But you’ve got to protect your IP, and the pressure is higher with easier access to information for competitors and recent events that indicate you have little recourse once it’s exposed. It’s time to inject enterprise digital rights management (EDRM) into your security and content management strategies.
Thursday, August 31, 2006
Oracle’s John Wookey on Fusion, SOA, and the Battle To Be No. 1(AMR)
We recently spent several hours with John Wookey, head of application development at Oracle. I usually describe him as having the most difficult job in Silicon Valley. Not only is he responsible for integrating the ever-expanding lineup of applications, his team is also developing the next generation of Fusion applications built on a service-oriented architecture.
SOA will kill off ERP says AMR (CMC - InsightExec)
The rapid adoption of web services and service-oriented architecture (SOAs) will lead to the end of enterprise resource planning market, according to research firm AMR.
With SAP and Oracle investing billions to web-service-enable their portfolios, but to date only a handful of deliverables have appeared. This delay could lead to customers deciding to seek functionality elsewhere.
"Here’s the doomsday scenario, circa 2010: SAP and Oracle customers have stopped buying applications from their ERP vendors. Instead, they contract with low-cost Indian or Eastern European integrators to build custom composite apps that sit on top of their ERP backbone," said AMR analyst Bruce Richardson.
With SAP and Oracle investing billions to web-service-enable their portfolios, but to date only a handful of deliverables have appeared. This delay could lead to customers deciding to seek functionality elsewhere.
"Here’s the doomsday scenario, circa 2010: SAP and Oracle customers have stopped buying applications from their ERP vendors. Instead, they contract with low-cost Indian or Eastern European integrators to build custom composite apps that sit on top of their ERP backbone," said AMR analyst Bruce Richardson.
Tuesday, August 29, 2006
Enterprise Applications Offer a Glimpse of Google's Ambitions (Gartner)
Google will introduce communications applications intended for use within enterprises. Service-level agreements, security and support will determine whether these applications will catch on within their target market.
Thursday, August 24, 2006
An In-Depth Look at Oracle's Retail Strategy: Don't Call It ERP (AMR)
“Should I go ERP or best of breed?” followed by “Should I go Oracle or SAP?” are probably the two main questions going through enterprise application buyers’ heads these days. Oracle wants to be the answer to both questions, but don’t expect to hear it trumpet the RP in ERP.
Wednesday, August 23, 2006
An SAP Retail Win (Line56)
New customer Beall's discusses what, in their opinion, makes SAP more attractive than Oracle and other retail e-business vendors
Tuesday, August 22, 2006
Monday, August 21, 2006
SAP AG and Microsoft Corp.'s Duet: Glue for SAP And Office
SAP AG and Microsoft Corp.'s Duet: Glue for SAP And Office
Jointly developed software provides the link between two applications, right off the shelf.
Jointly developed software provides the link between two applications, right off the shelf.
Tuesday, August 15, 2006
IBM Invests in Mainframe as 'Solutions Provider' (Gartner)
IBM has enhanced support for SAP applications on System z9. This new SAP partnership highlights IBM's mission to revolutionize and expand the mainframe platform.
Friday, August 11, 2006
Chordiant Software: Maneuvering in a Crowded Space (AMR)
Chordiant Software reported preliminary third quarter results on August 8. Revenue rose by 26% to $27.3M year to year. The company estimates that it posted a $3.0M net loss ($0.04 per share), compared with a $3.5M loss ($0.05 per share) in the prior-year period.
Thursday, August 10, 2006
For JDA, Both Opportunity and Challenge Lay Ahead (AMR)
JDA Software completed the acquisition of Manugistics on July 6, 2006, for $213M. A few days later, the company reported second quarter results of $51.8M in revenue, a 6% decline from the same quarter last year. Software license revenue fell 32% to $10.4M, driven in part by the focus on internal operations, including the Manugistics acquisition.
Tuesday, August 08, 2006
Infor Acquires Extensity (Line56)
The buying spree continues; thinking about the looming duplicate functionality challenge
Infor, the enterprise applications company that recently acquired SSA Global, has now acquired Extensity and, by default, Systems Union, a company recently acquired by Extensity.
Both Extensity and Systems Union specialize in different aspects of financial software, with Extensity holding a niche in financial performance management software and Systems Union having a broader applications portfolio.
Infor, the enterprise applications company that recently acquired SSA Global, has now acquired Extensity and, by default, Systems Union, a company recently acquired by Extensity.
Both Extensity and Systems Union specialize in different aspects of financial software, with Extensity holding a niche in financial performance management software and Systems Union having a broader applications portfolio.
Friday, August 04, 2006
IBM Acquires MRO Software for $740M, but at What Cost? (AMR)
IBM is acquiring MRO Software in an all-cash transaction priced at $740M, or $25.80 per share. This is a 19.4% premium over MRO Software’s closing price of $21.60 on August 2; MRO’s stock price closed at $25.46 on the day the deal was announced.
More Free ERP (Line56)
Here's another list of free enterprise resource planning (ERP)
products that could be of big interest to small companies
products that could be of big interest to small companies
Wednesday, August 02, 2006
Market Consolidation Contributes to Robust Quarterly PLM Performance (AMR)
PLM is seeing some strong quarterly earnings from its vendors. It also shows that the leaders are performing above the overall market growth, partially due to the consolidation taking place as this space matures. Vendors deriving from a legacy in CAD are the front-runners as manufacturers refocus on connecting design innovation to the broader cross-functional new product introduction (NPI) team.
PLM quarterly performance to date
Total revenue for Dassault Systemes was Euro 280M in 2Q06 versus Euro 217.3M the previous year, resulting in 29% GAAP revenue growth. Excluding recent acquisitions, total growth was approximately 10%, with MatrixOne contributing Euro 17.8M and Abaqus Euro 23.2M. The midmarket continues to show strength, with SolidWorks 3D CAD revenue reaching 20% growth.
PTC reported 3Q06 revenue of $216.7M versus $180.3M the prior year for a 20% increase in total revenue. Based on historical revenue, AMR Research estimates the Arbortext and MathSoft acquisitions contributed roughly $15M, resulting in an estimated 12% organic growth. PTC said acquisitions will continue to be an important part of its growth strategy of reaching $1B in revenue by 2008. Channel partners targeting the midmarket continue to be an important component, contributing roughly 21% of total revenue.
PTC and Dassault total revenue are well ahead of AMR Research estimates of total PLM market growth of 10% through 2006. However, they also reflect the dynamics of a consolidating PLM market, where organic growth is more in line with estimated total market growth. And they reflect a current trend toward PLM dominance by vendors with a legacy in CAD, as ERP vendors like SAP experience flat growth in their PLM applications.
Up next this quarter
UGS and Autodesk are still due to report numbers this quarter. Autodesk is in an excellent position to continue growth within manufacturing as midmarket manufacturer’s upgrade to 3D CAD; though expect them to see competitive pressure given the aggressive targeting of this market by Dassault, PTC, and UGS. Autodesk still depends heavily on the CAD and computer-aided-engineering (CAE) revenue given its limited presence in broader non-CAD PLM applications.
UGS’s momentum should continue given the endorsements from major customers, including Boeing and Ford for enterprise data management and embedded software. UGS has also made progress in new industries like apparel, but still depends heavily on its core industries of aerospace and defense and automotive for major revenue.
Agile Software will report numbers later this quarter, and remains the sole major independent PLM provider. It has experienced single-digit growth in recent quarters, struggling to meet its goals. The recent Prodika acquisition, while not adding huge revenue at roughly $5M per year, positions Agile well in the expanding food and beverage process industry against the CAD-centric providers. Agile must build momentum in these industries to distinguish itself from the bigger players, as well as expand its footprint within the typical stronghold of high tech.
Manufacturers continue to invest in speeding innovation to market for their own growth. To support this, they want to use existing investments in applications like CAD or ERP. For now, this is especially good news for design-oriented application providers as the pendulum swings from operational efficiency to innovation. However, effective innovation that returns a business benefit is the end goal, so expect manufacturers to continue to identify those NPI processes that result in the most success and the applications that best support their primary business pain.
PLM quarterly performance to date
Total revenue for Dassault Systemes was Euro 280M in 2Q06 versus Euro 217.3M the previous year, resulting in 29% GAAP revenue growth. Excluding recent acquisitions, total growth was approximately 10%, with MatrixOne contributing Euro 17.8M and Abaqus Euro 23.2M. The midmarket continues to show strength, with SolidWorks 3D CAD revenue reaching 20% growth.
PTC reported 3Q06 revenue of $216.7M versus $180.3M the prior year for a 20% increase in total revenue. Based on historical revenue, AMR Research estimates the Arbortext and MathSoft acquisitions contributed roughly $15M, resulting in an estimated 12% organic growth. PTC said acquisitions will continue to be an important part of its growth strategy of reaching $1B in revenue by 2008. Channel partners targeting the midmarket continue to be an important component, contributing roughly 21% of total revenue.
PTC and Dassault total revenue are well ahead of AMR Research estimates of total PLM market growth of 10% through 2006. However, they also reflect the dynamics of a consolidating PLM market, where organic growth is more in line with estimated total market growth. And they reflect a current trend toward PLM dominance by vendors with a legacy in CAD, as ERP vendors like SAP experience flat growth in their PLM applications.
Up next this quarter
UGS and Autodesk are still due to report numbers this quarter. Autodesk is in an excellent position to continue growth within manufacturing as midmarket manufacturer’s upgrade to 3D CAD; though expect them to see competitive pressure given the aggressive targeting of this market by Dassault, PTC, and UGS. Autodesk still depends heavily on the CAD and computer-aided-engineering (CAE) revenue given its limited presence in broader non-CAD PLM applications.
UGS’s momentum should continue given the endorsements from major customers, including Boeing and Ford for enterprise data management and embedded software. UGS has also made progress in new industries like apparel, but still depends heavily on its core industries of aerospace and defense and automotive for major revenue.
Agile Software will report numbers later this quarter, and remains the sole major independent PLM provider. It has experienced single-digit growth in recent quarters, struggling to meet its goals. The recent Prodika acquisition, while not adding huge revenue at roughly $5M per year, positions Agile well in the expanding food and beverage process industry against the CAD-centric providers. Agile must build momentum in these industries to distinguish itself from the bigger players, as well as expand its footprint within the typical stronghold of high tech.
Manufacturers continue to invest in speeding innovation to market for their own growth. To support this, they want to use existing investments in applications like CAD or ERP. For now, this is especially good news for design-oriented application providers as the pendulum swings from operational efficiency to innovation. However, effective innovation that returns a business benefit is the end goal, so expect manufacturers to continue to identify those NPI processes that result in the most success and the applications that best support their primary business pain.
Wednesday, July 26, 2006
HP Acquires Mercury Interactive for $4.5B (AMR)
Hewlett-Packard is acquiring Mercury Interactive—a top vendor of software quality, application management, and portfolio management products—for $52 a share, or approximately $4.5B in cash. The deal is expected to close in the fourth quarter of this year. HP expects that the addition of Mercury will be dilutive to earnings in fiscal 2007 but accretive in 2008.
Friday, July 21, 2006
Oracle as a Service (Line56)
COCC taps Oracle to extend e-business infrastructure and applications to small and medium-sized banks
Outside SAP (Line56)
Understanding why enterprise resource planning may have to be complemented by business process management "from the outside"
Manhattan Associate Posts Strong Quarter. The Pressure Is On. (AMR)
Manhattan Associates (MANH) reported strong 2Q06 results, posting a record $78M in consolidated revenue. Earnings per share rose by 37% to $0.34 year to year. These numbers far exceeded consensus projections of $69M in revenue and 27 cents in earnings per share. Its strong 2Q06 results position it to meet full-year guidance after its 1Q06 miss.
Manhattan and competitor RedPrairie are under intense pressure from the ERP vendors, especially Oracle (ORCL) and SAP (SAP). Buyers for new business have to prove to their executive management why they can’t use the equivalent products from Oracle or SAP, and have to go beyond them. Oracle and SAP are investing in warehouse and overall SCE space, as evidenced by Oracle’s 2005 purchase of G-Log. And because SAP and Oracle are extremely well funded and their customer adoption rates are high, the ramp to parity is faster.
Manhattan and competitor RedPrairie are under intense pressure from the ERP vendors, especially Oracle (ORCL) and SAP (SAP). Buyers for new business have to prove to their executive management why they can’t use the equivalent products from Oracle or SAP, and have to go beyond them. Oracle and SAP are investing in warehouse and overall SCE space, as evidenced by Oracle’s 2005 purchase of G-Log. And because SAP and Oracle are extremely well funded and their customer adoption rates are high, the ramp to parity is faster.
Manhattan Associate Posts Strong Quarter. The Pressure Is On.(AMR)
Manhattan Associates (MANH) reported strong 2Q06 results, posting a record $78M in consolidated revenue. Earnings per share rose by 37% to $0.34 year to year. These numbers far exceeded consensus projections of $69M in revenue and 27 cents in earnings per share. Its strong 2Q06 results position it to meet full-year guidance after its 1Q06 miss.
Manhattan and competitor RedPrairie are under intense pressure from the ERP vendors, especially Oracle (ORCL) and SAP (SAP). Buyers for new business have to prove to their executive management why they can’t use the equivalent products from Oracle or SAP, and have to go beyond them. Oracle and SAP are investing in warehouse and overall SCE space, as evidenced by Oracle’s 2005 purchase of G-Log. And because SAP and Oracle are extremely well funded and their customer adoption rates are high, the ramp to parity is faster.
Manhattan and competitor RedPrairie are under intense pressure from the ERP vendors, especially Oracle (ORCL) and SAP (SAP). Buyers for new business have to prove to their executive management why they can’t use the equivalent products from Oracle or SAP, and have to go beyond them. Oracle and SAP are investing in warehouse and overall SCE space, as evidenced by Oracle’s 2005 purchase of G-Log. And because SAP and Oracle are extremely well funded and their customer adoption rates are high, the ramp to parity is faster.
Thursday, July 20, 2006
Insights From SAP's Earnings Call (AMR)
Last week, Jim Shepherd reviewed SAP’s pre-announcement that its second quarter results would come in slightly below analyst expectations (see the AMR Research Alert article “SAP Warns on License Revenue Growth, Holds Firm on 2006 Outlook”). The company blamed it on lower-than-expected sales in Europe and Asia. Management did its best to dispel rumors that business was slowing by noting that “order entry” and the pipeline remained strong.
Wednesday, July 19, 2006
An SAP Retail Win (Line56)
Company that CIO calls "first full-suite SAP customer in North America for retail" talks to Line56; goals include improving customer experience, simplifying inventory ownership
Monday, July 17, 2006
SAP's quiet achiever makes a big noise (FT)
Henning Kagermann talks softly and talks well. He can deftly translate the forest of acronyms that makes SAP's business of making and selling business software such an impenetrable affair for those who can't tell their CRM from their ERP.
"We are the engine, if you like. You need a strong engine to power everything else," he says, describing new software - ESA (enterprise systems architecture) to those in the know - that allows accounts, inventory or customer management programs made by SAP or its rivals to communicate with each other.
Without fanfare Mr Kagermann has spent the past three years steering the world's biggest business software maker through the wreckage of the technology boom. He pumped money into research, making a push to come up with more user-friendly, web browser-based software.
"Organic growth" has been his clarion call. He believes it will allow him to put more distance between SAP and its arch-rival Oracle, whose market share is still less than half thatof the German company.
With the launch of the new ESA, the software supplier to many of the world's biggest corporations hopes to win new customers in small and medium-sized companies. The target is for sales of €8.5bn (£5.9bn)to double by 2010. This represents a genuine departure.
Instead of striving to offer a computer program for every niche of business life, Mr Kagermann wants to make SAP the platform for other providers.
"There are some important companies that are strong in [sections of] the market - and we want to earn a bit of money with them," he says, pointing to deals with Microsoft (to hook "Office" into SAP software) or IBM (to do the same for databases).
This flow of clear and quiet logic is interrupted if he is asked anything personal. His crisp blue gaze lowers, as if to avoid the embarrassment of any trivial personal revelation.
Mr Kagermann does talk about the fact that he joined the company in 1982 as "something like the 86th employee" and that "everybody played some kind of ball game", in the spirit of the sports-mad founding trio, Hasso Plattner, Klaus Tschira and Dietmar Hopp. But he interrupts the reverie. "I organised a volleyball team, but it didn't last long," he says, before switching back to business: "In sporting terms, I'm not going to leave SAP a great legacy."
Is he looking ahead to life at Europe's largest software company after Henning Kagermann? For months he has refused to say whether he will renew his contract before it runs out next year.
"It's not a question that will affect our success or our strategy," he says. "A decision hasn't been made yet. The time isn't ripe."
Investors might disagree on both counts. Since taking over as sole chief executive of the world's number three software house in 2003, thecerebral Mr Kagermann has more than filled the mantle of his brilliant and sometimes rowdy predecessor, Mr Plattner.
Since Mr Plattner ceded control to his co-chief, Mr Kagermann has increased SAP's share of the market for enterprise resource planning (ERP) programs with more than one function from 35 per cent to 43 per cent, according to AMR Research.
Even though the US group spent about $19bn buying up rivals, Oracle has 19 per cent of the ERP market. In 2003, it and Peoplesoft, now part of Oracle, held 25 per cent.
Double-digit growth in annual sales and profits has become the hallmark of the Kagermann era - and hints of less-than-stellar performance rattle investors. Last week, SAP said sales of software licences grew only 8 per cent in the second quarter as big orders were held up, and its shares dropped 5 per cent. But even quarterly blips cannot hide Mr Kagermann's success.
Operating profit margin rose from 22 per cent in 2002 to almost 28 per cent last year, raising group valuation by half to €70bn. In Germany, only Deutsche Telekom and Eon are worth more.
Of course, Mr Kagermann stresses this isn't only his doing. "We're a team," he says. "That means someone can always take over when someone else goes . . . It gets really dangerous when things . . . get attached too much to one individual."
The former Brunswick University professor of physics appears to place more trust in systems than in personalities. After all, he abandoned that career to become a developer for a company that was committed to banishing the unreliable, human aspect from business.
In SAP Mr Kagermann seems to have found a company in which good organisation is more important than the one leading light. Alluding to his own career, he says it is "statistically proven" that new bosses from within a company do better than those drafted in.
This suggests his choice of successor would, if one were needed, fall on one of his six board colleagues. The wily marketing head Léo Apotheker and the enthusiastic, young development boss Shai Agassi are seen as front-runners.
But Mr Kagermann's love of systems glosses over how important his personality has become to a company that is suffering as much as it is celebrating. German workers have become restive about the pace of jobs growth overseas; union influence has risen.
The majority of the 5,000 people SAP took on last year joined foreign operations. Only 40 per cent of the 34,000 employees are now based in Germany, a quotient that will drop further as more research and development goes to the US or India.
With swept-back grey hair and raked eyebrows, Mr Kagermann carries a hint of the mad professor. But to many German employees, he is a consoling figure - more so than Mr Apotheker, a German based in Paris, or Mr Agassi, an Israeli based in Palo Alto.
That is quite a feat. Mr Plattner had for decades been a gregarious and out-spoken ambassador for the company. He was famous for public spats about strategy with Oracle's founder Larry Ellison and for playing the guitar at SAP's big customer schmoozes.
His chosen successor, by contrast, was the quiet man nobody really knew. Many industry observers wondered whether Mr Kagermann, who started at SAP as a developer for cost-control software, was the right man for a big job in a sector full of big egos.
Mr Kagermann's refusal to join the dotcom personality parade was based on the conviction that actions speak louder than words. "You influence people less by talking to them," he says of running SAP, "than through what you do."
His approach had an effect. Andrew Nelson, founder of Tomorrow Now, a small support firm SAP bought last year, says of Mr Kagermann: "He keeps it simple. He keeps the client in mind. Way too often in this industry, egos and vanity get in the way."
Ironically, the resulting anti-persona has become Mr Kagermann's distinguishing feature. He has spread a quiet confidence that has even helped calm the worst fears of German staff. The public discussion about foreign influence on SAP has died down.
Clients like this assurance - though it can exasperate. Mr Kagermann tells of a visit to a sceptical Japanese executive, who listed his needs to explain why he was not running SAP. Mr Kagermann recalls interrupting: "But we can do that . . . and we can do that . . . and we can do that."
He smiles. "I've only once seen a Japanese person get angry. They're usually such a polite people," he adds with a glimmer of mischief.
No wonder he has been able to rile Oracle executives just as effectively as the more vociferous Mr Plattner once did.
Copyright The Financial Times Limited 2006
"We are the engine, if you like. You need a strong engine to power everything else," he says, describing new software - ESA (enterprise systems architecture) to those in the know - that allows accounts, inventory or customer management programs made by SAP or its rivals to communicate with each other.
Without fanfare Mr Kagermann has spent the past three years steering the world's biggest business software maker through the wreckage of the technology boom. He pumped money into research, making a push to come up with more user-friendly, web browser-based software.
"Organic growth" has been his clarion call. He believes it will allow him to put more distance between SAP and its arch-rival Oracle, whose market share is still less than half thatof the German company.
With the launch of the new ESA, the software supplier to many of the world's biggest corporations hopes to win new customers in small and medium-sized companies. The target is for sales of €8.5bn (£5.9bn)to double by 2010. This represents a genuine departure.
Instead of striving to offer a computer program for every niche of business life, Mr Kagermann wants to make SAP the platform for other providers.
"There are some important companies that are strong in [sections of] the market - and we want to earn a bit of money with them," he says, pointing to deals with Microsoft (to hook "Office" into SAP software) or IBM (to do the same for databases).
This flow of clear and quiet logic is interrupted if he is asked anything personal. His crisp blue gaze lowers, as if to avoid the embarrassment of any trivial personal revelation.
Mr Kagermann does talk about the fact that he joined the company in 1982 as "something like the 86th employee" and that "everybody played some kind of ball game", in the spirit of the sports-mad founding trio, Hasso Plattner, Klaus Tschira and Dietmar Hopp. But he interrupts the reverie. "I organised a volleyball team, but it didn't last long," he says, before switching back to business: "In sporting terms, I'm not going to leave SAP a great legacy."
Is he looking ahead to life at Europe's largest software company after Henning Kagermann? For months he has refused to say whether he will renew his contract before it runs out next year.
"It's not a question that will affect our success or our strategy," he says. "A decision hasn't been made yet. The time isn't ripe."
Investors might disagree on both counts. Since taking over as sole chief executive of the world's number three software house in 2003, thecerebral Mr Kagermann has more than filled the mantle of his brilliant and sometimes rowdy predecessor, Mr Plattner.
Since Mr Plattner ceded control to his co-chief, Mr Kagermann has increased SAP's share of the market for enterprise resource planning (ERP) programs with more than one function from 35 per cent to 43 per cent, according to AMR Research.
Even though the US group spent about $19bn buying up rivals, Oracle has 19 per cent of the ERP market. In 2003, it and Peoplesoft, now part of Oracle, held 25 per cent.
Double-digit growth in annual sales and profits has become the hallmark of the Kagermann era - and hints of less-than-stellar performance rattle investors. Last week, SAP said sales of software licences grew only 8 per cent in the second quarter as big orders were held up, and its shares dropped 5 per cent. But even quarterly blips cannot hide Mr Kagermann's success.
Operating profit margin rose from 22 per cent in 2002 to almost 28 per cent last year, raising group valuation by half to €70bn. In Germany, only Deutsche Telekom and Eon are worth more.
Of course, Mr Kagermann stresses this isn't only his doing. "We're a team," he says. "That means someone can always take over when someone else goes . . . It gets really dangerous when things . . . get attached too much to one individual."
The former Brunswick University professor of physics appears to place more trust in systems than in personalities. After all, he abandoned that career to become a developer for a company that was committed to banishing the unreliable, human aspect from business.
In SAP Mr Kagermann seems to have found a company in which good organisation is more important than the one leading light. Alluding to his own career, he says it is "statistically proven" that new bosses from within a company do better than those drafted in.
This suggests his choice of successor would, if one were needed, fall on one of his six board colleagues. The wily marketing head Léo Apotheker and the enthusiastic, young development boss Shai Agassi are seen as front-runners.
But Mr Kagermann's love of systems glosses over how important his personality has become to a company that is suffering as much as it is celebrating. German workers have become restive about the pace of jobs growth overseas; union influence has risen.
The majority of the 5,000 people SAP took on last year joined foreign operations. Only 40 per cent of the 34,000 employees are now based in Germany, a quotient that will drop further as more research and development goes to the US or India.
With swept-back grey hair and raked eyebrows, Mr Kagermann carries a hint of the mad professor. But to many German employees, he is a consoling figure - more so than Mr Apotheker, a German based in Paris, or Mr Agassi, an Israeli based in Palo Alto.
That is quite a feat. Mr Plattner had for decades been a gregarious and out-spoken ambassador for the company. He was famous for public spats about strategy with Oracle's founder Larry Ellison and for playing the guitar at SAP's big customer schmoozes.
His chosen successor, by contrast, was the quiet man nobody really knew. Many industry observers wondered whether Mr Kagermann, who started at SAP as a developer for cost-control software, was the right man for a big job in a sector full of big egos.
Mr Kagermann's refusal to join the dotcom personality parade was based on the conviction that actions speak louder than words. "You influence people less by talking to them," he says of running SAP, "than through what you do."
His approach had an effect. Andrew Nelson, founder of Tomorrow Now, a small support firm SAP bought last year, says of Mr Kagermann: "He keeps it simple. He keeps the client in mind. Way too often in this industry, egos and vanity get in the way."
Ironically, the resulting anti-persona has become Mr Kagermann's distinguishing feature. He has spread a quiet confidence that has even helped calm the worst fears of German staff. The public discussion about foreign influence on SAP has died down.
Clients like this assurance - though it can exasperate. Mr Kagermann tells of a visit to a sceptical Japanese executive, who listed his needs to explain why he was not running SAP. Mr Kagermann recalls interrupting: "But we can do that . . . and we can do that . . . and we can do that."
He smiles. "I've only once seen a Japanese person get angry. They're usually such a polite people," he adds with a glimmer of mischief.
No wonder he has been able to rile Oracle executives just as effectively as the more vociferous Mr Plattner once did.
Copyright The Financial Times Limited 2006
Friday, July 14, 2006
SAP Warns on License Revenue Growth, Holds Firm on 2006 Outlook (AMR)
SAP stock took a hit this week when the German software giant warned of a lower-than-expected outlook for 2Q06 license revenue growth, reflecting weakness in the Asia-Pacific region.
SAP said that quarterly license revenue likely grew by 8% to Euro 621M. Consensus estimates were for license revenue growth of 17% to Euro 675M. Overall, revenue likely increased by 9% to Euro 2.2B, according to SAP management. The consensus estimate for 2Q06 revenue is Euro 2.29B, according to Thomson Financial. Pro forma net income should jump by 38% to Euro 432M (Euro 1.41 per share).
But SAP held firm on its 2006 outlook. The company stated that it continues to expect 15% to 17% license revenue growth this year. It also reiterated its previous earnings forecast.
Here’s a rundown of the news and what it means:
SAP said that quarterly license revenue likely grew by 8% to Euro 621M. Consensus estimates were for license revenue growth of 17% to Euro 675M. Overall, revenue likely increased by 9% to Euro 2.2B, according to SAP management. The consensus estimate for 2Q06 revenue is Euro 2.29B, according to Thomson Financial. Pro forma net income should jump by 38% to Euro 432M (Euro 1.41 per share).
But SAP held firm on its 2006 outlook. The company stated that it continues to expect 15% to 17% license revenue growth this year. It also reiterated its previous earnings forecast.
Here’s a rundown of the news and what it means:
- Likely cause behind this shortfall?—SAP’s 2Q06 software sales likely rose by 16% to Euro 201M in the United States, while its core EMEA market likely stepped up by just 3% to Euro 296M. Management didn’t explain what was behind the now-flat license revenue expectation in the usually robust Asia-Pacific region.
- Outlook on the pipeline—“Our order entry is strong, and we continue to see a robust pipeline,” said CEO Henning Kagermann. In our view, SAP has a very strong pipeline of potential business, and nothing has occurred to diminish its competitiveness—it is simply feeling the effects of market nervousness.
While demand for enterprise applications remains very strong and SAP continues to execute well, we are once again seeing buyers extending the close cycles because of concerns about the economy and geopolitical instability. We have not seen evidence of budgets being reduced or projects being cancelled, but there is an additional level of caution that has caused deals to slip out and sales cycles to slow down.
Thursday, July 13, 2006
SAP tumbles on weak licence growth (FT)
SAP, the world’s largest business software group, worried investors on Thursday as it warned that growth in sales of new software licences were well below market expectations for the second quarter.
Wednesday, July 12, 2006
The Supply Chain "Mini-Maestro" (Line56)
Fascinating MIT Sloan paper discusses evolving role of supply networks
Tuesday, July 11, 2006
Saturday, July 01, 2006
IBM PLM Relational Product Developement (RPD) (IBM)
IBM PLM Relational Product Developement (RPD)
A PLM methodology to optimise the business value
of relational design
Thursday, June 29, 2006
SAP Leads Enterprise Software Market Worldwide (SAP)
SAP Ranks #1 Worldwide in CRM, ERP and SCM Markets, According to Latest Reports from Industry Research Firm
SAP Leads Apps Market (Line56)
Gartner numbers show SAP dominating the world of enterprise applications
Monday, June 05, 2006
SAP plans to remain independent, says chief (FT)
Henning Kagermann, chief executive of SAP, a German business software maker, believes consolidation in the sector has peaked and that big IT groups from the US are not planning to buy the market leader.
In an interview with the FT and sister paper FT Deutschland, Mr Kagermann tried to quell the excitement caused by Hasso Plattner, SAP chairman, who said recently a takeover of the company was always possible.
“I think we’ve seen the main thrust of consolidation. The next steps are going to be marginal,” Mr Kagermann said. The sector has recently seen Oracle, the number two, shell out billions for rivals such as PeopleSoft and Siebel.
The Californian company last year trounced SAP in a brief bidding war for Retek, a US maker of software for retailers, which would have marked the biggest transaction for SAP, a company otherwise focused on organic growth.
Instead of trying to buy big chunks of market share, SAP is betting on a new generation of software, launched last year, which is meant to give customers the flexibility to combine programs made by other companies.
“Our strategy of growing organically has proved successful even as other big players have gone together,” Mr Kagermann said.
“It’ll be enough for us to enrich our current portfolio with one or two smaller acquisitions.”
SAP has bought small companies including Tomorrow Now, which services Oracle products. But it has not been drawn into making significant further acquisitions, in spite of recent strong profits and a doubling of market capitalisation to more than €50bn ($65bn) in the past three years.
In spite of record growth since Mr Kagermann steered SAP from the wreckage of the technology bubble in 2003, Mr Plattner, a member of the company’s founding trio, said last month that a purchase by Microsoft, Google or IBM was possible. The remarks led to a rally in SAP stock as investors speculated about takeover premiums.
But Mr Kagermann said Mr Plattner’s remarks had been misunderstood and that the company would remain independent.
“These were single remarks made by someone who was in a good mood,” Mr Kagermann said. Mr Plattner was “constantly under observation” by a media ready to interpret every remark for “the last little bit of news”, he said.
Asked if he thought recent speculation that rivals could bid for his company in the foreseeable future was overdone, he said: “Yes, of course – not least because our customers want a strong, independent SAP.”
Such confidence is at least in part based on a notion that Oracle’s spending spree will cause it problems. Oracle recently revealed plans to overhaul its business offerings in the next few years.
“I thought they were going to announce that they’d put all their products together,” Mr Kagermann said.
“Instead, they’ve told their clients they’re going to rewrite all programs from scratch. That’s a hell of a task.”
In an interview with the FT and sister paper FT Deutschland, Mr Kagermann tried to quell the excitement caused by Hasso Plattner, SAP chairman, who said recently a takeover of the company was always possible.
“I think we’ve seen the main thrust of consolidation. The next steps are going to be marginal,” Mr Kagermann said. The sector has recently seen Oracle, the number two, shell out billions for rivals such as PeopleSoft and Siebel.
The Californian company last year trounced SAP in a brief bidding war for Retek, a US maker of software for retailers, which would have marked the biggest transaction for SAP, a company otherwise focused on organic growth.
Instead of trying to buy big chunks of market share, SAP is betting on a new generation of software, launched last year, which is meant to give customers the flexibility to combine programs made by other companies.
“Our strategy of growing organically has proved successful even as other big players have gone together,” Mr Kagermann said.
“It’ll be enough for us to enrich our current portfolio with one or two smaller acquisitions.”
SAP has bought small companies including Tomorrow Now, which services Oracle products. But it has not been drawn into making significant further acquisitions, in spite of recent strong profits and a doubling of market capitalisation to more than €50bn ($65bn) in the past three years.
In spite of record growth since Mr Kagermann steered SAP from the wreckage of the technology bubble in 2003, Mr Plattner, a member of the company’s founding trio, said last month that a purchase by Microsoft, Google or IBM was possible. The remarks led to a rally in SAP stock as investors speculated about takeover premiums.
But Mr Kagermann said Mr Plattner’s remarks had been misunderstood and that the company would remain independent.
“These were single remarks made by someone who was in a good mood,” Mr Kagermann said. Mr Plattner was “constantly under observation” by a media ready to interpret every remark for “the last little bit of news”, he said.
Asked if he thought recent speculation that rivals could bid for his company in the foreseeable future was overdone, he said: “Yes, of course – not least because our customers want a strong, independent SAP.”
Such confidence is at least in part based on a notion that Oracle’s spending spree will cause it problems. Oracle recently revealed plans to overhaul its business offerings in the next few years.
“I thought they were going to announce that they’d put all their products together,” Mr Kagermann said.
“Instead, they’ve told their clients they’re going to rewrite all programs from scratch. That’s a hell of a task.”
Friday, June 02, 2006
Oracle Acquires Demantra (Line56)
Adding sophisticated demand planning to the overall Oracle portfolio; addressing retail vertical again
Thursday, May 25, 2006
SAP Advances With Frictionless Buy, but SRM Weakness Remains (Gartner)
Buying Frictionless will give SAP a good on-demand e-sourcing solution, but in the short term it won't fix gaps in its supplier relationship management products. The deal means little change in this software market.
The Demand-Driven Journey: Lessons Learned and the Road Ahead (AMR)
Over the past three years, demand-driven strategies have gained a lot of traction. Companies have gained value through investing in a system of processes and technologies to sense real-time demand across a network of suppliers, customers, and employees. The fact is companies that are further along in their demand-driven strategies report better results on cost predictability, perfect order performance, and new product launch execution.
We’ve spent the past year defining demand-driven process models and assessing company progress in demand, sales and operations planning (S&OP), manufacturing, supply management, and logistics.
To gauge where companies are on their journeys, we surveyed 455 companies in Europe and North America. The study looked at supply chain organizational maturity, industry-specific issues, and why demand-driven supply network (DDSN) leadership matters to business results.
We’ve spent the past year defining demand-driven process models and assessing company progress in demand, sales and operations planning (S&OP), manufacturing, supply management, and logistics.
To gauge where companies are on their journeys, we surveyed 455 companies in Europe and North America. The study looked at supply chain organizational maturity, industry-specific issues, and why demand-driven supply network (DDSN) leadership matters to business results.
Wednesday, May 24, 2006
Introducing Demand-Driven Service: Move Over DDSN (AMR)
Demand-driven supply networks (DDSNs) are often discussed in relation to consumer products, but sensing and responding to demand signals is a tremendous opportunity for post-sales services as well. Evolutionary and revolutionary business models are creating competitive advantages for companies that can proactively anticipate, understand, and address user needs, ultimately leading to increased profits and customer loyalty.
A recent AMR Research Alert article, “Profitable Service Lifecycle Management,” highlights the business case to adopt a service lifecycle management strategy and the high-level competencies that are needed. By discovering the service need, fulfilling it proactively, and then harvesting the knowledge, companies are building competitive advantages.
A recent AMR Research Alert article, “Profitable Service Lifecycle Management,” highlights the business case to adopt a service lifecycle management strategy and the high-level competencies that are needed. By discovering the service need, fulfilling it proactively, and then harvesting the knowledge, companies are building competitive advantages.
Monday, May 22, 2006
Duet: Bringing Together Business Productivity and Enterprise Applications (SAP)
Duet software, the first joint product for use with Microsoft Office and SAP, brings together business productivity and enterprise applications. This demo reviews and illustrates how easily you can enjoy the features, functionality, and benefits of this innovative software.
Microsoft and SAP: Revolutionizing How Information Workers Access Enterprise Business Applications
Duet software, formerly known as Project Mendocino, is the first joint product for use with Microsoft Office and SAP. Created by industry leaders Microsoft and SAP, Duet is designed to revolutionize the way information workers access enterprise applications. With Duet software, you will benefit from time and cost savings, increases in process compliance, improvements in decision making, and decreases in redundancy and data errors. Your employees will enjoy improved and more flexible SAP access and achieve greater productivity and efficiency.
Microsoft and SAP: Revolutionizing How Information Workers Access Enterprise Business Applications
Duet software, formerly known as Project Mendocino, is the first joint product for use with Microsoft Office and SAP. Created by industry leaders Microsoft and SAP, Duet is designed to revolutionize the way information workers access enterprise applications. With Duet software, you will benefit from time and cost savings, increases in process compliance, improvements in decision making, and decreases in redundancy and data errors. Your employees will enjoy improved and more flexible SAP access and achieve greater productivity and efficiency.
Friday, May 19, 2006
Infor Becomes a 'Super Collector' With Planned SSA Global Buy (Gartner)
Infor will acquire SSA Global to extend its market presence and gain complementary products. Some product convergence is likely as Infor matches its newly acquired products to its business model.
SAP: Google a rival to-be (InfoWorld)
Co-founder Hasso Plattner says search giant or a Chinese company could be next competitor
SAP: More on-demand, new prices coming (InfoWorld)
Despite SAP's early reluctance to provide its business applications on a subscription-based on-demand model, the company is now catching up fast
Thursday, May 18, 2006
SAP CRM Moving to Hybrid Model (AMR)
Following last week’s release of the second wave of CRM on-demand that added more sales and marketing functionality to the product, SAP unveiled CRM 2006s at SAPPHIRE. The new release is billed as a “hybrid” on-demand/on-premises CRM suite. It’s the first step in the company’s strategy to move the entire mySAP CRM product to an on-demand mode.
What’s new in 2006s
Here’s a quick rundown of enhancements SAP has added to its CRM product:
- Web service enabled (the “s” in 2006s) to help move data in and out.
- Rolling the on-demand user interface across the entire on-premises CRM suite.
- A user interface (UI) configuration tool based on the on-demand configuration tool designed to let non-IT people configure the look, feel, and layout of the screens.
- More business-to-consumer (B2C) functionality (loyalty management and point management for travel, airlines, and hospitality), as well as campaign management, higher volume call center, and personalized e-commerce.
- Pipeline performance management, which SAP’s president of the product and technology group, Shai Agassi, demonstrated during his keynote. This includes a visual tool to manage the pipeline, conduct simulation, and perform other analysis activities.
- Improved marketing funds and configurable case management that can be more easily tailored (not just an industry version).
- Trade promotions management (TPM) and claims management for consumer products companies.
Architecture
As announced with the original on-demand launch, SAP will continue to use the “isolated tenancy” architecture in which each customer will have their own individual instance of the CRM application. However, SAP and IBM (the hosting partner) will continue to roll out quarterly upgrades though a template so that all instances are always kept on the latest version.
However, not all functionality for 2006s will be available on-demand. Areas in which tight back-office integration is required will likely remain only in the on-premises version. However, SAP remains committed to rolling out enhanced features each quarter for on-demand, and it will gain a larger portion of the on-premises footprint over time.
Keeping it in the family
SAP’s moves to on-demand were much anticipated as companies increasingly seek on-demand options for their customer management needs. In manufacturing, for instance, many companies have highly fragmented or custom-built customer management applications.
For these businesses, a jump right into a million dollar on-premises CRM project doesn’t sound particularly appealing, thus software as a service (SaaS) has become a popular option. If SAP was to maintain these customers for CRM, it needed to offer something comparable to salesforce.com. The popularity of salesforce.com’s SaaS model is evidenced in its latest earnings, posted the same time SAP was unveiling its CRM on-demand enhancements. For its first quarter, salesforce.com posted $104.7M in revenue, a whopping 63% leap from the same period last year, with paying subscribers growing from 45,000 the previous year to 444,000.
The move to a common interface should help SAP hold on to customers that might otherwise flee to options like salesforce.com. The first on-demand launch’s promise was that the application shared the same data model as the on-premises application. This let customers move from one to the other with minimal data transformation.
However, the two applications still had different UIs. Moving sales people from one UI to another can be a difficult process, and is one reason many companies have stayed on their temporary, on-demand CRM applications much longer. SAP CRM 2006s removes this objection, a much bigger advantage than simply having the same data model. While other competitors might have a broader functional footprint (at least for another year or two), none can say they have the same UI as CRM 2006s.
© Copyright 2006 by AMR Research, Inc.
SAP boss names three potential US buyers (FT)
SAP, the world’s biggest business software group, is open to an acquisition by US technology groups, according to its chairman.
Hasso Plattner, supervisory board chief at the German group, said in an interview with FT Deutschland, the FT’s sister paper: “There are only three potential buyers: IBM, Microsoft and Google. I don’t see anyone else. If shareholders think that a combination, and not independence, is better, then it will happen.”
Mr Plattner, who holds 12 per cent of the company, said he would have to act in the interest of all shareholders, not just himself.
He is the only one of the four SAP co-founders still holding a position within the group.
“You have to be emotionless,” Mr Plattner said.
Asked about the widely speculated merger scenario involving IBM, Plattner said: “I do not want to invent rumours because there are no talks. However, I do not want to say that I dislike IBM so much that I could not imagine such a scenario at all.”
But he could not imagine talks with Oracle, SAP’s arch rival.
A takeover of SAP would be a stretch for most companies, given its market capitalisation of more than €50bn ($64bn) and the fact that it is in the middle of a period of immense organic growth.
Two years ago, observers were surprised when Microsoft approached SAP with a bid and worries of long-winded EU competition probes brought talks to an early end.
Mr Plattner said many European IT companies had been unable to compete with American rivals in the past because they were too nationally minded and had focused on small markets.
Bull in France and Olivetti in Italy were number ones in their domestic markets until being overrun by US groups.
“We would long have needed an ‘IT-Airbus’,” Plattner said in analogy with the construction of aircraft where Germany, France, Spain and the UK had bundled their forces to compete with Boeing.
Last week, SAP gave Henning Kagermann, its chief executive, an incentive to renew his contract as chief executive next year by flagging unprecedented bonuses for senior staff.
The supervisory board plans to pay out €300m to hundreds of employees if SAP’s share price doubles by 2010, with one-third of the sum reserved for the chief executive and the six other executive directors.
Mr Kagermann took over in the aftermath of the tech-bubble bursting and has led SAP to stellar sales and profit growth. He has yet to say whether he will renew a contract that ends in 2007.
A vital part of his success is melding technology and marketing expertise, throwing up the question of whether SAP would be able to find a replacement with a similar balancing influence on the executive board.
A decision could come as late as next spring, with Mr Kagermann’s deliberations coinciding with a debate in Germany on whether executives should sign three-year rather than five-year contracts.
Mr Plattner told shareholders at last week’s annual meeting the bonuses would help SAP realise “very ambitious” goals to double sales in the next five years.
SAP boss names three potential US buyers (FT)
SAP, the world’s biggest business software group, is open to an acquisition by US technology groups, according to its chairman.
Hasso Plattner, supervisory board chief at the German group, said in an interview with FT Deutschland, the FT’s sister paper: “There are only three potential buyers: IBM, Microsoft and Google. I don’t see anyone else. If shareholders think that a combination, and not independence, is better, then it will happen.”
Mr Plattner, who holds 12 per cent of the company, said he would have to act in the interest of all shareholders, not just himself.
He is the only one of the four SAP co-founders still holding a position within the group.
“You have to be emotionless,” Mr Plattner said.
Asked about the widely speculated merger scenario involving IBM, Plattner said: “I do not want to invent rumours because there are no talks. However, I do not want to say that I dislike IBM so much that I could not imagine such a scenario at all.”
But he could not imagine talks with Oracle, SAP’s arch rival.
A takeover of SAP would be a stretch for most companies, given its market capitalisation of more than €50bn ($64bn) and the fact that it is in the middle of a period of immense organic growth.
Two years ago, observers were surprised when Microsoft approached SAP with a bid and worries of long-winded EU competition probes brought talks to an early end.
Mr Plattner said many European IT companies had been unable to compete with American rivals in the past because they were too nationally minded and had focused on small markets.
Bull in France and Olivetti in Italy were number ones in their domestic markets until being overrun by US groups.
“We would long have needed an ‘IT-Airbus’,” Plattner said in analogy with the construction of aircraft where Germany, France, Spain and the UK had bundled their forces to compete with Boeing.
Last week, SAP gave Henning Kagermann, its chief executive, an incentive to renew his contract as chief executive next year by flagging unprecedented bonuses for senior staff.
The supervisory board plans to pay out €300m to hundreds of employees if SAP’s share price doubles by 2010, with one-third of the sum reserved for the chief executive and the six other executive directors.
Mr Kagermann took over in the aftermath of the tech-bubble bursting and has led SAP to stellar sales and profit growth. He has yet to say whether he will renew a contract that ends in 2007.
A vital part of his success is melding technology and marketing expertise, throwing up the question of whether SAP would be able to find a replacement with a similar balancing influence on the executive board.
A decision could come as late as next spring, with Mr Kagermann’s deliberations coinciding with a debate in Germany on whether executives should sign three-year rather than five-year contracts.
Mr Plattner told shareholders at last week’s annual meeting the bonuses would help SAP realise “very ambitious” goals to double sales in the next five years.
Hasso Plattner, supervisory board chief at the German group, said in an interview with FT Deutschland, the FT’s sister paper: “There are only three potential buyers: IBM, Microsoft and Google. I don’t see anyone else. If shareholders think that a combination, and not independence, is better, then it will happen.”
Mr Plattner, who holds 12 per cent of the company, said he would have to act in the interest of all shareholders, not just himself.
He is the only one of the four SAP co-founders still holding a position within the group.
“You have to be emotionless,” Mr Plattner said.
Asked about the widely speculated merger scenario involving IBM, Plattner said: “I do not want to invent rumours because there are no talks. However, I do not want to say that I dislike IBM so much that I could not imagine such a scenario at all.”
But he could not imagine talks with Oracle, SAP’s arch rival.
A takeover of SAP would be a stretch for most companies, given its market capitalisation of more than €50bn ($64bn) and the fact that it is in the middle of a period of immense organic growth.
Two years ago, observers were surprised when Microsoft approached SAP with a bid and worries of long-winded EU competition probes brought talks to an early end.
Mr Plattner said many European IT companies had been unable to compete with American rivals in the past because they were too nationally minded and had focused on small markets.
Bull in France and Olivetti in Italy were number ones in their domestic markets until being overrun by US groups.
“We would long have needed an ‘IT-Airbus’,” Plattner said in analogy with the construction of aircraft where Germany, France, Spain and the UK had bundled their forces to compete with Boeing.
Last week, SAP gave Henning Kagermann, its chief executive, an incentive to renew his contract as chief executive next year by flagging unprecedented bonuses for senior staff.
The supervisory board plans to pay out €300m to hundreds of employees if SAP’s share price doubles by 2010, with one-third of the sum reserved for the chief executive and the six other executive directors.
Mr Kagermann took over in the aftermath of the tech-bubble bursting and has led SAP to stellar sales and profit growth. He has yet to say whether he will renew a contract that ends in 2007.
A vital part of his success is melding technology and marketing expertise, throwing up the question of whether SAP would be able to find a replacement with a similar balancing influence on the executive board.
A decision could come as late as next spring, with Mr Kagermann’s deliberations coinciding with a debate in Germany on whether executives should sign three-year rather than five-year contracts.
Mr Plattner told shareholders at last week’s annual meeting the bonuses would help SAP realise “very ambitious” goals to double sales in the next five years.
Wednesday, May 17, 2006
SAP Buys Frictionless Commerce (AMR)
SAP is buying privately held Frictionless Commerce, a supplier relationship management (SRM) software provider. This should be a good deal for customers of both companies.
SAP broadens customer base (InfoWorld)
The company continued its assault on the small and midsize business market at its Sapphire customer event Tuesday
Business-software vendor SAP AG kicked off its Sapphire customer event Tuesday by announcing deals with several customers, both big and small, underscoring the software vendor's aim to broaden its customer base.
Business-software vendor SAP AG kicked off its Sapphire customer event Tuesday by announcing deals with several customers, both big and small, underscoring the software vendor's aim to broaden its customer base.
Tuesday, May 16, 2006
Infor to acquire SSA in $1.4bn deal (FT)
SSA Global, a provider of software that powers companies’ customer relationship and human resources management systems, on Monday became the latest enterprise software group to be taken private.
It announced a $1.4bn deal to be acquired by Infor Global Solutions.
Infor, which is controlled by Golden Gate Capital and Summit Partners, the private equity groups, said it would pay $19.50 a share in cash for SSA, a premium of 25 per cent above Friday’s closing price for SSA shares.
SSA’s shares jumped more than 22 per cent to $19.04 by midday trading in New York.
The deal will add to Golden Gate’s growing stable of enterprise software companies. In November, Golden Gate announced a $1bn deal to acquire Geac, a Canadian software group specialising in financial and supply chain management systems.
Enterprise software has emerged as a favourite target for private equity groups working in the technology sector.
“We are seeing increased consolidation in the marketplace,” said Judy Sweeney, an analyst at enterprise software research group AMR Research. “[Private equity groups] are looking for financial gains by assembling these companies for economies of scale.”
Silver Lake Partners, another Silicon Valley buyout group, last year said it would buy Serena, an infrastructure software provider, for $1.2bn.
Last March, Silver Lake and six other private equity groups announced a deal to buy SunGard, a financial services software group, for $11.3bn in one of the biggest private equity deals of all time.
Enterprise software is viewed as a mature business, with little growth in new customer accounts.
However, many enterprise software companies see steady or even growing inflows of cash from providing maintenance and other services to existing clients.
Because Wall Street tends to value enterprise software groups based on new deal flow, many private equity groups consider the sector to be chronically undervalued, and some have been taking advantage of what they see as an opportunity to capture lucrative cash flow.
Jim Schaper, Infor’s chairman and chief executive, said the combined companies would have $1.6bn in annual revenues.
SSA and Infor said they expected the deal to close in the third quarter. SSA Global was advised by Schulte Roth and Zabel LLP and JPMorgan Securities. Infor was advised by Kirkland & Ellis LLP.
It announced a $1.4bn deal to be acquired by Infor Global Solutions.
Infor, which is controlled by Golden Gate Capital and Summit Partners, the private equity groups, said it would pay $19.50 a share in cash for SSA, a premium of 25 per cent above Friday’s closing price for SSA shares.
SSA’s shares jumped more than 22 per cent to $19.04 by midday trading in New York.
The deal will add to Golden Gate’s growing stable of enterprise software companies. In November, Golden Gate announced a $1bn deal to acquire Geac, a Canadian software group specialising in financial and supply chain management systems.
Enterprise software has emerged as a favourite target for private equity groups working in the technology sector.
“We are seeing increased consolidation in the marketplace,” said Judy Sweeney, an analyst at enterprise software research group AMR Research. “[Private equity groups] are looking for financial gains by assembling these companies for economies of scale.”
Silver Lake Partners, another Silicon Valley buyout group, last year said it would buy Serena, an infrastructure software provider, for $1.2bn.
Last March, Silver Lake and six other private equity groups announced a deal to buy SunGard, a financial services software group, for $11.3bn in one of the biggest private equity deals of all time.
Enterprise software is viewed as a mature business, with little growth in new customer accounts.
However, many enterprise software companies see steady or even growing inflows of cash from providing maintenance and other services to existing clients.
Because Wall Street tends to value enterprise software groups based on new deal flow, many private equity groups consider the sector to be chronically undervalued, and some have been taking advantage of what they see as an opportunity to capture lucrative cash flow.
Jim Schaper, Infor’s chairman and chief executive, said the combined companies would have $1.6bn in annual revenues.
SSA and Infor said they expected the deal to close in the third quarter. SSA Global was advised by Schulte Roth and Zabel LLP and JPMorgan Securities. Infor was advised by Kirkland & Ellis LLP.
Infor Acquires SSA Global (Line56)
SSA loved to acquire and consolidate ERP companies; now it has been bought by Infor, leaving one fewer applications player
SAP stresses master-data management (InfoWorld)
Agassi says companies looking to consolidate IT resources must first define a list of master
SAP on Tuesday emphasized the importance of users continually maintaining master data, a single version of attributes that best describe products or customers, as corporations work to rearchitect their IT systems.
SAP on Tuesday emphasized the importance of users continually maintaining master data, a single version of attributes that best describe products or customers, as corporations work to rearchitect their IT systems.
SSA taken over by ERP arch-rival (CMC - InsightExec)
It came out of the blue and it certainly won’t have gone down well inside Oracle, but the takeover of arch-acquirer SSA by rival Infor changes the landscape of the enterprise applications market.
SSA Global Technologies, which last year gobbled up CRM firm Epiphany, is itself being acquired for about $1.3 billion by Infor to create the world's third-largest corporate software developer.Infor Chairman and CEO Jim Schaper said: "With this acquisition, Infor will become the third-largest enterprise software provider in the industry with approximately $1.6 billion in revenue."
SSA Global Technologies, which last year gobbled up CRM firm Epiphany, is itself being acquired for about $1.3 billion by Infor to create the world's third-largest corporate software developer.Infor Chairman and CEO Jim Schaper said: "With this acquisition, Infor will become the third-largest enterprise software provider in the industry with approximately $1.6 billion in revenue."
Thursday, May 11, 2006
CRM Professional Services (Forrester)
Spending on CRM professional services providers (PSPs) will remain robust due to theshift from customer functional management to customer process management, the needto deliver a better "branded" customer experience, the shift to SOA as the basis fortechnology solutions, and the growth of high-value CRM offshore/near-shore servicesproviders. However, four out of 10 enterprises would not fully recommend their CRMPSP to others. To avoid disappointment, select a PSP that most closely matches yourneeds by understanding the strengths and weaknesses of the six types of CRM PSPs: 1)management consultants; 2) global full-service systems integration firms; 3) NorthAmerican regional specialists; 4) European regional specialists; 5)offshore/near-shore technology services providers; and 6) software vendorprofessional services organizations (PSOs).
CRM Services (Forrester)
Spending on CRM professional services providers (PSPs) will remain robust due to theshift from customer functional management to customer process management, the needto deliver a better "branded" customer experience, the shift to SOA as the basis fortechnology solutions, and the growth of high-value CRM offshore/near-shore servicesproviders. However, four out of 10 enterprises would not fully recommend their CRMPSP to others. To avoid disappointment, select a PSP that most closely matches yourneeds by understanding the strengths and weaknesses of the six types of CRM PSPs: 1)management consultants; 2) global full-service systems integration firms; 3) NorthAmerican regional specialists; 4) European regional specialists; 5)offshore/near-shore technology services providers; and 6) software vendorprofessional services organizations (PSOs).
Ariba LIVE 2006--It's time for spend management (AMR)
The gaming industry now generates $10B in actual gambling revenue, with the typical visitor to Las Vegas losing an average of $665 annually. Against this backdrop of excess and free spending, Ariba held its annual user conference, Ariba LIVE 2006. The theme: “It’s time for spend management.” With more than 1,300 customers and prospects in attendance, including 50% of the Fortune 100 companies, procurement practitioners gathered to hear what’s on tap from Ariba, as well as best-practice expertise from its leading customers.
DDSN Versus SCM: Look to the Sky for the Differences, Part 2 (AMR)
“There are a lot of parallels between what we’re doing and an expensive watch. It’s very complex, has a lot of parts, and it only has value when it’s predictable and reliable.”—Gordon Bethune, Chairman and CEO of Continental Airlines, 1997
In the first part of this series, “DDSN Versus SCM: Look to the Sky for the Differences, Part 1,” I looked at what we can learn about the implementation of demand-driven supply networks (DDSNs) by comparing them to our frequent experiences with airline travel. After a lot of positive feedback, I decided to do a sequel.
In the first part of this series, “DDSN Versus SCM: Look to the Sky for the Differences, Part 1,” I looked at what we can learn about the implementation of demand-driven supply networks (DDSNs) by comparing them to our frequent experiences with airline travel. After a lot of positive feedback, I decided to do a sequel.
The Enterprise Application Market Is Destroying Its Fragile Ecosystem (AMR)
The enterprise application market looks remarkably healthy...on the surface. It passed the $50B revenue mark in 2005, and the leading vendors, SAP, Oracle, Sage, UGS, and Microsoft, are all growing at double-digit rates. But peel back that surface, and you find that the success of these giant global players is not indicative of the state of the market.
Radical consolidation, several years of recession, and a major change in corporate buying preferences have combined to stunt the growth of most of the hundreds of smaller software firms that once drove much of the industry’s vibrancy and innovation. These companies, which have traditionally distinguished themselves on the basis of vertical, functional, or geographic specialization, simply don’t seem to be participating in the economic recovery.
Radical consolidation, several years of recession, and a major change in corporate buying preferences have combined to stunt the growth of most of the hundreds of smaller software firms that once drove much of the industry’s vibrancy and innovation. These companies, which have traditionally distinguished themselves on the basis of vertical, functional, or geographic specialization, simply don’t seem to be participating in the economic recovery.
Wednesday, May 03, 2006
Microsoft to Enhance IT Asset Inventory With AssetMetrix Buy (Gartner)
By purchasing AssetMetrix, Microsoft will acquire a library of known applications to improve asset reconciliation in Systems Management Server 2003.
Tuesday, May 02, 2006
It's a Duet: SAP/Microsoft Formalize Mendocino Project Offering (Gartner)
The integration of Microsoft Office capabilities into business applications is not new, but unlike previous announcements, Mendocino captured market attention. The latest announcement of the product, now called Duet, answers some user questions.
Lawson Finally Closes Acquisition of Intentia (AMR Research)
A year after the process began, Lawson has finally closed on its acquisition ofIntentia. The long delay has allowed the two companies to come to terms with varyingstructural and technological differences, positioning the combined company to almostseamlessly merge without the customary sales disruption and support hiccups.
JDA Buying Manugistics (AMR Research)
JDA Software is acquiring Manugistics for $211M. For Manugistics, once a high-flyingsupply chain planning star, this is a low revenue multiple. For JDA, this is a largetransaction.
Friday, April 28, 2006
Securing the Global Supply Chain (AMR)
The fallout from Dubai Ports World’s takeover of several U.S. port operating companies thrust international supply chain security into the global spotlight, making it front of mind for U.S. politicians.
Thursday, April 27, 2006
Kinaxis Goes On Demand (Line56)
Continuing to address a supply chain problem for which ERP is not optimally suited
Wednesday, April 26, 2006
JDA Acquires Manugistics (Line56)
Supply chain software pioneer goes for $211 million; transportation prospects solid, discrete and process manufacturing less certain, says analyst
Monday, April 24, 2006
The People Side of ERP (Line56)
Green Beacon explains why enterprise resource planning (ERP) implementation is about more than technology
Thursday, April 20, 2006
Strong growth in the US boosts SAP (FT)
SAP, the world’s biggest maker of business software, on Thursday said software sales rose 22 per cent in the first quarter, thanks to strong growth in the US and a solid performance in Germany.
SAP Starts 2006 With a Strong First Quarter (AMR Research)
SAP posted a very strong first quarter (ending March 31, 2006), with software revenue up 22% from 1Q05 and total revenue up 18%. The results were generally in line with financial analyst expectations, reflecting excellent execution by SAP and a continued improvement in the market for business applications.
SAP Update; salesforce.com To Go; Rapt, Pricing, and PLM (AMR)
SAP’s first quarter earnings were the big news this week. As you can see from Jim Shepherd’s write-up in this week’s Alert, the company had another very strong quarter. Needless to say, there will be plenty of press coverage devoted to the topic.
SAP: Full Speed Ahead (Line56)
In wake of Q1 2006 results, enterprise apps giant has no true weakness, notes analyst; but margins cause passing concern
Wednesday, April 19, 2006
mySAP ERP & Enterprise Services Architecture: Delivering Operational Excellence
Enterprises are burdened with complex IT landscapes, driving up the cost of innovation and slowing down the pace of change. With rapidly shifting business conditions such as mergers and acquisitions, business consolidations, new partnerships and changing market dynamics -- enterprises must find a better way to effect change and employ innovation. Read this white paper to learn how to overcome these challenges using an Enterprise Services Architecture (ESA) approach to SOA to achieve:
- Greater efficiency
- Reduce IT complexity
- Lower TCO
- Increase agility to change
- Greater efficiency
- Reduce IT complexity
- Lower TCO
- Increase agility to change
ERP Market Tops $16.6 Billion and Still Growing Strong (ARC Advisory Group)
Enterprise Resource Planning (ERP) continues to be an amazing market that has evolved and grown over the past three decades. While consolidation abounds in this segment of enterprise applications, the market continues to grow in spite of itself. As many industry leaders attempt to encroach on SAP’s dominant market share through aggressive acquisition strategies, they face challenges of the post-acquisition phase such as defining a forward strategy for integrating various products and the installed base.
Tuesday, April 18, 2006
Invensys Launches 'Sensor-to-Boardroom' Asset Controls (Gartner)
Invensys' new enterprise endeavor, InFusion, aims to improve manufacturing asset performance by rationalizing plant systems in an ERP infrastructure. SAP users will benefit most from joint technology developments.
The Formula for Product Success: Focus on Flexibility and Cooperation (TEC)
This is Part Two of the series Jeeves—Thriving Organically as a Humble Servant.
One pillar of the success of Jeeves Information Systems AB (JIS) is the way it has developed its main product from scratch. While most competitors work painstakingly to rewrite or merge their many (often recently acquired) complex and rigid systems, Jeeves has always had a product with built-in open and flexible architecture. Recent studies by an independent market research company, DPU Research, show that Jeeves Enterprise repeatedly receives the highest rating among European users in terms of ease of use, value for money, functional breadth and depth, and so on. Jeeves Enterprise tries to emulate the user thought process, and to accommodate multiple ways of building systems, according to needs. It is modular, flexible, and customizable, with an integrated, broad-scoped, functional footprint catering to many business processes and industries.
One pillar of the success of Jeeves Information Systems AB (JIS) is the way it has developed its main product from scratch. While most competitors work painstakingly to rewrite or merge their many (often recently acquired) complex and rigid systems, Jeeves has always had a product with built-in open and flexible architecture. Recent studies by an independent market research company, DPU Research, show that Jeeves Enterprise repeatedly receives the highest rating among European users in terms of ease of use, value for money, functional breadth and depth, and so on. Jeeves Enterprise tries to emulate the user thought process, and to accommodate multiple ways of building systems, according to needs. It is modular, flexible, and customizable, with an integrated, broad-scoped, functional footprint catering to many business processes and industries.
Oracle fires a shot across Red Hat’s bows (FT)
For long-time watchers of Larry Ellison, the revelation that Oracle is looking at launching its own version of the Linux open source operating system has aroused a suspicion: is the software industry’s most acquisitive CEO stalking his next target?
Mr Ellison made the comments in an interview with the Financial Times this week, laying out strong reasons why the database software company should embed a version of Linux into its existing software.
Such a move would make life far harder for Red Hat, which has emerged as the leading Linux company so far – particularly if, as Mr Ellison suggested, IBM decided to follow suit.
As a shot across Red Hat’s bows, the comments have had an immediate impact. The Linux company’s shares have dropped 8 per cent this week – although at $5bn, the company is still worth around three times what it was a year ago. “We want them to be successful, because Red Hat is to some degree our way of competing with Microsoft down at the core level,” the Oracle chief executive officer said. “But they’re a small company and they’re not supporting the customers very well.”
One answer, he suggested, was to launch a new version of Linux, or simply embed the Red Hat version in Oracle’s products and offer support from its own service organisation.
Simply offering the Red Hat version of Linux to its own customers could create a legal dispute, according to Rick Sherlund, software analyst at Goldman Sachs.
But Oracle would still be free to create its own version from the free component programs available over the internet.
For now, Mr Ellison has advanced two reasons for not buying Red Hat or Novell, which became the second biggest distributor of Linux after its acquisition of the German company SuSe two years ago. One is price. Open source companies have started to attract fancy valuations, as evidenced by Red Hat’s purchase last week of JBoss – a company that Oracle had itself tried to buy. Without control of their own intellectual property, these companies are not as valuable as Wall Street thinks, according to Mr Ellison.
“If an open source product gets good enough, we’ll simply take it,” he said. “We can do that, IBM can do that, HP can do that – anyone with a large support organisation is free to take that intellectual property and embed it in their own products.
“I believe JBoss is a $16m company breaking even, MySQL is a $30m company breaking even,” said Mr Ellison.
“You can build a sustainable business [in open source], you just can’t charge a lot for it. There’s brand value – there’s real brand – there’s people, and that’s it.”
The second reason for not buying a Linux company, according to Mr Ellison, is the risk that other big technology companies would abandon it.
“I don’t see how we could possibly buy Red Hat – IBM would just say, ‘Larry, congratulations, we’re going our own way’,” he said.
Despite that, Red Hat’s growing dominance of the Linux business, and its decision to acquire JBoss and start building out a fuller “stack” of software that competes with companies like Oracle and IBM, could alter the balance of partnerships in the software world and prompt a more drastic response.
Mr Ellison made the comments in an interview with the Financial Times this week, laying out strong reasons why the database software company should embed a version of Linux into its existing software.
Such a move would make life far harder for Red Hat, which has emerged as the leading Linux company so far – particularly if, as Mr Ellison suggested, IBM decided to follow suit.
As a shot across Red Hat’s bows, the comments have had an immediate impact. The Linux company’s shares have dropped 8 per cent this week – although at $5bn, the company is still worth around three times what it was a year ago. “We want them to be successful, because Red Hat is to some degree our way of competing with Microsoft down at the core level,” the Oracle chief executive officer said. “But they’re a small company and they’re not supporting the customers very well.”
One answer, he suggested, was to launch a new version of Linux, or simply embed the Red Hat version in Oracle’s products and offer support from its own service organisation.
Simply offering the Red Hat version of Linux to its own customers could create a legal dispute, according to Rick Sherlund, software analyst at Goldman Sachs.
But Oracle would still be free to create its own version from the free component programs available over the internet.
For now, Mr Ellison has advanced two reasons for not buying Red Hat or Novell, which became the second biggest distributor of Linux after its acquisition of the German company SuSe two years ago. One is price. Open source companies have started to attract fancy valuations, as evidenced by Red Hat’s purchase last week of JBoss – a company that Oracle had itself tried to buy. Without control of their own intellectual property, these companies are not as valuable as Wall Street thinks, according to Mr Ellison.
“If an open source product gets good enough, we’ll simply take it,” he said. “We can do that, IBM can do that, HP can do that – anyone with a large support organisation is free to take that intellectual property and embed it in their own products.
“I believe JBoss is a $16m company breaking even, MySQL is a $30m company breaking even,” said Mr Ellison.
“You can build a sustainable business [in open source], you just can’t charge a lot for it. There’s brand value – there’s real brand – there’s people, and that’s it.”
The second reason for not buying a Linux company, according to Mr Ellison, is the risk that other big technology companies would abandon it.
“I don’t see how we could possibly buy Red Hat – IBM would just say, ‘Larry, congratulations, we’re going our own way’,” he said.
Despite that, Red Hat’s growing dominance of the Linux business, and its decision to acquire JBoss and start building out a fuller “stack” of software that competes with companies like Oracle and IBM, could alter the balance of partnerships in the software world and prompt a more drastic response.
Transcript: FT interview with Larry Ellison (FT)
April 18 2006 05:01
Richard Waters of the Financial Times interviewed Larry Ellison, the chief executive officer of Oracle. The following are excerpts from the interview:
FT: In an interview with the FT four years ago, you predicted an end to the period of disruptive innovation from small technology companies and said that, in a maturing industry, there would be slower growth and a consolidation of power in the hands of the market leaders. However, the software world seems to be awash with disruptive innovation again, in the form of open source software, software-as-a-service, and the Web 2.0 movement. What has changed?
LE: I still think that to tackle the big jobs, the consolidation will continue. Take software-as-a-service. [The stand-alone software-as-a-service ventures] are tiny companies. I do believe in it, Oracle has offered software-as-a-service for some time. I own 5 per cent of Salesforce.com, I was a founding investor. It’s a delivery mechanism for software. I believe, over time, more and more software will be delivered as a service – I totally believe that. I would argue I started the first big software-as-a-service company, [Netsuite]. I think you’ll see SAP and Oracle simply adapting to that.
FT: Mark Benioff of Salesforce.com would say, though, that the multi-tenanted architecture of a true software-as-a-service company is a very different business to the kind of hosted software Oracle sells.
LE: It wasn’t his idea. And it’s sheer nonsense: most companies don’t want multi-tenant. It’s a convenience for a supplier. Most companies don’t want their data co-mingled with other customers. Small companies will tolerate it.
We make more money selling software-as-a-service than we make just selling software. I’d much rather be in the monthly service charge business, I’ve said this repeatedly. [At present] a huge percentage of our sales are done in the last week of the quarter: all of that goes away, it’s a much better business model.
FT: But would Wall Street appreciate it? The stock market doesn’t seem to value Oracle’s recurring maintenance revenues as highly as your new licence sales.
LE: I guess they don’t think recurring revenue at 90 per cent margins is very valuable. But then, Wall Street thought that Ariba was worth more than Daimler Benz [during the dotcom bubble.] All I can say is, our profit margins are now north of 40 per cent and will continue to grow past 50 [per cent] because more and more of our business will be in this recurring form, the form of subscription renewals rather than software sales.
FT: But won’t your profit margins fall?
LE: We make more margin dollars. In the end, the only thing that really matters is how many billions we make this year. I’d much rather make $10bn at 40 per cent margins than $8bn at 50 per cent margins. I want to make $10bn. Our margin dollars will increase at a higher rate with software-as-a-service. Plus there’s no piracy, and no need to maintain old versions. There are huge advantages to the model.
FT: Will there be a difficult transition from new licence sales to regular recurring subscriptions?
LE: If all people measure is our licence sales, they’re going to be really disappointed in our open source acquisitions, because I can tell them exactly what the open source new licence sales will be next year - it will be zero. On the one hand, people say open source and software-as-a-service are really hot – on the other hand, all they look at is our new licence sales. It’s the kind of absurdity that you find in the world at times.
All I care about is that we keep growing our profits every year. We have a five-year plan to grow our profits at 20 per cent a year. Last year we overshot, we grew at 28 per cent. This year we will grow at 20. We’re growing our profits very, very rapidly.
FT: Is open source going to be disruptive to Oracle?
LE: No. If an open source product gets good enough, we’ll simply take it. Take [the web server software] Apache: once Apache got better than our own web server, we threw it away and took Apache. So the great thing about open source is nobody owns it – a company like Oracle is free to take it for nothing, include it in our products and charge for support, and that’s what we’ll do. So it is not disruptive at all – you have to find places to add value. Once open source gets good enough, competing with it would be insane. Keep in mind it’s not that good in most places yet. We’re a big supporter of Linux. At some point we may embed Linux in all of our products and provide support.
Just like software-as-a-service, we have to be good at it. We don’t have to fight open source, we have to exploit open source. At some point we could very well choose to have Linux as part of the Oracle database server. We certify it, we test it. We could have JBoss as part of our middleware. It costs us nothing. We can do that, IBM can do that, HP can do that – anyone with a large support organisation is free to take that intellectual property and embed it in their own products.
I’ve had this discussion with the CEOs of open source companies. We’ve looked at buying some, some with very high price tags – but since we already have access to all the intellectual property, why wouldn’t we just embed this technology in our technology and provide support.
FT: Yet you have bought an open source database company – what did you buy it for?
LE: The people. If the price is reasonable, and you’re getting a high quality development team – we love the Berkeley DB guys. It’s a great team.
The way open source companies are valued now is interesting. Wall Street looks back at the historic growth rate and extrapolates it out forever, that’s the way it works. It’s kind of funny.
What if IBM were to decide to support Red Hat Linux – what does that do to Red Hat? One of the big problems we have with Red Hat today is, they’re not very good at supporting the customers, so we help them a lot – we want them to be successful, because Red Hat is to some degree our way of competing with Microsoft down at the core level. But they’re a small company and they’re not supporting the customers very well.
FT: What are the arguments against Oracle distributing its own Linux version?
LE: They’re not very strong – now that Red Hat has bought JBoss and competes with us in middleware, we have to relook at the relationship – so does IBM. If Oracle were to have its own Linux distribution, or just provide paid support for Red Hat, that’s one thing – if Oracle and IBM both did it, it’s a whole new world. I don’t think Oracle and IBM want to create a second Microsoft in Red Hat. But you can’t – because Red Hat doesn’t own anything, they own nothing. They couldn’t [become the next Microsoft], they own nothing.
FT: How well has Novell done in becoming a viable competitor to Red Hat? [Encouraged by large technology companies like Oracle and IBM, Novell bought German Linux company SuSe two years ago.]
LE: I would say, not very well. Several of our big customers have switched to Novell because they get better service from Novell. But still, Red Hat competing with a Novell is one thing – Red Hat competing with IBM or Oracle is quite different.
FT: Why didn’t you buy JBoss?
LE: JBoss wanted to sell the company to us. Clearly if we wanted to buy JBoss we’d have bought JBoss. Why didn’t we buy JBoss? Because we don’t have to – if it ever got good enough we’d just take the intellectual property – just like Apache – embed it in our fusion middleware suite, and we’re done. We always have that option available to us – IBM always has that option available to them.
The reason I have a hard time writing checks for billions or hundreds of millions of dollars for things that are open source is that if we could do this, other people could do this too. I don’t see how we could possibly buy Red Hat – IBM would just say, Larry, congratulations, we’re going our own way. They could hire Red Hat people and they’d be in business straight away. So I don’t see how anyone can buy Red Hat, not at anything near these prices, because anyone who feels like taking the code – they have no intellectual property.
We see in China and India, all that stuff is freely available and Red Hat is just cut completely out of the market. I’m not gong to spend $5bn, or $6bn, for something that can just be so completely wiped off the map. They take all the Red Hat code, have their own equivalent of the Red Hat network, and Red Hat gets zero.
So its all very interesting. You can build a sustainable business [in open source], you just can’t charge a lot for it. There’s brand value – there’s real brand – there’s people, and that’s it.
Richard Waters of the Financial Times interviewed Larry Ellison, the chief executive officer of Oracle. The following are excerpts from the interview:
FT: In an interview with the FT four years ago, you predicted an end to the period of disruptive innovation from small technology companies and said that, in a maturing industry, there would be slower growth and a consolidation of power in the hands of the market leaders. However, the software world seems to be awash with disruptive innovation again, in the form of open source software, software-as-a-service, and the Web 2.0 movement. What has changed?
LE: I still think that to tackle the big jobs, the consolidation will continue. Take software-as-a-service. [The stand-alone software-as-a-service ventures] are tiny companies. I do believe in it, Oracle has offered software-as-a-service for some time. I own 5 per cent of Salesforce.com, I was a founding investor. It’s a delivery mechanism for software. I believe, over time, more and more software will be delivered as a service – I totally believe that. I would argue I started the first big software-as-a-service company, [Netsuite]. I think you’ll see SAP and Oracle simply adapting to that.
FT: Mark Benioff of Salesforce.com would say, though, that the multi-tenanted architecture of a true software-as-a-service company is a very different business to the kind of hosted software Oracle sells.
LE: It wasn’t his idea. And it’s sheer nonsense: most companies don’t want multi-tenant. It’s a convenience for a supplier. Most companies don’t want their data co-mingled with other customers. Small companies will tolerate it.
We make more money selling software-as-a-service than we make just selling software. I’d much rather be in the monthly service charge business, I’ve said this repeatedly. [At present] a huge percentage of our sales are done in the last week of the quarter: all of that goes away, it’s a much better business model.
FT: But would Wall Street appreciate it? The stock market doesn’t seem to value Oracle’s recurring maintenance revenues as highly as your new licence sales.
LE: I guess they don’t think recurring revenue at 90 per cent margins is very valuable. But then, Wall Street thought that Ariba was worth more than Daimler Benz [during the dotcom bubble.] All I can say is, our profit margins are now north of 40 per cent and will continue to grow past 50 [per cent] because more and more of our business will be in this recurring form, the form of subscription renewals rather than software sales.
FT: But won’t your profit margins fall?
LE: We make more margin dollars. In the end, the only thing that really matters is how many billions we make this year. I’d much rather make $10bn at 40 per cent margins than $8bn at 50 per cent margins. I want to make $10bn. Our margin dollars will increase at a higher rate with software-as-a-service. Plus there’s no piracy, and no need to maintain old versions. There are huge advantages to the model.
FT: Will there be a difficult transition from new licence sales to regular recurring subscriptions?
LE: If all people measure is our licence sales, they’re going to be really disappointed in our open source acquisitions, because I can tell them exactly what the open source new licence sales will be next year - it will be zero. On the one hand, people say open source and software-as-a-service are really hot – on the other hand, all they look at is our new licence sales. It’s the kind of absurdity that you find in the world at times.
All I care about is that we keep growing our profits every year. We have a five-year plan to grow our profits at 20 per cent a year. Last year we overshot, we grew at 28 per cent. This year we will grow at 20. We’re growing our profits very, very rapidly.
FT: Is open source going to be disruptive to Oracle?
LE: No. If an open source product gets good enough, we’ll simply take it. Take [the web server software] Apache: once Apache got better than our own web server, we threw it away and took Apache. So the great thing about open source is nobody owns it – a company like Oracle is free to take it for nothing, include it in our products and charge for support, and that’s what we’ll do. So it is not disruptive at all – you have to find places to add value. Once open source gets good enough, competing with it would be insane. Keep in mind it’s not that good in most places yet. We’re a big supporter of Linux. At some point we may embed Linux in all of our products and provide support.
Just like software-as-a-service, we have to be good at it. We don’t have to fight open source, we have to exploit open source. At some point we could very well choose to have Linux as part of the Oracle database server. We certify it, we test it. We could have JBoss as part of our middleware. It costs us nothing. We can do that, IBM can do that, HP can do that – anyone with a large support organisation is free to take that intellectual property and embed it in their own products.
I’ve had this discussion with the CEOs of open source companies. We’ve looked at buying some, some with very high price tags – but since we already have access to all the intellectual property, why wouldn’t we just embed this technology in our technology and provide support.
FT: Yet you have bought an open source database company – what did you buy it for?
LE: The people. If the price is reasonable, and you’re getting a high quality development team – we love the Berkeley DB guys. It’s a great team.
The way open source companies are valued now is interesting. Wall Street looks back at the historic growth rate and extrapolates it out forever, that’s the way it works. It’s kind of funny.
What if IBM were to decide to support Red Hat Linux – what does that do to Red Hat? One of the big problems we have with Red Hat today is, they’re not very good at supporting the customers, so we help them a lot – we want them to be successful, because Red Hat is to some degree our way of competing with Microsoft down at the core level. But they’re a small company and they’re not supporting the customers very well.
FT: What are the arguments against Oracle distributing its own Linux version?
LE: They’re not very strong – now that Red Hat has bought JBoss and competes with us in middleware, we have to relook at the relationship – so does IBM. If Oracle were to have its own Linux distribution, or just provide paid support for Red Hat, that’s one thing – if Oracle and IBM both did it, it’s a whole new world. I don’t think Oracle and IBM want to create a second Microsoft in Red Hat. But you can’t – because Red Hat doesn’t own anything, they own nothing. They couldn’t [become the next Microsoft], they own nothing.
FT: How well has Novell done in becoming a viable competitor to Red Hat? [Encouraged by large technology companies like Oracle and IBM, Novell bought German Linux company SuSe two years ago.]
LE: I would say, not very well. Several of our big customers have switched to Novell because they get better service from Novell. But still, Red Hat competing with a Novell is one thing – Red Hat competing with IBM or Oracle is quite different.
FT: Why didn’t you buy JBoss?
LE: JBoss wanted to sell the company to us. Clearly if we wanted to buy JBoss we’d have bought JBoss. Why didn’t we buy JBoss? Because we don’t have to – if it ever got good enough we’d just take the intellectual property – just like Apache – embed it in our fusion middleware suite, and we’re done. We always have that option available to us – IBM always has that option available to them.
The reason I have a hard time writing checks for billions or hundreds of millions of dollars for things that are open source is that if we could do this, other people could do this too. I don’t see how we could possibly buy Red Hat – IBM would just say, Larry, congratulations, we’re going our own way. They could hire Red Hat people and they’d be in business straight away. So I don’t see how anyone can buy Red Hat, not at anything near these prices, because anyone who feels like taking the code – they have no intellectual property.
We see in China and India, all that stuff is freely available and Red Hat is just cut completely out of the market. I’m not gong to spend $5bn, or $6bn, for something that can just be so completely wiped off the map. They take all the Red Hat code, have their own equivalent of the Red Hat network, and Red Hat gets zero.
So its all very interesting. You can build a sustainable business [in open source], you just can’t charge a lot for it. There’s brand value – there’s real brand – there’s people, and that’s it.
Sunday, April 16, 2006
Jeeves—Thriving Organically as a Humble Servant (TEC)
The maturing enterprise applications market should not overlook the lesser-known vendors which deliver the requirements users are increasingly demanding, such as interoperability, or intuitive interfaces.Prominent among these small specialist providers is Jeeves Information Systems AB (JIS), based in Sweden. In essence, Jeeves develops and supplies flexible and technologically advanced business systems. This is meant to enable smarter business practices (bringing to mind the "Jeeves knows the answer before you know the question" motto) for enterprises in the manufacturing, wholesale and retail, and service and maintenance sectors...
Prophet of Oracle’s evolving future (FT)
Sitting in a sparse Japanese pavilion beside a private lake hidden among the wooded hills of northern California, the software industry's second-richest man seems fully in command of his domain.
This is Larry Ellison's personal Xanadu. Designed, he says, to resemble a Japanese village with structures from different parts of the country's history, it has taken five years to plan and 10 to build.
This is Larry Ellison's personal Xanadu. Designed, he says, to resemble a Japanese village with structures from different parts of the country's history, it has taken five years to plan and 10 to build.
Thursday, April 13, 2006
Enterprise Resource Planning for Services, and Professional Services Automation: Where Do You Draw the Line? (TEC)
Since the late nineties, it has been evident that the enterprise resource planning (ERP) vendors that originally serviced the needs of manufacturing organizations have slowly extended their functionality to service the needs of non-manufacturing industries also. By the year 2000, when many of the major ERP implementations for the manufacturing industry had tapered off, tier one ERP vendors, such as SAP and Oracle, had refocused efforts to market their integrated solutions in the greener pastures of service-oriented vertical markets, such as the health care sector, the public sector, and service based businesses. Simultaneously, professional services automation (PSA) solutions appeared, and best-of-breed vendors such as Changepoint (today Compuware) and Evolve (now part of Primavera’s PSA offering) were developing project- and service-oriented functionality. These PSA solutions were aimed at providing the missing pieces linking back-office solutions (typically provided by ERP or accounting vendors) to project management systems, which remain the heart of most professional services organizations (PSOs).
Wednesday, April 12, 2006
Enterprise Resource Planning (ERP) Market to Exceed $21 Billion (ARC Advisory Group)
Dedham, Massachusetts; April 12, 2006: The worldwide market for Enterprise Resource Planning (ERP) solutions continues to grow on the plethora of acquisitions and will exceed $21 billion in 2010. The worldwide market for ERP is expected to grow at a Compounded Annual Growth Rate (CAGR) of 4.8 percent over the next five years. The market was $16.67 billion in 2005 and is forecasted to be over $21 billion in 2010, according to a new ARC Advisory Group study.
Wednesday, April 05, 2006
SAP Fills Its Compliance Gap With Virsa Acquisition Deal (Gartner)
SAP's planned purchase of Virsa Systems will help put compliance at the center of its strategy. But Virsa customers not using SAP products should re-evaluate how Virsa fits in their environments as their contracts expire.
More ERP Consolidation: Intuitive Makes Two Acquisitions (AMR)
The flurry of merger and acquisition activity in the midmarket continues with Intuitive Manufacturing Systems making two recent acquisitions: SupplyWorks and Relevant Business Systems. For those of you unfamiliar with Intuitive, it is a private, .NET-based ERP vendor primarily targeting discrete markets.
Tuesday, April 04, 2006
SAP Acquires Virsa (Line56)
Getting compliant by bringing aboard controls software from partner; building on a good fit, say analysts
Monday, April 03, 2006
SAP Snaps Up Virsa Systems To Enhance Compliance Story (AMR)
Virsa Systems, the business controls compliance vendor that made its name untangling segregation of duties (SOD) issues for SAP SAP
SAP Buys Compliance Firm (Red Herring)
SAP said Monday it bought Virsa Systems, which provides governance, risk, and compliance management software, underscoring compliance software as the latest acquisition trend among larger business software companies.
Thursday, March 30, 2006
Clarifying Oracle's Fusion Strategy (AMR)
Oracle first unveiled its Fusion strategy about 15 months ago at the event that celebrated the conclusion of its PeopleSoft acquisition. Since that time, Oracle’s marketing team has valiantly struggled to refine and clarify the Fusion message, while the internal landscape has been constantly changing. The Fusion name is now also being used for the middleware suite, the overall software architecture, and as a code name for the next generation ERP product. Meanwhile, management has acquired 10 or 11 additional software companies.
Free ERP (Line56)
Here's a list of free enterprise resource planning (ERP) products that could be of big interest to small companies
Saturday, March 25, 2006
SAP Service Marketplace (SAP)
The SAP Service Marketplace contains a variety of internet portals that enable true collaboration among SAP, its customers and partners. These portals offer target group specific content.
Monday, March 20, 2006
SAP MDM Value (Line56)
Rubbermaid explains why good master data management is a requirement for best-in-class manufacturing
Thursday, March 16, 2006
Lawson's ERP upgrade adds SOA capabilities (InfoWorld)
Lawson Release 9 includes improved BI capabilities and BPM tools
More Industry Consolidation as SSA Global Acquires Provia (Gartner)
SSA Global Technologies' purchase of Provia Software indicates market consolidation is in full swing. SSA Global extends its customer base, but the product gains are minimal.Event
Wednesday, March 15, 2006
Software for the Software Company (Line56)
Hosted applications specialist NetSuite has debuted a set of enterprise resource planning (ERP) and customer relationship management (CRM) functionality, topped by dashboards, specifically for software companies.
SAP Safe Passage (Line56)
Arizona Electronic Power Cooperative discusses reasons for going with SAP over rival enterprise applications vendors
Agents in the Supply Chain: New Technology Offers Planning Promise (AMR)
Lift the hood on most supply chain applications, and you tend to find the same linear programming-based engines. ILOG, the France-based leader in linear programming, is most often the brand of choice.
As a mature technology, it is worth asking what alternatives are around, and if these present real opportunities for distinction in the market. While still in an early phase in terms of application development, agent technology offers one such alternative, with often faster, more reactive, more realistic planning, decision support, and simulation.
As a mature technology, it is worth asking what alternatives are around, and if these present real opportunities for distinction in the market. While still in an early phase in terms of application development, agent technology offers one such alternative, with often faster, more reactive, more realistic planning, decision support, and simulation.
Monday, March 13, 2006
SSA Buys Provia (Line56)
Good acquisition following questionable acquisition, says analyst; SCE complements SCM, other enterprise applications
SSA Global Technologies, the company best known for buying a string of enterprise applications vendors (including Baan as well as plenty of others), has now acquired warehouse management specialist Provia. Terms of the deal were not disclosed.
SSA Global Technologies, the company best known for buying a string of enterprise applications vendors (including Baan as well as plenty of others), has now acquired warehouse management specialist Provia. Terms of the deal were not disclosed.
Sunday, March 12, 2006
SAP/R3, Oracle (PeopleSoft), MAPICS, move over. There's a new guy in town. (xperia)
Gene Bonett's company Xperia took the mainframe portion of Apparel Business Systems, the premiere package for apparel developed in the 1970's by Paul Harkins and others, and brought it to the AS/400 platform and with continual enhancements from his 30-person firm of analysts and programmers created a very successful software business for himself. Based in Allentown PA, about 75 miles from Wilkes-Barre where I live, Bonett has taken this leading edge package designed for apparel manufacturers and importers and has recently created a generic ERP package from it with many of the avante garde features that were the hallmark of its success in the apparel industry.
Xperia Takes on Tier One ERP Vendors in the SMB Market (itjungle)
Where do small- and mid-sized businesses find ERP systems when they have outgrown the ones they have or can't afford to maintain the ones they have? There are niche ERP software vendors that know the requirements of a specific industry and have applications that are not very modern; there are large ERP application makers with reputations for not being very supportive or very cost effective for midrange shops. Getting the right fit of function and finances is not easy, but a software company called Xperia Solutions thinks it has what OS/400 shops need.
Thursday, March 09, 2006
Dassault Systemes to Expand PLM Scope With MatrixOne Purchase (Gartner)
Dassault Systemes (DS) has focused more on engineering aspects of product life cycle management (PLM) than product management. This deal will provide more PLM balance, but sales, service and software issues must be addressed.
Wednesday, March 08, 2006
Agassi wants Microsoft more visible than SAP (InfoWorld)
SAP moves ahead with integration of its R/3 ERP system with Microsoft's Office suite
Monday, March 06, 2006
Microsoft To Shift ERP Pricing (CRN)
In a huge shift, Microsoft is moving to per-user pricing for ERP. The goal of the planned transition from per-module pricing is to put its wares on a comparable footing with SAP and Oracle offerings, sources said.
Friday, March 03, 2006
Dassault buys US rival MatrixOne
Dassault Systèmes, the French software group, yesterday agreed to buy MatrixOne, a loss-making US competitor, for $408m in cash.
SAP employees in Germany vote against workers' council (InfoWorld)
Vote may have been swayed by SAP cofounder who warned of possible relocation if council were approved
Thursday, March 02, 2006
Dassault Acquires MatrixOne (Line56)
Consolidation in the product lifecycle management (PLM) space, and emergence of a bigger vendor
Buzzword: PLM
Buzzword: PLM
Wednesday, March 01, 2006
Warehouse Intelligence (Line56)
How Hanson Logistics uses Provia to offer customers detailed information about inventory, orders, and movement
Tuesday, February 28, 2006
SAP Denies Big M&A Plans (Line56)
And disses Oracle into the bargain, expecting more of a challenge from emergent Chinese competition than from its closest actual competitor; a jab at Salesforce.com as well
Friday, February 24, 2006
IBM Positioned in Magic Quadrant for Product Information Management Software (Market Wire)
ARMONK, NY -- (MARKET WIRE) -- 02/24/2006 -- IBM today announced that Gartner, Inc. has positioned IBM in the visionary quadrant in its Magic Quadrant for Product Information Management, 2005.
Thursday, February 23, 2006
Supply Chain Risk Management and the Avian Flu: Is Your Supply Chain Ready? (AMR)
I recently read an article in the New York Times entitled “Bird Flu Detected in Swans in Greece Italy Bulgaria Nigeria Africa Turkey Romania Turkey Turkey Asia
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