FT.com / Technology - Product lifecycle management: Benefits of being streamlined
Product lifecycle management: Benefits of being streamlined
Geoff Nairn
Published: March 14 2007 09:36 | Last updated: March 14 2007 09:36
Product lifecycle management goes way beyond design. Downstream functions such as production and marketing are important, while regulations on recycling and traceability are forcing manufacturers to take an interest in their products after they have been sold.
“PLM is morphing to be much more than just building better tools for engineers,” says Walter Donaldson, general manager of IBM’s PLM business.
The software includes not just computer-aided design but also tools to improve downstream functions, often characterised by disjointed processes and archaic systems.
“A lot of investment in PLM is now based on this downstream impact,” says Mike Burkett, research director at AMR Research, who is credited with popularising the term PLM.
He gives the example of Motorola, which engineers its products to use fewer parts and fewer vendors. “That makes a strategic difference,” he says
In similar fashion, Toyota says it has saved $1,000 on the cost of making each vehicle by standardising commodity components.
PLM makes these types of cost-saving initiative easier, as one of its key functions is to bring together all information on parts and products, which are traditionally spread over many systems.
The strategic difference PLM can make is shown in the aerospace sector.
Analysts say that Boeing’s success in winning orders owes much to its use of “digital tooling” to build its latest aircraft, the 787 Dreamliner.
The Dreamliner project is the first time Boeing has used PLM technology on such a scale, from inception to production and product support.
Its PLM software, from French vendor Dassault Systèmes, cut the time needed to develop the 787 from five years – the time it took to develop its predecessor, the 777 – to four.
In December, workers at Boeing’s factory in Washington state were shown, via a giant screen, a simulation of how the Dreamliner’s myriad parts will come together. The aircraft’s first flight is due this year.
Boeing’s success contrasts with that of its rival Airbus, whose new aircraft, the A380 has hit delays, forcing the European manufacturer to scale back the project.
Airbus also makes heavy use of Dassault’s PLM software but, crucially, different Airbus facilities have been running different versions of it. The resulting incompatibilities meant wiring harnesses designed in one Airbus factory did not fit in the fuselage that was being built in another.
This is the downside of digital manufacturing: one of the benefits is that no prototype is needed, but had Airbus built a physical prototype, the problem might have been spotted sooner and the solution would have been much cheaper and quicker.
“PLM offers a new way of working because you can eliminate prototypes, which are one of the biggest costs at the engineering stage,” says Heinz Mayer, chief engineer for information management at Magna Steyr, an Austrian car maker.
Magna Steyr is best known as the manufacturer of the BMW X3 but it also makes vehicles for other carmakers, including the new Fiat Bravo, which is being built without prototypes.
Magna Steyr has grown rapidly to become the largest carmaker in the world without a brand. Brand-name manufacturers turn to Magna Steyr to turn out low-volume vehicles that would take too long to develop themselves.
The engine and badge are supplied by the brand-name manufacturer, but everything else in cars such as the Saab 93 Cabrio or the BMW X3 has been developed and manufactured by Magna Stehr.
Mr Mayer says its PLM software, supplied by US vendor Agile Software, plays an important role in reducing the time and cost of developing cars, particularly when it comes to the inevitable design changes.
“By linking our PLM system to our production planning and manufacturing systems, we can immediately offer design options to our manufacturing planners,” he says.
This trend to outsource not just manufacturing but also product development is gathering force in many industries.
About 90 per cent of the work on the Boeing 787 has been outsourced and its partners collaborate using the PLM software from Dassault. Airbus is now planning to outsource more work to its “risk-sharing partners”.
Compared with building a new aircraft, the challenges involved in bringing a new toothpaste to market can seem trivial. Yet PLM is also emerging as a powerful tool for the consumer products industry.
In the US, 35,000 consumer products are introduced each year, yet more than 80 per cent of them fail to meet the financial objectives set by the manufacturer, says Daniel Staresinic, who heads the consumer products practice of UGS, a US-based PLM company.
He argues that the use of PLM can reduce the time needed to get a product to market, and so there is a greater chance that the product will live up to expectations.
One trend in the consumer products sector is customising items to the requirements of specific retailers, typically with special packaging or promotions – a toothbrush bundled with the toothpaste, for example.
The design element in these customised products is trivial, but nevertheless can create big headaches for manufacturers who have to decide not just if they can make the customised product but whether they can deliver it on time.
Mr Staresinic says the use of PLM for this application can reduce the decision time by 50 per cent and the “execution time” by 30 per cent or more.
Copyright The Financial Times Limited 2007
Wednesday, March 14, 2007
Friday, March 09, 2007
Will the Real SAP WM Please Stand Up? | AMR Research
Will the Real SAP WM Please Stand Up? | AMR Research
The most recent release of SAP’s supply chain management (SCM) module has many logistics and distribution managers confused. Few SAP customers understand what SAP’s warehouse management system (WM) options are and what the future development strategy is.
The most recent release of SAP’s supply chain management (SCM) module has many logistics and distribution managers confused. Few SAP customers understand what SAP’s warehouse management system (WM) options are and what the future development strategy is.
Monday, March 05, 2007
Hyperion Buy Will Add to Oracle BI and CPM Portfolio
Hyperion Buy Will Add to Oracle BI and CPM Portfolio
Hyperion Buy Will Add to Oracle BI and CPM Portfolio
5 March 2007
Bill Hostmann John E. Van Decker Nigel Rayner
Oracle's pact to buy Hyperion, a vendor of business intelligence and corporate performance management software, won't lead to major short-term product changes. But customers should ask for a road map once the deal closes.
Hyperion Buy Will Add to Oracle BI and CPM Portfolio
5 March 2007
Bill Hostmann John E. Van Decker Nigel Rayner
Oracle's pact to buy Hyperion, a vendor of business intelligence and corporate performance management software, won't lead to major short-term product changes. But customers should ask for a road map once the deal closes.
Friday, March 02, 2007
Oracle-Hyperion: 24 hours later (AMR)
It took 17 months, but we were right: consolidation has come to the business intelligence/performance management market. On September 29, 2005, John Hagerty and I collaborated on, “Handicapping the Next Big Deals,” that predicted the consolidation in the business intelligence/performance management space. In fact, one line looks prescient: “Don’t rule out Oracle-Hyperion.”
Within hours after Oracle announced it was buying Hyperion for $3.3B, John’s analysis was on our website (it’s included in this issue of First Thing Monday). Rather than repeating his work, let’s focus on three questions that warrant more analysis: Why Hyperion? Who’s next? What will SAP do?
Within hours after Oracle announced it was buying Hyperion for $3.3B, John’s analysis was on our website (it’s included in this issue of First Thing Monday). Rather than repeating his work, let’s focus on three questions that warrant more analysis: Why Hyperion? Who’s next? What will SAP do?
Thursday, March 01, 2007
Wednesday, February 28, 2007
Duet Brings New Ease-of-Use to Enterprise Applications > Windows in Financial Services > The Mag
Duet Brings New Ease-of-Use to Enterprise Applications > Windows in Financial Services > The Mag
Microsoft and SAP have answered the prayers of millions of business end users who wanted to leverage the power of SAP business applications through the intuitive interface of their Microsoft desktop.
Duet, a jointly-developed solution, enables business users to access SAP applications like time and expense management, budgeting, travel management, as well as business intelligence applications directly via Microsoft Office.
Microsoft and SAP have answered the prayers of millions of business end users who wanted to leverage the power of SAP business applications through the intuitive interface of their Microsoft desktop.
Duet, a jointly-developed solution, enables business users to access SAP applications like time and expense management, budgeting, travel management, as well as business intelligence applications directly via Microsoft Office.
Monday, February 19, 2007
Saturday, February 17, 2007
Friday, February 16, 2007
Monday, February 12, 2007
Thursday, February 08, 2007
Monday, February 05, 2007
Ariba showcases for financial services
The banking and insurance industries got a close look at Ariba during the spend management vendor’s Financial Services Industry Summit, with customers and prospects gathering to exchange experiences and best practices for spend management in the sector. While the Summit focused on the top three priorities of the financial industry as identified by executives in a recent study—generating meaningful and measurable results, accessing and analyzing spend data, completing projects on time and within budget—the issues extend to many other industries as well with lessons for all.
These priorities continue to reinforce the importance of ongoing procurement transformation. Procurement professionals must focus efforts on automated processed and workflows to free up time so they can put their energy into strategic initiatives that deliver measurable and meaningful results. Such results demand a company use spend management to set strategies and objectives, formulate the plans, and then track the progress. For a detailed look at how financial services are bringing spend under control, see, “Financial Services Offers Spend Management Lessons for All”.
These priorities continue to reinforce the importance of ongoing procurement transformation. Procurement professionals must focus efforts on automated processed and workflows to free up time so they can put their energy into strategic initiatives that deliver measurable and meaningful results. Such results demand a company use spend management to set strategies and objectives, formulate the plans, and then track the progress. For a detailed look at how financial services are bringing spend under control, see, “Financial Services Offers Spend Management Lessons for All”.
Epicor posts milestone (AMR)
Epicor closed 4Q06 and the fiscal year in milestone fashion, with revenue for the quarter topping $100M. Net license revenue was up 26% from 4Q05 to $32.3M. Year-end revenue came in at just more than $384M (up from $289M in 2005). The company added 750 new customers (228 in the fourth quarter alone) and reported $99M in license revenue alone for the year (up from $77M a year before). In fact, the top 10 deals for 4Q came in at $300K from sales of the Vantage and Enterprise products. The largest revenue contribution for the quarter came from maintenance at $38.3M ($150M for all of 2006).
Epicor reported winning back just more than 450 accounts for maintenance alone in the year as well. While this is a small number for a company with more than 20,000 customers and specific percentage ranges for the maintenance agreements were not disclosed, maintenance revenue is a valuable metric for midmarket ERP providers. As the competition in this space continues to increase and battles brew over new deals, maintenance revenue continues to be a valuable annuity.
The success of the firm’s acquisition of CRS Retail Systems in late 2005 has been a particularly bright spot. At the time of the acquisition, Epicor had a minimal presence in retail, and there was a tiny cross-sell potential for CRS into the Epicor customer base, too. However, CRS contributed $14.1M in total revenue in 4Q06 and $69.7M total for all of 2006.
Epicor reported winning back just more than 450 accounts for maintenance alone in the year as well. While this is a small number for a company with more than 20,000 customers and specific percentage ranges for the maintenance agreements were not disclosed, maintenance revenue is a valuable metric for midmarket ERP providers. As the competition in this space continues to increase and battles brew over new deals, maintenance revenue continues to be a valuable annuity.
The success of the firm’s acquisition of CRS Retail Systems in late 2005 has been a particularly bright spot. At the time of the acquisition, Epicor had a minimal presence in retail, and there was a tiny cross-sell potential for CRS into the Epicor customer base, too. However, CRS contributed $14.1M in total revenue in 4Q06 and $69.7M total for all of 2006.
Sunday, February 04, 2007
FTD.de - Köpfe - Nachrichten - SAP baut europäische Führungsspitze um
FTD.de - Köpfe - Nachrichten - SAP baut europäische Führungsspitze um
Der unerwartete Abschied des Technologievorstands Shai Agassi von SAP wirkt sich auch auf die europäische und deutsche Führungsetage des Softwarekonzerns aus. Nicht nur Köpfe, auch Strukturen werden neu verhandelt.
Der unerwartete Abschied des Technologievorstands Shai Agassi von SAP wirkt sich auch auf die europäische und deutsche Führungsetage des Softwarekonzerns aus. Nicht nur Köpfe, auch Strukturen werden neu verhandelt.
Friday, February 02, 2007
Friday, January 26, 2007
Thursday, January 25, 2007
Wednesday, January 24, 2007
Friday, January 19, 2007
Monday, January 15, 2007
Performance Management: Symphony in tune with Metreo (AMR)
Performance Management
Symphony in tune with Metreo
A little less than a year ago, Symphony Technology Group acquired price management vendor Metreo. An early pioneer in the emerging pricing software category, Metreo ran into some financial troubles that resulted in its acquisition by the privately held software investment group. The remainder of 2006 was spent supporting existing customers, enhancing the core product, and positioning the offering to new prospects.
In 4Q06, we published the “AMR Research Active Pricing and Profitability Framework” in which we emphasized that price management can also be used as an important cog in a broader pricing, profitability, and supply planning model. This interrelationship was also apparent to the Metreo management team. Another software asset they managed, SymphonyRPM, has been the foundation for customer-specific sales and operations planning (S&OP) deployments over the last few years. Now the distinct divisions have merged and will go to market as Metreo-Symphony.
We expect to see more details soon from the merged company as it fuses price, profit, and planning into a unified product. Suffice to say, many of us are intrigued by this combination and look forward to hearing more details in the next few months.
Symphony in tune with Metreo
A little less than a year ago, Symphony Technology Group acquired price management vendor Metreo. An early pioneer in the emerging pricing software category, Metreo ran into some financial troubles that resulted in its acquisition by the privately held software investment group. The remainder of 2006 was spent supporting existing customers, enhancing the core product, and positioning the offering to new prospects.
In 4Q06, we published the “AMR Research Active Pricing and Profitability Framework” in which we emphasized that price management can also be used as an important cog in a broader pricing, profitability, and supply planning model. This interrelationship was also apparent to the Metreo management team. Another software asset they managed, SymphonyRPM, has been the foundation for customer-specific sales and operations planning (S&OP) deployments over the last few years. Now the distinct divisions have merged and will go to market as Metreo-Symphony.
We expect to see more details soon from the merged company as it fuses price, profit, and planning into a unified product. Suffice to say, many of us are intrigued by this combination and look forward to hearing more details in the next few months.
Friday, January 12, 2007
Wednesday, January 10, 2007
Tuesday, January 09, 2007
Friday, January 05, 2007
Five Predictions: From Obvious, to Out There, to Outrageous | AMR Research
Five Predictions: From Obvious, to Out There, to Outrageous | AMR Research
First Thing Monday
Monday, January 08, 2007
First Thing Monday
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Five Predictions: From Obvious, to Out There, to Outrageous
by Bruce Richardson
The dawn of a new year brings promise and uncertainty. As we complete the first week of 2007, we have more questions than answers: How will the economy fare? What will we be talking about next year at this time? Which company will Larry Ellison buy next?
With that as a backdrop, here are five predictions for 2007.
1. Strong global economy, though still not evenly distributed
Like you, I’m always in search for clues about the economy. Last week, Werner Brandt, SAP’s CFO, said his company is expecting double-digit revenue growth in 2007, with the United States and Asia being the top two sources of growth. SAP’s optimism is a good omen for the enterprise software market.
This week, we met with the CEO of a well-known industrial automation company. He cited Asia and Latin America as two engines for continued growth. Many of the new Asian opportunities involve infrastructure projects in China and India. As for Latin America, two strong verticals include life sciences and biofuels.
As a too-frequent traveler, I also look to hotel and airfare pricing as a harbinger. Business hotel rates in India are moving up from “expensive” to “obscene.” The same is true in the United States and many parts of Europe and Asia, too. The sense is that this will be a good year for business. Even the airlines are set to report their best years since 2000.
2. SOA moves from “SOA what?” to small pilots in manufacturing and retail
I initially put this list together for an IT executive. When I asked colleagues to add their predictions, one of them warned me of a very strong “anti-SOA” (service-oriented architecture) sentiment at a recent meeting of IT executives. Here is his summary of the conversation:
“People bought ERP packages because they wanted a packaged application. SOA seems to be a step back from that. Companies don’t necessarily want more customization, and this [SOA] seems to be driven by the vendors not the end users. I only mention this because it might be worth considering moving SOA down the list a bit.”
My colleague is right, but it doesn’t matter. My interviews with the largest SAP and Oracle application customers also reveal that they are in little or no hurry to explore the wonders of web services. Nonetheless, I’ll bet that SAP creates a sales incentive program to get to the first 100 or so ESOA accounts. Knowing SAP’s tendencies, Shai Agassi will want to close 2007 with a large base of name accounts in hand in order to demonstrate his company’s SOA leadership over archrival Oracle, which is not expected to ship its Fusion SOA applications until 2008.
3. SAP and Workday fuel model-based craze
I may be the only analyst interested in the model-based approach to creating applications. Nonetheless, I predict that First Thing Monday readers will come to appreciate what the model-based development or definitional services methodology will mean to application development, modifications, upgrades, and maintenance.
When First Thing Monday readers see this or hear me talk about it, the first reaction might be: “Sounds like you’re talking about a 4GL” or fourth-generation language for application development. While space limitations (and reader attention spans) prevent me from rehashing my November column “Dave Duffield’s Workday Ushers in New Era of Apps http://recp.rm05.net/ctt?kn=11&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 here is how two Workday executives explained the difference between model-based and 4GLs:
“Programming has evolved from coding in binary (1GL if you will), through use of Assemblers (2GL), to higher level languages like C, Java, or other “3GLs,” and then to higher level 4GLs like ABAP, PLSQL, or PeopleCode. The next logical step in reducing code was to use a definitional or model-driven approach—using templates to prompt for application definitions, which could be turned into actual processing through either interpretation or code generation.”
There is no 3GL or 4GL code in Workday’s apps. Per the developers, “all parts of the application are defined as metadata, which is interpreted by our Object Management Server (OMS) at runtime.” This led into the discourse on the “19,000 method definitions” or “19,000 pieces of metadata without code” versus tens or hundreds of millions of lines of code in the leading ERP systems. Plus, with the new approach, you’ve severed the need to map all of the application data to a relational database and you can embrace new user interface technologies (such as AJAX) in the browser.
Workday is not alone. As we wrote last month in “SAP: A Tale of Two SOAs http://recp.rm05.net/ctt?kn=15&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 SAP is poised to launch a new set of model-based applications. Jim Shepherd bet me this morning that we could see the launch of SAP’s A1S as early as next month.
Now some of you are thinking, “Poor Bruce has fallen down the object-oriented wormhole.” Not true. This time things are different. I think we’re on the edge of having “do-it-yourself” (DIY) Web 2.0 applications that will be based on a common development framework and metadata.
Now if SOA makes CIOs nervous, DIY may induce apoplexy.
4. Oracle or IBM buy part or all of Ingres
In July 2004, I wrote “The Panic in Software Park http://recp.rm05.net/ctt?kn=9&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 in which I mentioned that I had bet a reporter that “one of the major software vendors would offer at least one of their products in an open source version.” Here were my two scenarios:
Scenario 1: PeopleSoft—PeopleSoft has two major CRM products, its own product developed after the Vantive acquisition, and the YOUcentric software that came with the J.D. Edwards merger. What if PeopleSoft offered the YOUcentric applications for free? Any loss in revenue could be offset by the offer of an annual support contract. The only vendors that could try to respond would be the other ERP vendors. Siebel and salesforce.com couldn’t match this with their own products.
Scenario 2: IBM—What if IBM bought an ERP vendor specializing in the small and midsize business (SMB) market? Rather than cede that market to Microsoft, IBM buys Syspro and offers it as an open source product.
Two and a half years later, I’m back to thinking about open source.
If you attended Larry Ellison’s keynote at the recent Oracle OpenWorld, you wondered why Oracle chose to launch an attack on the much-smaller Red Hat. After the event, I speculated that it might have been a pre-emptive strike on Microsoft against the new Vista operating environment or an attempt to launch a stack war on SAP.
One industry luminary said he believed everything Oracle does is an attempt to hurt IBM Software Group. He argued that the acquisitions of PeopleSoft (and JD Edwards by proxy) and Seibel was an attempt to reduce the oxygen to WebSphere and DB2 by eliminating its largest software partners. All that was missing was film of the man with the umbrella on the grassy knoll.
Assuming that my friend is right, what might Oracle do? How about this: Oracle has two very large targets for database, its existing base (especially very large organizations) and OEM customers. Now, I’m not a database expert, but I’d bet that customers with a large investment in Oracle database technology have little incentive to move to DB2 or an open source database. I’m guessing that switching costs and/or retraining might make this a non-starter.
If you look at the OEM segment, archrival SAP would do nearly anything to help its customers get off of the Oracle database. Again, it’s hard to envision that they would move. First-time customers, on the other hand, might be very amenable to mySQL or other offerings.
What if Oracle were to invest in or acquire Ingres, the self-described “business open source database”? Ingres has 10,000 customers and partners. One of the newest partners is Infor, the third-largest ERP vendor. Last month, Ingres said it would be providing database technology to Infor for one of its Adage ERP product line. Infor has 70,000 customers using software the company acquired via Baan, MAPICS, Marcam, and SSA. While the relationship with Infor is with the much smaller Adage customer base, Oracle would love to lure all of Infor’s ERP infrastructure business away from IBM.
Or, IBM gets to Ingres first.
5. U.S. government outlaws use of flash memory sticks
A few months ago I met with the founder of Verdasys, a small Boston area company specializing in security software. Here’s the premise: most companies have limited appeal to prevent the unwanted dissemination or theft of confidential data or intellectual property. A disgruntled employee (or entrepreneurial supplier) may cut-and-paste sensitive data to an Excel spreadsheet, e-mail it to a Gmail account, print it, fax it, or copy it to a memory stick or disk.
Verdasys’ Digital Guardian prevents this. The software deploys a number of safeguards including employee warnings, alerts, denial of access, and unexpected encryption of the targeted data.
Am I overreacting to the potential threat? During my recent swing through India, the cover story of Outlook, a weekly news magazine with 1.5 million readers, was entitled “India’s Top Secrets Sold.” According to the article, an Indian commander allegedly copied thousands of pages of military procurement plans from the ministry of defense on eight memory sticks, and gave them to an arms dealer who provided them to foreign weapons firms.
As it turns out, some of the Indian firms we visited have sealed the USB drives on employee laptops to prevent this type of activity from occurring.
Data theft or loss is not an India phenomenon. In the last year, I have received letters from my local newspaper and my college alma mater alerting me that my personal data has been compromised. I’m not saying Verdasys or similar tools could have stopped this, but looking for software solutions seems like a smarter approach than a government ban.
Your top predictions here
I initially started the list with 10 predictions, but it was already too long. Maybe I’ll add the other five next week. A better idea may be to solicit your 2007 predictions or reactions to my list—brichardson@amrresearch.com.
http://recp.rm05.net/ctt?kn=5&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1
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In Memoriam: Sam Starr
by Bruce Richardson
At 8:02 a.m.on January 2 I received a phone call from a friend at Sterling Commerce calling to tell us that Sam Starr, Sterling’s president and CEO, had passed away. He was 47.
I first met Sam 18 months ago at the Enterprise 2005 conference. He was a panelist on an M&A session that I was asked to moderate. My first impression of the Brooklyn-born Starr was that he was smart, funny, and focused. We became instant friends.
I last saw Sam a few months ago when he was in our office. I interrupted a briefing he was providing to our research team to make sure that he had a chance to meet Tony Friscia, our Brooklyn-born founder and CEO. They also became immediate friends.
Sam leaves his wife, Mary Ellen, and six children. Our thoughts go out to them on their loss. He will be sorely missed.
http://recp.rm05.net/ctt?kn=12&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1
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This week’s must-read news
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ERP
Oracle posts 2Q
Oracle’s results for its second quarter ending November 30 show total GAAP revenue of $4.2B, up 26% over the same period last year. For the applications business, the closely-watched new license revenue is $340M, up 28% (25% in constant currencies). At first glance, applications license performance was very strong. However, we were caught by surprise when president and CFO Safra Catz said that if you subtract the revenue from Siebel (acquisition was completed last January), i-flex solutions (closed last December), and Portal Software (closed in July), the rest of the application suite grew only 1% over the year earlier period. Siebel software generated $59M in new license sales, while i-flex added $10M. Oracle executives attributed the slower organic growth to “sales execution” issues, particularly in the United States, where several deals failed to close as expected. Investors got at least two pieces of good news: a strong pipeline and growing success in retail and telco. For more on Oracle’s quarter, see “Oracle’s App Licenses Up 28% Though Organic Sales Nearly Flat” http://recp.rm05.net/ctt?kn=1&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1. We’ll also be talking to Oracle President Charles Phillips this month and hope to have more detail on a pending deal with Wal-Mart reportedly worth more than $10M and the outlook for 2007.
Customer Management
RightNow Plans for Later
RightNow Technologies pre-announced preliminary results for the quarter and year end. The company expects Q4 revenue of $28M (missing consensus expectations of $31M) and earnings below previous guidance of 2 cents per share to break even. However, Q4 bookings are expected to come in at $41M, which would result in about 50% growth between the full year 2005 and 2006.
CEO Greg Gianforte blamed the revenue and earnings miss on a continued shift to subscription-based recurring revenue agreements from perpetual licenses, noting one particularly large deal forecast as perpetual that came in as a subscription deal. Most other SaaS CRM vendors, such as salesforce.com, offer only the subscription model, charging customers a per-user, per-month fee.
The subscription-based model is better for RightNow in the long term, since hosting and support are continually funded by customers. The company has not stated it will completely do away with the perpetual model, but doing so would likely be good for investors as well as customers into the future. However, this demonstrates how difficult it may be for public software companies that have historically sold perpetual licenses to make the shift to the recurring revenue model of SaaS. For more on RightNow’s pre-announcement and how this shift in models may affect others, see “RightNow Bites Bullet Now for Longer Term Security” http://recp.rm05.net/ctt?kn=6&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
salesforce.com opens AppStore
salesforce.com recently unveiled its AppStore vision and monetization strategy. For the zero-touch sales model for AppExchange partners, salesforce.com will manage the marketing, selling, invoicing, delivery, and payment of partner products through the AppExchange, so integration is already assured. Today more than 430 applications from 230 partners are available. These range from a gamut of customer-facing applications—sales, marketing, service and support, partner management, and analytics—to financial services, finance and accounting, human resources, tools and utilities, and vertical solutions.
Whether these programs generate much revenue for salesforce.com is hard to say. One executive said that AppExchange has fueled a “$100M economy... and growing,” referring to the vendor sales generated by that marketplace. For a more detailed look at AppStore and what it means to the larger applications market, see “Inside salesforce.com’s New AppStore” http://recp.rm05.net/ctt?kn=10&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Application Infrastructure
Cognos shows momentum
As Cognos heads into the final lap for FY07 (ending February 2007), it put up some pretty solid numbers for 3Q07 that provide some much-needed momentum. The company posted total quarterly turnover of $248M, with license revenue of $94M, up 17% and 24% respectively from 3Q06.
The firm had been buffeted by an SEC investigation earlier this year—now cleared with no financial impact—as well as restructuring activities earlier this quarter. These were expected to affect company performance 3Q07, but didn’t seem to in the final analysis.
As we reported earlier, the company has a clear vision of what it needs to accomplish and has its collective down, executing through to the finish line. See “A Conversation With Cognos” http://recp.rm05.net/ctt?kn=13&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 for more on our opinion of the firm’s prospects.
IDS Scheer offers SAP BI answers
SAP Business Intelligence (BI) is a hot topic in the SAP customer base. Customer inquiry is high as companies plan 2007 projects, and it’s an ongoing topic of discussion in SAP Forum groups. Process modeling vendor IDS Scheer now offers a product to assist companies in documenting the transformation steps from transaction data to Business Warehouse (BW) InfoCubes.
ARIS BI Modeler extracts the data flows and structures from the SAP BI system and remodels them in a visual display that integrates with the ARIS repository for business process. Today, it is only one direction—from SAP to ARIS—but the company expects this to be bidirectional later in 2007.
Buyers consistently report that it’s extremely difficult to find trained resources to assist in deployments of SAP BI. Earlier this year, we wrote about the demand-supply gap for SAP BI-literate resources (see “Addressing the SAP Skills Crunch: Handicapping BW Consultants” http://recp.rm05.net/ctt?kn=2&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1. We discovered that IDS Scheer also has a small but highly experienced consulting staff to assist in BI/BW implementation, regardless of release level. With an average of eight years SAP experience and more than five years BW experience, this becomes another source for these valuable resources.
Business Objects gains Nsite
Business intelligence/performance management (BI/PM) vendor Business Objects has acquired software-as-a-service (SaaS) development platform vendor Nsite to boost its capacity to develop and market on-demand products in 2007. Nsite fields an on-demand platform to create transaction processing applications and related dashboards as well as some prebuilt applications designed with workflow and approval processes in mind.
Business Objects is looking to flesh out its SaaS strategy with a three-pronged approach (with some parts already in place) that capitalizes on the burgeoning demand for SaaS-based products among small and midmarket customers. Although we see little difference in demand for large-scale buyers, the company will not immediately pursue that segment. These lines include the following areas: on-demand business applications, on-demand BI, on-demand business information.
Business Objects has an opportunity to capitalize on a rapidly emerging demand for business analytics in the burgeoning SaaS applications space. Most of the SaaS application vendors are currently preoccupied with battling the notion that the multitenancy delivery model has limitations with regard to integration and customization, and therefore are leaving analytics as a future endeavor. As SaaS usage broadens, however, the need for better analytics will increase almost exponentially. More detail on this deal and what it entails can be found in “A Small Acquisition Fuels Business Objects' SaaS Strategy” http://recp.rm05.net/ctt?kn=3&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Production Innovation
IBM builds a framework
IBM PLM is expanding the breadth of its application and services in PLM, recently launching the IBM Product Development Integration Framework (PDIF). PDIF builds off the IBM SOA WebSphere framework to target the complexities of large product development companies. IBM PLM has found 20 years of success as a strategic partner delivering the Dassault Systemes applications, and the PDIF is intended to broaden support for PLM processes that span further across multiple applications and business silos. The moves come as IBM PLM gets moved into the $18B IBM Software Group. IBM PLM is now assembling all its software applications, hardware, business partners, and services to address an organization’s PLM needs.
The challenge for manufacturers has been knowing with which part of IBM to engage. Many large global manufacturing companies will welcome this one-stop shop to solve their NPI challenges. However, many manufacturers seek to delineate the software decision from the services partnership. IBM PLM will need to clarify further the packaged software portions of the PDIF to help this audience understand the packaged applications versus the implementation and business transformation services. For more on IBM’s PLM plans and PDIF, see “IBM Introduces the Product Development Integration Framework” http://recp.rm05.net/ctt?kn=8&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Retail
VCs love retail
Retailers and retail software vendors were heavily wooed by venture capital investors last year, and 2007 is shaping up to be no different. The new technologies will be aimed at helping retailers sense and respond to consumer demand and deliver a seamless cross-channel shopping experience.
In our early coverage on this topic, “Private Equity Funds Targeting Retailers and Retail Software http://recp.rm05.net/ctt?kn=17&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 we said that if the pace of private equity activity continued, this year’s total would break the record $177.9B raised in 2000. According to Private Equity Analyst, between January and September 2006, private equity firms raised a staggering $172.2B in 253 funds (the six largest funds have raised 30% of the total). This is 72% more than the year-ago level and 6% above the $162.5B in total capital raised in 2005. Of the $172.2B, buyout funds have raised $118.5B, and venture capital firms have raised $21.8B. While the venture level year to date is considerably below the 2000 record of more than $81B, it exceeds the 2005 total. If these firms raise the $57B in 4Q06 that they have averaged in the first three quarters, then 2006 capital raising could reach close to $230B.
While going public has advantages, it also forces the company to operate in the public eye. Communicating with Wall Street and investors often diverts management time and attention. So, many retailers are going private, which allows them to concentrate on fixing problems without public scrutiny. For a detailed look at private equities activities in retail see, “Private Equity Investments in Retailers Will Continue To Be Blistering” http://recp.rm05.net/ctt?kn=18&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 and “VC Investment in Retail Software Vendors Should Remain Strong” http://recp.rm05.net/ctt?kn=14&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Market Roundup
Taking stock of the Software 60
Technology stock seems to be a pretty good bet, provided you put your money on the right company. AMR Research’s annual list of stock performance for the 60 major software companies we cover shows an arithmetic average return of 16.7% at calendar year’s end. Not a bad return when compared to the Dow Jones Industrial Average of 16.3%, S&P 500 Index return of 13.6%, and NASDAQ growth of 9.5%. Here’s the full list ranked in order of performance.
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Research and Advice That Matter
AMR Research is the No. 1 advisory firm focused on the intersection of business processes with supply chain and enterprise technologies. Founded in 1986, AMR Research provides subscription advisory services and facilitated executive peer forums to operations and IT executives in the consumer products, life sciences, manufacturing, and retail industries. More information is available at http://recp.rm05.net/ctt?kn=4&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Copyright 2007 AMR Research, Inc. All Rights Reserved.
AMR Research is a registered trademark of AMR Research, Inc.
Contents may not be reproduced in whole or in part without written permission of the publisher.
First Thing Monday
Monday, January 08, 2007
First Thing Monday
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Five Predictions: From Obvious, to Out There, to Outrageous
by Bruce Richardson
The dawn of a new year brings promise and uncertainty. As we complete the first week of 2007, we have more questions than answers: How will the economy fare? What will we be talking about next year at this time? Which company will Larry Ellison buy next?
With that as a backdrop, here are five predictions for 2007.
1. Strong global economy, though still not evenly distributed
Like you, I’m always in search for clues about the economy. Last week, Werner Brandt, SAP’s CFO, said his company is expecting double-digit revenue growth in 2007, with the United States and Asia being the top two sources of growth. SAP’s optimism is a good omen for the enterprise software market.
This week, we met with the CEO of a well-known industrial automation company. He cited Asia and Latin America as two engines for continued growth. Many of the new Asian opportunities involve infrastructure projects in China and India. As for Latin America, two strong verticals include life sciences and biofuels.
As a too-frequent traveler, I also look to hotel and airfare pricing as a harbinger. Business hotel rates in India are moving up from “expensive” to “obscene.” The same is true in the United States and many parts of Europe and Asia, too. The sense is that this will be a good year for business. Even the airlines are set to report their best years since 2000.
2. SOA moves from “SOA what?” to small pilots in manufacturing and retail
I initially put this list together for an IT executive. When I asked colleagues to add their predictions, one of them warned me of a very strong “anti-SOA” (service-oriented architecture) sentiment at a recent meeting of IT executives. Here is his summary of the conversation:
“People bought ERP packages because they wanted a packaged application. SOA seems to be a step back from that. Companies don’t necessarily want more customization, and this [SOA] seems to be driven by the vendors not the end users. I only mention this because it might be worth considering moving SOA down the list a bit.”
My colleague is right, but it doesn’t matter. My interviews with the largest SAP and Oracle application customers also reveal that they are in little or no hurry to explore the wonders of web services. Nonetheless, I’ll bet that SAP creates a sales incentive program to get to the first 100 or so ESOA accounts. Knowing SAP’s tendencies, Shai Agassi will want to close 2007 with a large base of name accounts in hand in order to demonstrate his company’s SOA leadership over archrival Oracle, which is not expected to ship its Fusion SOA applications until 2008.
3. SAP and Workday fuel model-based craze
I may be the only analyst interested in the model-based approach to creating applications. Nonetheless, I predict that First Thing Monday readers will come to appreciate what the model-based development or definitional services methodology will mean to application development, modifications, upgrades, and maintenance.
When First Thing Monday readers see this or hear me talk about it, the first reaction might be: “Sounds like you’re talking about a 4GL” or fourth-generation language for application development. While space limitations (and reader attention spans) prevent me from rehashing my November column “Dave Duffield’s Workday Ushers in New Era of Apps http://recp.rm05.net/ctt?kn=11&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 here is how two Workday executives explained the difference between model-based and 4GLs:
“Programming has evolved from coding in binary (1GL if you will), through use of Assemblers (2GL), to higher level languages like C, Java, or other “3GLs,” and then to higher level 4GLs like ABAP, PLSQL, or PeopleCode. The next logical step in reducing code was to use a definitional or model-driven approach—using templates to prompt for application definitions, which could be turned into actual processing through either interpretation or code generation.”
There is no 3GL or 4GL code in Workday’s apps. Per the developers, “all parts of the application are defined as metadata, which is interpreted by our Object Management Server (OMS) at runtime.” This led into the discourse on the “19,000 method definitions” or “19,000 pieces of metadata without code” versus tens or hundreds of millions of lines of code in the leading ERP systems. Plus, with the new approach, you’ve severed the need to map all of the application data to a relational database and you can embrace new user interface technologies (such as AJAX) in the browser.
Workday is not alone. As we wrote last month in “SAP: A Tale of Two SOAs http://recp.rm05.net/ctt?kn=15&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 SAP is poised to launch a new set of model-based applications. Jim Shepherd bet me this morning that we could see the launch of SAP’s A1S as early as next month.
Now some of you are thinking, “Poor Bruce has fallen down the object-oriented wormhole.” Not true. This time things are different. I think we’re on the edge of having “do-it-yourself” (DIY) Web 2.0 applications that will be based on a common development framework and metadata.
Now if SOA makes CIOs nervous, DIY may induce apoplexy.
4. Oracle or IBM buy part or all of Ingres
In July 2004, I wrote “The Panic in Software Park http://recp.rm05.net/ctt?kn=9&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 in which I mentioned that I had bet a reporter that “one of the major software vendors would offer at least one of their products in an open source version.” Here were my two scenarios:
Scenario 1: PeopleSoft—PeopleSoft has two major CRM products, its own product developed after the Vantive acquisition, and the YOUcentric software that came with the J.D. Edwards merger. What if PeopleSoft offered the YOUcentric applications for free? Any loss in revenue could be offset by the offer of an annual support contract. The only vendors that could try to respond would be the other ERP vendors. Siebel and salesforce.com couldn’t match this with their own products.
Scenario 2: IBM—What if IBM bought an ERP vendor specializing in the small and midsize business (SMB) market? Rather than cede that market to Microsoft, IBM buys Syspro and offers it as an open source product.
Two and a half years later, I’m back to thinking about open source.
If you attended Larry Ellison’s keynote at the recent Oracle OpenWorld, you wondered why Oracle chose to launch an attack on the much-smaller Red Hat. After the event, I speculated that it might have been a pre-emptive strike on Microsoft against the new Vista operating environment or an attempt to launch a stack war on SAP.
One industry luminary said he believed everything Oracle does is an attempt to hurt IBM Software Group. He argued that the acquisitions of PeopleSoft (and JD Edwards by proxy) and Seibel was an attempt to reduce the oxygen to WebSphere and DB2 by eliminating its largest software partners. All that was missing was film of the man with the umbrella on the grassy knoll.
Assuming that my friend is right, what might Oracle do? How about this: Oracle has two very large targets for database, its existing base (especially very large organizations) and OEM customers. Now, I’m not a database expert, but I’d bet that customers with a large investment in Oracle database technology have little incentive to move to DB2 or an open source database. I’m guessing that switching costs and/or retraining might make this a non-starter.
If you look at the OEM segment, archrival SAP would do nearly anything to help its customers get off of the Oracle database. Again, it’s hard to envision that they would move. First-time customers, on the other hand, might be very amenable to mySQL or other offerings.
What if Oracle were to invest in or acquire Ingres, the self-described “business open source database”? Ingres has 10,000 customers and partners. One of the newest partners is Infor, the third-largest ERP vendor. Last month, Ingres said it would be providing database technology to Infor for one of its Adage ERP product line. Infor has 70,000 customers using software the company acquired via Baan, MAPICS, Marcam, and SSA. While the relationship with Infor is with the much smaller Adage customer base, Oracle would love to lure all of Infor’s ERP infrastructure business away from IBM.
Or, IBM gets to Ingres first.
5. U.S. government outlaws use of flash memory sticks
A few months ago I met with the founder of Verdasys, a small Boston area company specializing in security software. Here’s the premise: most companies have limited appeal to prevent the unwanted dissemination or theft of confidential data or intellectual property. A disgruntled employee (or entrepreneurial supplier) may cut-and-paste sensitive data to an Excel spreadsheet, e-mail it to a Gmail account, print it, fax it, or copy it to a memory stick or disk.
Verdasys’ Digital Guardian prevents this. The software deploys a number of safeguards including employee warnings, alerts, denial of access, and unexpected encryption of the targeted data.
Am I overreacting to the potential threat? During my recent swing through India, the cover story of Outlook, a weekly news magazine with 1.5 million readers, was entitled “India’s Top Secrets Sold.” According to the article, an Indian commander allegedly copied thousands of pages of military procurement plans from the ministry of defense on eight memory sticks, and gave them to an arms dealer who provided them to foreign weapons firms.
As it turns out, some of the Indian firms we visited have sealed the USB drives on employee laptops to prevent this type of activity from occurring.
Data theft or loss is not an India phenomenon. In the last year, I have received letters from my local newspaper and my college alma mater alerting me that my personal data has been compromised. I’m not saying Verdasys or similar tools could have stopped this, but looking for software solutions seems like a smarter approach than a government ban.
Your top predictions here
I initially started the list with 10 predictions, but it was already too long. Maybe I’ll add the other five next week. A better idea may be to solicit your 2007 predictions or reactions to my list—brichardson@amrresearch.com.
http://recp.rm05.net/ctt?kn=5&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1
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In Memoriam: Sam Starr
by Bruce Richardson
At 8:02 a.m.on January 2 I received a phone call from a friend at Sterling Commerce calling to tell us that Sam Starr, Sterling’s president and CEO, had passed away. He was 47.
I first met Sam 18 months ago at the Enterprise 2005 conference. He was a panelist on an M&A session that I was asked to moderate. My first impression of the Brooklyn-born Starr was that he was smart, funny, and focused. We became instant friends.
I last saw Sam a few months ago when he was in our office. I interrupted a briefing he was providing to our research team to make sure that he had a chance to meet Tony Friscia, our Brooklyn-born founder and CEO. They also became immediate friends.
Sam leaves his wife, Mary Ellen, and six children. Our thoughts go out to them on their loss. He will be sorely missed.
http://recp.rm05.net/ctt?kn=12&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1
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This week’s must-read news
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ERP
Oracle posts 2Q
Oracle’s results for its second quarter ending November 30 show total GAAP revenue of $4.2B, up 26% over the same period last year. For the applications business, the closely-watched new license revenue is $340M, up 28% (25% in constant currencies). At first glance, applications license performance was very strong. However, we were caught by surprise when president and CFO Safra Catz said that if you subtract the revenue from Siebel (acquisition was completed last January), i-flex solutions (closed last December), and Portal Software (closed in July), the rest of the application suite grew only 1% over the year earlier period. Siebel software generated $59M in new license sales, while i-flex added $10M. Oracle executives attributed the slower organic growth to “sales execution” issues, particularly in the United States, where several deals failed to close as expected. Investors got at least two pieces of good news: a strong pipeline and growing success in retail and telco. For more on Oracle’s quarter, see “Oracle’s App Licenses Up 28% Though Organic Sales Nearly Flat” http://recp.rm05.net/ctt?kn=1&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1. We’ll also be talking to Oracle President Charles Phillips this month and hope to have more detail on a pending deal with Wal-Mart reportedly worth more than $10M and the outlook for 2007.
Customer Management
RightNow Plans for Later
RightNow Technologies pre-announced preliminary results for the quarter and year end. The company expects Q4 revenue of $28M (missing consensus expectations of $31M) and earnings below previous guidance of 2 cents per share to break even. However, Q4 bookings are expected to come in at $41M, which would result in about 50% growth between the full year 2005 and 2006.
CEO Greg Gianforte blamed the revenue and earnings miss on a continued shift to subscription-based recurring revenue agreements from perpetual licenses, noting one particularly large deal forecast as perpetual that came in as a subscription deal. Most other SaaS CRM vendors, such as salesforce.com, offer only the subscription model, charging customers a per-user, per-month fee.
The subscription-based model is better for RightNow in the long term, since hosting and support are continually funded by customers. The company has not stated it will completely do away with the perpetual model, but doing so would likely be good for investors as well as customers into the future. However, this demonstrates how difficult it may be for public software companies that have historically sold perpetual licenses to make the shift to the recurring revenue model of SaaS. For more on RightNow’s pre-announcement and how this shift in models may affect others, see “RightNow Bites Bullet Now for Longer Term Security” http://recp.rm05.net/ctt?kn=6&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
salesforce.com opens AppStore
salesforce.com recently unveiled its AppStore vision and monetization strategy. For the zero-touch sales model for AppExchange partners, salesforce.com will manage the marketing, selling, invoicing, delivery, and payment of partner products through the AppExchange, so integration is already assured. Today more than 430 applications from 230 partners are available. These range from a gamut of customer-facing applications—sales, marketing, service and support, partner management, and analytics—to financial services, finance and accounting, human resources, tools and utilities, and vertical solutions.
Whether these programs generate much revenue for salesforce.com is hard to say. One executive said that AppExchange has fueled a “$100M economy... and growing,” referring to the vendor sales generated by that marketplace. For a more detailed look at AppStore and what it means to the larger applications market, see “Inside salesforce.com’s New AppStore” http://recp.rm05.net/ctt?kn=10&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Application Infrastructure
Cognos shows momentum
As Cognos heads into the final lap for FY07 (ending February 2007), it put up some pretty solid numbers for 3Q07 that provide some much-needed momentum. The company posted total quarterly turnover of $248M, with license revenue of $94M, up 17% and 24% respectively from 3Q06.
The firm had been buffeted by an SEC investigation earlier this year—now cleared with no financial impact—as well as restructuring activities earlier this quarter. These were expected to affect company performance 3Q07, but didn’t seem to in the final analysis.
As we reported earlier, the company has a clear vision of what it needs to accomplish and has its collective down, executing through to the finish line. See “A Conversation With Cognos” http://recp.rm05.net/ctt?kn=13&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 for more on our opinion of the firm’s prospects.
IDS Scheer offers SAP BI answers
SAP Business Intelligence (BI) is a hot topic in the SAP customer base. Customer inquiry is high as companies plan 2007 projects, and it’s an ongoing topic of discussion in SAP Forum groups. Process modeling vendor IDS Scheer now offers a product to assist companies in documenting the transformation steps from transaction data to Business Warehouse (BW) InfoCubes.
ARIS BI Modeler extracts the data flows and structures from the SAP BI system and remodels them in a visual display that integrates with the ARIS repository for business process. Today, it is only one direction—from SAP to ARIS—but the company expects this to be bidirectional later in 2007.
Buyers consistently report that it’s extremely difficult to find trained resources to assist in deployments of SAP BI. Earlier this year, we wrote about the demand-supply gap for SAP BI-literate resources (see “Addressing the SAP Skills Crunch: Handicapping BW Consultants” http://recp.rm05.net/ctt?kn=2&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1. We discovered that IDS Scheer also has a small but highly experienced consulting staff to assist in BI/BW implementation, regardless of release level. With an average of eight years SAP experience and more than five years BW experience, this becomes another source for these valuable resources.
Business Objects gains Nsite
Business intelligence/performance management (BI/PM) vendor Business Objects has acquired software-as-a-service (SaaS) development platform vendor Nsite to boost its capacity to develop and market on-demand products in 2007. Nsite fields an on-demand platform to create transaction processing applications and related dashboards as well as some prebuilt applications designed with workflow and approval processes in mind.
Business Objects is looking to flesh out its SaaS strategy with a three-pronged approach (with some parts already in place) that capitalizes on the burgeoning demand for SaaS-based products among small and midmarket customers. Although we see little difference in demand for large-scale buyers, the company will not immediately pursue that segment. These lines include the following areas: on-demand business applications, on-demand BI, on-demand business information.
Business Objects has an opportunity to capitalize on a rapidly emerging demand for business analytics in the burgeoning SaaS applications space. Most of the SaaS application vendors are currently preoccupied with battling the notion that the multitenancy delivery model has limitations with regard to integration and customization, and therefore are leaving analytics as a future endeavor. As SaaS usage broadens, however, the need for better analytics will increase almost exponentially. More detail on this deal and what it entails can be found in “A Small Acquisition Fuels Business Objects' SaaS Strategy” http://recp.rm05.net/ctt?kn=3&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Production Innovation
IBM builds a framework
IBM PLM is expanding the breadth of its application and services in PLM, recently launching the IBM Product Development Integration Framework (PDIF). PDIF builds off the IBM SOA WebSphere framework to target the complexities of large product development companies. IBM PLM has found 20 years of success as a strategic partner delivering the Dassault Systemes applications, and the PDIF is intended to broaden support for PLM processes that span further across multiple applications and business silos. The moves come as IBM PLM gets moved into the $18B IBM Software Group. IBM PLM is now assembling all its software applications, hardware, business partners, and services to address an organization’s PLM needs.
The challenge for manufacturers has been knowing with which part of IBM to engage. Many large global manufacturing companies will welcome this one-stop shop to solve their NPI challenges. However, many manufacturers seek to delineate the software decision from the services partnership. IBM PLM will need to clarify further the packaged software portions of the PDIF to help this audience understand the packaged applications versus the implementation and business transformation services. For more on IBM’s PLM plans and PDIF, see “IBM Introduces the Product Development Integration Framework” http://recp.rm05.net/ctt?kn=8&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Retail
VCs love retail
Retailers and retail software vendors were heavily wooed by venture capital investors last year, and 2007 is shaping up to be no different. The new technologies will be aimed at helping retailers sense and respond to consumer demand and deliver a seamless cross-channel shopping experience.
In our early coverage on this topic, “Private Equity Funds Targeting Retailers and Retail Software http://recp.rm05.net/ctt?kn=17&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 we said that if the pace of private equity activity continued, this year’s total would break the record $177.9B raised in 2000. According to Private Equity Analyst, between January and September 2006, private equity firms raised a staggering $172.2B in 253 funds (the six largest funds have raised 30% of the total). This is 72% more than the year-ago level and 6% above the $162.5B in total capital raised in 2005. Of the $172.2B, buyout funds have raised $118.5B, and venture capital firms have raised $21.8B. While the venture level year to date is considerably below the 2000 record of more than $81B, it exceeds the 2005 total. If these firms raise the $57B in 4Q06 that they have averaged in the first three quarters, then 2006 capital raising could reach close to $230B.
While going public has advantages, it also forces the company to operate in the public eye. Communicating with Wall Street and investors often diverts management time and attention. So, many retailers are going private, which allows them to concentrate on fixing problems without public scrutiny. For a detailed look at private equities activities in retail see, “Private Equity Investments in Retailers Will Continue To Be Blistering” http://recp.rm05.net/ctt?kn=18&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1 and “VC Investment in Retail Software Vendors Should Remain Strong” http://recp.rm05.net/ctt?kn=14&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Market Roundup
Taking stock of the Software 60
Technology stock seems to be a pretty good bet, provided you put your money on the right company. AMR Research’s annual list of stock performance for the 60 major software companies we cover shows an arithmetic average return of 16.7% at calendar year’s end. Not a bad return when compared to the Dow Jones Industrial Average of 16.3%, S&P 500 Index return of 13.6%, and NASDAQ growth of 9.5%. Here’s the full list ranked in order of performance.
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Research and Advice That Matter
AMR Research is the No. 1 advisory firm focused on the intersection of business processes with supply chain and enterprise technologies. Founded in 1986, AMR Research provides subscription advisory services and facilitated executive peer forums to operations and IT executives in the consumer products, life sciences, manufacturing, and retail industries. More information is available at http://recp.rm05.net/ctt?kn=4&m=471271&r=MzI0MzIyNTQwOAS2&b=2&j=NzU3NjE3ODkS1&mt=1.
Copyright 2007 AMR Research, Inc. All Rights Reserved.
AMR Research is a registered trademark of AMR Research, Inc.
Contents may not be reproduced in whole or in part without written permission of the publisher.
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.
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