FT.com / Companies / IT - Icahn criticises BEA over Oracle bid
Icahn criticises BEA over Oracle bid
By Richard Waters in San Francisco
Published: October 27 2007 03:30 | Last updated: October 27 2007 03:30
Activist investor Carl Icahn turned up the heat on BEA Systems on Friday, pressing the embattled software company to let shareholders decide on a $6.7bn bid from Oracle if no better offers emerge.
His call came after BEA had declared that it was quite prepared to let Oracle walk away rather than start negotiations at the price that is currently on the table.
Mr Icahn’s intervention late on Friday came as the two software companies prepared for a weekend of brinkmanship over the unsolicited bid. Oracle has promised to abandon its offer, of $17 a share in cash, by Sunday afternoon if BEA does not either accept the terms or agree to let its shareholders vote on the proposal.
For its part, BEA on Friday released a terse letter that repeated its view that the price “significantly undervalues” the company, and that it therefore assumed the offer would expire this weekend. The biggest independent maker of the “middleware” used to build internet-based applications, BEA has held out of a price of $21 before it will enter negotiations.
Rather than risk losing the premium represented by the Oracle bid, BEA should launch a full auction of the company, Mr Icahn said.
“If a topping bid emerges, then all the better,” he said. “But if no topping bid arises it should be up to the BEA shareholders to decide whether to take the Oracle bid or remain as an independent company.”
One person familiar with the matter said BEA had held discussions with other technology companies since Oracle went public with its offer earlier this month. However, the nature of those discussions, or whether another bidder might emerge, was unclear.
Few rival bidders would be able to match the sort of cost savings from a deal that Oracle could achieve, according to analysts. One of the few that could, IBM, is BEA’s biggest rival, making it likely that any offer would attract anti-trust attention. The scale of the potential savings have led some analysts to suggest that Oracle could pay over $20 a share for BEA and still generate short-term financial benefits for its shareholders.
Copyright The Financial Times Limited 2007
Saturday, October 27, 2007
Friday, October 26, 2007
The Future of Software? Think Visual Apps | AMR Research
The Future of Software? Think Visual Apps | AMR Research
The days of static applications will soon be over, as will 2D screens that look like forms or reports. The future is coming and it’s far more visually appealing.
Since the start of this year, we’ve been tracking a wide range of companies and concepts that will change how we think about and use software. This week, we introduce Forterra Systems and provide some insights from recent meetings with IBM and salesforce.com.
The days of static applications will soon be over, as will 2D screens that look like forms or reports. The future is coming and it’s far more visually appealing.
Since the start of this year, we’ve been tracking a wide range of companies and concepts that will change how we think about and use software. This week, we introduce Forterra Systems and provide some insights from recent meetings with IBM and salesforce.com.
Wednesday, October 24, 2007
FT.com / Companies / IT - Oracle issues BEA deal ultimatum
FT.com / Companies / IT - Oracle issues BEA deal ultimatum
Oracle issues BEA deal ultimatum
By Richard Waters in San Francisco
Published: October 24 2007 03:48 | Last updated: October 24 2007 03:48
Oracle on Tuesday threatened to walk away from its proposed acquisition of BEA Systems by Sunday unless the embattled software company agreed to a deal.
While the threat wiped nearly 4 per cent from BEA’s share price by mid-afternoon, the stock still stood above the $17-a-share Oracle offer, pointing to a belief on Wall Street that the brinkmanship had not seriously damped the prospect of a deal and that Oracle or another buyer would still end up paying a higher price.
“Oracle has no interest in a long, drawn-out process to acquire BEA,” Chuck Phillips, Oracle’s president, wrote in a letter addressed to the company’s board on Tuesday. The letter followed what Oracle said had been another rejection by the BEA board of its all-cash offer.
BEA rejected the latest approach, repeating its earlier claim that the offer “seriously undervalues” the company and adding that it was open to “a transaction that appropriately reflects BEA’s value, reached through a reasonable process.”
The attempt to bring a quick end to the BEA battle is in stark contrast to the fight over PeopleSoft, the deal that launched Oracle’s ambitious attempt to force consolidation in parts of the business software market. That fight lasted 18 months, in part because Oracle had to persuade a court to overturn a US antitrust objection to the deal.
Though he started by offering $16 a share for PeopleSoft and insisting at one point that that was his “final” price, Larry Ellison, Oracle’s chief executive officer, eventually paid $26.50 a share to win over the PeopleSoft board.
Justifying the offer for BEA, Mr Phillips said it represented a 21 per cent premium to the price the day before the proposal was announced and a 44 per cent premium to the level before activist investor Carl Icahn disclosed in August that he had bought a stake in the company.
Mr Icahn, BEA’s biggest shareholder and a critic of the company’s management, has been pressuring BEA to find another buyer.
Copyright The Financial Times Limited 2007
Oracle issues BEA deal ultimatum
By Richard Waters in San Francisco
Published: October 24 2007 03:48 | Last updated: October 24 2007 03:48
Oracle on Tuesday threatened to walk away from its proposed acquisition of BEA Systems by Sunday unless the embattled software company agreed to a deal.
While the threat wiped nearly 4 per cent from BEA’s share price by mid-afternoon, the stock still stood above the $17-a-share Oracle offer, pointing to a belief on Wall Street that the brinkmanship had not seriously damped the prospect of a deal and that Oracle or another buyer would still end up paying a higher price.
“Oracle has no interest in a long, drawn-out process to acquire BEA,” Chuck Phillips, Oracle’s president, wrote in a letter addressed to the company’s board on Tuesday. The letter followed what Oracle said had been another rejection by the BEA board of its all-cash offer.
BEA rejected the latest approach, repeating its earlier claim that the offer “seriously undervalues” the company and adding that it was open to “a transaction that appropriately reflects BEA’s value, reached through a reasonable process.”
The attempt to bring a quick end to the BEA battle is in stark contrast to the fight over PeopleSoft, the deal that launched Oracle’s ambitious attempt to force consolidation in parts of the business software market. That fight lasted 18 months, in part because Oracle had to persuade a court to overturn a US antitrust objection to the deal.
Though he started by offering $16 a share for PeopleSoft and insisting at one point that that was his “final” price, Larry Ellison, Oracle’s chief executive officer, eventually paid $26.50 a share to win over the PeopleSoft board.
Justifying the offer for BEA, Mr Phillips said it represented a 21 per cent premium to the price the day before the proposal was announced and a 44 per cent premium to the level before activist investor Carl Icahn disclosed in August that he had bought a stake in the company.
Mr Icahn, BEA’s biggest shareholder and a critic of the company’s management, has been pressuring BEA to find another buyer.
Copyright The Financial Times Limited 2007
Tuesday, October 23, 2007
SAP to Bolster Business Rule Capabilities With Yasu Buy
SAP to Bolster Business Rule Capabilities With Yasu Buy
SAP's offer to acquire Yasu will bring business rule engine technology to NetWeaver customers. This smart, if late, acquisition will challenge the status quo of the BRE and business process management technology markets.
SAP's offer to acquire Yasu will bring business rule engine technology to NetWeaver customers. This smart, if late, acquisition will challenge the status quo of the BRE and business process management technology markets.
Friday, October 19, 2007
Oracle Seeks to Consolidate the Middleware Market With BEA Deal
Oracle Seeks to Consolidate the Middleware Market With BEA Deal
Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.
Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.
SAP Software Sales Soar 16% | AMR Research
SAP Software Sales Soar 16% | AMR Research
SAP posted another strong quarter, as expected, for its third quarter ending September 30. Software and software-related service revenue topped 1.74B euros, up 16% in constant currencies from the year-earlier period. Total revenue was 2.42B euros, up 13% in constant currencies. Translated to dollars at the rate of this writing, SAP’s revenue came in at $3.46B. SAP repeated guidance of 12% to 14% growth for the full year.
There were at least two departures from previous earnings calls. For one, the call was audio only, compared to previous video broadcasts. Secondly, there are normally three presentations: the opening set of financial results from CFO Werner Brandt, additional color from CEO Henning Kagermann, and a review of global sales performance from Deputy CEO Leo Apotheker. If you go to SAP’s website, you will only see Mr. Brandt’s slides.
Mr. Apotheker had several interesting statistics that didn’t make it into the slides or the press release. The number of new contracts increased 22% from the year-earlier period. New customers accounted for 26% of order entry. Midmarket customers represented 34% of the new contracts. The number of deals greater than 5M euros was 20% versus 33% for 3Q06. Last year, there were more deals in the 10M to 20M euro range; Mr. Apotheker said that the 20% figure was more typical. The number of deals less than 1M euros was 46% versus 36% last year. This is due to increased sales to smaller companies.
It would be helpful to have a bit more color on the number of contracts signed. SAP closed the second quarter with 41,200 customers and ended this quarter with 43,400, an increase of 2,200.
SAP posted another strong quarter, as expected, for its third quarter ending September 30. Software and software-related service revenue topped 1.74B euros, up 16% in constant currencies from the year-earlier period. Total revenue was 2.42B euros, up 13% in constant currencies. Translated to dollars at the rate of this writing, SAP’s revenue came in at $3.46B. SAP repeated guidance of 12% to 14% growth for the full year.
There were at least two departures from previous earnings calls. For one, the call was audio only, compared to previous video broadcasts. Secondly, there are normally three presentations: the opening set of financial results from CFO Werner Brandt, additional color from CEO Henning Kagermann, and a review of global sales performance from Deputy CEO Leo Apotheker. If you go to SAP’s website, you will only see Mr. Brandt’s slides.
Mr. Apotheker had several interesting statistics that didn’t make it into the slides or the press release. The number of new contracts increased 22% from the year-earlier period. New customers accounted for 26% of order entry. Midmarket customers represented 34% of the new contracts. The number of deals greater than 5M euros was 20% versus 33% for 3Q06. Last year, there were more deals in the 10M to 20M euro range; Mr. Apotheker said that the 20% figure was more typical. The number of deals less than 1M euros was 46% versus 36% last year. This is due to increased sales to smaller companies.
It would be helpful to have a bit more color on the number of contracts signed. SAP closed the second quarter with 41,200 customers and ended this quarter with 43,400, an increase of 2,200.
Wednesday, October 17, 2007
Oracle Seeks to Consolidate the Middleware Market With BEA Deal
Oracle Seeks to Consolidate the Middleware Market With BEA Deal
Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.
Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.
Tuesday, October 16, 2007
FT.com / Companies / US & Canada - Executive departure may delay Oracle plan
FT.com / Companies / US & Canada - Executive departure may delay Oracle plan
Executive departure may delay Oracle plan
By Richard Waters in San Francisco
Published: October 16 2007 22:46 | Last updated: October 16 2007 22:46
Oracle’s ambitious plan to unify the software applications it assumed through acquisitions appeared on Tuesday to be heading for a delay, following news that the executive in charge of the project is to leave the company.
John Wookey’s elevation two years ago to run Project Fusion put him in one of the most high-profile positions in the company following its purchases of PeopleSoft, Siebel Systems and other smaller companies.
By unifying these companies’ software applications on a single-code base, Fusion is intended to create integration between the various products, making it a central part of Oracle’s long-term strategy to compete with SAP.
Oracle refused to comment on Mr Wookey’s position. Yet one person close to the company said he would leave early next year, after a transitional period. The job of overseeing the Fusion work has been passed to Thomas Kurian, who will combine it with responsibility for Oracle’s middleware, the software layer on which the applications depend.
The shake-up has also led to greater responsibilities for Charles Rozwat, executive vice-president of server technologies.
The upheaval has prompted speculation that Fusion has fallen behind schedule. Large parts of the software seem likely to appear next year as planned, according to the person close to Oracle, though this person stopped short of saying the entire project would be completed next year.
Copyright The Financial Times Limited 2007
Executive departure may delay Oracle plan
By Richard Waters in San Francisco
Published: October 16 2007 22:46 | Last updated: October 16 2007 22:46
Oracle’s ambitious plan to unify the software applications it assumed through acquisitions appeared on Tuesday to be heading for a delay, following news that the executive in charge of the project is to leave the company.
John Wookey’s elevation two years ago to run Project Fusion put him in one of the most high-profile positions in the company following its purchases of PeopleSoft, Siebel Systems and other smaller companies.
By unifying these companies’ software applications on a single-code base, Fusion is intended to create integration between the various products, making it a central part of Oracle’s long-term strategy to compete with SAP.
Oracle refused to comment on Mr Wookey’s position. Yet one person close to the company said he would leave early next year, after a transitional period. The job of overseeing the Fusion work has been passed to Thomas Kurian, who will combine it with responsibility for Oracle’s middleware, the software layer on which the applications depend.
The shake-up has also led to greater responsibilities for Charles Rozwat, executive vice-president of server technologies.
The upheaval has prompted speculation that Fusion has fallen behind schedule. Large parts of the software seem likely to appear next year as planned, according to the person close to Oracle, though this person stopped short of saying the entire project would be completed next year.
Copyright The Financial Times Limited 2007
FT.com / Companies / Media & internet - SAP falls on static full-year forecast
FT.com / Companies / Media & internet - SAP falls on static full-year forecast
SAP falls on static full-year forecast
By Gerrit Wiesmann in Frankfurt
Published: October 18 2007 23:56 | Last updated: October 18 2007 23:56
Shares in Germany’s SAP dropped Thursday after it shied away from raising its full-year forecast even after a solid nine months’ business.
SAP stock closed 3.3 per cent lower at €38.29 after reporting that software sales rose 11 per cent – or 15 per cent at constant currencies – to €715m in the third quarter, while operating income rose 9 per cent to €601m.
Although these figures were in line with analysts’ expectations, investors were rattled by SAP’s refusal to raise its full-year forecast. They now fear the world’s largest maker of business software is preparing for a weaker-than-expected Christmas quarter.
The company’s share price was under pressure last week after it caught investors off guard in announcing the €4.8bn ($6.8bn) takeover of rival Business Objects, a move many saw as an end to a strategy of organic growth.
Henning Kagermann, chief executive, said he expected full-year revenue from software and software-related services to grow at the upper end of the forecast range of 12 per cent to 14 per cent in constant currencies.
Given that growth in the first nine months of the year reached 16 per cent, analysts at Citibank lamented that “implied growth” of about 10 per cent in the all-important fourth quarter looked disappointingly conservative.
The company did not reach its targets in the final quarter last year, a clear sign of the dangers it faces as it tried to broaden its product scope from a saturated market for supplying software to the world’s biggest companies.
In July, August and September, SAP saw overall sales rise 9 per cent – 13 per cent at constant currencies – to €2.4bn. It said it had gained one point in market share and now held 27 per cent.
Copyright The Financial Times Limited 2007
SAP falls on static full-year forecast
By Gerrit Wiesmann in Frankfurt
Published: October 18 2007 23:56 | Last updated: October 18 2007 23:56
Shares in Germany’s SAP dropped Thursday after it shied away from raising its full-year forecast even after a solid nine months’ business.
SAP stock closed 3.3 per cent lower at €38.29 after reporting that software sales rose 11 per cent – or 15 per cent at constant currencies – to €715m in the third quarter, while operating income rose 9 per cent to €601m.
Although these figures were in line with analysts’ expectations, investors were rattled by SAP’s refusal to raise its full-year forecast. They now fear the world’s largest maker of business software is preparing for a weaker-than-expected Christmas quarter.
The company’s share price was under pressure last week after it caught investors off guard in announcing the €4.8bn ($6.8bn) takeover of rival Business Objects, a move many saw as an end to a strategy of organic growth.
Henning Kagermann, chief executive, said he expected full-year revenue from software and software-related services to grow at the upper end of the forecast range of 12 per cent to 14 per cent in constant currencies.
Given that growth in the first nine months of the year reached 16 per cent, analysts at Citibank lamented that “implied growth” of about 10 per cent in the all-important fourth quarter looked disappointingly conservative.
The company did not reach its targets in the final quarter last year, a clear sign of the dangers it faces as it tried to broaden its product scope from a saturated market for supplying software to the world’s biggest companies.
In July, August and September, SAP saw overall sales rise 9 per cent – 13 per cent at constant currencies – to €2.4bn. It said it had gained one point in market share and now held 27 per cent.
Copyright The Financial Times Limited 2007
Sunday, October 14, 2007
FT.com / Companies / IT - SAP allays fears of Oracle bid war
FT.com / Companies / IT - SAP allays fears of Oracle bid war
SAP allays fears of Oracle bid war
By Gerrit Wiesmannin Frankfurt
Published: October 14 2007 22:03 | Last updated: October 14 2007 22:03
SAP has sought to allay investor fears about a new bidding rivalry between the German business software maker and US rival Oracle by pledging big acquisitions only to enter new markets rather than to consolidate existing ones.
Henning Kagermann, chief executive, said the offers by SAP for software maker Business Objects and that of Oracle for BEA Systems – both valued at €4.8bn – showed the two groups were still on different paths.
“We bought a company that complements our product line in a fast-growing market in which SAP is not market leader,” he told the Financial Times.
“We believe in complementary deals. We’re not interested in a classic consolidating of markets.”
Investors last week dumped SAP stock for fear the largest business software maker in the world had given up its goal of growing organically to ape Oracle, which has spent $31bn (€21.8bn) on rivals in recent years. The German group’s stock price lost 5 per cent after it announced by far its biggest acquisition to gain a leading position in the market for business analysis programmes, an “end-user” area in which SAP is weak.
But investor fears of a bidding war with Oracle ebbed on Friday when the US group announced an unsolicited bid for BEA Systems, a move to consolidate its position among makers of software to bundle disparate applications. Mr Kagermann said SAP was well positioned in the market for so-called service oriented architecture.
He was not considering a counter offer for BEA, or a bid for any other company in a market that had “so much overlap” with SAP.
He said this was consistent with SAP’s strategy of growing organically in its two core units that provide the software spine or “platform” for corporations, and address the needs of small and medium-sized companies.
But he repeated adverse investor reaction would not stop SAP from committing to more deals in the end-user market. “We’re categorically not excluding further big acquisitions,” he said.
Business Objects specialises in programmes that sift corporate data to help executives decide strategy. Mr Kagermann noted “that many analysts believe that there are still interesting opportunities in this sector”.
Copyright The Financial Times Limited 2007
SAP allays fears of Oracle bid war
By Gerrit Wiesmannin Frankfurt
Published: October 14 2007 22:03 | Last updated: October 14 2007 22:03
SAP has sought to allay investor fears about a new bidding rivalry between the German business software maker and US rival Oracle by pledging big acquisitions only to enter new markets rather than to consolidate existing ones.
Henning Kagermann, chief executive, said the offers by SAP for software maker Business Objects and that of Oracle for BEA Systems – both valued at €4.8bn – showed the two groups were still on different paths.
“We bought a company that complements our product line in a fast-growing market in which SAP is not market leader,” he told the Financial Times.
“We believe in complementary deals. We’re not interested in a classic consolidating of markets.”
Investors last week dumped SAP stock for fear the largest business software maker in the world had given up its goal of growing organically to ape Oracle, which has spent $31bn (€21.8bn) on rivals in recent years. The German group’s stock price lost 5 per cent after it announced by far its biggest acquisition to gain a leading position in the market for business analysis programmes, an “end-user” area in which SAP is weak.
But investor fears of a bidding war with Oracle ebbed on Friday when the US group announced an unsolicited bid for BEA Systems, a move to consolidate its position among makers of software to bundle disparate applications. Mr Kagermann said SAP was well positioned in the market for so-called service oriented architecture.
He was not considering a counter offer for BEA, or a bid for any other company in a market that had “so much overlap” with SAP.
He said this was consistent with SAP’s strategy of growing organically in its two core units that provide the software spine or “platform” for corporations, and address the needs of small and medium-sized companies.
But he repeated adverse investor reaction would not stop SAP from committing to more deals in the end-user market. “We’re categorically not excluding further big acquisitions,” he said.
Business Objects specialises in programmes that sift corporate data to help executives decide strategy. Mr Kagermann noted “that many analysts believe that there are still interesting opportunities in this sector”.
Copyright The Financial Times Limited 2007
FT.com / Companies / US & Canada - SAP warns surprise tactics might resurface
FT.com / Companies / US & Canada - SAP warns surprise tactics might resurface
SAP warns surprise tactics might resurface
By Gerrit Wiesman
Published: October 14 2007 23:48 | Last updated: October 14 2007 23:48
Perhaps Henning Kagermann, the chief executive of German business software maker SAP, senses that catching investors off guard once could be construed as an accident, but that doing it twice could smack of carelessness.
In January, the world’s biggest maker of business software shocked the stock market when it announced that a new internet-based product for small companies would demand computer centres costing an unexpected €400m ($566m).
Last week, the company surprised again by appearing to give up on its strategy of growing organically when it bid €4.8bn ($6.7bn) for Business Objects, a Franco-US company specialising in corporate analysis software.
“Finding the right way to communicate is a challenge,” Mr Kagermann tells the FT.
“We don’t want to surprise the market too much. At the same time, we don’t want to be taken hostage so that we can’t react quickly anymore.”
Having watched SAP stock take a drubbing for the second time running after a big strategic announcement, he almost ruefully concedes: “We always try our best to master this challenge. But sometimes our efforts aren’t perfect.”
It is a delicate mea culpa that follows a week in which SAP shares closed at €39.51 in Frankfurt, 5 per cent below prices seen before the announcement last week of its agreed bid for Business Objects.
The punishment meted out by investors may have been a touch harsher in January, when shares fell almost 7 per cent. But the recent drop still stings.
“I didn’t expect to see such a big market reaction,” Mr Kagermann says.
But he is too self-assured and too convinced of his mission to do more penance than that.
As humbled as he may feel, his message throughout the rest of the interview is clear: “I don’t think we could have done it any other way.”
For one thing, he says stock market reactions in January and October were not comparable.
Investors knew SAP was working on a new so-called mid-market product, what surprised some was the cost of online availability.
“A year before [the announcement], I had flagged the fact that we no longer excluded on-demand solutions for [so-called] ERP [enterprise resource planning] applications,” he says – and it was only later that SAP could forecast the cost of the move.
Flagging a major acquisition would, to boot, have been counter-productive, he says.
“It wouldn’t have been very helpful to say, ‘We’re looking at acquisitions in this and this area’ because there weren’t that many targets around.”
Mr Kagermann stresses that investors are wrong to see an end to SAP’s organic-growth strategy: It will continue in the core areas of providing the software spine to big corporations, and addressing the needs of smaller companies.
“The business user segment is a different field,” he says. A fast-growing segment in which SAP was not market leader, it called for a different approach.
“We want to buy innovation,” he says, signalling an appetite for more.
At the same time, he says SAP is not embarking on an acquisitive strategy in this field akin to its American rival Oracle.
It has spent $31bn in the three years to buy rivals and consolidate the various markets it is in.
The top priority now is to integrate Business Objects. Mr Kagermann hopes this will be done by 2009.
“By then we should have been able to convince the market that this was the right decision,” he says.
But he cautions: “You can’t pass up opportunities just because you feel you need a quarter or half a year to prepare for them.”
Perhaps he fears that shocking shareholders a third time would appear deliberate. Now they have been warned.
Copyright The Financial Times Limited 2007
SAP warns surprise tactics might resurface
By Gerrit Wiesman
Published: October 14 2007 23:48 | Last updated: October 14 2007 23:48
Perhaps Henning Kagermann, the chief executive of German business software maker SAP, senses that catching investors off guard once could be construed as an accident, but that doing it twice could smack of carelessness.
In January, the world’s biggest maker of business software shocked the stock market when it announced that a new internet-based product for small companies would demand computer centres costing an unexpected €400m ($566m).
Last week, the company surprised again by appearing to give up on its strategy of growing organically when it bid €4.8bn ($6.7bn) for Business Objects, a Franco-US company specialising in corporate analysis software.
“Finding the right way to communicate is a challenge,” Mr Kagermann tells the FT.
“We don’t want to surprise the market too much. At the same time, we don’t want to be taken hostage so that we can’t react quickly anymore.”
Having watched SAP stock take a drubbing for the second time running after a big strategic announcement, he almost ruefully concedes: “We always try our best to master this challenge. But sometimes our efforts aren’t perfect.”
It is a delicate mea culpa that follows a week in which SAP shares closed at €39.51 in Frankfurt, 5 per cent below prices seen before the announcement last week of its agreed bid for Business Objects.
The punishment meted out by investors may have been a touch harsher in January, when shares fell almost 7 per cent. But the recent drop still stings.
“I didn’t expect to see such a big market reaction,” Mr Kagermann says.
But he is too self-assured and too convinced of his mission to do more penance than that.
As humbled as he may feel, his message throughout the rest of the interview is clear: “I don’t think we could have done it any other way.”
For one thing, he says stock market reactions in January and October were not comparable.
Investors knew SAP was working on a new so-called mid-market product, what surprised some was the cost of online availability.
“A year before [the announcement], I had flagged the fact that we no longer excluded on-demand solutions for [so-called] ERP [enterprise resource planning] applications,” he says – and it was only later that SAP could forecast the cost of the move.
Flagging a major acquisition would, to boot, have been counter-productive, he says.
“It wouldn’t have been very helpful to say, ‘We’re looking at acquisitions in this and this area’ because there weren’t that many targets around.”
Mr Kagermann stresses that investors are wrong to see an end to SAP’s organic-growth strategy: It will continue in the core areas of providing the software spine to big corporations, and addressing the needs of smaller companies.
“The business user segment is a different field,” he says. A fast-growing segment in which SAP was not market leader, it called for a different approach.
“We want to buy innovation,” he says, signalling an appetite for more.
At the same time, he says SAP is not embarking on an acquisitive strategy in this field akin to its American rival Oracle.
It has spent $31bn in the three years to buy rivals and consolidate the various markets it is in.
The top priority now is to integrate Business Objects. Mr Kagermann hopes this will be done by 2009.
“By then we should have been able to convince the market that this was the right decision,” he says.
But he cautions: “You can’t pass up opportunities just because you feel you need a quarter or half a year to prepare for them.”
Perhaps he fears that shocking shareholders a third time would appear deliberate. Now they have been warned.
Copyright The Financial Times Limited 2007
Friday, October 12, 2007
FT.com / Companies / IT - Oracle launches $6.7bn bid for BEA
FT.com / Companies / IT - Oracle launches $6.7bn bid for BEA
Oracle launches $6.7bn bid for BEA
By Kevin Allison in San Francisco and Maija Palmer in London
Published: October 12 2007 13:33 | Last updated: October 12 2007 23:38
Oracle, the US business software company, on Friday made an unsolicited $6.7bn (£3.3bn) bid for BEA Systems, a San Jose-based software maker that has come under pressure from Carl Icahn, the billionaire activist investor.
The deal comes as Oracle is trying to overtake rivals SAP and IBM by pursuing an aggressive acquisitions strategy.
BEA rebuffed the offer, arguing that it “significantly undervalues” the company.
Shares in BEA rose above Oracle’s offer price of $17 a share, indicating investor hopes of an increased bid. On Friday, shares in BEA closed more than 38 per cent higher at $18.82.
Oracle’s $17-a-share offer represented a 25 per cent premium to BEA’s share price at the close of business on Thursday.
“We have made a serious proposal including a substantial premium for BEA,” said Charles Phillips, Oracle president. “We believe our all-cash offer provides the best value for BEA’s shareholders and the best home for BEA’s employees and customers.”
If successful, the deal would represent Oracle’s biggest takeover since its $10.3bn acquisition of PeopleSoft three years ago.
It would also mark the latest in a string of deals in the software sector this year. SAP earlier this week announced plans to buy Business Objects, the Franco-US software company, for $6.7bn.
Shares in Oracle edged 2 cents lower to $22.44 on Friday in New York.
Mr Icahn last month sparked a fresh wave of takeover speculation when he reported that he held more than 8 per cent of BEA shares and called for the company to be sold.
The corporate raider has since increased his stake in the company to 13 per cent. Mr Icahn did not return a request for comment.
Shares in BEA, which makes middleware, or software that connects business functions such as billing and supply chain management to back-office databases, fell more than 30 per cent between October and March. They began to rise again in August after the company reported its second-quarter results.
BEA has been the subject of takeover speculation since the beginning of the technology downturn in 2001.
The company was an early leader in the middleware market but it has struggled to gain momentum in recent years amid strong competition from rivals such as Oracle and SAP, both of which have moved to bolster their middleware offerings.
Charles di Bona, an analyst at Sanford Bernstein, said the deal’s valuation was “financially unattractive” for Oracle at $17 a share. However, Brent Thill, an analyst at Citigroup, said a price of up to $20 a share could still make financial sense for Oracle, assuming big cost cuts at BEA. Mr di Bona said he did not expect a rival bidder to emerge.
Copyright The Financial Times Limited 2007
Oracle launches $6.7bn bid for BEA
By Kevin Allison in San Francisco and Maija Palmer in London
Published: October 12 2007 13:33 | Last updated: October 12 2007 23:38
Oracle, the US business software company, on Friday made an unsolicited $6.7bn (£3.3bn) bid for BEA Systems, a San Jose-based software maker that has come under pressure from Carl Icahn, the billionaire activist investor.
The deal comes as Oracle is trying to overtake rivals SAP and IBM by pursuing an aggressive acquisitions strategy.
BEA rebuffed the offer, arguing that it “significantly undervalues” the company.
Shares in BEA rose above Oracle’s offer price of $17 a share, indicating investor hopes of an increased bid. On Friday, shares in BEA closed more than 38 per cent higher at $18.82.
Oracle’s $17-a-share offer represented a 25 per cent premium to BEA’s share price at the close of business on Thursday.
“We have made a serious proposal including a substantial premium for BEA,” said Charles Phillips, Oracle president. “We believe our all-cash offer provides the best value for BEA’s shareholders and the best home for BEA’s employees and customers.”
If successful, the deal would represent Oracle’s biggest takeover since its $10.3bn acquisition of PeopleSoft three years ago.
It would also mark the latest in a string of deals in the software sector this year. SAP earlier this week announced plans to buy Business Objects, the Franco-US software company, for $6.7bn.
Shares in Oracle edged 2 cents lower to $22.44 on Friday in New York.
Mr Icahn last month sparked a fresh wave of takeover speculation when he reported that he held more than 8 per cent of BEA shares and called for the company to be sold.
The corporate raider has since increased his stake in the company to 13 per cent. Mr Icahn did not return a request for comment.
Shares in BEA, which makes middleware, or software that connects business functions such as billing and supply chain management to back-office databases, fell more than 30 per cent between October and March. They began to rise again in August after the company reported its second-quarter results.
BEA has been the subject of takeover speculation since the beginning of the technology downturn in 2001.
The company was an early leader in the middleware market but it has struggled to gain momentum in recent years amid strong competition from rivals such as Oracle and SAP, both of which have moved to bolster their middleware offerings.
Charles di Bona, an analyst at Sanford Bernstein, said the deal’s valuation was “financially unattractive” for Oracle at $17 a share. However, Brent Thill, an analyst at Citigroup, said a price of up to $20 a share could still make financial sense for Oracle, assuming big cost cuts at BEA. Mr di Bona said he did not expect a rival bidder to emerge.
Copyright The Financial Times Limited 2007
SAP Customers on Business Objects; salesforce.com’s VC Fund | AMR Research
SAP Customers on Business Objects; salesforce.com’s VC Fund | AMR Research
SAP Customers on Business Objects
by Bruce Richardson
By now, you know that SAP is buying Business Objects. (See “SAP Buys Business Objects” below in News of Note for more details.) When the deal is completed in 1Q08, SAP will have the broadest business intelligence / performance management (BI/PM) offering in the world. That’s both good news and bad news. If anything, SAP will have too many products.
I spent two days last week with 15 IT executives at an SAP event, and they all wanted to talk about the Business Objects deal. Ironically, the last time I saw most of these people was the week after Oracle announced that it was buying Hyperion for $3.3B. Many were Hyperion customers, too.
When I asked how many had Business Objects software in their companies, more than two-thirds of the executives raised their hand. I then asked whether they had Hyperion, and the same people raised their hand again. It will be interesting to see whether these executives can get their companies to adopt SAP-Business Objects as their standard or if they will continue to support a multivendor BI/PM world.
When Oracle bought Hyperion, several of the SAP customers I talked with were looking at big Hyperion upgrade bills. They were hoping that SAP would soon unveil plans for bolstering its business consolidation software. Six months later, they are still waiting for SAP to declare its plans for weaning them off of Hyperion.
SAP won’t be able to discuss its plans for Business Objects until the deal closes. The customers I talked with were concerned about which of the SAP and Business Objects products will survive. This is a bit unsettling for those that have already started down the Pilot Software or OutlookSoft path.
At the SAP event, several CIOs told me that their Business Objects reps were filling their BlackBerrys with invitations to seminars or requests to meet. I would expect the Business Objects reps to be very aggressive; I’m sure all good salespeople are racing to drain their pipelines before the deal closes.
What should SAP customers do for BI/PM? In next week’s First Thing Monday, we’ll look at areas SAP needs to address for this to work.
SAP Customers on Business Objects
by Bruce Richardson
By now, you know that SAP is buying Business Objects. (See “SAP Buys Business Objects” below in News of Note for more details.) When the deal is completed in 1Q08, SAP will have the broadest business intelligence / performance management (BI/PM) offering in the world. That’s both good news and bad news. If anything, SAP will have too many products.
I spent two days last week with 15 IT executives at an SAP event, and they all wanted to talk about the Business Objects deal. Ironically, the last time I saw most of these people was the week after Oracle announced that it was buying Hyperion for $3.3B. Many were Hyperion customers, too.
When I asked how many had Business Objects software in their companies, more than two-thirds of the executives raised their hand. I then asked whether they had Hyperion, and the same people raised their hand again. It will be interesting to see whether these executives can get their companies to adopt SAP-Business Objects as their standard or if they will continue to support a multivendor BI/PM world.
When Oracle bought Hyperion, several of the SAP customers I talked with were looking at big Hyperion upgrade bills. They were hoping that SAP would soon unveil plans for bolstering its business consolidation software. Six months later, they are still waiting for SAP to declare its plans for weaning them off of Hyperion.
SAP won’t be able to discuss its plans for Business Objects until the deal closes. The customers I talked with were concerned about which of the SAP and Business Objects products will survive. This is a bit unsettling for those that have already started down the Pilot Software or OutlookSoft path.
At the SAP event, several CIOs told me that their Business Objects reps were filling their BlackBerrys with invitations to seminars or requests to meet. I would expect the Business Objects reps to be very aggressive; I’m sure all good salespeople are racing to drain their pipelines before the deal closes.
What should SAP customers do for BI/PM? In next week’s First Thing Monday, we’ll look at areas SAP needs to address for this to work.
Thursday, October 11, 2007
Crossgate Challenges B2B Market With Tight Alliance With SAP
Crossgate Challenges B2B Market With Tight Alliance With SAP
Crossgate has announced an alliance with SAP that has the potential to change the vendor dynamics in the business-to-business infrastructure market. But crossgate will need to grow rapidly to ensure market success.
Crossgate has announced an alliance with SAP that has the potential to change the vendor dynamics in the business-to-business infrastructure market. But crossgate will need to grow rapidly to ensure market success.
Wednesday, October 10, 2007
SAP's Planned Business Objects Buy Signals Strategic Shift
SAP's Planned Business Objects Buy Signals Strategic Shift
SAP's plan to buy Business Objects will put SAP into the lead for revenue from business intelligence platform products. However, many integration and execution challenges lie ahead.
SAP's plan to buy Business Objects will put SAP into the lead for revenue from business intelligence platform products. However, many integration and execution challenges lie ahead.
Monday, October 08, 2007
Ãœbernahme von Business Objects SAP befeuert Software-Krieg - Wirtschaft - sueddeutsche.de
Ãœbernahme von Business Objects SAP befeuert Software-Krieg - Wirtschaft - sueddeutsche.de
Im Duell mit Konkurrent Oracle rüstet SAP auf: Der deutsche Softwarekonzern stemmt für knapp fünf Milliarden Euro die teuerste Übernahme seiner Geschichte.
Im Duell mit Konkurrent Oracle rüstet SAP auf: Der deutsche Softwarekonzern stemmt für knapp fünf Milliarden Euro die teuerste Übernahme seiner Geschichte.
FT.com / Companies / Europe - A new mantra to explain SAP purchase
FT.com / Companies / Europe - A new mantra to explain SAP purchase
A new mantra to explain SAP purchase
By Gerrit Wiesmann
Published: October 8 2007 20:20 | Last updated: October 8 2007 20:20
Having spent years stressing organic growth over the acquisitive strategy of arch-rival Oracle, the departure of German business-software maker SAP from its big corporate mantra proved surprisingly matter-of-fact.
But, as so often with Henning Kagermann, chief executive of the world’s largest maker of business software, it was not so much that he was changing tack – the world was at last beginning to understand things he said all along.
The €4.8bn ($6.7bn) agreed takeover offer for Franco-American software group Business Objects was entirely consistent with SAP’s goals to grow in three sectors, Mr Kagermann said in Frankfurt.
Organic growth was – and would remain – the mantra for the two areas that had been the focus of attention for the past four years: revamping the software backbone that all companies need, and luring smaller businesses.
In both areas, buying other companies made no sense because SAP was a clear market leader and so confident about its technological leadership that it saw no need for any outside help, SAP’s chief executive explained.
But, apparently forgotten by everyone, except Mr Kagermann, was SAP’s third ambition: to diversify from supplying software backbones, so-called business-process platforms, to selling programmes for end-users. And this, Mr Kagermann implied, had always been a very different proposition. So-called “business user solutions are very different”, he said, noting that this market is growing and consolidating extremely quickly.
“We have some innovation and know-how [in this field], but we have to accept that there are other [market] leaders,” he said, noting a slew of smallish companies that had long focused on addressing specialised user needs.
“People expect us to embrace the latest and coolest technology,” Mr Kagermann said. That’s why SAP decided it would be better quickly to buy in potential big sellers rather than start time-consuming development.
One of these is compiling and sifting through corporate data to improve performance. According to SAP, Business Objects is the clearleader in this market with annual sales of €10bn and yearly growth of 10 per cent.
Mr Kagermann said adverse reaction by investors – SAP stock fell 4 per cent to €39.95 – had more to do with the fact that “the market is not educated” than with any inconsistency at SAP. It would in time come around.
SAP had in past years already bought software makers Virsa and OutlookSoft to offer its customers, respectively, integrated programmes to check legal compliance and assess corporate performance. But in spending $200m on OutlookSoft, for example, SAP long made these moves look part of a pocket-money financed sideshow that would not lay claim to corporate resources to any noticeable extent.
Having announced a deal 34 times bigger than the OulookSoft move this spring, Mr Kagermann strongly hinted that the time of trifling “fill-in acquisitions” had ended, presaging fill-in purchases easily above the billion mark.
SAP had proven it could grow organically and that it could innovate. “Now we are on our way to proving that we can make larger acquisitions,” he said, declining to name what fields are next.
“There are other areas in which such a move would make sense,” Mr Kagermann said, noting that ever more companies wanted integrated software “But [the acquisition of Business Objects] is by far the most important.”
Copyright The Financial Times Limited 2007
A new mantra to explain SAP purchase
By Gerrit Wiesmann
Published: October 8 2007 20:20 | Last updated: October 8 2007 20:20
Having spent years stressing organic growth over the acquisitive strategy of arch-rival Oracle, the departure of German business-software maker SAP from its big corporate mantra proved surprisingly matter-of-fact.
But, as so often with Henning Kagermann, chief executive of the world’s largest maker of business software, it was not so much that he was changing tack – the world was at last beginning to understand things he said all along.
The €4.8bn ($6.7bn) agreed takeover offer for Franco-American software group Business Objects was entirely consistent with SAP’s goals to grow in three sectors, Mr Kagermann said in Frankfurt.
Organic growth was – and would remain – the mantra for the two areas that had been the focus of attention for the past four years: revamping the software backbone that all companies need, and luring smaller businesses.
In both areas, buying other companies made no sense because SAP was a clear market leader and so confident about its technological leadership that it saw no need for any outside help, SAP’s chief executive explained.
But, apparently forgotten by everyone, except Mr Kagermann, was SAP’s third ambition: to diversify from supplying software backbones, so-called business-process platforms, to selling programmes for end-users. And this, Mr Kagermann implied, had always been a very different proposition. So-called “business user solutions are very different”, he said, noting that this market is growing and consolidating extremely quickly.
“We have some innovation and know-how [in this field], but we have to accept that there are other [market] leaders,” he said, noting a slew of smallish companies that had long focused on addressing specialised user needs.
“People expect us to embrace the latest and coolest technology,” Mr Kagermann said. That’s why SAP decided it would be better quickly to buy in potential big sellers rather than start time-consuming development.
One of these is compiling and sifting through corporate data to improve performance. According to SAP, Business Objects is the clearleader in this market with annual sales of €10bn and yearly growth of 10 per cent.
Mr Kagermann said adverse reaction by investors – SAP stock fell 4 per cent to €39.95 – had more to do with the fact that “the market is not educated” than with any inconsistency at SAP. It would in time come around.
SAP had in past years already bought software makers Virsa and OutlookSoft to offer its customers, respectively, integrated programmes to check legal compliance and assess corporate performance. But in spending $200m on OutlookSoft, for example, SAP long made these moves look part of a pocket-money financed sideshow that would not lay claim to corporate resources to any noticeable extent.
Having announced a deal 34 times bigger than the OulookSoft move this spring, Mr Kagermann strongly hinted that the time of trifling “fill-in acquisitions” had ended, presaging fill-in purchases easily above the billion mark.
SAP had proven it could grow organically and that it could innovate. “Now we are on our way to proving that we can make larger acquisitions,” he said, declining to name what fields are next.
“There are other areas in which such a move would make sense,” Mr Kagermann said, noting that ever more companies wanted integrated software “But [the acquisition of Business Objects] is by far the most important.”
Copyright The Financial Times Limited 2007
FT.com / Companies / Europe - SAP signals hunger for deals
FT.com / Companies / Europe - SAP signals hunger for deals
SAP signals hunger for deals
By Gerrit Wiesmann in Frankfurt and Pan Kwan Yuk in Paris
Published: October 8 2007 20:20 | Last updated: October 8 2007 20:20
Germany’s SAP, the world’s largest maker of business software, Monday signalled it could look at further acquisitions even as its departure from an avowed strategy of organic growth sent investors running for cover.
Outlining an agreed takeover offer worth €4.8bn ($6.7bn) for Franco-American software house Business Objects, SAP chief executive Henning Kagermann said SAP was on its “way to proving we can make larger acquisitions”.
The company’s announcement late Sunday that it was buying the market leader in programmes to collect and sift corporate data knocked 4 per cent of SAP stock in trading Monday.
The shares closed at €39.95 in Frankfurt.
Investors were rattled because Mr Kagermann had for years underlined SAP’s superiority to US rival Oracle by pointing out the German company was focused on organic growth – not dealmaking.
To catch SAP, Oracle has spent billions on buying rival makers of central business programmes as well as end-user suppliers such as Hyperion, a Business Objects rival, it bought for $3.3bn (€2.3bn) this spring.
But at a press conference in Frankfurt, Mr Kagermann said the largest acquisition in SAP’s history was not a reaction to Oracle.
“We have not seen … that Oracle is gaining market share,” he stressed.
He said the move was consistent with SAP’s strategy outlined as far back as 2003. Having “done our homework” in its two core sectors, which would still grow organically, SAP now had time to look at end-users’ needs.
As demand for traditional manufacturing and supply-chain management slows, SAP said that sales of business analysis software were growing at around 10 per cent per year from current annual sales of about €10bn.
In buying Business Objects, SAP would be able to offer its clients more integrated features, Mr Kagermann said, stressing that demand for such end-user features would likely continue to rise over the next years.
“There are other areas in which such a move would make sense,” Mr Kagermann said, noting that ever more companies wanted integrated software. “But [the acquisition of Business Objects] is by far the most important.”
SAP has spent the past years reinventing its so-called business process platform, the nervous systems of companies’ IT systems, and making a foray into the market for mid-sized companies, which critics argue came late.
Copyright The Financial Times Limited 2007
SAP signals hunger for deals
By Gerrit Wiesmann in Frankfurt and Pan Kwan Yuk in Paris
Published: October 8 2007 20:20 | Last updated: October 8 2007 20:20
Germany’s SAP, the world’s largest maker of business software, Monday signalled it could look at further acquisitions even as its departure from an avowed strategy of organic growth sent investors running for cover.
Outlining an agreed takeover offer worth €4.8bn ($6.7bn) for Franco-American software house Business Objects, SAP chief executive Henning Kagermann said SAP was on its “way to proving we can make larger acquisitions”.
The company’s announcement late Sunday that it was buying the market leader in programmes to collect and sift corporate data knocked 4 per cent of SAP stock in trading Monday.
The shares closed at €39.95 in Frankfurt.
Investors were rattled because Mr Kagermann had for years underlined SAP’s superiority to US rival Oracle by pointing out the German company was focused on organic growth – not dealmaking.
To catch SAP, Oracle has spent billions on buying rival makers of central business programmes as well as end-user suppliers such as Hyperion, a Business Objects rival, it bought for $3.3bn (€2.3bn) this spring.
But at a press conference in Frankfurt, Mr Kagermann said the largest acquisition in SAP’s history was not a reaction to Oracle.
“We have not seen … that Oracle is gaining market share,” he stressed.
He said the move was consistent with SAP’s strategy outlined as far back as 2003. Having “done our homework” in its two core sectors, which would still grow organically, SAP now had time to look at end-users’ needs.
As demand for traditional manufacturing and supply-chain management slows, SAP said that sales of business analysis software were growing at around 10 per cent per year from current annual sales of about €10bn.
In buying Business Objects, SAP would be able to offer its clients more integrated features, Mr Kagermann said, stressing that demand for such end-user features would likely continue to rise over the next years.
“There are other areas in which such a move would make sense,” Mr Kagermann said, noting that ever more companies wanted integrated software. “But [the acquisition of Business Objects] is by far the most important.”
SAP has spent the past years reinventing its so-called business process platform, the nervous systems of companies’ IT systems, and making a foray into the market for mid-sized companies, which critics argue came late.
Copyright The Financial Times Limited 2007
FT.com / Companies / IT - SAP buys Business Objects for €4.8bn
FT.com / Companies / IT - SAP buys Business Objects for €4.8bn
SAP buys Business Objects for €4.8bn
By Gerrit Wiesmann in Frankfurt and Lina Saigol in London
Published: October 7 2007 21:55 | Last updated: October 8 2007 00:07
Germany’s SAP on Sunday night launched a €4.8bn (£3.3bn) bid for Franco-American software maker Business Objects in what seems a departure from its long-term strategy to expand only organically and by smaller purchases.
The world’s largest maker of business software said it would offer €42 a share for the company, which specialises in business-analysis packages; a 20 per cent premium to Friday’s closing price in Paris.
The decision was seen as a response by SAP to a purchase by Oracle, its US archrival, which in March bought Hyperion, a smaller rival of Business Objects, for $3.3bn (£1.6bn).
SAP denied its agreed bid was a change of tack. Henning Kagermann, chief executive, said the company had bought interesting applications with “end-user appeal” before. SAP would continue to expand its core business organically.
In a conference call, he said that was consistent with SAP’s 2003 strategy statement. After changes to the main software platform, SAP was looking at individual applications.
Mr Kagermann said this opportunity to combine “market leaders in their respective domains” was “an opportunity unparalleled” in the German group’s history. He declined to give details of new products.
SAP said the move, financed by cash and debt, would go through if supported by 50.01 per cent of Business Objects’ shareholders. It hopes to close the transaction in the first quarter of next year.
The deal would mildly dilute earnings in the coming year, but boost profits in 2009 and beyond. “Financially and not just strategically, this is a good deal,” Mr Kagermann said.
It comes at a sensitive time for the German software maker. It is spending €400m to introduce software for small businesses, which will, for the first time, be hosted on the web by its own computer centres.
Copyright The Financial Times Limited 2007
SAP buys Business Objects for €4.8bn
By Gerrit Wiesmann in Frankfurt and Lina Saigol in London
Published: October 7 2007 21:55 | Last updated: October 8 2007 00:07
Germany’s SAP on Sunday night launched a €4.8bn (£3.3bn) bid for Franco-American software maker Business Objects in what seems a departure from its long-term strategy to expand only organically and by smaller purchases.
The world’s largest maker of business software said it would offer €42 a share for the company, which specialises in business-analysis packages; a 20 per cent premium to Friday’s closing price in Paris.
The decision was seen as a response by SAP to a purchase by Oracle, its US archrival, which in March bought Hyperion, a smaller rival of Business Objects, for $3.3bn (£1.6bn).
SAP denied its agreed bid was a change of tack. Henning Kagermann, chief executive, said the company had bought interesting applications with “end-user appeal” before. SAP would continue to expand its core business organically.
In a conference call, he said that was consistent with SAP’s 2003 strategy statement. After changes to the main software platform, SAP was looking at individual applications.
Mr Kagermann said this opportunity to combine “market leaders in their respective domains” was “an opportunity unparalleled” in the German group’s history. He declined to give details of new products.
SAP said the move, financed by cash and debt, would go through if supported by 50.01 per cent of Business Objects’ shareholders. It hopes to close the transaction in the first quarter of next year.
The deal would mildly dilute earnings in the coming year, but boost profits in 2009 and beyond. “Financially and not just strategically, this is a good deal,” Mr Kagermann said.
It comes at a sensitive time for the German software maker. It is spending €400m to introduce software for small businesses, which will, for the first time, be hosted on the web by its own computer centres.
Copyright The Financial Times Limited 2007
Sunday, October 07, 2007
Friday, September 28, 2007
Software Potpourri for $500, Alex | AMR Research
Software Potpourri for $500, Alex | AMR Research
Software potpourri could be a future category on Jeopardy, “America’s favorite quiz show.” If you’ve never seen the TV show, a contestant picks a one of 30 blocks on a six column by five row grid. Game show host Alex Trebek reads the answer. If the contestant gets it right, he/she collects the points for the correct response: “American History for $100, Alex.” If not, the other two competitors can respond. For example, the answer might be: “Team that won the World Series in 2004.” Of course, the correct response would be “Who are the Boston Red Sox?”
In addition to the television program, there is a home version, an online game on the website, and even a version for your cell phone. While we don’t have the space to replicate the whole six columns of categories and five rows of answers, here is a chance to play FTM Jeopardy.
Software potpourri could be a future category on Jeopardy, “America’s favorite quiz show.” If you’ve never seen the TV show, a contestant picks a one of 30 blocks on a six column by five row grid. Game show host Alex Trebek reads the answer. If the contestant gets it right, he/she collects the points for the correct response: “American History for $100, Alex.” If not, the other two competitors can respond. For example, the answer might be: “Team that won the World Series in 2004.” Of course, the correct response would be “Who are the Boston Red Sox?”
In addition to the television program, there is a home version, an online game on the website, and even a version for your cell phone. While we don’t have the space to replicate the whole six columns of categories and five rows of answers, here is a chance to play FTM Jeopardy.
Saturday, September 22, 2007
Friday, September 21, 2007
Thursday, September 20, 2007
FTD.de - Kommentare - Leitartikel - SAP - Mit den Kleinen wachsen
FTD.de - Kommentare - Leitartikel - SAP - Mit den Kleinen wachsen
Der Softwarekonzern SAP ist auf dem richtigen Weg: Das vorgestellte neue Produkt für den Mittelstand eröffnet dem weltweit führenden Anbieter von Unternehmenssoftware neue Wachstumsperspektiven. Diese Perspektiven sind nötig, denn im Geschäft mit Großkunden ist der Spielraum ausgereizt.
Der Softwarekonzern SAP ist auf dem richtigen Weg: Das vorgestellte neue Produkt für den Mittelstand eröffnet dem weltweit führenden Anbieter von Unternehmenssoftware neue Wachstumsperspektiven. Diese Perspektiven sind nötig, denn im Geschäft mit Großkunden ist der Spielraum ausgereizt.
Wednesday, September 19, 2007
FT.com / Technology - Control of the supply chain turns critical
FT.com / Technology - Control of the supply chain turns critical
Control of the supply chain turns critical
By Stephen Pritchard
Published: September 19 2007 00:54 | Last updated: September 19 2007 00:54
An efficient supply chain is a prize worth striving for. According to Accenture, the consultancy firm, “supply chain leadership” can increase a company’s market capitalisation by between 7 and 26 per cent above the industry average.
But for a business, even competing for that prize demands a significant investment in resources. In sectors such as consumer goods and retailing, established companies have already achieved the easiest supply chain efficiencies.
“Things that are likely to move the dial have to make a significant difference, rather than be technology experiments,” says Stephen Proud, a partner in Accenture’s supply chain practice.
None the less, an efficient supply chain is a must for a widening range of businesses. Fashion, hi-tech and grocery retailers grasped early on the importance of ensuring the right stock reached the right store at the right time.
No one wants a warehouse full of summer dresses in October, or indeed shelves of last season’s mobile phones in the run-up to Christmas. But the supply chain is now moving up the agenda in slower-moving sectors such as heavy manufacturing.
Effective supply chain management is the only way to make efficient use of global sourcing strategies and especially, the huge manufacturing capacity of China and the Pacific Rim.
Although globalisation has reduced production costs in a wide range of sectors, the trend to source components or even finished goods from China and elsewhere has made the supply chain manager’s task far harder.
“Our internal systems handle more than 700 suppliers,” says Christian Verstraete, worldwide supply chain expert at Hewlett-Packard. “We have to be able to ex-change messages not just with them, but with their suppliers.”
Supply chain managers in many sectors are looking for greater visibility of what is happening in their supply chains and faster access to more accurate data.
This means that if there is an unexpected event, be it storms affecting shipping or a production shortfall, companies can divert stocks or bring in alternative suppliers.
“Companies are not just asking suppliers why there is a problem with an order,” says Sanjiv Sidu, president of supply chain management software vendor i2. “They are asking: ‘When did you first know, and why did you surprise me?’”
In sectors such as retail, supply chain problems lead to “stock outs” or empty shelves, which send customers elsewhere. In heavy or complex manufacturing, supply chain problems can lead to cancelled orders running into billions of dollars, or severe penalties for late delivery.
As manufacturers move away from vertically integrated production, the supply chain suddenly becomes critical.
“In aerospace and defence, we are 10 years behind the hi-tech or even automotive sectors and how we improve the performance of our supply chain is quite a challenge,” explains Bill Black, chief quality officer at aerospace manufacturer EADS.
“The cost of running our supply chain logistics is minor, set against the $100m cost of an aircraft. But the cost of failure is enormous.”
About 80 per cent of the cost of an aircraft is accounted for by suppliers and partners,” says Black, making EADS “architects of complex products”.
“I need to know if an event can affect our master schedule and that means that I need to know what is happening, not just with my tier one, but with tier four, five or six suppliers.”
The increasing demands of customers, as well as the drive to cut supply costs, are causing manufacturing companies in particular to renew their investment in supply chain technologies.
But efficient supply chain technology can also open up business opportunities.
For Kautex-Unipart, an automotive component manufacturer based in Coventry, in the UK, supplying BMW’s Mini production line with fuel tanks came with an onerous condition attached. The company had to achieve 100 per cent delivery accuracy, matched to BMW’s JIS 5000 manufacturing process.
Kautex-Unipart is BMW’s sole tank supplier for the Mini plant at Cowley, in Oxfordshire. It has to supply 250,000 tanks each year, in exactly the order specified by BMW, for each of the 13 tanks used on the Mini car.
The tanks even have to be stored the right way round in the shipping containers. If they are not, BMW’s production robots cannot fit them.
The company used a photographic identification system, Visidot, from Israeli vendor Image ID to ensure that tanks can only leave Coventry if the order exactly matches BMW’s requirements.
“Getting supply wrong is the cardinal sin in the automotive industry,” says Jan Parylo, IT manager at Kautex-Unipart. “But the BMW contract has also brought us benefits. We used to have 24 to 48 hours’ visibility of orders. Now BMW can give us six days. As a result, we have more flexibility in our manufacturing and supply processes.”
Visidot is one of a number of new technologies that are helping businesses improve supply chain visibility and the speed at which they collect supply chain data. Others include radio frequency identity (RFID) tags as well as three-dimensional and even colour bar codes.
“In the past, for manufacturers [supply chain] visibility stopped at the batch or lot level,” says Krish Mantripragada, head of RFID and Auto-ID solutions at enterprise software vendor, SAP. “But recalls and quality issues are putting a lot of pressure on companies to make their data more granular, and to be able to track single items.”
The response to RFID, however, differs from industry to industry. Mr Mantripragada says that interest is greatest in sectors such as pharmaceuticals, aerospace and defence “where complete traceability and product integrity are the priorities”.
In other industries, some companies are looking to use RFID to make their supply chains more efficient, but they are finding the costs to be higher than expected. The costs of RFID tags may be heading downwards, but there is far more to a supply chain project than the tags alone.
RFID, for example, produces a unique serial number for each product, while conventional tracking systems may be designed just to record a product’s stock code, and assume that each product with the same code is identical.
“It is partly an infrastructure problem, with the need to deploy sensors. But the second problem is serialised data management,” says Mr Mantripragada. “Many production processes batch supplies, so business processes need to adapt to handle serialisation.”
Business processes that are already designed around items with individual serial numbers often lend themselves best to technologies such as RFID; for others, bar codes or similar scanning technologies might be good enough for some time to come.
“We are certainly not wedded to RFID as a technology. If the project is about better serialisation and that could be done as well with coloured dots, that would not be an issue. And there are environments where radio frequency technologies are not applicable,” says Mr Proud at Accenture.
For businesses considering their supply chains, the most important step is to look at the business process and how it could be improved, and then pick the technology that fits best.
Nick Costides, portfolio manager for UPS Supply Chain Solutions, based in Atlanta, says: “As an express delivery company, barcodes meet our needs. But in the long term, there are opportunities. For example, if every item in a warehouse had an RFID tag, it would make taking physical inventories much easier.”
Companies also need to consider how access to item-level data, or indeed more up-to-date status information from the supply chain will support decision making.
“Distribution centre operators clearly have different needs from C-level executives,” says Mr Costides. “We give them the information they want to see, so they are not overwhelmed.”
Fortunately, modern enterprise IT systems have the capacity to handle the increased data coming in from systems such as RFID. But technologists caution against relying on a single change to improve supply chain performance.
“There is not one killer application but rather a series of incremental steps before we see the ground shift,” says SAP’s Mr Mantripragada. “Some customers have seen significant returns on investment from better data accuracy and visibility, but no two customer scenarios are the same.”
Copyright The Financial Times Limited 2007
Control of the supply chain turns critical
By Stephen Pritchard
Published: September 19 2007 00:54 | Last updated: September 19 2007 00:54
An efficient supply chain is a prize worth striving for. According to Accenture, the consultancy firm, “supply chain leadership” can increase a company’s market capitalisation by between 7 and 26 per cent above the industry average.
But for a business, even competing for that prize demands a significant investment in resources. In sectors such as consumer goods and retailing, established companies have already achieved the easiest supply chain efficiencies.
“Things that are likely to move the dial have to make a significant difference, rather than be technology experiments,” says Stephen Proud, a partner in Accenture’s supply chain practice.
None the less, an efficient supply chain is a must for a widening range of businesses. Fashion, hi-tech and grocery retailers grasped early on the importance of ensuring the right stock reached the right store at the right time.
No one wants a warehouse full of summer dresses in October, or indeed shelves of last season’s mobile phones in the run-up to Christmas. But the supply chain is now moving up the agenda in slower-moving sectors such as heavy manufacturing.
Effective supply chain management is the only way to make efficient use of global sourcing strategies and especially, the huge manufacturing capacity of China and the Pacific Rim.
Although globalisation has reduced production costs in a wide range of sectors, the trend to source components or even finished goods from China and elsewhere has made the supply chain manager’s task far harder.
“Our internal systems handle more than 700 suppliers,” says Christian Verstraete, worldwide supply chain expert at Hewlett-Packard. “We have to be able to ex-change messages not just with them, but with their suppliers.”
Supply chain managers in many sectors are looking for greater visibility of what is happening in their supply chains and faster access to more accurate data.
This means that if there is an unexpected event, be it storms affecting shipping or a production shortfall, companies can divert stocks or bring in alternative suppliers.
“Companies are not just asking suppliers why there is a problem with an order,” says Sanjiv Sidu, president of supply chain management software vendor i2. “They are asking: ‘When did you first know, and why did you surprise me?’”
In sectors such as retail, supply chain problems lead to “stock outs” or empty shelves, which send customers elsewhere. In heavy or complex manufacturing, supply chain problems can lead to cancelled orders running into billions of dollars, or severe penalties for late delivery.
As manufacturers move away from vertically integrated production, the supply chain suddenly becomes critical.
“In aerospace and defence, we are 10 years behind the hi-tech or even automotive sectors and how we improve the performance of our supply chain is quite a challenge,” explains Bill Black, chief quality officer at aerospace manufacturer EADS.
“The cost of running our supply chain logistics is minor, set against the $100m cost of an aircraft. But the cost of failure is enormous.”
About 80 per cent of the cost of an aircraft is accounted for by suppliers and partners,” says Black, making EADS “architects of complex products”.
“I need to know if an event can affect our master schedule and that means that I need to know what is happening, not just with my tier one, but with tier four, five or six suppliers.”
The increasing demands of customers, as well as the drive to cut supply costs, are causing manufacturing companies in particular to renew their investment in supply chain technologies.
But efficient supply chain technology can also open up business opportunities.
For Kautex-Unipart, an automotive component manufacturer based in Coventry, in the UK, supplying BMW’s Mini production line with fuel tanks came with an onerous condition attached. The company had to achieve 100 per cent delivery accuracy, matched to BMW’s JIS 5000 manufacturing process.
Kautex-Unipart is BMW’s sole tank supplier for the Mini plant at Cowley, in Oxfordshire. It has to supply 250,000 tanks each year, in exactly the order specified by BMW, for each of the 13 tanks used on the Mini car.
The tanks even have to be stored the right way round in the shipping containers. If they are not, BMW’s production robots cannot fit them.
The company used a photographic identification system, Visidot, from Israeli vendor Image ID to ensure that tanks can only leave Coventry if the order exactly matches BMW’s requirements.
“Getting supply wrong is the cardinal sin in the automotive industry,” says Jan Parylo, IT manager at Kautex-Unipart. “But the BMW contract has also brought us benefits. We used to have 24 to 48 hours’ visibility of orders. Now BMW can give us six days. As a result, we have more flexibility in our manufacturing and supply processes.”
Visidot is one of a number of new technologies that are helping businesses improve supply chain visibility and the speed at which they collect supply chain data. Others include radio frequency identity (RFID) tags as well as three-dimensional and even colour bar codes.
“In the past, for manufacturers [supply chain] visibility stopped at the batch or lot level,” says Krish Mantripragada, head of RFID and Auto-ID solutions at enterprise software vendor, SAP. “But recalls and quality issues are putting a lot of pressure on companies to make their data more granular, and to be able to track single items.”
The response to RFID, however, differs from industry to industry. Mr Mantripragada says that interest is greatest in sectors such as pharmaceuticals, aerospace and defence “where complete traceability and product integrity are the priorities”.
In other industries, some companies are looking to use RFID to make their supply chains more efficient, but they are finding the costs to be higher than expected. The costs of RFID tags may be heading downwards, but there is far more to a supply chain project than the tags alone.
RFID, for example, produces a unique serial number for each product, while conventional tracking systems may be designed just to record a product’s stock code, and assume that each product with the same code is identical.
“It is partly an infrastructure problem, with the need to deploy sensors. But the second problem is serialised data management,” says Mr Mantripragada. “Many production processes batch supplies, so business processes need to adapt to handle serialisation.”
Business processes that are already designed around items with individual serial numbers often lend themselves best to technologies such as RFID; for others, bar codes or similar scanning technologies might be good enough for some time to come.
“We are certainly not wedded to RFID as a technology. If the project is about better serialisation and that could be done as well with coloured dots, that would not be an issue. And there are environments where radio frequency technologies are not applicable,” says Mr Proud at Accenture.
For businesses considering their supply chains, the most important step is to look at the business process and how it could be improved, and then pick the technology that fits best.
Nick Costides, portfolio manager for UPS Supply Chain Solutions, based in Atlanta, says: “As an express delivery company, barcodes meet our needs. But in the long term, there are opportunities. For example, if every item in a warehouse had an RFID tag, it would make taking physical inventories much easier.”
Companies also need to consider how access to item-level data, or indeed more up-to-date status information from the supply chain will support decision making.
“Distribution centre operators clearly have different needs from C-level executives,” says Mr Costides. “We give them the information they want to see, so they are not overwhelmed.”
Fortunately, modern enterprise IT systems have the capacity to handle the increased data coming in from systems such as RFID. But technologists caution against relying on a single change to improve supply chain performance.
“There is not one killer application but rather a series of incremental steps before we see the ground shift,” says SAP’s Mr Mantripragada. “Some customers have seen significant returns on investment from better data accuracy and visibility, but no two customer scenarios are the same.”
Copyright The Financial Times Limited 2007
Friday, September 14, 2007
Some Northern Exposure on Software Innovation | AMR Research
Some Northern Exposure on Software Innovation | AMR Research
We recently spent a couple of days in Toronto to meet with a leading Canadian venture firm and three software companies. While it had been years since my last trip to Canada, the combination of beautiful late summer weather and the buzz around the start of the International Film Festival made Toronto the ideal September destination.
The trip was proposed by Derek Smyth, a partner at EdgeStone Capital Partners, whom we first met when he was COO at Ironside Technologies, one of the e-commerce pioneers. Ironside was acquired by SSA Global Technologies in June 2003. While at Ironside, Mr. Smyth helped grow the company from zero to C$50M (Canadian dollars) in four years.
While many U.S. venture firms shy away from enterprise software startups, EdgeStone focuses almost exclusively on this sector. In fact, the firm’s preferred role is to be the lead investor in early stage companies by taking a healthy equity position in exchange for cash and expertise.
Best early bets: SlipStream, Taleo, and Workbrain
The EdgeStone Capital Venture Fund I raised C$104M in 2000, which as been invested in 15 companies. Key investments included Workbrain, Taleo, and SlipStream Data. Workbrain and Taleo went on to have successful initial public offerings, while SlipStream was acquired by Research in Motion (RIM) (Blackberry owners) in July 2006. To date, that fund has returned 1.6 times in invested capital to investors, ranking it near the top of all North American tech venture firms in the post-bubble period.
Four years later, EdgeStone raised C$108M for Fund II. I was struck by two differences between the portfolios of the two funds: the newer fund broadened EdgeStone’s portfolio outside of enterprise software and beyond Canada, too. To date, Fund II has been invested in eight companies. There is capital available for one or two additional investments.
The Fund II portfolio includes Solace Systems, pVelocity, Shoplogix, CiRBA, RedMere Technology, Varicent Software, MusicIP, and RapidMind. On our trip, we met with pVelocity and Shoplogix (see below). The others seem intriguing, too. Solace is in the XML routing market. CiRBA, with its virtualization software, would love to be the next VMware. RedMere is an Irish fabless semiconductor company that serves the consumer electronics and multimedia markets. Varicent provides incentive management software. MusicIP is a digital-music platform, which helps listeners discover similar types of artists that map to their favorite music. RapidMind provides development tools for multicore platforms.
Steady deal flow, fewer VCs, tighter pockets
EdgeStone has begun raising money for Fund III. The goal is to build a C$150M fund. The Canadian VC market has changed dramatically since Fund I. In 2001, there were 55 early stage Canadian VCs; now there are 12. More than C$4B was raised in 2001 compared to C$1.5B in 2006. Despite the contraction, deal flow has remained relatively constant over the same period. EdgeStone looks at 150 to 160 deals a year, before settling on the two or three best.
One advantage of investing north of the border is the R&D tax credits that the Canadian government provides for early-stage companies. This can result in a 45% lower net cash cost compared to their U.S. counterparts. In some provinces like Quebec, the net cash cost delta is even greater. On the flip side, the primary challenge for firms like EdgeStone is finding experienced CEOs to run the startups. As a result, Canada has a greater percentage of first-time CEOs.
EdgeStone is well-positioned to take advantage of gyrations in the tech market. Its parent company is GMP Capital Trust, one of Canada’s leading investment banks with a strong technology investment practice. In addition to its venture group, EdgeStone has a buyout/later stage equity team. That side of the firm has raised nearly C$1.35B for its three funds. These have gotten progressively larger. Fund I raised C$179M in March 2000. Fund II took in C$361M in October 2003. Fund III generated C$800M in summer 2006.
Meet the portfolio companies
Our journey took us to two companies in EdgeStone’s portfolio, three if you count the Shoplogix customer we also met with, and one company not in its portfolio, but with which Mr. Smyth is highly enamored. For each of their stories, click the following links:
“pVelocity: Software Plumber for Profit Leakage”
“Shoplogix: A Single Version of ‘Machine Truth’”
“Panorama: Silicon Valley Meets Toronto”.
SupplyScape Adds New CEO to Team and $10M in Financing
We also recently met with Mark O’Connell on his sixth day as CEO of SupplyScape, the fast-growing provider of software and services for the life sciences industry. If the name is familiar, Mr. O’Connell was the former CEO of MatrixOne, a leading product lifecycle management (PLM) software company. At MatrixOne, he led the company through several milestones: a successful IPO in March 2000; achieving the status as the largest independent provider of PLM software ($145M in revenue); and the successful sale of the company to Dassault Systemes for $408M last year. Mr. O’Connell joins SupplyScape as president and CEO.
On the same day, SupplyScape also announced it raised $10M in Series C financing from its existing investors: IDG Ventures Boston, North Bridge Venture Partners, Pilot House Ventures, Bethesda Partners, and Pfizer Strategic Investments Group.
SupplyScape is an interesting company to watch. The 70-person company has emerged as the software leader in the nascent e-pedigree market. E-pedigree is designed to secure the distribution channel for pharmaceuticals as finished goods move from the manufacturer to the dispensing point (such as pharmacy or hospital) and guard against counterfeit products and diversion. To date, the company has 63 customers, including many of the best-known pharmaceutical manufacturers and top retailers and pharmacies.
Coming next week: salesforce’s Dreamforce and SAP’s A1S launch
By the time you read this, we will be at salesforce.com’s annual Dreamforce user conference in San Francisco. This event has traditionally provided a sneak preview of the future of software. From there, we head to Manhattan for the official launch of SAP’s new business offering, code-named A1S, for the small and midsize market.
As always, I welcome your feedback and ideas. Is EdgeStone smart to focus on the enterprise software market? If you were a gambler and could only pick one, would you bet your retirement fund or kids’ college fund on pVelocity, Shoplogix, or Panorama? Will Benioff surprise the world at next week’s Dreamforce? Is A1S truly designed exclusively for the SMB market or will this ultimately become the R/3 replacement product? Let me know—brichardson@amrresearch.com.
--------------------------------------------------------------------------------
© Copyright by AMR Research, Inc.
AMR Research® is a registered trademark of AMR Research, Inc.
We recently spent a couple of days in Toronto to meet with a leading Canadian venture firm and three software companies. While it had been years since my last trip to Canada, the combination of beautiful late summer weather and the buzz around the start of the International Film Festival made Toronto the ideal September destination.
The trip was proposed by Derek Smyth, a partner at EdgeStone Capital Partners, whom we first met when he was COO at Ironside Technologies, one of the e-commerce pioneers. Ironside was acquired by SSA Global Technologies in June 2003. While at Ironside, Mr. Smyth helped grow the company from zero to C$50M (Canadian dollars) in four years.
While many U.S. venture firms shy away from enterprise software startups, EdgeStone focuses almost exclusively on this sector. In fact, the firm’s preferred role is to be the lead investor in early stage companies by taking a healthy equity position in exchange for cash and expertise.
Best early bets: SlipStream, Taleo, and Workbrain
The EdgeStone Capital Venture Fund I raised C$104M in 2000, which as been invested in 15 companies. Key investments included Workbrain, Taleo, and SlipStream Data. Workbrain and Taleo went on to have successful initial public offerings, while SlipStream was acquired by Research in Motion (RIM) (Blackberry owners) in July 2006. To date, that fund has returned 1.6 times in invested capital to investors, ranking it near the top of all North American tech venture firms in the post-bubble period.
Four years later, EdgeStone raised C$108M for Fund II. I was struck by two differences between the portfolios of the two funds: the newer fund broadened EdgeStone’s portfolio outside of enterprise software and beyond Canada, too. To date, Fund II has been invested in eight companies. There is capital available for one or two additional investments.
The Fund II portfolio includes Solace Systems, pVelocity, Shoplogix, CiRBA, RedMere Technology, Varicent Software, MusicIP, and RapidMind. On our trip, we met with pVelocity and Shoplogix (see below). The others seem intriguing, too. Solace is in the XML routing market. CiRBA, with its virtualization software, would love to be the next VMware. RedMere is an Irish fabless semiconductor company that serves the consumer electronics and multimedia markets. Varicent provides incentive management software. MusicIP is a digital-music platform, which helps listeners discover similar types of artists that map to their favorite music. RapidMind provides development tools for multicore platforms.
Steady deal flow, fewer VCs, tighter pockets
EdgeStone has begun raising money for Fund III. The goal is to build a C$150M fund. The Canadian VC market has changed dramatically since Fund I. In 2001, there were 55 early stage Canadian VCs; now there are 12. More than C$4B was raised in 2001 compared to C$1.5B in 2006. Despite the contraction, deal flow has remained relatively constant over the same period. EdgeStone looks at 150 to 160 deals a year, before settling on the two or three best.
One advantage of investing north of the border is the R&D tax credits that the Canadian government provides for early-stage companies. This can result in a 45% lower net cash cost compared to their U.S. counterparts. In some provinces like Quebec, the net cash cost delta is even greater. On the flip side, the primary challenge for firms like EdgeStone is finding experienced CEOs to run the startups. As a result, Canada has a greater percentage of first-time CEOs.
EdgeStone is well-positioned to take advantage of gyrations in the tech market. Its parent company is GMP Capital Trust, one of Canada’s leading investment banks with a strong technology investment practice. In addition to its venture group, EdgeStone has a buyout/later stage equity team. That side of the firm has raised nearly C$1.35B for its three funds. These have gotten progressively larger. Fund I raised C$179M in March 2000. Fund II took in C$361M in October 2003. Fund III generated C$800M in summer 2006.
Meet the portfolio companies
Our journey took us to two companies in EdgeStone’s portfolio, three if you count the Shoplogix customer we also met with, and one company not in its portfolio, but with which Mr. Smyth is highly enamored. For each of their stories, click the following links:
“pVelocity: Software Plumber for Profit Leakage”
“Shoplogix: A Single Version of ‘Machine Truth’”
“Panorama: Silicon Valley Meets Toronto”.
SupplyScape Adds New CEO to Team and $10M in Financing
We also recently met with Mark O’Connell on his sixth day as CEO of SupplyScape, the fast-growing provider of software and services for the life sciences industry. If the name is familiar, Mr. O’Connell was the former CEO of MatrixOne, a leading product lifecycle management (PLM) software company. At MatrixOne, he led the company through several milestones: a successful IPO in March 2000; achieving the status as the largest independent provider of PLM software ($145M in revenue); and the successful sale of the company to Dassault Systemes for $408M last year. Mr. O’Connell joins SupplyScape as president and CEO.
On the same day, SupplyScape also announced it raised $10M in Series C financing from its existing investors: IDG Ventures Boston, North Bridge Venture Partners, Pilot House Ventures, Bethesda Partners, and Pfizer Strategic Investments Group.
SupplyScape is an interesting company to watch. The 70-person company has emerged as the software leader in the nascent e-pedigree market. E-pedigree is designed to secure the distribution channel for pharmaceuticals as finished goods move from the manufacturer to the dispensing point (such as pharmacy or hospital) and guard against counterfeit products and diversion. To date, the company has 63 customers, including many of the best-known pharmaceutical manufacturers and top retailers and pharmacies.
Coming next week: salesforce’s Dreamforce and SAP’s A1S launch
By the time you read this, we will be at salesforce.com’s annual Dreamforce user conference in San Francisco. This event has traditionally provided a sneak preview of the future of software. From there, we head to Manhattan for the official launch of SAP’s new business offering, code-named A1S, for the small and midsize market.
As always, I welcome your feedback and ideas. Is EdgeStone smart to focus on the enterprise software market? If you were a gambler and could only pick one, would you bet your retirement fund or kids’ college fund on pVelocity, Shoplogix, or Panorama? Will Benioff surprise the world at next week’s Dreamforce? Is A1S truly designed exclusively for the SMB market or will this ultimately become the R/3 replacement product? Let me know—brichardson@amrresearch.com.
--------------------------------------------------------------------------------
© Copyright by AMR Research, Inc.
AMR Research® is a registered trademark of AMR Research, Inc.
Tuesday, September 11, 2007
Bridgestream Buy Positions Oracle as a Top IAM Suite Vendor
Bridgestream Buy Positions Oracle as a Top IAM Suite Vendor
A complete identity and access management solution must include a role mining and role life cycle management capability. By acquiring the role management vendor Bridgestream, Oracle moves to the head of the IAM suite vendors.
Oracle's acquisition of Bridgestream, a Gartner 2005 "Cool Vendor," is the first attempt by a large user-provisioning vendor to enter the broader IAM market, which Gartner defines as including user provisioning, role management for enterprises (RME), identity auditing and resource administration. Three smaller user-provisioning vendors — Beta Systems, Courion and Voelker Informatik — already have their own RME capability. Other large software vendors — such as BMC, CA, IBM, Novell and Sun — have partnered with RME vendors (including Bridgestream) for some time.
A complete identity and access management solution must include a role mining and role life cycle management capability. By acquiring the role management vendor Bridgestream, Oracle moves to the head of the IAM suite vendors.
Oracle's acquisition of Bridgestream, a Gartner 2005 "Cool Vendor," is the first attempt by a large user-provisioning vendor to enter the broader IAM market, which Gartner defines as including user provisioning, role management for enterprises (RME), identity auditing and resource administration. Three smaller user-provisioning vendors — Beta Systems, Courion and Voelker Informatik — already have their own RME capability. Other large software vendors — such as BMC, CA, IBM, Novell and Sun — have partnered with RME vendors (including Bridgestream) for some time.
Friday, September 07, 2007
MCA Solutions: Weekdays With Morris… and SAP | AMR Research
MCA Solutions: Weekdays With Morris… and SAP | AMR Research
Over the last few months, we have had a series of meetings with executives from MCA Solutions, one of the pioneers in the service parts optimization space. We have also had the chance to interview four customers, including several that were among the first in their industry to use MCA, and another that qualifies as the most recent to go live.
Google “MCA” and the search engine returns lots of listing for various art museums, a club for Ford Mustang fans, the Music Corporation of America, the UK Maritime and Coastguard Agency, and a company offering “superior clay roofing tile.”
Over the last few months, we have had a series of meetings with executives from MCA Solutions, one of the pioneers in the service parts optimization space. We have also had the chance to interview four customers, including several that were among the first in their industry to use MCA, and another that qualifies as the most recent to go live.
Google “MCA” and the search engine returns lots of listing for various art museums, a club for Ford Mustang fans, the Music Corporation of America, the UK Maritime and Coastguard Agency, and a company offering “superior clay roofing tile.”
Thursday, August 30, 2007
Friday, August 24, 2007
Monday, August 20, 2007
Workday Releases Beta Of Its On-Demand Financial Applications -- Workday -- InformationWeek
Workday Releases Beta Of Its On-Demand Financial Applications -- Workday -- InformationWeek
The startup, launched by PeopleSoft founder Dave Duffield, faces growing competition in the market for subscription-based ERP software.
The startup, launched by PeopleSoft founder Dave Duffield, faces growing competition in the market for subscription-based ERP software.
Friday, August 10, 2007
Monday, August 06, 2007
Friday, August 03, 2007
The View from Oracle OpenWorld in Shanghai (AMR)
The View from Oracle OpenWorld in Shanghai
by Bruce Richardson - Chief Research Officer
It was 4:10 a.m. on Sunday when the alarm clock went off. By 5:00 a.m. I was at Logan Airport, only to find that the 6:30 a.m. flight to Chicago was delayed for an hour. Even at that early hour, Logan was pure bedlam.
We managed to make up some of that delay on the flight to O’Hare. Despite my initial concerns, we had ample time to make the connecting flight to Shanghai. We left at 10:30 a.m. central time and arrived the following afternoon just after 2:00 p.m. Despite losing a day in the air, we never encountered night. We followed the sun as the flight took us over Wisconsin, Saskatchewan, British Columbia, Alaska, the International Date Line, the edge of Russia, and northern Asia.
As we approached the airport, I was struck by how the water and the sky were the same color, a burnt reddish brown. I had been warned by a colleague about the increased pollution in Shanghai, but had not expected this. Fortunately, that color palette was confined to the airport. Shanghai, though, was in the midst of the worst heat wave in over 60 years. During the time I’ve been here, the daytime temperature has hovered around 100 degrees (38 degrees centigrade). Right now, it’s 100 degrees, with 42% humidity and a dew point reading of 77%. According to weather.com, it “feels like 113.” Nice.
While there was a bus to the conference, I preferred the six-minute walk from the Shangri-La Hotel to the Shanghai International Convention Centre. As you might surmise, this was always a bad idea. I’d arrive for a meeting looking like I had just lost a water balloon fight. Even at midnight, the city was too warm and muggy.
Outside of the initial flight delay and the hazy, hot weather, the only other disappointment was the discovery that the new Verizon BlackBerry 8830 World Edition Smartphone was hardly the global tool I was promised. Despite numerous calls to my IT department and Verizon, I could not send or receive e-mails or use the browser. The phone and text messaging worked great, but that’s not really the point of the BlackBerry. The BlackBerry issue seemed to be confined to Verizon and this particular model. Ironically, the phone had turned itself back on after I had put it away—it must have touched something inside my briefcase while flashing the “press any key to abort” message while I was turning it off. When I got to Shanghai, I had received a dozen e-mails while traversing North American airspace, but nothing after that. Maddening.
China’s economy hotter than weather: +11.9% for 2Q07, +11.5% for first half
The Shangri-La sits high over the Huangpu River. The other side of the river features a diverse mix of older European-style buildings from the first few decades of the twentieth century and new Manhattan-like skyscrapers. One Oracle executive told me that the area where my hotel sits was a rice paddy only 10 or 15 years ago. It seems hard to believe until you consider the rapid rise of China’s economy. A few weeks ago the Chinese government reported that the economy grew 11.9% in the second quarter and 11.5% for the first half of the year.
Like the architecture, the China of today is a mix of the old and the new. While the business pages of the Shanghai Daily were trumpeting the $15B invested in computer equipment and telecommunications manufacturing in the first half of this year, the front page focused on the continuing attempts to rescue 69 miners trapped in a flooded coal pit. As the paper pointed out, the Chinese coal industry is the world’s most dangerous, leading to an average of 13 deaths per day. As I write this, every few minutes a barge loaded with coal floats by on the Huangpu.
Oracle in China: 1,500+ employees, 800+ partners
I had not been to China since February 2004. Ironically, my host for that trip was Agile Software, now part of the extended Oracle family. As I said last week, I came here to get a better understanding of the Chinese software market, not to hear any new product announcements. Outside of a detailed presentation on the recently announced 11g database, Oracle made no product announcements. The primary news was the announcement of plans to open a new Oracle Asia Research and Development Center (OARDC) in Shanghai. This will be the third in China. Oracle opened the first development center in Shenzhen in June 2002 and the second in Beijing in October 2003.
Oracle OpenWorld Asia Pacific 2007 drew an estimated 8,000 attendees to Shanghai this week. This was twice the attendance of the previous event held here three years ago. About 87% of the attendees were drawn from China, Hong Kong, and Taiwan. Most were partners or employees. Oracle has more than 1,500 employees spread across 13 branch offices in China—there were eight offices a year ago. These resources are backed by more than 800 partners. The vast majority are local firms. These partners are very important to the region as the channel accounts for more than 90% of Oracle’s revenue here.
Unlike the U.S. market, it is harder to discern between independent software vendors (ISVs), resellers, and integrators in China. Often partners play multiple roles. Some also embed Oracle software into devices and other products. To draw ISVs to Oracle database and middleware products, Oracle has opened two partner solution centers that are co-located with the existing OARDCs in Beijing and Shenzhen. To date, more than 150 ISVs have been through the centers to port their applications to Oracle technologies and/or integrate with Oracle applications.
Ironically, the ISV partners include UFIDA Software and Kingdee International Software Group Company Limited. Both are fierce Oracle competitors in the ERP market for small and midsize businesses. Kingdee has been rumored to be an Oracle acquisition target.
7,000+ database customers, 700+ apps customers
One executive estimated that OpenWorld drew more than 3,600 customers and prospects. This figure may be a little low as many business partners paid for their customers and prospects to attend. Nonetheless, this would represent a sizeable number of Oracle’s 7,000 customers in China. Nearly all use its database.
It seems that the large banking, telecommunications, utilities, and energy firms use Oracle’s E-Business Suite, while smaller industrial manufacturers and energy producers and small and large engineering and construction companies deploy Oracle’s J.D. Edwards software. There are some installations of Siebel and PeopleSoft though Oracle executives said that these companies had very little presence here until after Oracle acquired them. To emphasize the point, one executive said Siebel had 16 employees here before Oracle purchased the firm.
Oracle has high hopes for Hyperion sales in China. While its classic customer has been the CIO, the bet is that Hyperion will help open up the door to the CFO’s office. Demand is building here for business intelligence and performance management software.
While walking around the convention center, I was struck by the relative youth of the attendees. Oracle’s major U.S. events tend to attract people in the 35 to 55 range. Here, most attendees appeared to be under 35. One Oracle executive confirmed that buyers tend to be younger here, even in the public sector. I viewed this as a positive indicator for the future of technology spending and deployment.
The real question: how big is the Chinese market?
Given that China has a population of more than 1.3 billion, 7,000 customers seems like a modest achievement, particularly since Oracle has had a presence here since 1989. This prompts the question, how big could Oracle China become? No one I met seemed to have a handle on the size of the potential market, especially the number of small and midsize businesses.
While SAP is acknowledged as the primary threat, custom software appears to be the real competition in the largest accounts. It’s only been in the last five years that the government has encouraged enterprises to use packaged software and offered them incentives.
As you might guess, Oracle declined to break out its revenue for China. Executives would only say that China is the “sixth biggest market” for Oracle and the third largest in Asia, presumably after Japan and India. This could change quickly—China is poised to overtake Germany this year to become the third largest economy after the United States and Japan.
The only real color Oracle provided was on the overall market for Oracle Asia Pacific. The company said that the 29 countries comprising Asia Pacific accounted for $2.499B in FY07 revenues. This was up 24% over the previous year. In the recent concluded fiscal year, Asia Pacific accounted for 14% of Oracle total revenues and 19% of new license sales. Overall, the region represents 35,000 customers out of the total 275,000 customer base.
Reaching new customers through schools and OTN
According to the Shanghai Daily (July 31), Oracle has contributed more than $200M to China’s educational system since 2002. Five years ago, it started the investment with Oracle University which provided online training and certification to 600 participants. Over time it’s expanded down to primary and secondary schools via Think.com (www.think.com) which is a global online community for learning. The focus also includes college interns, new graduates, and post-graduate learning.
During a reception, we spoke with Derek Williams, executive vice president and chairman of Oracle Asia Pacific about his college recruiting plans. So far this year, he’s added 200 new college graduates in 12 cities and has plans for 100 more. He boasted that most have at least two degrees and are tri-lingual—in addition to Chinese and English, they also speak Japanese or Korean.
The overall hiring market is tight with demand exceeding supply. Mr. Williams estimates that they get 10,000 resumes in China for every 100 people they hire. Retention of younger people continues to be a challenge though turnover has yet to approach the levels of India—which has been in the high teens for many firms. The challenge is managing the lofty ambitions of today’s graduates.
While Oracle’s commitment to education has helped build the brand, it also benefits from the growing presence of the Oracle Technology Network (OTN). There are 245,000 members in China, up from 150,000 two years ago. China’s OTN membership is the second largest base in Asia, trailing only India.
Is Pakistan the next China? Who’s the next i-flex?
During one of the receptions I asked one Oracle Asia Pacific executive his views on which Asian country will become the next big market. The next day I asked two more executives the same question. I was stunned that all three instantly responded with the same answer—Pakistan. All three added Indonesia as another market to watch. Apparently some of the Indian IT boom has carried over the border to Pakistan. Rather than pursuing a business or engineering degree, enterprising students are choosing IT for a career.
I also asked the last two executives what they see as the Chinese equivalent of i-flex solutions, the India-based financial services software firm that is majority owned by Oracle. Based on their responses, you may want to keep an eye on Taiji Computer Corp. in the utilities market and Neusoft Group in telco, insurance, energy, and other sectors. Another company to watch is Digital China, a large IT services firm. While unknown outside of its core market, Digital China has emerged as one of Oracle’s top five global partners.
Add Shanghai to your list of must-see cities
On my 2004 trip, I also visited Suzhou, renowned for its Confucian gardens. This time I stayed within a five mile radius of Pudong, Shanghai. Nonetheless, if you haven’t been to Shanghai, add it to your list of must-see cities because of how well the city appears to embrace and manage change. It’s especially impressive when you consider that Shanghai spans 2,239 square miles, or nearly 100 times the island of Manhattan (23.7 square miles). I wouldn’t visit during the summer months, though.
If you come, watch out for the drivers. In some countries, pedestrians have the right of way. Here they are viewed as potential speed bumps. On the walk over this morning, a truck and two taxis attempted to turn me into a hood ornament. It was as though they were practicing their human dodge ball moves.
Next week: Back in the USA
By the time you get this, I will have spent 17 or 18 hours flying home. That’s assuming the air gods are good to me in Shanghai and Chicago. It’s that last leg that is the wild card.
In the meantime, I welcome your feedback and ideas—brichardson@amrresearch.com. What do you think will happen in the Chinese market? Will the large software and services firms become major global players or will they be content serving the enormous domestic market? Will Pakistan be the next important global tech market? Should Human Dodge Ball be an exhibition sport at the 2008 Olympics in Beijing?
by Bruce Richardson - Chief Research Officer
It was 4:10 a.m. on Sunday when the alarm clock went off. By 5:00 a.m. I was at Logan Airport, only to find that the 6:30 a.m. flight to Chicago was delayed for an hour. Even at that early hour, Logan was pure bedlam.
We managed to make up some of that delay on the flight to O’Hare. Despite my initial concerns, we had ample time to make the connecting flight to Shanghai. We left at 10:30 a.m. central time and arrived the following afternoon just after 2:00 p.m. Despite losing a day in the air, we never encountered night. We followed the sun as the flight took us over Wisconsin, Saskatchewan, British Columbia, Alaska, the International Date Line, the edge of Russia, and northern Asia.
As we approached the airport, I was struck by how the water and the sky were the same color, a burnt reddish brown. I had been warned by a colleague about the increased pollution in Shanghai, but had not expected this. Fortunately, that color palette was confined to the airport. Shanghai, though, was in the midst of the worst heat wave in over 60 years. During the time I’ve been here, the daytime temperature has hovered around 100 degrees (38 degrees centigrade). Right now, it’s 100 degrees, with 42% humidity and a dew point reading of 77%. According to weather.com, it “feels like 113.” Nice.
While there was a bus to the conference, I preferred the six-minute walk from the Shangri-La Hotel to the Shanghai International Convention Centre. As you might surmise, this was always a bad idea. I’d arrive for a meeting looking like I had just lost a water balloon fight. Even at midnight, the city was too warm and muggy.
Outside of the initial flight delay and the hazy, hot weather, the only other disappointment was the discovery that the new Verizon BlackBerry 8830 World Edition Smartphone was hardly the global tool I was promised. Despite numerous calls to my IT department and Verizon, I could not send or receive e-mails or use the browser. The phone and text messaging worked great, but that’s not really the point of the BlackBerry. The BlackBerry issue seemed to be confined to Verizon and this particular model. Ironically, the phone had turned itself back on after I had put it away—it must have touched something inside my briefcase while flashing the “press any key to abort” message while I was turning it off. When I got to Shanghai, I had received a dozen e-mails while traversing North American airspace, but nothing after that. Maddening.
China’s economy hotter than weather: +11.9% for 2Q07, +11.5% for first half
The Shangri-La sits high over the Huangpu River. The other side of the river features a diverse mix of older European-style buildings from the first few decades of the twentieth century and new Manhattan-like skyscrapers. One Oracle executive told me that the area where my hotel sits was a rice paddy only 10 or 15 years ago. It seems hard to believe until you consider the rapid rise of China’s economy. A few weeks ago the Chinese government reported that the economy grew 11.9% in the second quarter and 11.5% for the first half of the year.
Like the architecture, the China of today is a mix of the old and the new. While the business pages of the Shanghai Daily were trumpeting the $15B invested in computer equipment and telecommunications manufacturing in the first half of this year, the front page focused on the continuing attempts to rescue 69 miners trapped in a flooded coal pit. As the paper pointed out, the Chinese coal industry is the world’s most dangerous, leading to an average of 13 deaths per day. As I write this, every few minutes a barge loaded with coal floats by on the Huangpu.
Oracle in China: 1,500+ employees, 800+ partners
I had not been to China since February 2004. Ironically, my host for that trip was Agile Software, now part of the extended Oracle family. As I said last week, I came here to get a better understanding of the Chinese software market, not to hear any new product announcements. Outside of a detailed presentation on the recently announced 11g database, Oracle made no product announcements. The primary news was the announcement of plans to open a new Oracle Asia Research and Development Center (OARDC) in Shanghai. This will be the third in China. Oracle opened the first development center in Shenzhen in June 2002 and the second in Beijing in October 2003.
Oracle OpenWorld Asia Pacific 2007 drew an estimated 8,000 attendees to Shanghai this week. This was twice the attendance of the previous event held here three years ago. About 87% of the attendees were drawn from China, Hong Kong, and Taiwan. Most were partners or employees. Oracle has more than 1,500 employees spread across 13 branch offices in China—there were eight offices a year ago. These resources are backed by more than 800 partners. The vast majority are local firms. These partners are very important to the region as the channel accounts for more than 90% of Oracle’s revenue here.
Unlike the U.S. market, it is harder to discern between independent software vendors (ISVs), resellers, and integrators in China. Often partners play multiple roles. Some also embed Oracle software into devices and other products. To draw ISVs to Oracle database and middleware products, Oracle has opened two partner solution centers that are co-located with the existing OARDCs in Beijing and Shenzhen. To date, more than 150 ISVs have been through the centers to port their applications to Oracle technologies and/or integrate with Oracle applications.
Ironically, the ISV partners include UFIDA Software and Kingdee International Software Group Company Limited. Both are fierce Oracle competitors in the ERP market for small and midsize businesses. Kingdee has been rumored to be an Oracle acquisition target.
7,000+ database customers, 700+ apps customers
One executive estimated that OpenWorld drew more than 3,600 customers and prospects. This figure may be a little low as many business partners paid for their customers and prospects to attend. Nonetheless, this would represent a sizeable number of Oracle’s 7,000 customers in China. Nearly all use its database.
It seems that the large banking, telecommunications, utilities, and energy firms use Oracle’s E-Business Suite, while smaller industrial manufacturers and energy producers and small and large engineering and construction companies deploy Oracle’s J.D. Edwards software. There are some installations of Siebel and PeopleSoft though Oracle executives said that these companies had very little presence here until after Oracle acquired them. To emphasize the point, one executive said Siebel had 16 employees here before Oracle purchased the firm.
Oracle has high hopes for Hyperion sales in China. While its classic customer has been the CIO, the bet is that Hyperion will help open up the door to the CFO’s office. Demand is building here for business intelligence and performance management software.
While walking around the convention center, I was struck by the relative youth of the attendees. Oracle’s major U.S. events tend to attract people in the 35 to 55 range. Here, most attendees appeared to be under 35. One Oracle executive confirmed that buyers tend to be younger here, even in the public sector. I viewed this as a positive indicator for the future of technology spending and deployment.
The real question: how big is the Chinese market?
Given that China has a population of more than 1.3 billion, 7,000 customers seems like a modest achievement, particularly since Oracle has had a presence here since 1989. This prompts the question, how big could Oracle China become? No one I met seemed to have a handle on the size of the potential market, especially the number of small and midsize businesses.
While SAP is acknowledged as the primary threat, custom software appears to be the real competition in the largest accounts. It’s only been in the last five years that the government has encouraged enterprises to use packaged software and offered them incentives.
As you might guess, Oracle declined to break out its revenue for China. Executives would only say that China is the “sixth biggest market” for Oracle and the third largest in Asia, presumably after Japan and India. This could change quickly—China is poised to overtake Germany this year to become the third largest economy after the United States and Japan.
The only real color Oracle provided was on the overall market for Oracle Asia Pacific. The company said that the 29 countries comprising Asia Pacific accounted for $2.499B in FY07 revenues. This was up 24% over the previous year. In the recent concluded fiscal year, Asia Pacific accounted for 14% of Oracle total revenues and 19% of new license sales. Overall, the region represents 35,000 customers out of the total 275,000 customer base.
Reaching new customers through schools and OTN
According to the Shanghai Daily (July 31), Oracle has contributed more than $200M to China’s educational system since 2002. Five years ago, it started the investment with Oracle University which provided online training and certification to 600 participants. Over time it’s expanded down to primary and secondary schools via Think.com (www.think.com) which is a global online community for learning. The focus also includes college interns, new graduates, and post-graduate learning.
During a reception, we spoke with Derek Williams, executive vice president and chairman of Oracle Asia Pacific about his college recruiting plans. So far this year, he’s added 200 new college graduates in 12 cities and has plans for 100 more. He boasted that most have at least two degrees and are tri-lingual—in addition to Chinese and English, they also speak Japanese or Korean.
The overall hiring market is tight with demand exceeding supply. Mr. Williams estimates that they get 10,000 resumes in China for every 100 people they hire. Retention of younger people continues to be a challenge though turnover has yet to approach the levels of India—which has been in the high teens for many firms. The challenge is managing the lofty ambitions of today’s graduates.
While Oracle’s commitment to education has helped build the brand, it also benefits from the growing presence of the Oracle Technology Network (OTN). There are 245,000 members in China, up from 150,000 two years ago. China’s OTN membership is the second largest base in Asia, trailing only India.
Is Pakistan the next China? Who’s the next i-flex?
During one of the receptions I asked one Oracle Asia Pacific executive his views on which Asian country will become the next big market. The next day I asked two more executives the same question. I was stunned that all three instantly responded with the same answer—Pakistan. All three added Indonesia as another market to watch. Apparently some of the Indian IT boom has carried over the border to Pakistan. Rather than pursuing a business or engineering degree, enterprising students are choosing IT for a career.
I also asked the last two executives what they see as the Chinese equivalent of i-flex solutions, the India-based financial services software firm that is majority owned by Oracle. Based on their responses, you may want to keep an eye on Taiji Computer Corp. in the utilities market and Neusoft Group in telco, insurance, energy, and other sectors. Another company to watch is Digital China, a large IT services firm. While unknown outside of its core market, Digital China has emerged as one of Oracle’s top five global partners.
Add Shanghai to your list of must-see cities
On my 2004 trip, I also visited Suzhou, renowned for its Confucian gardens. This time I stayed within a five mile radius of Pudong, Shanghai. Nonetheless, if you haven’t been to Shanghai, add it to your list of must-see cities because of how well the city appears to embrace and manage change. It’s especially impressive when you consider that Shanghai spans 2,239 square miles, or nearly 100 times the island of Manhattan (23.7 square miles). I wouldn’t visit during the summer months, though.
If you come, watch out for the drivers. In some countries, pedestrians have the right of way. Here they are viewed as potential speed bumps. On the walk over this morning, a truck and two taxis attempted to turn me into a hood ornament. It was as though they were practicing their human dodge ball moves.
Next week: Back in the USA
By the time you get this, I will have spent 17 or 18 hours flying home. That’s assuming the air gods are good to me in Shanghai and Chicago. It’s that last leg that is the wild card.
In the meantime, I welcome your feedback and ideas—brichardson@amrresearch.com. What do you think will happen in the Chinese market? Will the large software and services firms become major global players or will they be content serving the enormous domestic market? Will Pakistan be the next important global tech market? Should Human Dodge Ball be an exhibition sport at the 2008 Olympics in Beijing?
Friday, July 20, 2007
Wednesday, July 11, 2007
FT.com / Technology - E-procurement: From chaos comes the ‘eBay for business’
FT.com / Technology - E-procurement: From chaos comes the ‘eBay for business’
E-procurement: From chaos comes the ‘eBay for business’
By Andrew Baxter
Published: July 11 2007 12:23 | Last updated: July 11 2007 12:23
The rapid pace of development in consumer technology has made some enterprise IT look clunky. This is certainly the case with corporate e-procurement – the purchasing of workplace goods and services online.
At home, online shoppers buy quickly and easily from a range of websites, all of which have invested heavily in making their sites as simple and intuitive as possible. The corporate world has largely missed out. But now there is growing recognition that enhanced user-friendliness could be the key to increasing the usage of e-procurement systems and extracting more benefits from them.
“If you ask any of the e-procurement vendors today for a demonstration you can guarantee it’s going to look like an eBay shopping experience,” says Sharon Crawford, principal analyst at Quocirca. “There are going to be shopping baskets and clicks and so on – everybody has built that into their software to make it easier for any end-user to participate in purchasing.”
Because the process increasingly resembles an online consumer purchase, organisations can devolve the buying process much more effectively to end users who are not purchasing professionals. It could also mean companies can keep a closer eye on who is buying what.
One of the companies in the vanguard of this new approach to e-procurement is UK-based ProcServe, which has developed a commercial e-procurement system of the same name and also led a consortium that is delivering a programme called Zanzibar for the UK public sector.
The interface for Zanzibar, launched last year, was modelled on consumer sites such as lastminute.com and eBay, says Veera Johnson, ProcServe’s chief executive. “We tried to relate it back to what experience I would want if I was a public sector employee, so the debate was about usability and not about procurement language,” she says.
This challenges long-held assumptions about e-procurement – for example, that it requires huge amounts of training because of its complexity. “The user interface is absolutely crucial for getting people to use the system based on their own experiences,” says Ms Johnson. “Training and driving the adoption of the system become easier.”
If properly implemented, corporate e-procurement should be like “eBay for business”, says Lyn Duncan, business development director at @UK PLC, a company that works with businesses to enable them to trade online quickly with their customers. Once purchasing professionals have sorted out issues such as contracts with suppliers, and who is allowed to buy what from whom, the clicking and buying for the rest of the organisation should be simple, she says.
“There are lots of people with enterprise solutions who want to make this stuff complex, because it is expensive,” says Ms Duncan. In contrast, the @UK system uses the same interface for public sector e-procurement as it does for consumer purchases. “You can set up favourites – it works just like a Tesco [online] shopping list.”
One target market for ProcServe, a PA Consulting Group company, is schools, which need a simple e-procurement system that can be used by bursars, teachers and secretaries rather than e-marketplace professionals. By last month, 600 UK schools were using the system, and a national roll-out is planned this summer.
Another cherished assumption with e-procurement is that, to increase efficiency and control, it makes sense for organisations to restrict the number of users. But once a system becomes as simple as a home shopping website, more employees will try to use it if they can.
The UK Department of Work and Pensions, one of the earliest Zanzibar customers, will probably have 30,000 users on the system once it has reached the next stage of its implementation, says Ms Johnson. That sounds a recipe for chaos, but all the purchases are made via a central collaborative contract and the entire process is electronic, from sending the purchase order to receiving the invoice, so the number and size of orders becomes largely irrelevant, even to suppliers.
As systems such as this devolve buying throughout an organisation, however, there is a need to prevent the free-for-all that the modern, intuitive home shopping website represents. This explains why corporate attitudes to user-friendliness have often been ambivalent.
Brett Mauser, director of global procurement at NCR, recalls a comment from the company’s chief purchasing officer several years ago when the US retail systems, ATM and IT services company was considering a web-based e-procurement system: “Why would we want to make it easier for people to spend money faster? What we want is for the right people to buy the right things at the right price.”
Without wishing to make web-based procurement deliberately cumbersome, says Mr Mauser, companies need a balance between user-friendliness and control. “We’re not an L.L.Bean or a Lands’ End, which have been given awards for their usability. It’s very easy to shop and buy stuff from them – they want it that way so people spend more.”
The big fear for organisations has been that employees would use the web for “maverick spending” on items that do not conform to their standards or – as often occurs with online travel – deals that look like a bargain but result in the company losing out on a discount for multiple or bulk purchases.
“One of the challenges is that there are always nice things that people will try to find a way to buy, or suppliers will find a way to users,” says Mr Mauser.
NCR, along with many other large companies, directs its buyers of indirect materials, such as office supplies, to various approved suppliers’ websites. The supplier will host an NCR page with special prices, and everyone from the company pays the same price. The supplier will then send a summary bill electronically.
Many organisations, however, want employees to go to one online source – what Ms Crawford calls a “central backbone” – which handles all the relationships with suppliers and from which purchasers can draw down what they need. This is the approach taken by ProcServe.
As employees from across the buying organisation gain access to the catalogues that have been loaded on to the system, and make purchases, their managers achieve visibility, at a very detailed level, of what is being bought by whom.
The St Mary’s National Health Service Trust in London is one of a group of hospitals introducing the Zanzibar system and Andrew Holden, the trust’s finance director, is impressed by the greater level of control over maverick purchases that the system will give.
“In the past, a catalogue might arrive on your desk and you are a doctor in orthopaedics, and you say: ‘I like that, I’ll buy one of them,’ but now you won’t see it,” says Mr Holden. “The ability to make sure people stick to buying what you want them to is much greater.”
The hope is that a user-friendly interface will encourage more employees to go through the right channels when they buy items online at work, reducing organisations’ worries about indiscriminate web-based purchasing and ensuring that companies make the most of the deals they have made with suppliers.
“Because e-procurement systems have improved, people are less likely to do their own thing, they can browse catalogues and see pictures, and that has reduced maverick spending,” says Ms Crawford at Quocirca. “This is one place where, because of the importance of purchasing and the control of it, it is recognised that the user experience at work needs to be as good as it is at home.”
Copyright The Financial Times Limited 2007
E-procurement: From chaos comes the ‘eBay for business’
By Andrew Baxter
Published: July 11 2007 12:23 | Last updated: July 11 2007 12:23
The rapid pace of development in consumer technology has made some enterprise IT look clunky. This is certainly the case with corporate e-procurement – the purchasing of workplace goods and services online.
At home, online shoppers buy quickly and easily from a range of websites, all of which have invested heavily in making their sites as simple and intuitive as possible. The corporate world has largely missed out. But now there is growing recognition that enhanced user-friendliness could be the key to increasing the usage of e-procurement systems and extracting more benefits from them.
“If you ask any of the e-procurement vendors today for a demonstration you can guarantee it’s going to look like an eBay shopping experience,” says Sharon Crawford, principal analyst at Quocirca. “There are going to be shopping baskets and clicks and so on – everybody has built that into their software to make it easier for any end-user to participate in purchasing.”
Because the process increasingly resembles an online consumer purchase, organisations can devolve the buying process much more effectively to end users who are not purchasing professionals. It could also mean companies can keep a closer eye on who is buying what.
One of the companies in the vanguard of this new approach to e-procurement is UK-based ProcServe, which has developed a commercial e-procurement system of the same name and also led a consortium that is delivering a programme called Zanzibar for the UK public sector.
The interface for Zanzibar, launched last year, was modelled on consumer sites such as lastminute.com and eBay, says Veera Johnson, ProcServe’s chief executive. “We tried to relate it back to what experience I would want if I was a public sector employee, so the debate was about usability and not about procurement language,” she says.
This challenges long-held assumptions about e-procurement – for example, that it requires huge amounts of training because of its complexity. “The user interface is absolutely crucial for getting people to use the system based on their own experiences,” says Ms Johnson. “Training and driving the adoption of the system become easier.”
If properly implemented, corporate e-procurement should be like “eBay for business”, says Lyn Duncan, business development director at @UK PLC, a company that works with businesses to enable them to trade online quickly with their customers. Once purchasing professionals have sorted out issues such as contracts with suppliers, and who is allowed to buy what from whom, the clicking and buying for the rest of the organisation should be simple, she says.
“There are lots of people with enterprise solutions who want to make this stuff complex, because it is expensive,” says Ms Duncan. In contrast, the @UK system uses the same interface for public sector e-procurement as it does for consumer purchases. “You can set up favourites – it works just like a Tesco [online] shopping list.”
One target market for ProcServe, a PA Consulting Group company, is schools, which need a simple e-procurement system that can be used by bursars, teachers and secretaries rather than e-marketplace professionals. By last month, 600 UK schools were using the system, and a national roll-out is planned this summer.
Another cherished assumption with e-procurement is that, to increase efficiency and control, it makes sense for organisations to restrict the number of users. But once a system becomes as simple as a home shopping website, more employees will try to use it if they can.
The UK Department of Work and Pensions, one of the earliest Zanzibar customers, will probably have 30,000 users on the system once it has reached the next stage of its implementation, says Ms Johnson. That sounds a recipe for chaos, but all the purchases are made via a central collaborative contract and the entire process is electronic, from sending the purchase order to receiving the invoice, so the number and size of orders becomes largely irrelevant, even to suppliers.
As systems such as this devolve buying throughout an organisation, however, there is a need to prevent the free-for-all that the modern, intuitive home shopping website represents. This explains why corporate attitudes to user-friendliness have often been ambivalent.
Brett Mauser, director of global procurement at NCR, recalls a comment from the company’s chief purchasing officer several years ago when the US retail systems, ATM and IT services company was considering a web-based e-procurement system: “Why would we want to make it easier for people to spend money faster? What we want is for the right people to buy the right things at the right price.”
Without wishing to make web-based procurement deliberately cumbersome, says Mr Mauser, companies need a balance between user-friendliness and control. “We’re not an L.L.Bean or a Lands’ End, which have been given awards for their usability. It’s very easy to shop and buy stuff from them – they want it that way so people spend more.”
The big fear for organisations has been that employees would use the web for “maverick spending” on items that do not conform to their standards or – as often occurs with online travel – deals that look like a bargain but result in the company losing out on a discount for multiple or bulk purchases.
“One of the challenges is that there are always nice things that people will try to find a way to buy, or suppliers will find a way to users,” says Mr Mauser.
NCR, along with many other large companies, directs its buyers of indirect materials, such as office supplies, to various approved suppliers’ websites. The supplier will host an NCR page with special prices, and everyone from the company pays the same price. The supplier will then send a summary bill electronically.
Many organisations, however, want employees to go to one online source – what Ms Crawford calls a “central backbone” – which handles all the relationships with suppliers and from which purchasers can draw down what they need. This is the approach taken by ProcServe.
As employees from across the buying organisation gain access to the catalogues that have been loaded on to the system, and make purchases, their managers achieve visibility, at a very detailed level, of what is being bought by whom.
The St Mary’s National Health Service Trust in London is one of a group of hospitals introducing the Zanzibar system and Andrew Holden, the trust’s finance director, is impressed by the greater level of control over maverick purchases that the system will give.
“In the past, a catalogue might arrive on your desk and you are a doctor in orthopaedics, and you say: ‘I like that, I’ll buy one of them,’ but now you won’t see it,” says Mr Holden. “The ability to make sure people stick to buying what you want them to is much greater.”
The hope is that a user-friendly interface will encourage more employees to go through the right channels when they buy items online at work, reducing organisations’ worries about indiscriminate web-based purchasing and ensuring that companies make the most of the deals they have made with suppliers.
“Because e-procurement systems have improved, people are less likely to do their own thing, they can browse catalogues and see pictures, and that has reduced maverick spending,” says Ms Crawford at Quocirca. “This is one place where, because of the importance of purchasing and the control of it, it is recognised that the user experience at work needs to be as good as it is at home.”
Copyright The Financial Times Limited 2007
FT.com / Technology - What’s new: SMEs offered business intelligence from Oracle
FT.com / Technology - What’s new: SMEs offered business intelligence from Oracle
What’s new: SMEs offered business intelligence from Oracle
By Geoff Nairn
Published: July 11 2007 09:43 | Last updated: July 11 2007 09:43
Oracle is bringing business intelligence to the masses with Oracle BI Standard Edition One aimed at SMEs and departmental users.
Oracle did the same with its flagship database to produce a cut-down version called Oracle 10g Standard Edition One, which this lies at the heart of the new BI offering and includes tools for creating dashboards, ad hoc reporting and publishing. The BI SE One software costs $1,000 for each user, minimum five, maximum 50.
Asset management
Infor, the fast-growing US enterprise software vendor, has unveiled Infor EAM Enterprise Edition, a new version of its enterprise asset management (EAM) solution.
The product aims to help businesses in the fleet management, manufacturing, facilities and life sciences industries track their capital assets.
Future releases will include more industries. The product was previously known as Infor Datastream and stems from Infor’s 2006 acquisition of Datastream, an EAM specialist.
Searching the abstract
Xerox says its new search technology, FactSpotter, goes beyond the limitations of traditional keyword-based searches.
FactSpotter looks not only for keywords in a query but also the context of the document containing those words. It can also handle abstract concepts.
Xerox plans to target FactSpotter at the legal and regulatory compliance market and possibly other vertical applications, but there are no plans to compete with the likes of Google in consumer search.
Power saver
Hewlett-Packard offers green storage with a trio of mid-range disc arrays named EVA4100, 6100 and 8100, which improve power efficiency by up to 45 per cent over their predecessors.
HP claims a big data centre with a monthly storage electricity bill of $3,000 could save as much as $18,000 a year in power and cooling costs.
Social integration
IBM’s Lotus software hopes for a new lease of life thanks to social networking technologies such as wikis and blogs.
IBM claims Lotus Connections will make it easier for businesses to integrate social networking into their existing IT infrastructures and commonly used applications.
Lotus is best known for Notes, once the leading business e-mail application before Microsoft’s Exchange took the top slot. Lotus Connections costs $110 per user.
Google and Linux
Google has finally released a version of its popular Google Desktop search application for the Linux operating system. The free program is already offered for Windows and Mac OS X users and now there is a Linux version, although in a typical Google move, it is currently only a beta version. The software was developed by Google’s Beijing engineering team. As well as two Chinese languages, it comes in English and eight other tongues.
Copyright The Financial Times Limited 2007
What’s new: SMEs offered business intelligence from Oracle
By Geoff Nairn
Published: July 11 2007 09:43 | Last updated: July 11 2007 09:43
Oracle is bringing business intelligence to the masses with Oracle BI Standard Edition One aimed at SMEs and departmental users.
Oracle did the same with its flagship database to produce a cut-down version called Oracle 10g Standard Edition One, which this lies at the heart of the new BI offering and includes tools for creating dashboards, ad hoc reporting and publishing. The BI SE One software costs $1,000 for each user, minimum five, maximum 50.
Asset management
Infor, the fast-growing US enterprise software vendor, has unveiled Infor EAM Enterprise Edition, a new version of its enterprise asset management (EAM) solution.
The product aims to help businesses in the fleet management, manufacturing, facilities and life sciences industries track their capital assets.
Future releases will include more industries. The product was previously known as Infor Datastream and stems from Infor’s 2006 acquisition of Datastream, an EAM specialist.
Searching the abstract
Xerox says its new search technology, FactSpotter, goes beyond the limitations of traditional keyword-based searches.
FactSpotter looks not only for keywords in a query but also the context of the document containing those words. It can also handle abstract concepts.
Xerox plans to target FactSpotter at the legal and regulatory compliance market and possibly other vertical applications, but there are no plans to compete with the likes of Google in consumer search.
Power saver
Hewlett-Packard offers green storage with a trio of mid-range disc arrays named EVA4100, 6100 and 8100, which improve power efficiency by up to 45 per cent over their predecessors.
HP claims a big data centre with a monthly storage electricity bill of $3,000 could save as much as $18,000 a year in power and cooling costs.
Social integration
IBM’s Lotus software hopes for a new lease of life thanks to social networking technologies such as wikis and blogs.
IBM claims Lotus Connections will make it easier for businesses to integrate social networking into their existing IT infrastructures and commonly used applications.
Lotus is best known for Notes, once the leading business e-mail application before Microsoft’s Exchange took the top slot. Lotus Connections costs $110 per user.
Google and Linux
Google has finally released a version of its popular Google Desktop search application for the Linux operating system. The free program is already offered for Windows and Mac OS X users and now there is a Linux version, although in a typical Google move, it is currently only a beta version. The software was developed by Google’s Beijing engineering team. As well as two Chinese languages, it comes in English and eight other tongues.
Copyright The Financial Times Limited 2007
Wednesday, July 04, 2007
FTD.de - IT+Telekommunikation - Nachrichten - Imageschlacht der Software-Giganten
FTD.de - IT+Telekommunikation - Nachrichten - Imageschlacht der Software-Giganten
SAP startet im Rechtsstreit mit Oracle um die amerikanische Tochter Tomorrow Now die groߥ PR-Offensive. Es geht um Schadensbegrenzung.
SAP startet im Rechtsstreit mit Oracle um die amerikanische Tochter Tomorrow Now die groߥ PR-Offensive. Es geht um Schadensbegrenzung.
Monday, July 02, 2007
Look Behind the Numbers at Oracle's Earnings
Look Behind the Numbers at Oracle's Earnings
Oracle's earnings call for 4Q07 posted impressive gains in all segments. But clients must understand what the numbers mean for market momentum in their respective areas as they consider Oracle's solutions.
Oracle's earnings call for 4Q07 posted impressive gains in all segments. But clients must understand what the numbers mean for market momentum in their respective areas as they consider Oracle's solutions.
Friday, June 29, 2007
“Performance Transparency;” Shai Surfaces; Can Greenough Do It Again? | AMR Research
“Performance Transparency;” Shai Surfaces; Can Greenough Do It Again? | AMR Research
Listening to the earnings calls of Oracle and SAP, I only wish that they provided the same level of “performance transparency” as Tata Consultancy Services (TCS). A few years ago, SAP used to break out performance by vertical, by “pillar” or application category (such as ERP, customer management, supply chain management), and by software license and maintenance. It no longer provides that much color on the business, and the license and maintenance are combined into “software and software-related service revenue.”
The increasing levels of opaqueness make it really difficult for analysts or serious investors to get a full view. While I’m sure that’s the intent, why?
Look at Oracle: Since completing the PeopleSoft purchase in January 2005, the company has made 30 additional acquisitions, spending close to $24B in the process. But how much do investors know about the success of the acquisitions outside of some vague references to organic versus inorganic growth?
Don’t get me wrong. The have succeeded based on the strong growth in revenue, profits, cash flow, and market cap. But as a shareholder, do you know if PeopleSoft or Siebel have generated revenue or licenses anywhere near their purchase prices? Do you have a clue as to what percent of these customers renewed their annual maintenance contracts or bought more Oracle software or services?
Do you have any idea what an acquired customer is worth to Oracle, or SAP, or any of their other competitors? An Oracle sales executive once told me, “I tell my people to never lose a deal based on price because over the next five years, that customer is going to generate four to eight times the initial sales price in follow-on business with us.” Is there a model that we should be watching or building?
Contrast this with TCS
For last week’s call, Oracle provided a 14-page press release and an audio conference. On its last call, SAP arguably went one step better by providing video and hard copy of all of the presentations. In both cases, each could have provided more information.
If you have five minutes, go to the TCS’s website and click on the “investors” tab up near the top. Once on that page, open the presentations given at the May 7 analyst day in New York. Among the charts you will find are the number of clients TCS has with deals valued at $10M-to-$20M range, $20M-to-$50M, and $50M-plus, as well as the type of engagement (such as “global package implementation,” “end-to-end solutions,” and the like).
Another slide shows revenue growth for the last several years, with base revenue, organic revenue, and inorganic revenue. Later in the deck, there’s a detailed multiyear breakdown of revenue by service. This looks at assurance services, business process outsourcing, infrastructure services, asset leverage, business intelligence, enterprise solutions, and other offerings. Other slides have detailed discussions of growth strategies, cost reduction moves, and hiring plans and concerns.
I sat through a similar presentation by TCS executives when they came to Boston last spring. When it was over, you really seemed to have the sense that not only did they understand their opportunities and challenges, but also the audience did as well. This level of openness or performance transparency is not new to TCS. You will find that all of the major Indian services firms provide a lot more detail than many of their application brethren.
Calling all experts: Rob Schwartz, Jefferies & Company
Concerned that I may be overreacting to the Oracle and SAP calls, I talked to Jim Shepherd about the ever-dwindling fountain of information that flows from the largest vendors (be sure to read Shep’s in-depth analysis of Oracles Q4 and FY07 earnings in News of Note below).We talked about whether they are doing this for competitive reasons (like they don't want the other to know) or to limit comparisons from one period to the next, or has there by some other regulatory changes that is limiting a company’s ability to share more detailed information?
Shep suggested that I call an expert—Robert Schwartz, managing director of equities research at Jefferies & Company. We’ve known Rob for a long time and trust his insights. I sent him an e-mail that expressed the “why are they doing this” points from the previous paragraph. Here’s his response:
The “knife edge problem”
“Your piece is timely and your view on point.
The problem is true, especially post-acquisition in this rapidly consolidating industry. The universal excuse I hear from management teams is that the acquired organization are integrated so fast and all product lines (acquired or not) are now bundled for the customer so seamlessly at pricing, that allocation of revenue to product lines is an arbitrary exercise. But in so many cases, the field organizations run overlay or parallel sales teams by product or vertical. The parent company manages to figure out a segment revenue number for sales comp, so why isn’t that a good approximation for the Street?
We all recognize the “knife edge problem” for management from breaking out segment performance, particularly after an acquisition. If the acquired revenue is high, the company is questioned about slow growth in its traditional businesses. If the acquisition out-performs early after it is bought, the upside can be dismissed as a springboard from deals held back by the acquired company to aid the post-acquisition performance.
The same skepticism is given to business unit performance even if there is no acquisition. In a solid quarter often there is some segment that looks light. It seems some analysts and investors regularly ignore the natural variability of segment performance and focus on the lower-than-expected numbers.
Management is now eliminating the scrutiny by aggregating. They report less detail because they can, not because of competitive concerns or regulators preventing them from giving more visibility into the business. If they couldn’t really get at revenue by product line, they could give us other metrics—number of deals with a product from the vertical in the mix, number of new customers to the product. Management shouldn’t expect full credit for cross-selling and integration success if they won’t give us data. The criticism and questions comes with the territory and will be forgotten if the aggregate cash, revenue, and profit numbers keep rising.
Oracle would not quote organic license growth for Q4. The only help it gave investors was a license number for the Hyperion acquisition, which closed in the quarter. Yet, on the Q3 call, Safra Katz gave the applications license revenue growth rate estimate, excluding i-flex, MetaSolv, Portal Software, SPL WorldGroup, and even Siebel. It’s in the transcript. The explanation for the limited reporting this quarter was a “materiality” hurdle on the size of the deals—i.e., if they aren’t big enough, the accountants aren’t requiring disclosure—but it is not clear what changed for the other recent acquisitions to make them immaterial. Since Oracle’s explicit strategy is to consolidate the applications world, it is relevant to investors to know how acquisitions fare after they are brought on board.
To the point, the Q4 Q&A had questions about how long it takes to get an acquisition integrated and how we should layer them into our models.
Hope this helps.”
Yes, it does. Thanks Rob.
Shai Agassi surfaces—sort of—at Better PLC
A few days after Shai Agassi left SAP in late March, he noted on his blog (shaiagassi.typepad.com) that he had decided to take 100 days to go through the 100 or so offers he received in the first 100 hours. Well, we’re approaching the 100-day mark.
His latest post is called “Blog Interrupted.” It opens with an apology for not updating the blog in three weeks. He then adds that “we are raising money to start this new company called Better PLC. After years of fighting for budget allocations, I forgot how much fun it is to actually go convince investors that your idea has enough merit that they should put their money, and much more importantly - their trust in you.”
That got our attention so we Googled “Better PLC.” The only mention was that of a summer internship opportunity. Here is the description:
“This is the ‘Google’ opportunity of electric automotive transportation. Come be a part of an exciting project that will have an immense impact on climate change, the transportation industry, and the way we commute on a daily basis.
Located in Palo Alto, California, Better PLC is a start-up company still in stealth mode that is focused on scaling the deployment of non-hydrocarbon powered cars through a combination of infrastructure, public policy and financial frameworks. The company establishes and manages a multi-year transformation mega-project that drives complete transformation at the scale of city to country.
This summer we are looking to build a series of electric car concepts and prove technical feasibility of various ideas which will serve as prototypes for our car and battery manufacturers (we are working with various manufacturers including one of the top 5 carmakers in the world).”
I’m assuming that the company name is to be pronounced “Better Place.” We will attempt to reach Mr. Agassi to confirm this and to search for more details. Look for an update in a future First Thing Monday.
Former SSA Global CEO Mike Greenough surfaces, too
Speaking of new sightings, we received a press release that a unit of Cerberus Capital Management had acquired Torex Retail for $420M, and that the large private equity firm had named Mike Greenough as Torex’s new chairman and CEO (see the News of Note item on this below).
Mr. Greenough was formerly the chairman, president, and CEO of SSA Global. During his five years at the helm, he acquired at least a dozen software companies, including Baan, Epiphany, EXE, Infinium, and Marcam. In May 2006, he sold SSA Global to Infor Global Solutions for $1.4B in cash. While I was unsuccessful in my attempt to reach him before writing this, I am fairly confident that he will repeat his strategy of growth through acquisitions. Cerberus is a good partner for him; according to its website, the firm has $25B under management.
Listening to the earnings calls of Oracle and SAP, I only wish that they provided the same level of “performance transparency” as Tata Consultancy Services (TCS). A few years ago, SAP used to break out performance by vertical, by “pillar” or application category (such as ERP, customer management, supply chain management), and by software license and maintenance. It no longer provides that much color on the business, and the license and maintenance are combined into “software and software-related service revenue.”
The increasing levels of opaqueness make it really difficult for analysts or serious investors to get a full view. While I’m sure that’s the intent, why?
Look at Oracle: Since completing the PeopleSoft purchase in January 2005, the company has made 30 additional acquisitions, spending close to $24B in the process. But how much do investors know about the success of the acquisitions outside of some vague references to organic versus inorganic growth?
Don’t get me wrong. The have succeeded based on the strong growth in revenue, profits, cash flow, and market cap. But as a shareholder, do you know if PeopleSoft or Siebel have generated revenue or licenses anywhere near their purchase prices? Do you have a clue as to what percent of these customers renewed their annual maintenance contracts or bought more Oracle software or services?
Do you have any idea what an acquired customer is worth to Oracle, or SAP, or any of their other competitors? An Oracle sales executive once told me, “I tell my people to never lose a deal based on price because over the next five years, that customer is going to generate four to eight times the initial sales price in follow-on business with us.” Is there a model that we should be watching or building?
Contrast this with TCS
For last week’s call, Oracle provided a 14-page press release and an audio conference. On its last call, SAP arguably went one step better by providing video and hard copy of all of the presentations. In both cases, each could have provided more information.
If you have five minutes, go to the TCS’s website and click on the “investors” tab up near the top. Once on that page, open the presentations given at the May 7 analyst day in New York. Among the charts you will find are the number of clients TCS has with deals valued at $10M-to-$20M range, $20M-to-$50M, and $50M-plus, as well as the type of engagement (such as “global package implementation,” “end-to-end solutions,” and the like).
Another slide shows revenue growth for the last several years, with base revenue, organic revenue, and inorganic revenue. Later in the deck, there’s a detailed multiyear breakdown of revenue by service. This looks at assurance services, business process outsourcing, infrastructure services, asset leverage, business intelligence, enterprise solutions, and other offerings. Other slides have detailed discussions of growth strategies, cost reduction moves, and hiring plans and concerns.
I sat through a similar presentation by TCS executives when they came to Boston last spring. When it was over, you really seemed to have the sense that not only did they understand their opportunities and challenges, but also the audience did as well. This level of openness or performance transparency is not new to TCS. You will find that all of the major Indian services firms provide a lot more detail than many of their application brethren.
Calling all experts: Rob Schwartz, Jefferies & Company
Concerned that I may be overreacting to the Oracle and SAP calls, I talked to Jim Shepherd about the ever-dwindling fountain of information that flows from the largest vendors (be sure to read Shep’s in-depth analysis of Oracles Q4 and FY07 earnings in News of Note below).We talked about whether they are doing this for competitive reasons (like they don't want the other to know) or to limit comparisons from one period to the next, or has there by some other regulatory changes that is limiting a company’s ability to share more detailed information?
Shep suggested that I call an expert—Robert Schwartz, managing director of equities research at Jefferies & Company. We’ve known Rob for a long time and trust his insights. I sent him an e-mail that expressed the “why are they doing this” points from the previous paragraph. Here’s his response:
The “knife edge problem”
“Your piece is timely and your view on point.
The problem is true, especially post-acquisition in this rapidly consolidating industry. The universal excuse I hear from management teams is that the acquired organization are integrated so fast and all product lines (acquired or not) are now bundled for the customer so seamlessly at pricing, that allocation of revenue to product lines is an arbitrary exercise. But in so many cases, the field organizations run overlay or parallel sales teams by product or vertical. The parent company manages to figure out a segment revenue number for sales comp, so why isn’t that a good approximation for the Street?
We all recognize the “knife edge problem” for management from breaking out segment performance, particularly after an acquisition. If the acquired revenue is high, the company is questioned about slow growth in its traditional businesses. If the acquisition out-performs early after it is bought, the upside can be dismissed as a springboard from deals held back by the acquired company to aid the post-acquisition performance.
The same skepticism is given to business unit performance even if there is no acquisition. In a solid quarter often there is some segment that looks light. It seems some analysts and investors regularly ignore the natural variability of segment performance and focus on the lower-than-expected numbers.
Management is now eliminating the scrutiny by aggregating. They report less detail because they can, not because of competitive concerns or regulators preventing them from giving more visibility into the business. If they couldn’t really get at revenue by product line, they could give us other metrics—number of deals with a product from the vertical in the mix, number of new customers to the product. Management shouldn’t expect full credit for cross-selling and integration success if they won’t give us data. The criticism and questions comes with the territory and will be forgotten if the aggregate cash, revenue, and profit numbers keep rising.
Oracle would not quote organic license growth for Q4. The only help it gave investors was a license number for the Hyperion acquisition, which closed in the quarter. Yet, on the Q3 call, Safra Katz gave the applications license revenue growth rate estimate, excluding i-flex, MetaSolv, Portal Software, SPL WorldGroup, and even Siebel. It’s in the transcript. The explanation for the limited reporting this quarter was a “materiality” hurdle on the size of the deals—i.e., if they aren’t big enough, the accountants aren’t requiring disclosure—but it is not clear what changed for the other recent acquisitions to make them immaterial. Since Oracle’s explicit strategy is to consolidate the applications world, it is relevant to investors to know how acquisitions fare after they are brought on board.
To the point, the Q4 Q&A had questions about how long it takes to get an acquisition integrated and how we should layer them into our models.
Hope this helps.”
Yes, it does. Thanks Rob.
Shai Agassi surfaces—sort of—at Better PLC
A few days after Shai Agassi left SAP in late March, he noted on his blog (shaiagassi.typepad.com) that he had decided to take 100 days to go through the 100 or so offers he received in the first 100 hours. Well, we’re approaching the 100-day mark.
His latest post is called “Blog Interrupted.” It opens with an apology for not updating the blog in three weeks. He then adds that “we are raising money to start this new company called Better PLC. After years of fighting for budget allocations, I forgot how much fun it is to actually go convince investors that your idea has enough merit that they should put their money, and much more importantly - their trust in you.”
That got our attention so we Googled “Better PLC.” The only mention was that of a summer internship opportunity. Here is the description:
“This is the ‘Google’ opportunity of electric automotive transportation. Come be a part of an exciting project that will have an immense impact on climate change, the transportation industry, and the way we commute on a daily basis.
Located in Palo Alto, California, Better PLC is a start-up company still in stealth mode that is focused on scaling the deployment of non-hydrocarbon powered cars through a combination of infrastructure, public policy and financial frameworks. The company establishes and manages a multi-year transformation mega-project that drives complete transformation at the scale of city to country.
This summer we are looking to build a series of electric car concepts and prove technical feasibility of various ideas which will serve as prototypes for our car and battery manufacturers (we are working with various manufacturers including one of the top 5 carmakers in the world).”
I’m assuming that the company name is to be pronounced “Better Place.” We will attempt to reach Mr. Agassi to confirm this and to search for more details. Look for an update in a future First Thing Monday.
Former SSA Global CEO Mike Greenough surfaces, too
Speaking of new sightings, we received a press release that a unit of Cerberus Capital Management had acquired Torex Retail for $420M, and that the large private equity firm had named Mike Greenough as Torex’s new chairman and CEO (see the News of Note item on this below).
Mr. Greenough was formerly the chairman, president, and CEO of SSA Global. During his five years at the helm, he acquired at least a dozen software companies, including Baan, Epiphany, EXE, Infinium, and Marcam. In May 2006, he sold SSA Global to Infor Global Solutions for $1.4B in cash. While I was unsuccessful in my attempt to reach him before writing this, I am fairly confident that he will repeat his strategy of growth through acquisitions. Cerberus is a good partner for him; according to its website, the firm has $25B under management.
Wednesday, June 27, 2007
FT.com / Companies / IT - Oracle boosted by stronger sales
FT.com / Companies / IT - Oracle boosted by stronger sales
Oracle boosted by stronger sales
By Richard Waters in San Francisco
Published: June 26 2007 23:24 | Last updated: June 26 2007 23:24
The growth in Oracle’s applications business, the area where it competes most directly with German rival SAP, slowed notably in recent months, according to quarterly figures released on Tuesday.
However, stronger sales elsewhere helped the US software company top market forecasts for both revenues and earnings in the fourth and most important quarter of its fiscal year.
Oracle, which has used a string of acquisitions to mount a challenge to SAP, reported new licence revenue of $726m from its applications arm, up 13 per cent from a year ago, helped in part by the recent purchase of Hyperion. Given the much higher growth rate earlier in its fiscal year, the latest application results are likely to come as a disappointment to Oracle investors, according to Bruce Richardson, analyst at AMR Research.
Larry Ellison, chief executive, attributed the slowdown to “a very, very tough comparison” with the company’s performance in North America the year before. “It’s simply a matter of spectacular growth a year ago,” he said. Commenting on Oracle’s recent spate of acquisitions, Mr Ellison added: “I expect the pace to continue.”
Safra Catz, president and chief financial officer, said Oracle’s forecast of revenue growth of between 18-21 per cent in the coming quarter, typically the slowest in Oracle’s fiscal year, showed its confidence in a new product cycle that was driving growth in its core database business. “We are really going on all cylinders,” she added.
Overall, Oracle reported revenues of $5.8bn, up 20 per cent from a year before, though reported growth would have been a more moderate 16 per cent without foreign currency benefits. Net income rose 23 per cent to $1.6bn as Oracle boosted its margins.
Copyright The Financial Times Limited 2007
Oracle boosted by stronger sales
By Richard Waters in San Francisco
Published: June 26 2007 23:24 | Last updated: June 26 2007 23:24
The growth in Oracle’s applications business, the area where it competes most directly with German rival SAP, slowed notably in recent months, according to quarterly figures released on Tuesday.
However, stronger sales elsewhere helped the US software company top market forecasts for both revenues and earnings in the fourth and most important quarter of its fiscal year.
Oracle, which has used a string of acquisitions to mount a challenge to SAP, reported new licence revenue of $726m from its applications arm, up 13 per cent from a year ago, helped in part by the recent purchase of Hyperion. Given the much higher growth rate earlier in its fiscal year, the latest application results are likely to come as a disappointment to Oracle investors, according to Bruce Richardson, analyst at AMR Research.
Larry Ellison, chief executive, attributed the slowdown to “a very, very tough comparison” with the company’s performance in North America the year before. “It’s simply a matter of spectacular growth a year ago,” he said. Commenting on Oracle’s recent spate of acquisitions, Mr Ellison added: “I expect the pace to continue.”
Safra Catz, president and chief financial officer, said Oracle’s forecast of revenue growth of between 18-21 per cent in the coming quarter, typically the slowest in Oracle’s fiscal year, showed its confidence in a new product cycle that was driving growth in its core database business. “We are really going on all cylinders,” she added.
Overall, Oracle reported revenues of $5.8bn, up 20 per cent from a year before, though reported growth would have been a more moderate 16 per cent without foreign currency benefits. Net income rose 23 per cent to $1.6bn as Oracle boosted its margins.
Copyright The Financial Times Limited 2007
Tuesday, June 26, 2007
FTD.de - IT+Telekommunikation - Nachrichten - SAP-Gründer fürchtet Eigenkonkurrenz durch Mietsoftware
FTD.de - IT+Telekommunikation - Nachrichten - SAP-Gründer fürchtet Eigenkonkurrenz durch Mietsoftware
Mit seiner neuen Mittelstandssoftware wird sich der Walldorfer Software-Konzern SAP nach Einschätzung von Mitgründer und Aufsichtsratschef Hasso Plattner selbst Konkurrenz machen. Zuvor war das Management genau gegenteiliger Meinung gewesen.
Mit seiner neuen Mittelstandssoftware wird sich der Walldorfer Software-Konzern SAP nach Einschätzung von Mitgründer und Aufsichtsratschef Hasso Plattner selbst Konkurrenz machen. Zuvor war das Management genau gegenteiliger Meinung gewesen.
Saturday, June 23, 2007
Friday, June 22, 2007
Wednesday, June 20, 2007
Visiprise on SAP Brings Benefits But Needs a Clear Message
Visiprise on SAP Brings Benefits But Needs a Clear Message
SAP's move to partner with Visiprise in offering a manufacturing execution system will help to clarify SAP's product positioning. A consistent message is needed to make things easier for SAP customers.
SAP's move to partner with Visiprise in offering a manufacturing execution system will help to clarify SAP's product positioning. A consistent message is needed to make things easier for SAP customers.
Visiprise on SAP Brings Benefits But Needs a Clear Message
Visiprise on SAP Brings Benefits But Needs a Clear Message
SAP's move to partner with Visiprise in offering a manufacturing execution system will help to clarify SAP's product positioning. A consistent message is needed to make things easier for SAP customers.
SAP's move to partner with Visiprise in offering a manufacturing execution system will help to clarify SAP's product positioning. A consistent message is needed to make things easier for SAP customers.
Tuesday, June 19, 2007
FT.com / Home UK / UK - Supply Chain Management
FT.com / Home UK / UK - Supply Chain Management
Supply Chain Management
By Stephen Pritchard
Published: May 21 2007 12:41 | Last updated: May 21 2007 12:41
As recently as 20 years ago, the most reliable way to ensure on-time delivery of materials was to buy from companies that were close at hand.
Manufacturing businesses moving to “just-in-time” production methods ensured reliable deliveries of parts by setting up on-site supplier parks, such as those at Nissan’s UK plant in Sunderland, or Volkswagen’s commercial vehicle operations at Hanover, where supplies are fed directly into production lines by way of a 360m-long “logistics bridge”.
Supply Chain Management
By Stephen Pritchard
Published: May 21 2007 12:41 | Last updated: May 21 2007 12:41
As recently as 20 years ago, the most reliable way to ensure on-time delivery of materials was to buy from companies that were close at hand.
Manufacturing businesses moving to “just-in-time” production methods ensured reliable deliveries of parts by setting up on-site supplier parks, such as those at Nissan’s UK plant in Sunderland, or Volkswagen’s commercial vehicle operations at Hanover, where supplies are fed directly into production lines by way of a 360m-long “logistics bridge”.
Friday, June 15, 2007
Oracle Fights for its Share of Manufacturing | AMR Research
Oracle Fights for its Share of Manufacturing | AMR Research
Oracle MES by a nose
ERP vendors are once again leading the polls on manufacturing mindshare, early results from AMR Research’s latest survey shows. The survey of manufacturing operations software deployments and spending among select industries that AMR Research covers in discrete and process manufacturing indicate that, this time, Oracle is giving SAP a run for its marketing dollars. This is especially true in the mid-market, the next prime growth opportunity for Oracle and SAP. The preliminary results (and this could change quickly) show 49% of the more than 200 respondents in these industries claim to be using Oracle for manufacturing execution, while only 36% indicate they’ve deployed SAP in this capacity.
While Oracle hasn’t been matching SAP’s partnering and composite application development activities in manufacturing, this latest survey confirms that deep manufacturing functionality embedded in Oracle’s Enterprise One and E-Business Suite is recognized and broadly deployed by its customers. Oracle also seems to be giving SAP a run for its money in new manufacturing deployments; users are in fact looking beyond SAP’s partner programs, reseller agreements, integration toolkits, and manufacturing marketing initiatives. They are giving Oracle equal consideration when it comes to future manufacturing software investments. For a more detailed analysis of this horse race, see “Oracle Fights for its Share of Manufacturing”.
Oracle MES by a nose
ERP vendors are once again leading the polls on manufacturing mindshare, early results from AMR Research’s latest survey shows. The survey of manufacturing operations software deployments and spending among select industries that AMR Research covers in discrete and process manufacturing indicate that, this time, Oracle is giving SAP a run for its marketing dollars. This is especially true in the mid-market, the next prime growth opportunity for Oracle and SAP. The preliminary results (and this could change quickly) show 49% of the more than 200 respondents in these industries claim to be using Oracle for manufacturing execution, while only 36% indicate they’ve deployed SAP in this capacity.
While Oracle hasn’t been matching SAP’s partnering and composite application development activities in manufacturing, this latest survey confirms that deep manufacturing functionality embedded in Oracle’s Enterprise One and E-Business Suite is recognized and broadly deployed by its customers. Oracle also seems to be giving SAP a run for its money in new manufacturing deployments; users are in fact looking beyond SAP’s partner programs, reseller agreements, integration toolkits, and manufacturing marketing initiatives. They are giving Oracle equal consideration when it comes to future manufacturing software investments. For a more detailed analysis of this horse race, see “Oracle Fights for its Share of Manufacturing”.
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