Truly amazing how far we have come in six centuries since the first use of movable type: “Not even Gutenberg could have imagined that he would have to conquer not only time – making more than one copy of a book – but space as well – making books “fit” on every possible device, in multiple formats for multiple vendors”
One of the most enjoyable phases of writing a book is the conversations I get to have with some of the most innovative executives in the world. With SAP Nation, that was tough to arrange at the start – many of the executives I talked to described pain, anger, other negative emotions about their SAP environments.
I almost gave up on the book a couple of times. I am glad I persisted because I found many executives who have taken risks and optimized their environments often contrary to what SAP and its partners and many of their peers were advising them. They are the brave ones and to salute them I will excerpt on New Florence in January each of the 12 strategies I heard from them summarized in the graph below.
They include Marc Kustoff at Endo International and their complex ERP consolidation with the backdrop of number of acquisitions and divestitures. And Andre Blumberg at CLP Group and their highly analytical supplier management culture and its application to SAP. And Dave Smoley at AstraZeneca and his project to invert the 70/30 outsourced/insourced talent model he inherited. And Alexandre Baulé at Embraer who went with third party maintenance even when surrounded by one of the most complex regulatory settings in Brazil and in the aviation industry. There are many similar executives profiled in the book across 10 countries and 15 industries.
While these examples are set in SAP environments, their strategies can equally be applied to other IT settings. A common element is they are risk takers.
As I say in the book
The customers profiled in the book are the “canaries in the coal-mine.” For every one of these risk-takers, many other customers continue with business as usual. When these customers finally get ready to optimize their environments, they will thank McNamara, Daru and other pioneers.
Enjoy the excerpts in January, and if you happen to run into any of them in your travels please express your admiration.
The Workday Predict and Prepare videocast that Bill Kutik, Naomi Bloom, Brian Sommer and I recorded a couple of weeks ago is now available for on-demand viewing here (registration required)
The video lasts an hour but, if I may say so, flows very well. I saw it for the first time today and Bill, moderating his 102nd such panel, clearly knows how to run a nice show.
My prediction towards end of video is that more CIOs, like the NFL players/alums who are running commercials on the sensitive topic of domestic violence, will in 2015 finally fess up and say they have been making all kinds of excuses to stay with their inefficient, on-premise back office software - “The cloud is not secure”, “The SLAs are not acceptable” “We don’t want to be in the integration business” - etc, etc, etc.
The list of excuses is long and well worn. My book, SAP Nation, has a $ trillion worth of detail to combat each of those excuses. Time for these CIOs to speak up like Chris Carter
Brian and Naomi have other excellent predictions and comments. Well worth a watch.
My wife booked the family on a Christmas cruise through the Caribbean. Brilliant suggestion. It’s tougher to get the aging kids to agree on a destination but there was no argument about this one. I was just a tad wary. The carrier, Carnival had a series of mishaps in the last couple of years. No problems on ours – in fact, everything was superb.
Except for the wi-fi. After the eighth session with download speeds under 1mb, I finally complained. At 75c a minute they should be doing much better especially as satellite connectivity (via Ka-band and other innovations) has improved each year. I offered the lady Speedtest.net images I had run during my mobile sessions. She said she needed to check their own monitor. Except after a few minutes she said it would not load: “the connectivity is very poor”. Duh! I told her to get back to me later. She forgot to. The next morning another agent helped and told me I “should not expect speeds you get at home”. Hello, I got better speeds on DSL a decade ago. She had a supervisor call who offered me 25 extra minutes. I told him I did not need more of the crappy service and we worked out a credit.
It made me contrast to the other experiences on the cruise. Don’t like an entrée? Want another appetizer? Want to swap “non-refundable” excursions? Want late check-out? No problem. But when it came to the telecom, over-priced poor service, and then excuses and bureaucracy.
Marriott has been my home away from home. They tell me I have stayed nearly 4 years with them! In the last few months, however, I have complained to several properties. Either the service is too slow or it requires repeated log ins. They treat it like gold – ok, their beach towels they used to inventory after every stay. One of their properties even settled a claim they illegally jammed customer hot spots. Seriously?
I have qualified for a Companion Pass on Southwest for 8 years running. It is their honor for very frequent fliers. Last year I sent the CEO a letter saying because of poor wifi (and couple of other reasons) I was moving 25% of my travel budget away from them. That allowed me to discover the much faster speeds on Jetblue, and much more reliable (albeit not as fast) GoGo service on Delta. In the meantime, the Row 44 service on Southwest has gotten even worse this year, so next year I plan to reduce my travel with Southwest even more.
Why are these respected brands offering such crappy connectivity? Do they have no leverage with their providers? Why do they feel the need to price what is a utility so obnoxiously?
Oh wait, these are cousins of our telcos and cable companies who consistently compete with tobacco companies for the worst brand reputations. It’s an unfortunate race to the bottom which nullifies so much else good these companies do in other facets of their products and services.
I first met Bill McDermott, CEO of SAP, when he did a brief stint at Gartner in the late 90s. He was charismatic, showed good grooming and paid attention to whoever was in the room in an environment where analysts were not known to. His new book, Winners Dream, oozes of those qualities and you can see how he has been a successful sales executive in many settings. In his decade or so at SAP he also has benefitted from several other impressive executives around him. In my book, SAP Nation, I say:
As I reviewed decades of archives, I found myself admiring the architectural brilliance SAP co-founder Dr. Plattner has displayed over four decades. .…You have to respect the global enterprise that SAP ex- CEO Dr. Henning Kagermann helped establish. I have had a chance to watch the even more impressive work he has done after leaving SAP at acatech, the German National Academy of Science and Engineering, as I describe in Chapter 2. Even with his short tenures as CEO at SAP and at HP, you have to respect the enduring customer relationships Leo Apotheker helped build at SAP.
But all these executives failed in one major area – in corralling the massive ecosystem around SAP which keeps growing (by the book’s estimate it has cost SAP customers over $ 1 trillion since the recession) and has few checks and balances around it. You do have to wonder what more Bill could have done if he had been surrounded by solid operational executives
a) Imagine if someone like Tim Cook had worked his Apple supply chain magic on the SAP ecosystem. Or Tony Prophet or Jim Miller could have brought their HP and Google/Amazon operational experience to the data centers and networks in the SAP customer base.
b) Imagine if someone had driven service economics, SLAs and continuous improvements around the systems integrators and outsourcers like Gary Reiner did as CIO of GE. Or Scott Forstall did with the Apple iOS ecosystem
c) Imagine if some big thinking architects had brought shared, multi-tenancy efficiencies to the SAP customer base like Parker Harris at Salesforce.com or Stan Swete have at Workday.
Bill has an impressive resume. He will take it to new heights if he can deliver on the promise of “simplification” that the company’s new branding promises. He needs to dramatically collapse the $ 200+ bn a year burden on his customers.
To do so, he need only to be inspired by his own book. His winner’s dreams should be about building a dream team around himself – with different skillsets than SAP has groomed in the past..
Amazon has SAP Nation on the Kindle and in softcover. Over the next few weeks the book will be available in hardback and other eBook formats. As I have done with my other books, I plan to excerpt here about 10% of the book over the next several weeks for my blog readers. Here is some from Chapter 2:
“I first heard about Industrie 4.0 from Dr. Henning Kagermann, former CEO of SAP, and now President of acatech, the German Academy of Science and Engineering. The first three industrial revolutions came about as a result of mechanization, electricity, and IT. Now, the introduction of the Internet of Things into the manufacturing environment is ushering in a fourth industrial revolution. I conducted many interviews with executives at German companies like Daimler and Deutsche Bahn AG for the book The Digital Enterprise by Karl-Heinz Streibich, CEO of Software AG. I repeatedly heard about Industrie 4.0. They were describing how next-gen agile robots, urban factories, augmented reality training, 3D printing, predictive maintenance, and sensor technologies are reshaping manufacturing and logistics. You would think that SAP, as Germany’s biggest technology vendor, would be spearheading Industrie 4.0 efforts at most of these companies. It has not been doing so, which is surprising given the extent of its reach in the German economy.”
“Cramer should have steered the customer-centric talk to probe the SAP leader about his company’s lackluster performance in the customer relationship management (CRM) space — sales, customer service, and marketing activities. Instead, Cramer brought Marc Benioff, CEO of Salesforce.com, on the show a month later. Benioff made the CRM point: “Why have SAP’s largest customers become our largest customers?” Benioff could have also mentioned that, in fact, it was his company’s marketing cloud, including tools like Radian6, which instantly showed Budweiser that its young Clydesdale commercial made it the most mentioned brand during the 2013 Super Bowl.”
“Infor, which is a much purer enterprise applications vendor, has pushed the vertical pedal even harder since Charles Phillips arrived as CEO from Oracle in 2010. It has been pursuing a “micro-verticals” strategy, finding niches in fashion, hospitality, healthcare, nonprofit and other sectors. Instead of going in with more generalized food and beverage positioning, Infor can now present shelf-life management features to bakeries and sublot traceability to breweries. Rather than just go with an all-purpose fashion offering, it can offer unique features for sportswear vendors as well as uniform makers.”
“In the meantime, while waiting for the McDermott fastball, NetSuite has tripled its revenues. It has done well with many retailers looking for consistent omni-channel customer experiences. It has also done well in “two-tier” ERP settings, as we discuss in Chapter A2. And, it is running full-page ads in the Wall Street Journal with the tag line “Maybe somebody should get fired for choosing SAP.””
“What’s going on here? Why has the world’s largest enterprise application vendor missed out on so many application market opportunities? SAP itself has pivoted. This shift started with NetWeaver, which was introduced in 2003, and continued with its $7 billion BusinessObjects acquisition in 2007, followed by its $6 billion Sybase acquisition in 2010, and has accelerated with an intense focus on HANA over the last few years. “
“While Agassi was charismatic, Sikka was widely considered brilliant. Just as Agassi rode corporate interest in SOA, Sikka rode interest in an exciting new industry focus, Big Data, by pushing hard on the HANA pedal. Dr. Plattner had been evangelizing in-memory, columnar computing for years by then. The Hasso Plattner Institute (HPI), funded by his foundation, had been validating his passion in Potsdam, Germany. SAP R&D had, however, been slow to commercialize it. Sikka became the champion of the product named HANA, frequently referring to it as SAP’s ‘baby’”
“Dave Kellogg, former SVP of marketing at BusinessObjects (which SAP acquired) and now CEO of cloud EPM vendor, Host Analytics, comments: “Application companies should do apps. They rarely build good platforms. Salesforce had numerous disasters with specialized database attempts and finally gave up and just stayed married to Oracle. Besides, platforms are commoditizing and cloudizing. Despite misleading marketing, HANA has virtually nothing to do with cloud. It is a column-oriented database system. So, if HANA is the answer to the cloud threat, it’s not a good one. It’s orthogonal.I think HANA is quixotic and a desire to get out from atop Oracle infrastructure.””
“There have been three major consequences from this SAP pivot: Customers became worried. After all, they were paying significant maintenance fees to SAP to maintain and enhance applications, not divert so much money into platforms.
SAP’s R&D became divided. Much has been written and spoken about the difficulty in bridging teams in Walldorf, Palo Alto, and elsewhere. Those are clearly sticky, cultural issues. An even wider chasm had developed between business, application-centric developers and those who wanted to work on platform areas.
SAP’s control over its ecosystem, never very rigorous, got even more diluted with the attitude that applications were passé. With the rise of HANA, it started focusing on an ecosystem of start-ups”
“Starting with its Ariba acquisition in 2013, SAP began to talk about the “network economy.”While the description suggests a “new SAP economy,” the reality is that SAP has acquired revenues of companies which were all over a decade old — Concur, for example, was two decades old. And SAP was back to its roots — cross-industry, back office applications — when customers in every industry are looking for a new generation of business applications.”
Infor’s continued focus on micro-verticals and deploying them in the Amazon cloud is starting to pay off. In its quarterly earnings announcement it said “it has more than 25 million users of its cloud applications, and industry-specific certifications in healthcare, aerospace & defense, and government" People will nitpick about their definition of “cloud” but to me the bigger part is they are starting to rejuvenate transaction backbones of many industries.
Vertical apps which have traditionally been the focus of ERP vendors and specialty software vendors but are starting to open up to a whole range of new players. Apple (yes!) and IBM are offering mobile apps to several industries. As Ray Wang writes they include “Advise & Grow (Banking and Financial Markets), Case Advice (Government), Expert Tech (Telecom), Incident Aware (Government), Passenger+ (Travel and Transportation), Pick & Pack (Retail), Plan Flight (Travel and Transportation), Retention (Insurance), Sales Assist (Retail), Trusted Advice (Banking and Financial Markets)”
GE’s Predix platform which allows enterprises to leverage Big Data from industrial equipment like turbines and locomotives is spawning a new generation of analytical apps for a wide range of complex industries.
Cognizant, the outsourcing firm, acquired a couple of months ago TriZetto which provides transaction processing capabilities to 16 of the top 20 U.S. health plans and four of the top five pharmacy benefit management companies. Infosys, with new executive leadership, could very well expand into software for verticals as it does with Finacle for the banking sector.
Finally, there are plenty of custom developments and niche software vendors as every industry looks at mobile, social, telematics, wearable technology and other applications in their industries.
While much of the attention today is going to cloud infrastructure and horizontal SaaS apps, the much bigger opportunity will be in industry sectors. Expect a froth of next-gen applications and a wide range of players.
Oracle is skirting with a market valuation of $ 2oo billion. Wall Street is gushing. Whatever. I am not writing this to join their praises – I have never judged companies purely on their financial performance.
I am more impressed with operational metrics which Oracle has been disclosing over the last few months but which just don’t seem to get much play in analyst/media world including:
47 industry-specific cloud applications
In the past three-and-a-half years, Oracle’s industry-specific revenues have tripled
19 Tier 4 class data centers around globe
250 new Fusion HCM customers
Pioneering Data-as-a-service via its Bluekai marketing tools
I am also writing this because for the last couple of years I have been impressed with the grace with which Oracle employees and executives seem to absorb snarky barbs. It seems like everyone thinks it is ok to take potshots at Oracle.
Example – “Larry missed his OOW keynote for a sailing event”. Hello, it was only one of the most improbable comebacks in any sports – ever. Was Larry not entitled to be excited? Thousands of sailing fans were. And it was his second keynote in a couple of days. He did not completely abandon his audience.
As I researched for my SAP Nation book, I was taken aback at how many people readily accept the perception Oracle is “evil”. Several asked me if I was focused on the “wrong vendor”.
I have a section in the book where I compare SAP to Ahab and Oracle to Moby Dick in the Melville classic. I don’t want to excerpt too many pages here but encourage you to read that section in the book which ends with
While the whale was fearsome, many readers would say Ahab was actually the villain with his relentless obsession and reckless use of his ship and crew in chasing the whale.
As part of my research for the book I had conversations with many of SAP’s competitors. Oracle executives could have easily given me all kinds of dirt on SAP. They declined to comment. Made me respect them more for taking the high road.
I cannot expect many to magically like Oracle. But it is reasonable to ask we not take needless potshots?
Amazon has SAP Nation on the Kindle and in softcover. Over the next few weeks the book will be available in other print and eBook formats. As I have done with my other books, I plan to excerpt here about 10% of the book over the next several weeks for my blog readers. Here is some from Chapter 1:
“But, this Saturday afternoon was different, and the two executives had to be totally “on message.” They were going to see Mike McNamara, the CEO of Flextronics. It sounded like an ambitious call. Flextronics was a global giant on a $20 billion revenue run rate that year. In the conservative enterprise software market, where companies wait for plenty of references andbenchmarks, surely it was too big a customer for a three-year-old start-up. At that point, Workday could not show benchmarks that it could scale above 5,000 employees. Flextronics had over 160,000 employees at the end of 2008……So, given that complexity, he took a huge risk on Workday. He told his skeptical executives there was no Plan B. They had to make Workday work. His push toward Workday was as forceful as his pull away from SAP:….“With SAP, I was afraid we would get something average, same as that at every one of their customers. Or, maybe even something mediocre. At a very high cost with one of its large services partners. We used zero external consultants on the Workday implementation. It was just us and them working hand and hand.”…The Flextronics decision in 2008 was a harbinger of change at many enterprises I describe in this book. A few years prior, it would have been considered suicidal for a global company like Flextronics to not go with safe choices like SAP and its partners. Not any more.”
“McLain is CIO and Chief Procurement Officer at Big Heart Pet Brands, one of the country’s largest pet food and treat companies. And, he shares a similar story about betting on a new breed of cloud application vendor….The payback came in the personalized attention from the vendor and the ability to influence the product development road map. Kurtzig promised (and delivered) to Big Heart PetBrands a commitment to go live with Kenandy at Natural Balance just 90 minutes after the acquisition was complete. When you consider the scope of the project covered not just back office areas, but also production, quality management, shipping, and receiving, that is quite an accomplishment. McLain says, “We had the unique experience of being able to work with Kenandy and influencing the product design, specifically around the trade management and industry-specific order to cash and financial accounting features.” As with Flextronics, Big Heart Pet Brands also leveraged professional services directly from the application vendor, rather than bringing in an outside systems integrator.”
“Over my last decade of writing about technology-enabled innovation, I have repeatedly marveled at how the small team led by Phiroz Darukhanavala, VP and CTO for IT at BP, better known as “Daru,” is constantly pushing boundaries. Ten years ago — yes, a decade ago — BP was implementing sensors and motes (sensor nodes) on tankers and in refineries, even before the term “Internet of Things” was commonly used. In 2006, it ran several advanced predictive analytics applications on rotating equipment. Back in 2010, Curt Smith in Daru’s team, described to me how BP had evaluated unmanned aerial vehicles to supplement manned Cessna flights for monitoring remote pipelines. BP is now operating the first FAA-approved commercial drones to monitor remote fields and pipelines. Like many other large oil companies, BP is a major SAP customer. So, I asked Daru how SAP fits into their vision of technology-enabled innovation….With 3D visualization, sensory analytics and massive computing power, we can enable the geologist to perform sub-surface analysis of a formation remotely and empower the corrosion planner to virtually create plans in hours versus walking around facilities or in the field for days….Having said that, as we automate the front end to release top-line value, we also expect our SAP and other back-office systems to become much more efficient. They have to continue to run robustly, but at the lowest possible cost.”
“Like BP, many other companies are finding payback in their “coal face” — and expecting much more efficiency from their SAP environments. Throughout this book, we will see other SAP “customer pivots.” We will see Embraer, the aircraft manufacturer, take the risk of third-party maintenance of the SAP software in Brazil, one of the most complex regulatory environments in the world. We will see Delta Airlines go with Microsoft technology for its in-flight point-of-sale applications even as it continues with SAP at headquarters. We will see how AstraZeneca is starting to in-source its SAP talent.”
“The customers profiled in the book are the “canaries in the coal-mine.” For every one of these risk-takers, many other customers continue with business as usual. When these customers finally get ready to optimize their environments, they will thank McNamara, Daru and other pioneers. Yes, history will recognize February 23, 2008, as a pivotal day for technology”