Microsoft Licensing, June 2010 — The Perfect Storm

Last week I recorded a podcast on what has recently become a very hot IT research topic at Forrester right now — Microsoft licensing. June 2010 signifies an extremely active and very hectic month for a large number of businesses because it's not only the last month of Microsoft’s fiscal year but also the last month for a large portion of Microsoft's three-year contracts.

The reason for this pileup of Microsoft licensing activity partially stems back to 2000: Microsoft refreshed their volume licensing program and introduced Software Assurance. Microsoft Enterprise Agreements are typically for three years. Facing the initial June deadline in 2001, many businesses switched over to this offering and since then, every three years their licensing agreements need to be reassessed and renegotiated. Now fast forward nine years to June 2010 and factor in several significant new products releases — and  here we are again witnessing what is truly the perfect storm of activity, discussion, and negotiation for businesses and their Microsoft licensing, decision-making personnel.

As you might expect, we receive an ever-increasing number of inquiries related to this subject as we continue to get closer to the aforementioned June 30th deadline. Clients bring a range of questions like whether or not they should renew their enterprise agreement (EA), if Software Assurance holds enough value to justify the commitment, or what IT upgrades and migrations impact their decisions. My first response to these questions is. . . there is no easy answer. Each company has their own set of requirements, cost limitations, and future strategic plans that affect which decision is right for them.

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Where Does Web Conferencing Technology Make Sense?

Last night I had the pleasure of attending the Citrix Online Executive Meet-Up here in Boston; as an East Coast-based technology analyst, I rarely see the vendors I cover in person without hopping on a plane. For those unfamiliar, Citrix Online is the maker of popular remote access and Web conferencing technologies GoToMyPC, GoToAssist, GoToMeeting and GoToWebinar. The centerpiece of this event was a customer panel exclusively made up of marketing professionals who use the conferencing technologies for customer and channel interactions. It was a fact I made sure to jot down in my notebook – why such a marketing-heavy panel? This prompted a broader question: are sales and marketing the real killer applications for Web conferencing?

A myriad of companies occupy the Web conferencing market, offering solutions that address four basic use cases:

  • Ad hoc meetings: collaborative sessions that need to happen on short notice. These could be quick screen sharing/document sharing sessions, technical support or demonstrations.
  • Formal meetings: planned sessions with formal agendas that are centered on a group considering one or more pieces of content.
  • Large & small group presentations: more formal events where a presenter addresses a group of some size with varying degrees of interactivity.
  • Training sessions: educational sessions where participants get information, have interactive learning sessions and can be tested on content.
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Crisis Communication, Business Continuity, And Risk Management

I recently recorded a podcast with Stephanie Balaouras, discussing the potential for increased collaboration between crisis communication, business continuity, and risk management functions. The strategies that businesses implement to manage disasters can mean the difference between bankruptcy and resilience... and we unfortunately see reminders of this on an almost weekly basis.

As each disaster hits the news (BP’s oil spill in the Gulf Coast, the recent volcanic eruption over Iceland, the financial crisis, the H1N1 virus, the extreme weather that crippled Washington, DC this past winter, etc.), the overwhelmingly negative impacts that occur start to hit home. Fortunately, we are starting to see our clients turning more to their crisis communication, business continuity, and risk management teams to ensure that they are prepared for the worst.

There are many potential points of collaboration between these teams. . . from modeling critical business processes and assessing the business impact of incidents to executing effective remediation plans and conducting post-incident loss analysis. Recently, I’ve also seen companies that talk about starting from scratch with a risk management function, although they have already done a substantial amount of relevant work for their business continuity function.

Of course, while there are some good trends that point to increased cooperation, there are still many areas for further improvement for every company. In fact, our data shows it to be the rare case in which both internal and external crisis communication functions are handled well in the same plan, with one usually being much stronger and more of a focal point.

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10 Components Of A Successful BI Strategy Plan

Defining a successful BI strategy is a lot more than gathering requirements and selecting a vendor. While it’s been a subject of many books, I know few of you have time to read them, so here’s a short version.

  1. First defining what BI is and what it is not. Is it just reporting, analytics and dashboards? Or does it involve ETL, DW, portal, MDM, etc., as well?
  2. If the former, you then need to define linkages, dependencies, overlaps and integration with all of the latter (including - very importantly - integration and coordination with the higher level enterprise architecture efforts). If latter, it’s a whole different subject. You then really do need to read a few thick books.
  3. Ensure senior business executive commitment and top down mandate. If you cannot get that, do not proceed until you do. Two ways to “sell BI” to them (even though that’s not a good position to be in):
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Deltek Announces Its Intent To Acquire Maconomy: The PSA Segment Of Project-Based Solutions Is Alive And Well

Deltek’s announcement today of its intent to acquire Maconomy has the potential to vault the vendor’s position as a potential leader in the project-based solutions (PBS) space. For midmarket organizations that deliver projects as a crucial part of their revenue generation, this is a good move.

While the focuses of the products share slight overlaps, the products themselves target different functionality and different markets. Deltek has long been a major vendor in the AEC and government contractor markets, while Maconomy, a Denmark-based PBS vendor, focuses on the public relations/advertising, legal, publishing and accounting markets.  

What’s good:

  • Few overlaps – in customers and in industries.
  • Opening doors to new regions – Deltek has limited exposure in EMEA, and Maconomy has had a very difficult time penetrating North America.
  • Mature product sets – Deltek isn’t acquiring an idea but a full blown product. This will allow them to quickly pursue new customers in expanding regions.

 

What’s going to be a challenge:

  • Create visibility in existing markets in new regions – The struggles to gain penetration in the new regions won’t get any easier for either vendor; however, the solutions’ strengths may gain them easier entry.
  • Integration – Deltek is still working through integration challenges with some of its earlier acquisitions (namely, Welcom) and now adds another platform into the mix. The positive here is that Maconomy is fully functional on its own, and we don’t expect there to be huge overlap, if any.
  • Sales integration – Opening new regions and new industries can be a tough sales training challenge. Expect a few bumps.

 

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Big Data Center Operators Keep Getting Bigger

It is becoming very clear that data center facilities have metamorphosed from small computer rooms to industrialized facilities. Due to the cost and complexity of running such a facility, we believe that many firms will opt to get out of that business and use data centers that are built and run by firms that focus on mission-critical facilities. Most of us are familiar with suppliers like AT&T and Savvis, but very few have noticed the larger data center wholesalers behind the scenes. This is partly because data center wholesalers are more focused on facilities than IT, leasing large chunks of capacity, entire data centers, or even supplying data center space to popular hosters and outsourcers that resell them to corporate buyers.

However, for firms with large data centers that aren't interested in outsourcing IT, it sometimes makes economic sense to go directly to wholesalers like 365 Main, CoreSite, and Digital Realty Trust. Or maybe just CoreSite and Digital Realty Trust. As of yesterday, almost 1 million square feet of 365 Main data center space was acquired by Digital Realty Trust, which brings their portfolio to somewhere just shy of 16 million square feet.

From a technical architecture standpoint, we believe that larger, more efficient, and industrialized data centers are the future of IT. As servers have multiplied and become more power-hungry, we find that firms with older facilities have fewer architectural choices. For them, highly utilized racks of blades are simply not an option because they can not provide the required environment.

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DOJ Approves GXS And Inovis Merger

As of today, June 3, 2010, GXS (the largest B2B service provider in the world) and Inovis (number 3 in overall size) will begin operating as one entity under the name of GXS. The combined GXS entity will now have more than 40,000 B2B customers and will provide effective competition to the planned IBM/Sterling Commerce operation (which still needs regulatory approval to proceed). Sterling Commerce will remain the second-largest B2B service provider after GXS. The high level of M&A activity in this sector highlights the growing importance of B2B service providers in meeting the full range of enterprise needs that span end-to-end business processes that reach beyond the corporate firewall. Expect more M&A activity in this sector during the coming months.

The Ariba Commerce Cloud: Stratus Or Cumulus?

Bob Calderoni and Tim Minahan, Ariba’s CEO and CMO respectively, explained their vision for the future of supplier networks at the company’s Ariba Live customer event this week. The basic concepts, of a B2B community with value-adding services for sellers, such as prospect discovery and multi-customer e-invoicing, is one I’ve advocated to network providers for a long time, including in my report of internetwork interoperability (Enterprises Should Push Supplier Networks To Deliver Interoperability). The community concept is certainly fashionable at the moment, with lots of business-to-business (B2B) technology vendors trying to match the success of Facebook, LinkedIn, Twitter, and the like. The big question is whether Ariba can achieve the universal reach that the commerce cloud will need if it is to deliver value to its members.

Social media consumers don’t seem to be worried by monopolies. As my daughters tell me, people of their age have to be on Facebook to know what’s going on. There’s no point using other services like MySpace or Bebo (or, for older readers, Yahoo Groups, Geocities, Friends Reunited, and their equally overhyped predecessors), because everyone uses Facebook, and the community only works if everyone’s in it. It’s the same with B2B eCommerce — supplier-side members want to know about all the relevant parties (i.e., RFX’s), and party organizers (i.e., buyers) want to publish the invitation in one place yet still reach all their potential friends. In practice, this means the community must either be:
a) a broad stratus formation covering everything, Straus cloud cover

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Excuse Me, But Do You Know Where I Can Find A Job?

That's how one of my client meetings started at last week's IT Forum in Las Vegas. Now, normally this would concern me. It could be a sign that jobs are scarce, unemployment is up, or that Infrastructure & Operations professionals are being let go. But that's certainly not the case. This was actually someone proactively seeking a new job. His company — a large US manufacturing firm — was merging with another firm and he felt it was time to move on.

This led to the first of three interesting observations at last week's Forum. Here are my top three I&O takeaways in no particular order:

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IBM's Plans To Acquire Sterling Commerce Will Trigger More B2B Consolidation

Situations like this typically need a single vendor to take the first step, and then others follow. In this vein, we believe that IBM's move to acquire the 2nd largest B2B service provider in the world will get others (like Oracle, Software AG and TIBCO) to consider similar moves. Why? If you are a vendor that provides internally focused application and process integration solutions, the next logical step is to provide comprehensive B2B integration solutions to address the full range of the integration needs of your customers. That means B2B solutions that go beyond support for Web services and AS2-based EDI/INT transactions.

The vast majority of enterprises that are involved with B2B activity still rely heavily on 3rd party B2B networks for the movement of their EDI transactions. Many of these firms have large trading partner communities that have proven to be highly resistant to change where the prevailing attitude seems to be, "if it ain't broke, don't fix it." The fact of the matter is that B2B networks will continue to play a key role in meeting overall enterprise integration needs for the foreseeable future.

Another factor that we believe drove IBM's decision is the emergence and growing importance of cloud-based SaaS integration solutions. These applications require a hosting environment, and the Sterling Collaboration Network is tailor-made to fit this new requirement. IBM will now have its own B2B network to support this growing market. There are many other interesting aspects to this proposed acquisition. For details, refer to our just-published document entitled "IBM To Acquire Sterling Commerce": http://www.forrester.com/rb/Research/ibm_to_acquire_sterling_commerce/q/id/57109/t/2

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