It's nice to see that SAP has managed the turnaround to leave the recession behind and pick up growth again. The company reported a strong 34% SW revenue growth in Q4 2010 as compared with the previous year - "The strongest software sales quarter in SAP's history" as stated by Co-CEO Bill McDermott. However, one has to keep in mind that one year ago SAP was in deep crisis and reported a YoY -15% SW revenue decline in Q4 2009 followed by the departure of CEO Léo Apotheker in February 2010 and other subsequent executive changes.
Indeed Q4 2010 was the strongest SW sales quarter in SAP's history but the fourth quarter is always the strongest in SAP's annual sales cycle. Actually Q4 SW revenue declined for 2 years since 2007 (€1,4 billion) to 2008 (€1,3 billion) to 2009 (€1,1 billion), and it was about time to turn around the curve again. While Q4 2010 was the best SW revenue quarter, the full year 2010 was still not the best in SAP's history. In 2007, SAP reported total SW revenues of $3,4 billion, followed by 2008 (€3,6 billion), 2009 (€2,6 billion), and now total SW revenue 2010 with €3,3 billion – SW revenues are still below the level of 2007! While total revenue (€12,5 billion) looks to be back on track, net new SW license revenue still remains a challenging point in SAP's balance sheet!
The new Q4 2010 revenue announcement is a very positive and promising signal, but the company needs to continue to innovate its portfolio to accelerate again new SW revenues for long-term sustained growth.
Last month I launched an online self-assessment and survey tool to help you — business process change agents and architects — determine the sustainability of your business process management (BPM) change effort. The source of inspiration for the assessment criteria I used is the conclusion of the Harvard Business School's Evergreen Project.
Evergreen analyzed the impact of 200 different management "best practices" on the performance of 160 business organizations over a time period of 10 years. The researchers studied broad areas such as strategy, innovation, and business processes, as well as specific practices, and concluded that organizations that truly produce superior results excel at four fundamental practices:
Devise and maintain a clearly stated, focused strategy.
Develop and maintain flawless operational execution.
Develop and maintain a performance-oriented culture.
Build and maintain a fast, flexible, flat organizational structure.
It's a real pleasure for me to be able to bring you some insights that emerged from the Forrester Leadership Board's Application Development & Delivery Councilduring 2010. My colleague Julia Spencer, an Advisor to the council, has written up these insights, which I have pasted in below, but we are inviting you to enter the discussion as well. Thanks, Julia, for bringing us this wisdom and for helping us get a peek inside this exclusive community of application delivery leaders:
From Julia Spencer:
During 2010, the Forrester Leadership Boards’ (FLB) Application Development & Delivery Council (AD&D Council) tackled many issues, including that of defining and managing requirements for more-effective application delivery. As a Council Advisor, I receive many questions about requirements, such as “How do you define a quality requirement?” I’d like to share some best practices revealed during our Member Meetings in Las Vegas, Nevada, and Lisbon, Portugal, and our highly interactive CouncilTel (FLB group discussion) on software requirements.
I’d love your feedback: Which best practices have worked for you? What is missing from the list?
First: What are requirements, and why do they matter?
I have learned that the word “requirements” means different things to different people, and some struggle to define the word altogether.
Many organizations have seen large swings over the past two years in IT spending on technology, business spending on technology, and the way that IT and business interact to best manage business technology. Have you seen changes in your budgeting and planning cycles? Does the business expect more (or less) from IT today, as compared to two years ago? How well aligned is your IT organization to goals? We’ve seen these changes in many of the organizations we’ve been speaking with. But what about your organization? Please let us know what’s going on in your organization by taking this short survey on budgeting, planning, and alignment. If you’re a member of our CIO panel, you received an invitation to participate in this survey, and we’re hoping that you’ll let us know what’s going on in your organization. If you’re not currently a member of the panel, you can join our panel by clicking here. Thanks. We’ll publish the results in March or April.
When I started as an architect, I was part of the team called “IT Architecture.” It was clear what we did and who we did it for – we standardized technology and designs so that IT would be more reliable, deliver business solutions more quickly, and cost less. We were an IT-centric function. Then the term “Enterprise Architecture” came in – and spurred debates as to “isn’t EA about the business?,” “what’s the right scope for EA?,” and “should EA report to the CEO?” We debated it, published books and blogs about it – but it didn’t change what most architects did; they did some flavor of IT Architecture.
Meanwhile, the interplay of business and technology changed . . . Technology became embedded and central to business results, and business leaders became technology advocates. The locus of technology innovation moved from the “heavy lifting” of core system implementations to the edges of the business, where business staff see opportunities and demand more autonomy to seize them. For enterprise architects, this means that regardless of what EA has been, in the future it must become a business-focused and embedded discipline. Mapping this shift is a key theme of Forrester’s Enterprise Architecture Forum 2011.
Gene Leganza, who will be presenting the opening keynote “EA In The Year 2020: Strategic Nexus Or Oblivion?,” states it this way:
We are pleased the AT&T iPhone monopoly is over (three and a half years later?!), but we do not expect that Verizon will aggressively pursue multinational enterprise (MNC) customers who frequently travel overseas with its soon-to-launch (data pricing not yet announced) iPhone service. The Verizon iPhone 4 will run on its existing EVDO network, so international roaming capabilities are limited since the CDMA-based cellular network platform is incompatible with the GSM-based networks used by well over 85% of the world’s cellular carriers. Verizon's iPhone won't work in cellular mode in most places outside the US and Canada. There's no such thing (yet — or likely on the drawing table) as a CDMA/GSM World iPhone, so the opportunity for your overseas iPhone travelers will be restricted to AT&T's network if your primary cellular service was purchased in the US (It should work okay in Wi-Fi mode for data, which helps somewhat.)
A second reason that enterprise iPhone users won't jump to Verizon is that they typically are bound by multiyear contracts (two years is the norm) – whether or not they are CLU (corporate liable user), and we anticipate that AT&T will play an aggressive retention game for North America-only enterprise iPhone customers.
NetApp recently announced that it was acquiring Akorri, a small but highly regarded provider of management solutions for virtualized storage environments. All in all, this is yet another sign of the increasingly strategic importance of virtualized infrastructure and the need for existing players, regardless of how strong their positions are in their respective silos, to acquire additional tools and capabilities for management of an extended virtualized environment.
NetApp, while one of the strongest suppliers in the storage industry, not only faces continued pressure from not only EMC, which owns VMware and has been on a management software acquisition binge for years, but also renewed pressure from IBM and HP, who are increasingly tying their captive storage offerings into their own integrated virtualized infrastructure offerings. This tighter coupling of proprietary technology, while not explicitly disenfranchising external storage vendors, will still tighten the screws slightly and reduce the number of opportunities for NetApp to partner with them. Even Dell, long regarded as the laggard in high-end enterprise presence, has been ramping up its investment management and ability to deliver integrated infrastructure, including both the purchase of storage technology and a very clear signal with its run at 3Par and recent investments in companies such as Scalent (see my previous blog on Dell as an enterprise player and my colleague Andrew Reichman’s discussion of the 3Par acquisition) that it wants to go even further as a supplier of integrated infrastructure.
Okay, so Verizon Wireless (VZW) now will offer iPhone 4s to its customers on its 3G network. (The official launch date is February 10, 2011). What does this mean for content & collaboration professionals? A lot, as it turns out, as yet another brick is laid in the post-PC future.
Forrester customers can read the new report by my colleague Charles Golvin analyzing the impact on the industry and the consumer market. Here are some thoughts on what this deal means for the enterprise and for content and collaboration professionals. iPhone-on-VZW means:
You have yet one more reason to support iPhones. Mobile service provider choice is important on smartphones and tablets, both to provide good network coverage to employees and also to keep competition high hence prices low. AT&T Mobility’s lock on iPhone in the US was one reason some firms have been reluctant to support iPhone. With iPhone-on-VZW (not to mention the aggressive $30/month introductory pricing for an unlimited data plan), that barrier is gone.
Yet more employees will bring their personal iPhones to work and ask for your help. Verizon Wireless has been driving the consumerization of Android devices; it will now also spend some money promoting and selling iPhone-on-VZW. This will only increase the “osmotic pressure” of employees aka consumers bringing their personal devices to work. And they will want more than just email on their personal smartphones; they will also ask for SharePoint and the employee portal and and and . . .
Similar to the past few years at this time of year, we have received a number of global banking platform vendors’ 2010 banking platform deals submissions. While evaluation and analysis will still take some time, a first look at the survey responses shows three interesting aspects:
The number of survey participants increased. The 2010 survey has more participants than in prior years. A number of more-regional players such BML Istisharat, Cobiscorp, Intracom, and SAB participated for the first time, while CSC and InfrasoftTech rejoined after some years of absence.
Some vendors preferred not to participate. Open Solutions decided not to participate anymore after a few years of participation. And, similar to the past, Accenture, Fiserv, Jack Henry, all invited Russian players, as well as a few others chose to not participate for various reasons.
Success is regaining momentum. A few vendors have been able to retain their 2009 success, while a few others submitted remarkably high numbers as far as new named deals and extended business are concerned.
We still have to see what the detailed deal evaluations will show. However, right now it seems that the banking platform market has at least regained some of the momentum it lost in 2008 and 2009. As always, let me know your thoughts. JHoppermann@Forrester.com.