Cloud computing continues to be hyped. By now, almost every ICT hardware, software, and services company has some form of cloud strategy — even if it’s just a cloud label on a traditional hosting offering — to ride this wave. This misleading vendor “cloud washing” and the complex diversity of the cloud market in general make cloud one of the most popular and yet most misunderstood topics today (for a comprehensive taxonomy of the cloud computing market, see this Forrester blog post).
Software-as-a-service (SaaS) is the largest and most strongly growing cloud computing market; its total market size in 2011 is $21.2 billion, and this will explode to $78.4 billion by the end of 2015, according to our recently published sizing of the cloud market. But SaaS consists of many different submarkets: Historically, customer relationship management (CRM), human capital management (HCM) — in the form of “lightweight” modules like talent management rather than payroll — eProcurement, and collaboration software have the highest SaaS adoption rates, but highly integrated software applications that process the most sensitive business data, such as enterprise resource planning (ERP), are the lantern-bearers of SaaS adoption today.
NetSuite was kind enough to invite me to the analyst day at its SuiteWorld 2011 user conference — an event packed with product, strategy, customer, and partner information. The focus was clearly on its platform and ERP solutions. Here are my thoughts and takeaways:
NetSuite wants to ride the SaaS wave into the enterprise. NetSuite is the only SaaS-based ERP suite of scale. It reports that its data centers get 2.2 million unique logins and 4 billion customer requests a month. However, NetSuite wants to do better. It wants to take its well-tested and well-adopted solution in the midmarket and extend into the enterprise. The timing is right, as Forrester reports that enterprises are ready to consider SaaS-based ERP solutions. In fact, NetSuite reports that sales to enterprise customers increased 37% between 2009 and 2010.
NetSuite has a solution package targeted at the enterprise. NetSuite announced a new “Unlimited” package for about $1 million, which includes all modules, unlimited storage, applications, SuiteCloud customizations, subsidiaries, and unlimited users. The exact pricing is based on functionality and number of users (which starts at 500), and scales up from there. It is a package targeted to compete with traditional on-premise ERP vendors as well as SAP’s on-demand solution, Business ByDesign.
With about 41,000 attendees, 1,800 sessions, and a whooping 63,000-plus slides, Oracle OpenWorld 2010 (September 19-23) in San Francisco was certainly a mega event with more information than one could possibly digest or even collect in a week. While the main takeaway for every attendee depends, of course, on the individual’s area of interest, there was a strong focus this year on hardware due to the Sun Microsystems acquisition. I’m a strong believer in the integration story of “Hardware and Software. Engineered to Work Together.” and really liked the Iron Man 2 show-off all around the event; but, because I’m an application guy, the biggest part of the story, including the launch of Oracle Exalogic Elastic Cloud, was a bit lost on me. And the fact that Larry Ellison basically repeated the same story in his two keynotes didn’t really resonate with me — until he came to what I was most interested in: Oracle Fusion Applications!
Technology innovation and business disruption are changing the software market today. Cloud computing is blurring the line between applications and services, and smart solutions are combining hardware with software into new, purpose-engineered solutions. We are happy to announce that we have launched our Forrester Forrsights Software Survey, Q4 2010, to predict and quantify the future of the software market and help IT vendors to tap into the insights from approximately 2,500 IT decision-makers across North America and Western Europe.
The survey will provide insights on the strategic direction and spending plans of enterprises from very small businesses to global enterprises, segmented by industry and country. In comparison with last year’s survey, we significantly boosted the sample size this year for the energy (oil and gas, utilities, and mining) and healthcare industries; we’ll be able to provide an in-depth analysis for these industries along with retail, financial services, high tech, and other industries.
Key themes for this year’s software survey include the following topics:
Cloud computing. Besides a 360-degree overview on current and future adoption rates of software-as-a-service (SaaS) for different software applications, we are going much deeper this year and have asked IT decision-makers about their cloud strategy for application replacement as well as for different data and transaction types.
Integrated information technology. Purpose-engineered solutions combining hardware with software are promising higher performance and faster implementation times. But do IT users really buy into single-vendor strategies?
Many cloud computing services in the consumer space are per se for free. Even sophisticated platform-as-a-service (PaaS) environments are coming from most vendors with a free sandbox environment and start charging finally the productive use. The obvious question I hear from many vendors today is how to monetize platforms and applications in the cloud. The situation for established ISVs of business applications can be even worse: The cloud might significantly cannibalize existing license revenue streams. Thus a transformation of existing business models and vendor strategy is anything but easy.
Addressing this challenge, I'd like to point you to a Forrester workshop “Selling The Cloud” on 30th September in London.
The workshop will focus on a evaluating your “cloud readiness” and consequently help develop your cloud strategy through the use of a self assessment tool. This is a great opportunity to learn an effective method for improving the business results of any migration to a cloud-based service. You can actually predict which, if any, of your products will be successful in a cloud deployment.
The workshop will be hosted by Stefan Ried, Senior Analyst at Forrester and in case you’re interested, here’s a Web page with an agenda: View Workshop Details.
You can register right on the site or, if you’d like more information, you can contact an Event Sales Representative at +1 888/343-6786 or firstname.lastname@example.org
You can also simply leave a comment to this blog, asking any question to the event agenda and value.
Recently, SAP announced a definitive agreement to acquire Sybase for $5.8 billion, at $65 a share, a 44% premium over the share's three-month average price. The transaction is expected to close during the third quarter of 2010. Sybase will operate as a standalone unit under the name “Sybase, a SAP Company,” and be run by Sybase’s management team.
Although execs from SAP and Sybase have stressed mobility, real-time information, in-memory, and analytics benefits that come from this acquisition, the increasing pressure from Oracle cannot be undermined. Oracle’s stronger focus of stack level integration and selling around applications, middleware and database, and recent acquisition of SUN has put pressure on SAP.
SAP-Sybase Deal Offers A Lot Of Synergies
SAP and Sybase offer many benefits ranging from in-memory technologies, databases, analytics, and data integration to mobility and ILM.
Finally, SAP Is Acquiring (At Least A Mobile) Middleware
SAP’s customers and the analyst community have been speculating about the possibility of SAP acquiring a middleware company for a while. After it had missed out on acquiring one of the heavyweights like BEA and hesitated over TIBCO and Progress Software, SAP and Sybase agreed yesterday on the $5.8 billion transaction.
Sybase used to be a database, but its database’s visibility in the market decreased so dramatically that, in a recent Forrester survey, it wasn’t considered to be a primary database choice by any application domain. A good share of the 4% of open source databases used in the ERP space are actually SAP’s open source MaxDB (based on SOFTWARE AG’s original ADABAS D), which is a default for SAP systems if a customer doesn’t provide a third-party database like Oracle or DB2. SAP is unlikely to replace this default database with Sybase. This would be an even less important database than MaxDB, which integrates well with NetWeaver. But different analysts have different opinion and you might like to look for Boris Evelson's take on the impact of Sybase's database. If SAP runs a careful post-merger process, it will recognize Sybase’s database knowledge and employ all the engineers who have already developed in-memory database capabilities to bring Hasso’s idea from the Palo Alto “garage” to full product availability. While SAP has deployed in-memory capabilities in its analytics technology stack, the in-memory capabilities for transactions are still in the lab.
Hi, I'd like to share part two of a recent discussion that I had with Martin Schindler, Editor of Silicon.de. See part one here in case you missed it.
Martin Schindler: You indicated earlier that interest in third-party maintenance has increased since SAP wanted to make its Enterprise Support basically mandatory. Is this just excitement or real demand?
Stefan Ried: Yes, interest has increased. We're also seeing that from the vendor side. In addition to Rimini Street, which already offers maintenance for SAP systems, there is also Aptech, netCustomer, the Spinnaker Management Group, and Versytec, which are today limited to PeopleSoft, JD Edwards, and Siebel. The vendor space has developed further, and the list of SAP-supporting vendors will soon become longer. Finally, it makes sense to ask the larger systems integrators, such as Wipro, Tata Consultancy Services, IBM Global Services, and Siemens (SIS), which are also the largest SAP integrators, to quote for offering SAP third-party maintenance.
Martin Schindler: This is interesting. We've read little about such offers.
Stefan Ried: These integrators naturally don't make a lot of noise about these things, as they also have a partner relationship with SAP, of course. At the end of the day, the demand will be balanced with the supply — and if more customers request SAP maintenance from their systems integrator, they will start to offer it.
Martin Schindler: Is this profitable for integrators?
I'd like to share a recent discussion that I had with Martin Schindler, Editor of Silicon.de
Martin Schindler: There are experts who talk of a non-existing market when it comes to SAP third party maintenance. Is that correct?
Stefan Ried: You could have the impression, especially for Germany, because companies remain very close to SAP and many have decided for a Single-Vendor-Strategy. But in other countries it is much less the case. However the price politics of SAP in the last year and now the slow innovation speed has raised the discussion of alternative maintenance model again.
Martin Schindler: Are there German users with real interest in obtaining maintenance for their SAP system through another company?
Stefan Ried: Yes, there is definitely interest.
We regularly make, and particularly in the last year, sample calculations for users (as well as for system integrators) if it is worth going for third-party maintenance. It depends on various factors, whether it is worth it.
Martin Schindler: What do these factors look like?
Stefan Ried: Companies must check, for example, how much "know-how" exists in-house. Third-party maintenance can work very well, if not everything from SAP-Maintenance is needed. This is for example the case, when parts of the SAP-System are regarded as frozen, small legal changes follow, or to repair a bug. With this technical problems, compatibility with operating system patches, performance problems within an established system can be addressed and the system can operate securely with very little change. So, third-party maintenance vendors can, especially for older SAP systems, work very well.
After the recent board changes the strategy will change too
After the recent board changes at SAP the message we could read in most news was like ‘new board – old strategy’. Along with the board changes SAP did not announce (yet) any significant strategic changes. But what good is it to change the board and leave everything else as is?
The recent SAP board changes are just the visible tip of the iceberg of much deeper changes SAP will and has to go through to renew itself as a leading IT vendor. Below are 10 predictions for changes in SAP’s strategic direction I expect within the next 10+ months:
1. More SAP Board Changes Will Come
Additional board changes will further strengthen the product & technology focus and competence within the SAP board. See also Forrester’s blog on the recent SAP board changes: SAP CEO Resigns – Long Live The Co-CEOs
2. Business ByDesign Will Get Back Into SAP’s Strategic Center
Business ByDesign will become again the corner stone of SAP’s growth strategy and the successful introduction will mark a ‘make it or break it’ milestone for SAP.
3. SAP Announces The Next-Generation ERP
SAP will announce a next-generation ERP solution to regain leadership in its core business area and it will likely be based on the ByDesign platform.
4. SAP Changes Its Cloud Strategy
SAP will rework its whole On-Demand strategy and will unify and align all components based on the ByDesign platform. See also Forrester’s recent blog on SAP’s On-Demand strategy: SAP Is Skydiving Into The Clouds.