Herculean Buyers, Lions, And Hydra — Do You Want One Throat To Choke, Or Reps That Understand The Products They’re Selling?

Duncan Jones

The proposed acquisitions of SuccessFactors by SAP, and of Emptoris by IBM got me thinking about the impact on buyers of market consolidation, in respect of the difference between dealing with independent specialists versus technology giants selling a large portfolio of products and services. Sourcing professionals talk about wanting “one throat to choke,” but personally I’ve never met one with hands big enough to get round the neck of a huge vendor such as IBM or Oracle. Moreover, many of the giants organize their sales teams by product line, to ensure they fully understand the product they are selling, rather than giving customers one account manager for the whole portfolio who may not understand any of it in sufficient depth. Our clients complain about having to deal with just as many reps as before the acquisitions. They all now have the same logo on their business card, but can’t fix problems outside their area, nor negotiate based on the complete relationship. It seems that buyers end up like Hercules, wrestling either with a Nemean lion   or with a Lernaean hydra.

The acquirers' press releases tend to take it for granted that customers will be better off with the one-stop shop. Bill McDermott, co-CEO of SAP, said, “Together, SAP and SuccessFactors will create tremendous business value for customers.” While Lars Dalgaard, founder and CEO of SuccessFactors, talks about “expanding relationships with SAP’s 176,000 customers.” Craig Hayman, general manager of industry solutions at IBM, said, “Adding Emptoris strengthens the comprehensive capabilities we deliver and enables IBM to meet the specific needs of chief procurement officers."

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Oracle Delivers A Lump Of Coal To The Tech Market, But It's Too Soon To Call It A Harbinger Of A Tech Downturn

Andrew Bartels

Oracle yesterday reported surprisingly weak results for its fiscal quarter ending on November 30 (see December 20, 2011, "Oracle Reports Q2 GAAP EPS Up 17% to 43 Cents; Q2 Non-GAAP EPS up 6% to 54 Cents"), with total revenues up just 2%, software revenues up 7%, hardware revenues down 10%, and services revenues flat. Even worse, hardware product sales were down 14%, new software license revenues rose just 2%, and license revenues for Oracle applications actually fell by 4%. Oracle had set expectations for revenue growth of 5% to 15%, and most financial analysts had projected growth at the high end of that range, based on Oracle's license revenues in prior quarters growing by 22% to 34% for applications, and 14% to 27% for database and middleware revenues. Oracle attributed the shortfall in revenues to potential deals that failed to close by the end of the quarter due to buyer caution.

For the tech sector, this is a worrisome report. Oracle's software revenues had been consistently stronger than the overall tech market, growing by 17% in US dollars in the prior quarters in 2011. If Oracle's software revenue growth slips to 7%, does that imply that the rest of the tech market is going to see little or no growth in Q4 2011?

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IBM's Acquisition Of Emptoris Moves It Squarely Into The ePurchasing Software Market — Watch Out For Fireworks

Andrew Bartels

IBM today announced that it will acquire Emptoris, a leading vendor of ePurchasing software products, with strengths in eSourcing, spend analysis, contract lifecycle management, services procurement, and supplier risk and performance management (see December 15, 2011, “IBM Acquisition of Emptoris Bolsters Smarter Commerce Initiative, Helps Reduce Procurement Costs and Risks”). That IBM made an acquisition of this kind was not a surprise to me, given that the heads of IBM's Smarter Commerce software team at the IBM Software Analyst Connect 2011 event on November 30 had laid out a vision of providing solutions for the buying activities of commerce as well as the sales, marketing, and services activities. Indeed, in the breakout session in which Craig Hayman, general manager of industry solutions at IBM, laid out the Smarter Commerce software strategy and showed the vendors that IBM had acquired in the sales, marketing, and services arenas, he said in response to my comment about the obvious gaps that IBM had in the buying area that we should expect to see IBM acquisitions in that area.

What was a surprise to me was that IBM acquired Emptoris. My prediction would have been that IBM would buy Ariba, because of the long relationship that has existed between these companies. In contrast, Emptoris has generally worked more with Accenture, and not as much with IBM.

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SAP Acquires SuccessFactors – A Look At The Deal

Holger Kisker

Some Reflections On The Deal For Competitors, Partners, and Customers

 The Deal

On December 3, SAP announced the acquisition of SuccessFactors, a leading vendor for human capital management (HCM) cloud solutions. SAP will pay $3.5 billion (a 52% premium over the Dec 2 closing price) out of its full battle chest and take a $1 billion loan. SuccessFactors brings about 1,500 employees, more than 3,500 customers, and about 15 million users to the table. In 2010, the company reported revenues of $206 million and a net loss of $12.5 million. A price of $3.5 billion is certainly a big premium, but the acquisition catapults SAP into the ranks of leading software-as-a-service (SaaS) solution providers — a business that will grow from $21.3 billion in 2011 to $78.4 billion by 2015 (for more information, check out our report “Sizing The Cloud”). The deal will certainly help SAP to achieve its 2015 target of $20 billion revenue and 1 billion users as it mainly targets the 500,000 employees that SAP’s already existing customers have. The deal is expected to close in Q1 next year. However, because most of the stocks are widely spread, stakeholders might hold back for now, waiting for possible counter bids from competition.

 The Organization

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HP Expands Its x86 Options With Mission-Critical Program – Defense And Offense Combined

Richard Fichera

Today HP announced a new set of technology programs and future products designed to move x86 server technology for both Windows and Linux more fully into the realm of truly mission-critical computing. My interpretation of these moves is that it is both a combined defensive and pro-active offensive action on HP’s part that will both protect them as their Itanium/HP-UX portfolio slowly declines as well as offer attractive and potentially unique options for both current and future customers who want to deploy increasingly critical services on x86 platforms.

What’s Coming?

Bearing in mind that the earliest of these elements will not be in place until approximately mid-2012, the key elements that HP is currently disclosing are:

ServiceGuard for Linux – This is a big win for Linux users on HP, and removes a major operational and architectural hurdle for HP-UX migrations. ServiceGuard is a highly regarded clustering and HA facility on HP-UX, and includes many features for local and geographically distributed HA. The lack of ServiceGuard is often cited as a risk in HP-UX migrations. The availability of ServiceGuard by mid-2012 will remove yet another barrier to smooth migration from HP-UX to Linux, and will help make sure that HP retains the business as it migrates from HP-UX.

Analysis engine for x86 – Analysis engine is internal software that provides system diagnostics, predictive failure analysis and self-repair on HP-UX systems. With an uncommitted delivery date, HP will port this to selected x86 servers. My guess is that since the analysis engine probably requires some level of hardware assist, the analysis engine will be paired with the next item on the list…

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UNIX – Dead Or Alive?

Richard Fichera

There has been a lot of ill-considered press coverage about the “death” of UNIX and coverage of the wholesale migration of UNIX workloads to LINUX, some of which (the latter, not the former) I have contributed to. But to set the record straight, the extinction of UNIX is not going to happen in our lifetime.

While UNIX revenues are not growing at any major clip, it appears as if they have actually had a slight uptick over the past year, probably due to a surge by IBM, and seem to be nicely stuck around the $18 - 20B level annual range. But what is important is the “why,” not the exact dollar figure.

UNIX on proprietary RISC architectures will stay around for several reasons that primarily revolve around their being the only close alternative to mainframes in regards to specific high-end operational characteristics:

  • Performance – If you need the biggest single-system SMP OS image, UNIX is still the only realistic commercial alternative other than mainframes.
  • Isolated bulletproof partitionability – If you want to run workload on dynamically scalable and electrically isolated partitions with the option to move workloads between them while running, then UNIX is your answer.
  • Near-ultimate availability – If you are looking for the highest levels of reliability and availability ex mainframes and custom FT systems, UNIX is the answer. It still possesses slight availability advantages, especially if you factor in the more robust online maintenance capabilities of the leading UNIX OS variants.
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Will Oracle Listen To The External Keynoters At Oracle Openworld And Help Customers Cut Their Maintenance Costs?

Duncan Jones

I’ve just returned home from San Francisco where I was attending the Oracle Openworld 2011 (#OOW11) event. Overall it's a good event, although, as usual, a bit frustrating. Instead of examples of how customers are using its products to transform their businesses, the Oracle keynotes always descend into technical detail, with too little vision and too many unimpressive product demonstrations and ‘paid programming’ infomercials (if I had wanted to listen to Cisco, Dell, and EMC plugging their products, I’d have gone to their events).

When, a month ago, I accepted Oracle’s invitation to attend #OOW11, I thought I’d be able to escape the oncoming British autumn for some California sunshine and watch some Redsox playoffs games on TV. Well not only did the Sox’s form plummet in September like a stock market index, but Northern California turned out to be 20° colder than London. But despite that, and the all-day Sunday trip to get to the event, one can’t help being impressed by the attendee buzz and by the logistical achievement, with over 45,000 attendees accommodated around the Bay Area and bussed in and out every day to the conference location. Luckily, Oracle looks after its analyst guests very well, so we were within walking distance at the excellent Intercontinental Hotel.

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Oracle Open World Part 2 – Flash Mobs And The Quest For Performance

Richard Fichera

Well actually I meant mobs of flash, but I couldn’t resist the word play. Although, come to think of it, flash mobs might be the right way to describe the density of flash memory system vendors here at Oracle Open World. Walking around the exhibits it seems as if every other booth is occupied by someone selling flash memory systems to accelerate Oracle’s database, and all of them claiming to be: 1) faster than anything that Oracle, who already integrates flash into its systems, offers, and 2) faster and/or cheaper than the other flash vendor two booths down the aisle.

All joking aside, the proliferation of flash memory suppliers is pretty amazing, although a venue devoted to the world’s most popular database would be exactly where you might expect to find them. In one sense flash is nothing new – RAM disks, arrays of RAM configured to mimic a disk, have been around since the 1970s but were small and really expensive, and never got on a cost and volume curve to drive them into a mass-market product. Flash, benefitting not only from the inherent economies of semiconductor technology but also from the drivers of consumer volumes, has the transition to a cost that makes it a reasonable alternative for some use case, with database acceleration being probably the most compelling. This explains why the flash vendors are gathered here in San Francisco this week to tout their wares – this is the richest collection of potential customers they will ever see in one place.

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Oracle Open World Part 1 – The Circus Comes To Town And The Acts Are Great!

Richard Fichera

In the good old days, computer industry trade shows were bigger than life events – booths with barkers and actors, ice cream and espresso bars and games in the booth, magic acts and surging crowds gawking at technology. In recent years, they have for the most part become sad shadows of their former selves. The great SHOWS are gone, replaced with button-down vertical and regional events where you are lucky to get a pen or a miniature candy bar for your troubles.

Enter Oracle OpenWorld. Mix 45,000 people, hundreds of exhibitors, one of the world’s largest software and systems company looking to make an impression, and you have the new generation of technology extravaganza. The scale is extravagant, taking up the entire Moscone Center complex (N, S and W) along with a couple of hotel venues, closing off a block of a major San Francisco street for a week, and throwing a little evening party for 20 or 30 thousand people.

But mixed with the hoopla, which included wheel of fortune giveaways that had hundreds of people snaking around the already crowded exhibition floor in serpentine lines, mini golf and whack-a-mole-games in the exhibit booths along with the aforementioned espresso and ice cream stands, there was genuine content and the public face of some significant trends. So far, after 24 hours, some major messages come through loud and clear:

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Oracle Delivers On SPARC Promises With New T4 Processors And Systems

Richard Fichera

Background – Promises And Potential

Last year I wrote about Oracle’s new plans for SPARC, anchored by a new line of SPARC CPUs engineered in conjunction with Fujitsu (Does SPARC have a Future?), and commented that the first deliveries of this new technology would probably be in early 2012, and until we saw this tangible evidence of Oracle’s actual execution of this road map we could not predict with any confidence the future viability of SPARC.

The T4 CPU

Fast forward a year and Oracle has delivered the first of the new CPUs, ahead of schedule and with impressive gains in performance that make it look like SPARC will remain a viable platform for years. Specifically, Oracle has introduced the T4 CPU and systems based on them. The T4, an evolution of Oracle’s highly threaded T-Series architecture, is implemented with an entirely new core that will form the basis, with variations in number of threads versus cores and cache designs, of the future M and T series systems. The M series will have fewer threads and more performance per thread, while the T CPUs will, like their predecessors, emphasize throughput for highly threaded workloads. The new T4 will have 8 cores, and each core will have 8 threads. While the T4 emphasizes highly threaded workload performance, it is important to note that Oracles has radically improved single-thread performance over its predecessors, with Oracle claiming performance per thread improvements of 5X over its predecessors, greatly improving its utility as a CPU to power less thread-intensive workloads as well.

The SPARC SuperCluster

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