Just over a week after SAP published its intention to buy Success Factors, IBM announced yesterday that it will acquire Emptoris, one of the leading ePurchasing suite vendors. My colleague Andrew Bartels has described in his blog some of the implications for other vendors in the ePurchasing market:
My interest is in what the acquisition means for sourcing professionals, not just the CPOs who might be Emptoris customers, but the IT sourcing professionals setting strategies for dealing with major suppliers such as IBM and SAP.
· Emptoris customers should give IBM the benefit of the doubt, for now. Craig Hayman, General Manager of IBM’s Industry Solutions division, assured me that he would take great care not to damage Emptoris’s strengths, the ones that attracted him to the company, as they did you, its customers. Emptoris consistently does well in Forrester Wave™ evaluations, not only for its functionality but also its focus on sourcing and procurement, its emphasis on ensuring customer success, and its consistent record of innovation. The good news is that Hayman doesn’t underestimate the challenges of integrating Emptoris into IBM, but is confident he can overcome them. It will take a couple of years before we can judge his success.
Having attended Oracle’s customer event a couple of weeks ago, I wasn’t sure I’d be able to make it to Emptoris’s Empower event this year, but I'm glad I was able to attend. The quality of the external speakers, the access to Emptoris execs, the content mix (high-level procurement trends and implementation best practices), the plentiful opportunities to chat with customers, partners, and employees — all these made it an extremely valuable couple of days.
A key event theme was the urgent need for procurement leaders to improve their risk monitoring and mitigation processes. For instance, according to Deloitte Consulting’s 2011 CPO survey, nearly 60% of respondents believe their risk exposure is higher than a year ago. Emptoris’s President & CEO Patrick Quirk explained his company’s response, with an ambitious roadmap to convert the acquired Xcitec product (now called Emptoris Supplier Lifecycle Management) into a comprehensive supplier risk and performance management suite (SRPM), in line with our description of this category: FAQs About Supplier Risk And Performance Management Software.
I handle many inquiry calls from clients asking for help negotiating with large suppliers, and often they claim the supplier is a strategic partner. I’ve noticed that many clients use that term, but when I ask them what it actually means in practice, I get varying responses. So Forrester recently surveyed over 150 sourcing and vendor management (SVM) professionals to ask them what they expect to get from strategic partners, and what they offer in return. I was bit disappointed with the results. For instance, while 68% said they would always expect partners to give them the best possible discount, only 6% said they would always make the partner their sole source for specific technology categories.
What’s wrong with this picture? Well, to quote Godfather 2, when explaining Hyman Roth’s longevity, Johnnie Ola says, “He always made money for his partners.” That concept doesn’t seem to apply in the technology world. On the one hand, buyers complain about vendors’ unfair policies (see my recent report Buyers Should Reject Unfair Licensing Rules) and transactional sales approach. Yet OTOH they want to squeeze their partners’ margins while still expecting them to sell their wares site-by-site and product-by-product around their enterprise. As one senior software executive told me the other day, “Sure, I’ll waive my usual policies for partners, but only if they let me off the huge cost of supporting individual, small product buying decisions.”
As soon as you think you understand software companies’ policies on virtualization, a new problem appears that makes you tear your hair out and scratch your now-bald head. This month’s conundrum is whether or not VMware’s ThinApp product breaches your Microsoft Windows license agreement:
However, Microsoft, via its knowledge base, claims that “Running multiple versions of Windows Internet Explorer, or portions of Windows Internet Explorer, on a single instance of Windows is an unlicensed and unsupported solution.” http://support.microsoft.com/kb/2020599/en-us#top
VMware doesn’t warn customers that ThinApp could cause them Microsoft licensing problems, but neither does it claim that it is legal. It merely advises customers to check with Microsoft.
My tireless research of sourcing and vendor management technologies has brought me to Barcelona, for Emptoris’ EMEA customer conference. I’d like to assure my colleagues in Boston, still cold and still "0 and . . .", that I’m not writing this while sitting in the sunshine at an open air café, sipping a cold cervesa and watching the lightly clad señoritas walk by. I’d like to assure them that, but I can’t, because this is exactly what I am doing. Hopefully you’ll also be able to experience Barcelona if you attend our IT Forum here in June: http://www.forrester.com/events/eventdetail/0,9179,2510,00.html
I saw some very good presentations by customers about their implementations of Emptoris’ sourcing site. As a fearless analyst, I asked the question about the elephant that, while not actually in the room here in Barcelona, is certainly present in the customers' IT environment, namely SAP. All the speakers were procurement professionals in supposedly SAP-shops, so why had they chosen Emptoris over SAP’s sourcing and CLM products?
It’s a beautiful sunny day here in England, the first snowdrops have appeared in my garden and at least one of my pet hens has restarted laying – yes, Spring is on the way. Meanwhile, in the US the main harbinger of the changing season is the migration of baseball teams to Florida and Arizona for their annual pre-season ritual known as ‘Spring Training’. In the software sourcing world, the rites of Spring often include major negotiations with Oracle and Microsoft ahead of their fiscal year ends of May and June respectively. That’s why this is a perfect time of year to get some spring training of your own, at one of our ever-popular Microsoft Negotiation workshops.1 Anyone considering a major purchase or renewal with the Redmond Sluggers between now and the World Series should come along to Amsterdam on February 16 or Dallas on March 2 to hear why they may have extra leverage this year, and how to use it to get the best possible deal.
Microsoft had very high sales revenue for its December quarter, particularly the business division, but that didn’t come from the multi-year Enterprise Agreement (EA) and Software Assurance (SA) deals that the direct sales teams need. Microsoft’s revenue boost came from one-off purchases of its just-released Office 2010 product through its retail and small business programs. EA/ SA deals would initially appear in the accounts as unearned revenue in the balance sheet, and that was at the same level as two years earlier.2 So these results are consistent with our research that predicts that Microsoft’s direct sales teams will struggle to meet their tough EA bookings targets this year, and that will strengthen prospective buyers’ negotiating position.
We can’t promise warm weather or adoring fans, but our spring training session will help you with:
With Halloween just around the corner, it’s time to get creative about how you can scare the pants off of the people in your IT organization. I’ve been attending a fair amount of CIO events recently, and in the spirit of Halloween I put together a few costumes that I can guarantee will keep your CIO up at night.
A Storm Cloud. While “The Fog” might have scared your CIO in 1980, thirty years later it's the cloud that is scaring him. Despite all of the hype around "as-a-service technologies" over the past two years, Forrester has found 48% of IT decision makers still say they are “not interested” or “have no plans to adopt” software-as-a-service -- a number that rises for other cloud-based offerings. Why the lack of interest? Security, integration, and lack of customization top the list of key SaaS concerns. Yet, as the cost savings and purchasing flexibility benefits becomes increasingly obvious, IT professionals know they have to get comfortable with their fears to reap the benefits that cloud-based offerings provide.
Some of you may recognize the guy at the front as Fireman Sam, the eponymous "hero next door" of the BBC children’s program set in the fictional Welsh town of Pontypandy. What does he have to do with software licensing?
Yesterday I spoke about software licensing trends to a group of customers, prospects, and partners of licensing optimization vendor Flexera. One of my key messages was that software asset managers (SAMs) must move on from reactive firefighting via fire prevention (both of which I call "Fireman SAM") to a more proactive management of license needs (which I call "license optimization"). Fireman Sam uses traditional asset inventory and hard disk discovery tools to try to measure software usage, compare it with license entitlement, and rectify any shortfalls. Fireman Sam’s arch enemy is License Audit Bill.
In contrast, a more mature process adds analysis of what licenses you really need to the data on usage and ownership. This information enables software sourcing managers to cut expenditure on excess licenses and over-specified versions. For example, Flexera’s product for SAP enables customers to put users in the right categories, thereby minimizing the purchase of more expensive "full user" licenses.
Best Software License Management Considers Three Questions
Vendor managers in companies with Oracle applications may have heard a lot of talk about its next-generation applications over the last five years. Well, the news from Oracle’s customer event in San Francisco is that Fusion is almost here. Oracle is extensively demonstrating the product here at the event, early adopter customers are already in the implementation process, and Oracle intends to generally release it in the first quarter of next year.
Oracle hasn’t announced final pricing yet, but Steve Miranda, SVP of Oracle Application Development, confirmed that customers on maintenance will get a 1:1 exchange when they swap the product they own now for the Fusion equivalent. That is good news, although to be fair, my Oracle contacts had indicated this, off the record, all along.
The packaging into SKUs will mimic that of the current product set, to make the swap easier. I.e., the price list for HR will look like the PeopleSoft price list, CRM like Siebel, and so on. That makes some sense, but I wish Oracle had taken the opportunity to simplify the pricing so that there are fewer SKUs. For instance, Siebel's price list is over 20 pages long, and there's no clear link between the the items in the price list and the functionality you want to use. As a result, some customers buy modules by mistake, while others fail to buy ones they really need. Hopefully Fusion will provide a clearer audit trail between functionality and SKU.
Enterprises are increasingly turning toward cloud deployment models (including SaaS, PaaS, IaaS, etc.), attracted by promises of fast deployment, lower upfront costs, and greater elasticity in pricing and consumption models. This trend has been further fueled by resource constraints (capital and people); cloud solution maturity (sophisticated functionality, customization, and integration); and “empowered” workers (seeking DIY technologies to drive business results). However, the growing use of cloud technologies creates new challenges and questions in areas like TCO, security, support, and vendor management.
Enter cloud sourcing. Cloud sourcing typically refers to a model where third parties play a broker and consulting role in helping firms leverage the cloud strategically across business applications.
Cloud sourcing provides alternatives to traditional outsourcing, packaged application implementation, and application development. Cloud sourcing spans applications, utilities, and services. Cloud sourcing strategies include both the use of cloud applications such as salesforce.com and Workday to deliver business applications as well as the sourcing of complete managed processes via cloud applications plus associated services, such as offerings from Capgemini and Wipro.
Forrester will be part of an upcoming panel at Global Sourcing Forum in New York City on October 13 that discusses key elements of and considerations for cloud sourcing, including:
• How strategic sourcing decisions can include cloud-based solutions.
• What SaaS, Paas, IaaS, and BPO mean in the cloud context.
• Practical lessons and best practices for adopting cloud solutions.
• Challenges with cloud sourcing and how to overcome them.
• Emerging providers and solutions for cloud sourcing.