Spring Training For Microsoft Negotiators

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:

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Which Software Licensing Policy Is The Unfairest Of Them All?

Early next year I'm going to ask Sourcing & Vendor Management professionals to vote on which software companies' licensing policies they most resent as Unfair.  Fairness is a subjective quality, but it seems to me that some policies penalize customers for circumstances beyond their control that are unrelated to the value they are getting from the software. Others have serious consequences that may not have been apparent to the buyer when he agreed to the contract. Fair software pricing charges some companies more than others, but in a logical, transparent way that is related to value. Jim Hagemann Snabe (SAP's co-CEO) explained software pricing best practice extremely well in this recent interview with Computerweekly.com's Warwick Ashford:

"Q: What is SAP doing to meet user demand for greater clarity on licensing and pricing?"

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What Does Oracle's Court Victory Mean For IT Sourcing Professionals? Not Much, Actually.

Yesterday, Oracle got a surprisingly high award from an Oakland jury in its case against SAP, in respect of its now defunct TomorrowNow subsidiary.


Photo of Oakland Raiders Fans

The Oakland Jury, pictured after the verdict.

As my colleague Paul Hamerman blogs here (http://blogs.forrester.com/paul_hamerman/10-11-23-oracle_wins_13_billion_award_over_sap  ) SAP wasn't able to test the validity of the 3rd party support model, so this case has no bearing on the separate case between Oracle and Rimini Street.  I've stated previously that IT sourcing managers should not be put off by that dispute: Don't Let Oracle's Lawsuit Dissuade You From Considering 3SPs, But Recognize The Risks.

SAP customers shouldn't worry about the financial hit. SAP can pay the damages without having to rein back R&D. The pain may also stimulate it to greater competition with Oracle, both commercially and technologically, which will be beneficial for IT buyers. 

Was the award fair? Well, IANAL, so I can't answer that. But my question is, if the basis of the award was "if you take something from someone and you use it, you have to pay", as the juror said, does that mean SAP gets to keep the licenses for which the court is forcing it to pay?

An Impressive Keynote From SAP’s Co-CEO Opens SAP’s UK And Ireland User Conference

I attend several software company customer events each year, and I always feel like the only atheist in a room full of religious zealots. However big or small the vendor, whether it consistently delivers competitive advantage or overcharges for mediocre software, the people who come to the events are usually fans — people whose careers depend on their employer continuing to invest in the product they know.

The SAP UK user conference today in Manchester was no different. So when Jim Hageman Snabe stood up to deliver his keynote, this wasn’t the toughest crowd he’s ever faced. Whatever their concerns about product strategies, support costs, court cases, etc., these people are desperate for him to do well, because otherwise they are out of a job.

Nonetheless, even heretics like me would have to admit that JHS delivered a great keynote. Even Ruby Wax, the Anglo-American comedienne compere was moved to say “you could sell anything.” Here are some of the things that particularly impressed me:

·         Likeability. From linking his speech to Ruby’s opening routine, to funny and pertinent family stories, JHS showed what sort of person he is. This is very different from his predecessors and competitors. When he says he wants SAP to be more customer-focused, it’s clear that he means it.

·         Clarity. JHS set out simply and effectively where he wants SAP to focus its development. He set out six themes: quality first, stabilize the core, reduce TCO, innovate without disruption, improve usability, give customers predictability. Then he explained succinctly how SAP is addressing each one, in parallel with its vision for in-memory computing, on demand availability, and mobile device usability. Even if you disagree with his vision, you’re in no doubt what it is.

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At Last, After A Long Courtship, They’re Engaged! (Ariba and Quadrem, That Is)

No, I’m not wasting Forrester’s blog space for yet more coverage of the royal engagement. I think Ariba’s proposed acquisition of Quadrem, that it announced today, is much more interesting. http://ht.ly/3bPei

Royal souvenir plate

Forrester has been predicting, and advocating, consolidation in the procure-to-pay market for a while:

“Once consolidation starts, the natural imperative of scale in the technology business will transform the market into one in which a few large, successful, interoperating networks enable buyers to reach all their suppliers, however small or physically remote.” Enterprises Should Push Supplier Networks To Deliver Interoperability, July 2009.

While I’m unqualified to comment on whose investors do better from the $150m purchase price for a company with about $50m revenue, I do believe the merger is good news for both sets of customers and suppliers. Firstly, Ariba reinforces its place as one of the four or five large supplier networks that will eventually dominate the market. Its customers now get access to a wider stable of suppliers. Quadrem originated as a marketplace for mining companies, so it is particularly strong in MRO categories and in natural-resource-rich regions such as Africa and Latin America where Ariba is under-represented.

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Fireman Sam Versus License Optimization, At Flexera's UK Workshop

©2008 Prism Art & Design Limited.[i]

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

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This Is What We Have To Endure Every Week

Analysts suffer get the benefit of dozens of briefings per year from hopeful vendors trying to convince us that they are the next big thing. Here’s a typical example of marketing-speak messaging that is an amalgam of all the mistakes that will ensure a vendor goes on our "not with a barge pole" list.

“Exvezium[1] is a leading provider[2] of Purchasing and Supply Optimization (PSO)[3] solutions, focused on the automotive, retail, financial services, and government sectors[4]. Customers such as Mutt Publishing, Shania Entertainment[5], and the Steiner Wig Corporation[6] have chosen Exvezium for its very unique[7] requisition automation, online tendering and award optimization capabilities[8]. Leading analyst firm Milometer[9] classed Exvezium as a Strong Challenger in its Sourcery Square 2009 evaluation.

"The four best practices[10] for implementing PSO are getting executive buy-in, choosing a configurable solution, supporting constraint-based awarding, and maximizing event activity," said CEO, President and Founder[11] Mark Ettingbabble. "Exvezium supports these through our combination of cutting-edge technology and best-in-class services[12]."

What’s wrong with this? Here are my dirty dozen analyst pet hates:

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Will Fusion Be In Your Oracle Applications Road Map?

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.

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Lots Of Talk About Chatter At Salesforce’s UK Customer Event

Marc Benioff, CEO of salesforce.com, gave a typically energetic performance at London’s Royal Festival Hall yesterday, both in the main-stage keynote and the private lunch for press and analysts. In addition to some humorous digs at Oracle, SAP, and pretty much any company that wants to run its own data center, Benioff described his vision for enterprise applications in the world of social computing, which he calls Cloud 2. Key to this vision is salesforce.com’s own Chatter application, which is . . .  er, well actually it's not really clear what it is. Various spokespeople described it as an internal Facebook, a collaboration engine, Twitter but secure, but to me it still seems to be a user interface in search of an application.

The demonstration reminded me forcibly of the scene in Bruce Almighty in which Morgan Freeman lets Jim Carrey hear all the prayers being made at that instant by the citizens of Chicago. The user gets a stream of tweets, discussion threads, notifications, and alerts from feeder applications, messages from colleagues to each other, general questions, etc. My question, which no-one could answer adequately was “how is this different from email?” The features they cite — filtering, highlighting, threading, categorizing, etc. — are all in Outlook if you care to use them.

The main difference, apart from the fashionable user interface with the sender’s photo next to each message, is the switch from emailers deciding who they want to read their message, to readers deciding whose chats they want to see. Benioff’s description of his own Chatter feed puts him as the omniscient Bruce, watching every sales process, customer service problem resolution, product design collaboration, and invoice approval throughout his organization.

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Sales Reps' Top Five Annoying Habits (Whether They're Selling Cars Or Software)

I’m in the process of buying a new car, and I’m trying to apply everything I’ve learned from my research into software negotiation towards getting a good deal. I’m noticing many of the irritating behaviors from the dealers’ sales staff that Forrester’s sourcing and vendor management clients encounter regularly from their software reps. Here is my list of the worst ones, but I’d love to hear other people’s suggestions:

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