Hopefully you’ve all read SAP’s co-CEO’s open letter to you (http://ceos.blogs-sap.com), and also some of the great responses such as this one: http://bit.ly/b5foPD . With all these open letters flying around, I thought I’d write a slightly different one. Unlike most of my fellow commentators, I’m not going to tell SAP how to run its business. Instead, I’m going to give you, its customers, a suggestion on how you can cut the cost of your SAP environment. You ready? The answer is “buy less stuff from them”.
Actually, it is not as facile as it sounds. Many companies that I speak with automatically favour their incumbent vendors for new projects, while their IT vendor managers complain to me about their negotiation impotence. You won’t be able to get the contractual protection you need, such as limits on CPI maintenance increases, unless you make them a condition of future purchases. Large software companies such as IBM, Oracle and SAP focus predominantly on license sales. It wasn’t customers’ unhappiness, resulting from the Enterprise Support blunder, that caused SAP to fire its CEO and rethink its approach. It was the fact that you showed that unhappiness by voting with your purchase orders, delaying projects, going to competing vendors, and causing SAP’s license revenue to plummet. When Jim and Bill promise to “accelerate the pace of the innovation we deliver to you”, the d word is a euphemism for ‘sell’.
The SAP services market is undergoing significant change: provider consolidation, changes in pricing models, new delivery options, and cloud-based deployment. At the same time, firms are entering 2010 with an eye to growth and business strategy enablement, after significant focus on cost-cutting during the recession. Firms struggle with finding the best services provider for their SAP project and the best delivery, pricing, and deployment models to ensure value, ROI, and success in achieving business goals,. Increasingly, firms are also considering Cloud and SaaS delivery models.
SAP users wondering about the latest trends in SAP services – from pricing models to multi-sourcing to cloud – are welcome to join us for an interactive session next Thursday March 25th. Moderated by Forrester’s George Lawrie, Bill Martorelli, Euan Davis, Stefan Ried and I will lead an interactive discussion around:
- SAP services provider landscape. The market has undergone significant consolidation, with major acquisitions by firms like PwC (BearingPoint), Xerox(ACS), and Dell(Perot) as well as numerous smaller acquisitions. Leading India-based firms have rapidly built their strategy consulting capabilities and now challenge the MNCs in higher value project work.
- Offshore delivery. Offshore ratios have grown extremely high. Implementation and project work is commonly 60% or more offshore; support and maintenance work surpasses 90%. Firms’ offshore strategy is broadening beyond India into geographies such as Latin America, China, and Philippines.
- Outsourcing and AMS work. Firms weigh the trade-offs between single-sourcing their project across implementation, AMS, and hosting versus using multiple providers. Firms also struggle with pricing models and SLAs, with many firms exploring outcome-based pricing models that shift risk to their provide. Outcome-based pricing also provides a potential foundation for innovation and savings beyond labor arbitrage.
Fast Access To Data Is The Primary Purpose Of Caching
Developers have always used data caching to improve application performance. (CPU registers are data caches!) The closer the data is to the application code, the faster the application will run because you avoid the access latency caused by disk and/or network. Local caching is fastest because you cache the data in the same memory as the code itself. Need to render a drop-down list faster? Read the list from the database once, and then cache it in a Java HashMap. Need to avoid the performance-sapping disk trashing of an SQL call to repeatedly render a personalized user’s Web page? Cache the user profile and the rendered page fragments in the user session.
Although local caching is fine for Web applications that run on one or two application servers, it is insufficient if any or all of the following conditions apply:
The data is too big to fit in the application server memory space.
Cached data is updated and shared by users across multiple application servers.
User requests, and therefore user sessions, are not bound to a particular application server.
Failover is required without data loss.
To overcome these scaling challenges, application architects often give up on caching and instead turn to the clustering features provided by relational database management systems (RDBMSes). The problem: It is often at the expense of performance and can be very costly to scale up. So, how can firms get improved performance along with scale and fault tolerance?
Elastic Caching Platforms Balance Performance With Scalability And Availability
In my recent interviews with IT services providers on the topic of innovation, one of the key findings was the many different ways in which innovation can be categorized. Some companies view innovation as simply an extension of their traditional R&D capabilities, others view their innovation as a way to prove their thought leadership, still others view innovation largely as a strategic marketing imperative. Sometimes, it’s a combination of these factors.
One interview that stood out was with Lem Lasher, the Chief Innovation Officer (and Global Business Services President) at CSC, who described to me a deep and holistic approach to transforming CSC’s innovation capabilities. Three things that stood out at me about Lem’s approach:
With Forrester’s new blogging platform in place, I have the opportunity to launch a series of blogs about tech economics. What do I mean by tech economics? To me, tech economics first means how the larger economy and the tech sector interact. I am interested both in how economic conditions impact the demand for technology goods and services and how business and government purchases of these tech goods and services affect the economy as a whole and the industries and firms in the economy. Second, tech economics is about the revenue of tech vendors, both what they are reporting in the present and past and what we expect those revenues will be based on future purchases by their business and government customers.
My published research on the US and global IT market outlook, industry, regional, and country IT purchase trends, big trends like Smart Computing, and the ePurchasing software market (which I also cover) will continue to be my platform for addressing tech economics. However, I want to use this blog to talk about four focused aspects of the tech market: 1) tech data sources; 2) tech industry definitions; 3) tech market developments; and 4) tech market dynamics. Let’s call these the 4Ds of tech economics, and each will have its own strand of comments and observations.
D1: Tech data sources will be of most use to the data geeks like me in tech vendors. These are folks who use my numbers in their own forecasts of the market for their firm and its products. These blogs will talk about the data sources that I use in building my tech market sizing and forecasts, issues and questions about these data sources, and how the data geeks can leverage them. I will share some (but not all!) of our secret sauce for our forecasts, and I hope you will share some of yours so we can all get better.
Sikka made two comments that indicate how he's thinking about the NetWeaver portfolio.
1. In response to my question about whether SAP is concerned that Oracle's ownership of Java will put it at a disadvantage, Sikka started by highlighting SAP's work on Java performance, but then noted the availability of good open-source Java software to support the requirements of SAP customers.
For the past couple of years, I have worked on the analysis of global banking platform deals at this time of the year. Currently, I’m again working on the results of a global banking platform deals survey, this time for the year 2009. Accenture and CSC did not participate in 2009, and former participants Fiserv and InfrasoftTech continued their absence from the survey, which started about two years ago. The 2009 survey began with confirmed submissions from a total of 19 banking platform vendors.
We would have been glad to see more participating vendors, in particular some of the more regionally oriented ones. However, US vendor Jack Henry & Associates as well as multiple regional vendors in Eastern Europe, Asia, and South America did not participate. Nevertheless, the survey saw some “newcomers” from the Americas, Europe, and the Middle East, for example, Top Systems in Uruguay, Eri Bancaire in Switzerland, and Path Solutions in Kuwait. Consequently, the survey now covers banking platform vendors in all regions of the world except Africa and Central America.
However, 19 was not the final vendor count: One of the 19 vendors, France-based banking platform vendor Viveo, dropped out of the survey because Temenos acquired it shortly before Viveo provided its data. Another vendor simply told us that it only saw business with existing clients and, in the absence of any business with new clients, it saw no sense in participating. While all other participating vendors won business with new clients (whether the rules of the game allowed Forrester to count that business or not), 2009 was not the best of times.
IBM has been talking a good cloud game for the last year or so. They have clearly demonstrated that they understand what cloud computing is, what customers want from it and have put forth a variety of offerings and engagements to help customers head down this path – mostly through internal cloud and strategic rightsourcing options. But its public cloud efforts, outside of application hosting have been a bit of wait and see. Well the company is clearly getting its act together in the public cloud space with today’s announcement of the Smart Business Development and Test Cloud, a credible public Infrastructure as a Service (IaaS) offering. This new service is an extension of its developerWorks platform and gives its users a virtual environment through which they can assemble, integrate and validate new applications. Pricing on the service is as you would expect from an IaaS offering (and free for a limited time). If you are testing with IBM software you can either bring your licenses or check out the equivalent instances from their service catalog. There’s even a new version of Rational Software Delivery Services for shops familiar with Jazz.
As some of you may already be aware, I joined Forrester Research a little over a month ago. Some will wonder why, after many years of plowing the independent field, I decided to join the competition. Well, I don’t feel I have joined the competition.
I know it sounds a little sickly, but I feel like I have finally come home. I got so used to working by myself, I forgot what it was like to have colleagues. I really came here to help build a business that caters for the needs of Business Process Professionals. I have known Connie Moore for about 17 years and we have been erstwhile collaborators throughout that time. Clay and I had been exploring partnership opportunities before he joined Forrester.
My first experience inside Forrester was to attend “Starting Blocks” - a 3-day program where the Executive Team come in one at a time, to meet with all new employees that had joined the organization since the last program. What a fantastic eye-opener that was. Here we had the thinkers and strategists sitting down and engaging in a dialogue - exploring what they were doing and listening to feedback - quite an unusual behavior, and a reflection of the culture of the organization.
Now I work in Connie’s team, bringing my own perspectives and capabilities - complementing the skills already here. My research focus could be summarized as follows:
“I am specializing in the methods, approaches, frameworks, tools, techniques and technologies of Business Process Management (BPM), Business Process Improvement, Business Transformation and Organisational Change; with a special emphasis on an outcome-based, customer-focused approaches.”