The New Clearwire: Enterprise Play Anything But “Clear”

by Lisa Pierce
Prior to yesterday’s announcement concerning the formation of the new Clearwire, it was becoming increasingly evident to us from both an opportunity and cost perspective that Sprint’s near term objectives for Xohm’s should be refocused — less initially towards serving the needs of high end mobile consumers — and more towards the needs of enterprises — particularly those with small sites who would like to ‘cut the cord’ on ILEC T1 access. That a number of technical issues would have to be worked out to meet this aim is certain. But demand for such connectivity — especially from a nationwide provider — is sky high. Moreover, Sprint’s share of enterprise networking is small; this type of offer could provide it with an important impetus for growth.

The substance of yesterday’s announcement does nothing to diminish business customers’ needs for alternatives to incumbent strangleholds, but it does raise more questions than answers about the ability of the new entity to serve their needs. Based on its cast of owners, the new Clearwire is decidedly focused on consumers. Despite this, it’s possible that Intel and Sprint together could exert the necessary influence to prioritize funding modifications to make WiMax enterprise-class. But whether this will occur soon is unknown. Should this type of opportunity be missed, it only reinforces the dominance of the current AT&T-Verizon duopoly.

Previous IT Project Failures Do Not Matter When Choosing An IT Service Provider

by Tim Sheedy
A factor that tends to be considered when choosing an IT service provider is how many project failures they have had – particularly when some of those failures are large, costly, and well-publicized. And if that is not a formal consideration, project failures are often on the mind of sourcing organizations. In fact many companies that I have spoken with over the past 12 months have actively excluded some players from their short list due to their previous failures. These types of metrics tend to work against the large players as they have more contracts and therefore, if they run at an industry average failure rate, they are most likely to have more failures. IBM, as the company that probably does the most IT projects, has the most failures (assuming that their failure rate is the same as that of their competitors) – and this works against them. I have actually heard people say that they would never have IBM in as an IT services partner because of the fact that so many of their projects fail. And this does not only refer to IBM – you could switch in any large IT services vendor’s name here as the sheer number of projects they work on means that they are likely to have more problems too (as very few IT projects go smoothly). If the failure rate is 1 in 10 (and this is just a guess) then a vendor that has undertaken 1,000 projects will have more failures than one who has undertaken 10…

In my humble opinion, focusing on failures or project problems is a short-sighted view. Project failure is rarely the fault of your IT services partner – even if it is, it is your fault for not managing the process effectively and pulling them up before it turns into a failure. The only time when the partner is to blame is when they promise to do something that simply is not possible – and again, they are probably just responding to your impossible requests.

The “X-factor” that seems to separate the average from the excellent in IT implementations is not their ability to avoid failure, but how they respond to failures and issues when they invariably do happen. I just completed many client reference interviews for the ANZ SAP Implementation Wave that I am working on at the moment, and nearly every client had a major issue at some stage within the project. Now remember that these client references were actually supplied by the providers themselves, so these are the GOOD ones – which means that in the real world the number of major issues within projects is even higher! It is how the provider responds to these challenges that sets them apart. Some have great project management to resolve the situation, some have individual experts who went above and beyond the call of duty to fix the problem, and some have management who were happy to step in and do whatever it took to ensure the project gets back on track.

So therefore when you speak to client references (which you should do before undertaking a major project or outsourcing a large chunk of your IT) focus more on the problem resolution aspect and less on the rate of failure or the number of issues – for you will have issues no matter how much planning and prep work you do! What you will find out in the process can be hugely valuable when looking for the right partner. For example, one company I recently spoke with mentioned that whenever things went wrong, the senior management of their partner always stepped in to make things right. On the surface that sounds great – exactly what you are after in a partner – commitment at the management level! But they then went on to say how the CEOs of both their companies are good personal friends and look out for each other. This should ring warning bells (unless, of course, your CEO is good mates with your IT services partner’s CEO!). Others mentioned how whenever there were problems they were resolved due to their own company’s great project management methodologies. If you don’t have these great methodologies then this is something to watch out for as well.

Projects do go off the tracks. And while I have no empirical data to prove this, my gut feeling is that the number of failed projects has decreased significantly over the past few years as project implementation methodologies improve, IT departments are closer to the business to ensure project alignment, and project sizes have decreased (or at least implementation times have shortened). It is how you and your partner respond to the issues that will define not only the outcome of the project, but how much grey hair you get along the way.

Sourcing SAP talent is a challenge that needs to be dealt with soon

I was fortunate enough to attend the SAP Influencers Summit in Boston towards the end of 2007 - this gave me the opportunity to get a better understanding of SAP's product and solution vision going forward and of the challenges that both SAP and their customers will face over the next few years.

One of the biggest issues that will also be the hardest to resolve is the shortage of skilled SAP consultants. This will not only make it difficult to source the best skills for a project but will also drive up the cost of SAP implementations as the demand for the limited skilled resources continues to increase while the supply stagnates. SAP themselves forecast that between now and 2010 the market will need between 30 and 50 thousand new SAP consultants. And while India, China and other low-cost high skilled markets may take up some of that slack, our recent research into SAP Implementations (undertaken by Liz Herbert & Stephanie Moore in the US and myself in ANZ) has shown that there is usually a requirement to have a considerable proportion of people on-site in SAP implementations - so skilling up within the offshore providers will not fill the gap entirely.

SAP will need to make a number of changes to the SAP ecosystem in order to lower the entry barrier and make it more attractive for both new graduates and consultants skilled in other ecosystems. With the reduced numbers of IT-based graduates coming through universities in many developing countries on top of an aging workforce with a large proportion of staff retiring in the next 5-10 years, just maintaining the current skills base will be difficult. SAP will need to look to other non-traditional sources of skilled labor. An example of this in Australia is where they have teamed up with a local TAFE college (a technical education institution traditionally known for training tradespeople) to offer SAP certification. While this is a step in the right direction for them many more such as this will be required to ensure the SAP consulting market does not price the complete SAP solution (software plus services) out of the market.

SAP themselves are experiencing the same challenges as the other SIs in sourcing skilled consultants for their own internal consulting business. They have begun to "productize and standardize" processes and knowledge within the business in order to make the roll-out of SAP solutions less labor intensive. And this is the best way for both you as a sourcer of IT services, SAP as the software provider and the SIs themselves will need to go about solving the challenges faced by SAP implementations. More of the approaches to implementation and integration will need to be standardized, automated and templated in order to reduce the requirement for skilled SAP consultants.

I believe that in the long run we will be moving towards a polarized market for SAP skills - where the the less complex implementations and those that can be highly automated or templated will be sent offshore for the most part, and the more complex implementations that do will remain onshore. This is not implying at all that the offshore-based vendors will only do the simple implementations and the offshore ones will do the complex ones - as the line between offshore and onshore vendors is gray.

Acquiring and retaining in-house SAP consultants will continue to be a challenge - if you have not already you should consider moving  your SAP consultants up the skills stack and outsource much of the basic maintenance and management of the existing solutions. Have your internal people work on the more exciting projects where the business outcome can be understood. This will hopefully stop them from accepting the lucrative offers to join an SAP SI that abound in the market at the moment.

Dan Hesse Appointed As Sprint's New CEO: A Solid Choice - Enterprise 'Fit' Depends on Three Key Issues

From an enterprise user perspective, the appointment of Dan Hesse as Sprint's new CEO is the appointment we hoped Sprint would make. The company is facing a number of important challenges, and thus can greatly benefit from Mr. Hesse's depth of industry experience. Several key issues that the new CEO should swiftly address include:

1. The appointment of a chief operating officer. Sprint's ambitions and challenges are such that one man can't do it all in the timeframe that critical decisions need to be made and executed upon. Despite Mr. Hesse's strong track record in telecom operations, the COO position is a full time job, and Mr. Hesse already has one as CEO.

2. The future of enterprise services, particularly landline. Enterprises need alternatives to the effective duopoly of AT&T and Verizon Business and would like Sprint to be a key enterprise service provider going forward. In order to fulfill this objective substantially, sustainable commitment from Sprint and its new CEO is required in 2008 and beyond. 

3. The future of WiMax. A key component of commitment to enterprises is their need to find an alternative access mechanism to traditional ILEC T1 connections, which are expensive and increasingly prone to outages.  WiMax has the potential to be that vehicle, and can bring with it packets and minutes to enhance Sprint's top-line revenue.

- Lisa Pierce

Sprint Sets Its Sights on a New CEO and Forrester Sets Its Expectations

The change of command at the top is never an easy undertaking.  However, we see opportunity in Sprint's decision to bring in a new CEO, especially when considering enterprise services.  With the consolidation of providers to near-oligopoly status in the US, we think a new CEO at Sprint's helm could help re-energize the languishing domestic enterprises services marketplace – if (and it may be a big if) he or she elects to re-commit Sprint to enterprise services. 

• First and foremost, this would require a significantly deeper commitment to enterprise landline services, something that Sprint has been falling farther and farther behind via-a-vis its competitors. 

• Secondly, the use of WiMax as an alterative to traditional T1 connections for smaller enterprise sites has potentially huge potential to improve the customer experience—both for end-to-end service performance, and at lower prices.  Virtually every enterprise client we work with says they are interested in 'cutting the (ILEC) cord' for their smaller sites. 

• And more and more enterprises are also looking at mobile services as critical business enablers.  Among the largest US enterprise telecom service providers, Sprint has been the strongest vocal advocate of mobility, but it has not been the strongest on total delivery of these types of services to the enterprise. For instance, clients tell us repeatedly that Sprint's 3G activation experience needs improvement. So, it's time to re-commit here too.

• Regarding its support for multinational enterprise customers, the provider's strategy also needs reinvigoration – mainly around managed mobility (including mobile voice and data roaming).  Given all the items on Sprint's enterprise plate, its current partnership-oriented approach to supporting international customers is good enough.

The more that Sprint embraces a renewed focus on building up a stronger, broader, and deeper suite of enterprise landline and mobile services and an improved customer experience throughout the entirety of the contract lifecycle, the more enterprise clients should look at Sprint. It's been said that actions speak louder than words. A new CEO's actions will tell us all volumes about Sprint's future viability as an enterprise telecoms supplier.

by Lisa Pierce and Brownlee Thomas, Ph.D. 

HP Positions New Zealand As An Offshore Location

I attended an event last week with HP in Christchurch in New Zealand. The event was aimed at positioning the New Zealand operation as an offshore location for Applications Modernization. The model definitely has merit. In 2005 HP acquired CGNZ, the New Zealand operation of Cap Gemini that had previously gone independent through a management buyout. This acquisition has given the HP New Zealand operation the status as second largest consulting and systems integration vendor in NZ - one of the few economies around the world where HP has such a presence in this market.

The skills acquired have given HP a considerable presence in the Application Modernization space - providing some good processes and methodologies for export to other locations around the world. While it is hard to quantify why, New Zealanders bring an ability to look at challenges from different angles and think outside the square when approaching projects. Other offshore locations may be better (and cheaper) at running the process, antipodeans (loosely defined as Australians and New Zealanders) clearly are good at developing the process in the first place.

The challenge that HP will face is that NZ is not on the way to anywhere. It is an "out of the way" location and one that does not have access to a largely under-utilized and well educated workforce such as that in India, China and some Eastern European countries. And while the New Zealanders will have the ability to hop on planes to help define and lead opportunities and projects in all parts of the world, it is not a great model for business. The NZ operation has had success with a number of high priority business IT implementations for Australian and New Zealand enterprises and government departments, and this is partly due to the fact that CGNZ already had the relationships at the senior business level within their clients. HP, in many countries, does not have these relationships - they are very strong in the CIO world but not so strong in the business leader/CEO world.

The real opportunity for HP in NZ will be as an internal process development center - to help create and build processes for offshoring Applications Modernization and Testing - and then to implement these processes within HP's larger offshore centers - particularly those within India.

For me, the real outcome of the event in Christchurch was the ability to see how successful HP could be in the consulting and systems integration markets when they acquire a good and established player in this space - one that brings with it the business and IT relationships to push HP's message and its solutions all the way through an organization.

HP is clearly strong in the IT infrastructure services market - but to truly benefit from the shift to Business Technology they will need a strong partner or acquisition that can take them to the CEO's office and have HP help to define the strategic direction of IT within their clients.

SAP's New SMB Licensing Model Is Not Right For Enterprises

by Duncan Jones

I was at SAP’s launch event for its new product for the SMB market, now called Business ByDesign™ (BBD), and was particularly interested in its licensing model and price point. BBD may be a good solution for an enterprise's smaller business units, but vendor managers should be wary of its SaaS model. The price of $149 per user per month works out as $5,364 for the minimum three year commitment, which is no cheaper than a perpetual license for a rival product with annual maintenance. Worse, the renter is still committed to paying $1800 pa (double or triple what maintenance would cost) as long as it uses the software, even assuming SAP hasn't increased the price by then.

Businesses can't switch complete application suites as easily as they can a niche product such as CRM, so BBD customers won't benefit from the flexibility that is usually a valuable feature of SaaS. Companies considering BBD must look at the TCO over six to 10 years, not merely the first three. The hosted delivery model is certainly beneficial to smaller business units that don't want to employ IT operations staff, but enterprises could get hosting services without agreeing to an open-ended term license.

Asked if BBD would be available via a perpetual license, SAP executives said that while there were no plans currently, they would never say never, and they would respond to customer demand. Buyers in enterprises considering BBD should create that demand. The initial commitment is reasonable so that SAP covers its selling costs, but from that point on the support & hosting costs will be minimal. BBD could be a very interesting option for small subsidiaries if buyers can get a reasonable deal from SAP – for example, a commitment that service charges will plummet to basic maintenance levels after the initial three year commitment period.

BT does it again

For the seventh consecutive year, BT has been recognised as the world's top telecoms company in the Dow Jones Sustainability Index (DJSI).The index assesses 2,500 companies worldwide, looking at corporate governance and ethical practices, investor relations, environmental management and climate change, digital inclusion, community investment, human rights, health and safety, diversity, supply chain and risk management.

The DJSI citation states: "Although an out-performer in most sustainability criteria, BT particularly excels in the environmental and social dimensions. The company's sustainability efforts are very much aligned with the group's wider corporate strategy. In addition, BT's commitment to society at large and the environment remain an important strategic focus to the firm, as illustrated by its efforts in energy efficiency and its responsible disposal of redundant equipment.