Oracle: "we want to be like IBM from the 1960's... but open"

Following the EU's approval of Oracle+Sun last Friday, Oracle officially launched its strategy as a combined company with Sun, along with a new tag-line:

"Software. Hardware. Complete."

Oracle co-President Chuck Phillips, along with several other Oracle executives, mentioned during the presentations that they could now execute on IBM's complete system strategy of the 1960's, while being an open development platform...


Complete Solutions from Oracle

In essence, Oracle is looking to go beyond the marriage of hardware with infrastructure software products (OS, DB, Middleware) to also include enterprise applications (horizontal and vertical), in order to provide a complete solution. While the latter will be the new frontier for the combined company, the integration of applications with hardware (aka "Appliances" - a word I thought was dead 2 years ago) will be focused on increasing performance, as well as the ease of deployment, scalability and upgrades.


A More Direct Oracle Presence for Service & Support

Oracle also noted that by having a fully integrated solution, telemetry feeds can occur between the system and Oracle support, helping to more rapidly identify system issues whether it be in the hardware, infrastructure software or application layer. Oracle also boldly announced that it would provide "Professional and Management Services that support every aspect of the solution lifecycle."

Which brings me to my next point...


Is IT Services next?

As any CIO knows "hardware+software" doesn't create a full solution, and a large amount of IT services resources (whether internal or external) will be required to customize, configure and implement any solution. So I am left wondering, if Oracle really intends to "support every aspect of the solution lifecycle," could a significant IT services acquisition be the next frontier for the company? Especially now that the company is in competition with other hardware suppliers (IBM, HP/EDS) that have far larger and broader services resources and capabilities, this could very well make sense, since Sun brings Oracle into an entirely new segment of the IT business.

On the subject of services, Oracle did state that it would have a major direct focus on its top 1700 customers, where the company would like to have a very active services relationship. Oracle did slightly hedge these comments during the presentation by saying that their partners and channel will be very important, however with a more balanced and focused approach on value added services.


Final Thoughts

PAC is very interested to see whether Oracle's partners and customers will follow their new lead. With Sun and its +60 acquisitions over the past 5 years, Oracle now stands alone as an IT supplier trying to offer nearly everything to its enterprise customers. In comparison, IBM has left enterprise applications to ISV partners, Microsoft leaves services generally to partners and the channel, SAP is focused on its business application footprint with a very robust IT services ecosystem, etc, etc... If Oracle intends to deliver full solutions stacks (hardware + software), as well as covering the full IT services lifecycle, what's left for partners?

On the customer side (the most important side!), Oracle brought a few customers out, particularly from industries that have very specialized hardware platform needs like telecommunications, who stated their strong desire for hardware appliances, pre-configured with all of the necessary infrastructure and business application software. While this might be the case for very specialized, high transaction processing IT environments... what about a large chunk of the market that is looking to SaaS and cloud computing to support many of their needs? While SaaS isn't right for all kinds of business needs or kinds of company's, its delivery mode is clearly going to be a big part of the future of enterprise application deployment. Call me crazy, but today if a company is going to buy a SFA (sales force automation) application, I don't think they are looking for one coming on a gigantic box!

Either way, what Oracle is attempting will obviously take time to flesh out completely, and certainly the company will continue to evolve as it gets feedback from customers and partners alike... but perhaps the current strategy could adapt a little bit more to 2010, as opposed to looking back to 1960 for inspiration!

SAP Starts 2010 with Customer-Friendly Move

As announced on Thursday, January 14, 2010, SAP offers customers to choose between two maintenance support options: they can switch from Standard Support to Enterprise Support and vice versa. This is new and kind of a small revolution. Up till now, SAP has insisted that Enterprise Support is the only available maintenance support option, regardless of the current structure of the customer’s SAP environment.

The Standard Support fee is 18% in 2010, with the right to raise this fee for inflation on an annual basis, starting 2011. For Enterprise Support, SAP charges 18.36% this year. Fees develop according to SAP’s Enterprise Support ramp-up reference curve.

Good News ...

First, companies that today are not able to leverage the support features of Enterprise Support due to their SAP environment can switch to Standard Support. If their situation changes, they are free to move to Enterprise Support later on.

Second, the new terms apply for all SAP customers.

SAP keeps the patterns for raising maintenance fees as they were before, meaning that Enterprise Support fees (now at 18.36%) will climb in steps up to 22% in 2016 (also referred to as ‘SAP Enterprise Support ramp-up reference curve’).

... But Room for Improvement

PAC rates SAP’s move positive, but it still leaves room for improvement:

• + Companies have to decide whether to choose Standard or Enterprise Support for their whole SAP environment. However, some companies run a mix of old and new SAP product releases.
• + There are still no options within Enterprise Support, allowing users to choose the amount of service they need (kinds of “Enterprise Support Bronze”, “Silver” or “Gold”).
• + SAP users in Germany and Austria of which many are still on Standard Support can move to Enterprise Support at a fee of 18.36%, if they do so by March 15, 2010 (with fees raised in the following years as mentioned above). After that date, a switch to Enterprise Support comes at a fee of 22% - these customers only have little time left to review their maintenance strategy.

SAP Listens to its Customers: Basic Maintenance is Back!

Today SAP announced that they are bringing back Basic Maintenance to its customer base, following quite a bit of customer frustration when it was announced maintenance would be increased in August of 2008... which soon turned into outrage in late 2008 and 2009 following the financial bust.

The main details are as follows:

• Enterprise Support - 18.36% in 2010, with incremental increases to 2016 where it will reach 22%

• Basic Support - 18%

Customers have the opportunity to make a change each year (from basic to enterprise support or vice-versa), but if they decide to move down to basic, and then later decide to go to enterprise support, they won't have the benefit of incremental increases and will go immediately to 22%... so customers will have to think carefully about this!

In PAC's opinion, there are still a host of issues with the traditional license/maintenance model itself in the face of SaaS utility billing, but we applaud SAP for listening to their customers (finally!). Some serious damage has already been done to its image with customers, but perhaps this could be a first step in turning the tide... let's hope that bigger and better ideas are to come from SAP in 2010!

What are the SAP Consulting Trends to Watch in 2010?

2009 was not a banner year for SAP consulting. That’s a nice way of saying that some consultants actually started missing airports and security screenings... okay, maybe not after what happened in Newark last night! But while the consulting lifestyle is not always a picnic, it beats riding the pine bench. However, the news was not bad for all parties. For SAP customers, it was a year to procure SAP consultants at cheaper rates. Customers also gained from the streamlining of services and creative delivery models that consultancies were compelled to pursue.

The SAP freelancer was caught in the middle of these changes, with senior consultants predictably faring better than juniors. New “virtual” consulting options brought new opportunities to the freelance community, but at reduced rates. So what can we expect from 2010?

In this blog post, the first in a two part series, I’ll review SAP market developments that should stimulate consulting demand.

No surprises here: small, focused SAP projects will carry the day in 2010. Perhaps the only exception will be large scale SAP upgrades. But even these upgrades will look nothing like the expansive projects of previous upgrade cycles.

1. “Smart Upgrades” - Upgrades to ERP 6.0 will continue, but in a targeted fashion. SAP’s classic upgrade methodology will be a reference point, but many customers will look to firms that provide a leaner upgrade model. Examples will include: fixed cost upgrades with most of the project managed virtually (group:basis being one firm that provides this type of upgrade), tools that cut the upgrade testing cycle (Panaya’s offering being the most powerful example of this), and help with specialized SAP upgrade issues like Unicode (see: unicodesap.com). With more companies managing part or all of their SAP upgrade within Solution Manager, we will see a continued emphasis on Solution Manager skills and perhaps even some service offerings structured around SolMan.

2. BI projects – Look for BI to be a major spending focus in 2010, but not just SAP BusinessObjects. When it comes to BI, SAP customers are going to do their version of coupon clipping. During these pricing comparisons, BusinessObjects will not always come out on top. Third party BI tools will have an impact on the SAP space as well. Expect most BI projects to be focused on dashboarding and the visualization of data. Upgrades to BW 7.0 and use of the Business Warehouse Accelerator to improve processing speeds will be another point of emphasis. “Give the users the data they want at the speed they expect” will be the mantra for 2010.

The only glitch? Many companies face data cleansing, integration, and master data management issues. These data-intensive projects are more complex in scope, so look for companies to try to get by without them in 2010 (or settle for the next best thing to “real time,” such as data synchronization overnight or on weekends). I expect to see more data-centric BI projects in 2011. That should buy SAP some much needed time to flesh out its own Master Data Management (MDM) offering.

3. Mobility and Visibility – Visibility of operations will continue to be a major SAP project focus. Empowering employees from the shop floor to the field service unit to access SAP remotely and input information from mobile UIs will be a priority. SAP’s NetWeaver Mobile component and the Mobile Development Kit (MDK) will get a workout in 2010. Like many “edge” areas of SAP, the development skills needed for SAP mobile development will combine ABAP fundamentals (like ABAP Objects and ABAP Workbench) with Java-based SAP competencies like Web Dynpro for Java. The NetWeaver Developer Studio, mostly Java focused, will be a preferred environment for many of these projects. Perhaps more importantly, we’ll see a continued demand for services firms (and consultants) who have an architectural grasp of SAP’s mobile landscape.

4. “Green SAP” – Sustainability will continue its growth as a services approach that combines the repackaging of traditional SAP functionality with new SAP tools like SAP Carbon Impact. (Click here for an interactive map of SAP's sustainability solutions). Although the new SAP tools may provide some new consulting opportunities, sustainability is as much a mindset shift as a skills shift. Sustainability’s key business drivers are regulatory concerns, shareholder transparency, and efficient energy consumption. With that in mind, those services firms who can present a comprehensive set of “sustainability skills” that cover reporting, data visibility, energy measurement and risk management should be in demand in 2010. That means being able to advise on SAP's latest sustainability solutions, such as the now-available Sustainability Performance Management app.

This expertise should also include SAP virtualization knowledge (to reduce burn rates on servers) as well as lean (agile) coding methodologies like Scrum. Sometimes the exact same project can be “spun” a different way. In the social media era, viral PR matters. Firms that know how to tie their clients’s energy reduction efforts into sustainability mission statements will have an edge over those who simply provide hands-on skills without connecting the sustainability dots.

5. SME - The SME market will be a focal point for SAP during 2010. With SAP's emphasis on consulting partners in that space, there will be opportunities for those firms that have industry traction and productive partner/lead sharing relationships with SAP. All-in-One, SAP’s most sophisticated SME offering, should provide the most consulting opportunities in 2010. Some R/3 consultants have adapted well to All-in-One, given the many similarities in the product.

Business One represents a whole different consulting space and will be hard for larger services firms to break into. Smaller, decentralized firms built from the ground up with low overhead should be well positioned to pick up B1 business this year (if they are SAP B1 partners). Though Business By Design should gain momentum in the second half of 2010, only those with deeper pockets should pursue ByD skills ramp up now, as the year of consulting growth for ByD looks to be 2011.

What about BPM? You may be wondering about BPM – why didn’t it make this list? Though more companies are addressing their ERP projects from a process-driven perspective (example: “how can we standardize/improve our order-to-cash systems?”) I don’t see BPM as a major consulting area for SAP shops in 2010. Two reasons: first, true process overhauls are cumbersome and time consuming – not catch phrases that will set management on fire in 2010. Second, SAP consulting demand has always peaked when there is a mature tool set to drive the consulting efforts (see: SAP BI consulting).

NetWeaver BPM is intriguing, but it’s just not ready to drive consulting growth. Until NetWeaver BPM’s tight integration with SAP comes to fruition, it may be more tempting to use a simpler tool like Gravity, the modeling tool based on Google Wave developed by SAP Australia.

In 2011, when SAP BPM is more mature, and more closely integrated with a more robust Solution Manager, then I expect to see BPM consulting have an impact. In this futuristic vision, Solution Manager would store the business processes, which would be altered on the fly in BPM and then quickly tied back into SolMan, with a minimum of manual reconfiguration or coding needed. Let’s be honest: sounds like science fiction as we head into 2010, but it might be viable by 2011. Services firms should be paying close attention to SAP’s BPX skills certification, but BPM skills investment should proceed carefully in 2010.

In part two of this blog post, I’ll look at some of the trends on consulting service delivery we should see in 2010.