Last week, I shared some advice for CEO's as gleaned from colleagues at Enterprise Irregulars. A few more chimed in this week, and I thought I'd share some more advice to enterprise software industry CEO's.
Greg Gianforte
Fix your messaging finally. It's been a problem way too long. Everything else is getting to be so right.
John Chambers
Get serious about SaaS. It sells more routers.
Explain to us again why you are going after HP's far lower margin server business and pissing a bull off which is 3 times your size?
Larry Ellison
Give it up on the cloud already. You know you need it and so many of your execs and customers love it.
Be a better partner or be ganged up on.
Leo Apotheker
Choose your co-CEO now.
Get your message straight. You're not an "in memory, end to end process, SaaS and Cloud hybrid model committed, whatever else you think you are" company. You're an enterprise solutions provider with more innovation than you ever let on. Let people know that. There's nothing to be ashamed of and its still "hip."
Marc Benioff
Love you, keep up the innovation, but stop interrupting your partners and customers onstage. Looks REALLY bad. AND show up ontime to your keynotes. The attendees' time is valuable too. Plus Service Cloud 2, Sales Cloud 2, Custom Cloud 2 and Chatter aren't 4 "clouds." Finally, please, keep growing your philanthropy. That's our view into your real heart - and it does SO much good for so many.
Mark Hurd
Time to leave. You're killing HP.
Randall Stephenson
The Fake Steve Jobs only threatened. The real Steve Jobs will fly over and smash your face with a rock if you keep trying to "incentize" iPhone customers to use less of your network.
Sam Palmisano
AARP will honor you this year for being most committed to technology elders. Your data centers, Lotus, Tivoli and other software portfolio, and your average SAP consultant all are the oldest in the business.
Steve Ballmer
I don't know what to make of you or your company anymore. That's not a good thing. Figure out what it takes to get your customers and folks like us to make SOMETHING of you.
Zach Nelson
Keep fixing customer service. Lay off the stupid anti-SAP campaign. Its neither clever, cute, nor wins you anything. You've got a good thing going with your product now. Get in alignment with that. Keep integrating social features as you are doing now. Way to go.
More great advice there from some really smart, experienced people. If you have any to add, just put in your comment below or at http://dbmoore.blogspot.com/. Thanks!
I feel very honored to be a member of the Enterprise Irregulars group - a very plugged group of people, with lots of hands-on knowledge and experience. I asked them what advice they'd like to give to enterprise solutions company CEO's, and I got the following fascinating list of suggestions.
Carol Bartz
Ya gotta know when to fold 'em, sometimes even the best poker players come up with a deuce/three offsuit.
Dave Duffield
Keep control. No more "got the moves" CEOs.
Eric Schmidt
Don't lose your newfound cash flow and cost cutting religion just because the needle is moving up and to the right again.
Enjoy. Really. Cut some costs if you can. Its all good.
Experiments are fun, but you are a one trick pony and don't have the same power to monopolize that market the way Microsoft did. Ad-supported revenue will die, so cannibalize yourself and diversify with meaningful revenue streams before someone else does it for you.
Jeff Bezos
Have a chat with Larry & Bill. See who wants to find the next greatest CEO for their company. Spin out retail under Zappos guy or someone else. And go be a computer industry God by continuing to simultaneously kick some serious butt - you are the only one who can take on Google (see Google Products & Checkout) and Apple (see music/books/devices) and stand your ground.
Keep on keepin on, no one does it better.
Love what you're doing with cloud computing, but 2010 might be the year to spin it off and let it go its own way.
John Chambers
Pay a dividend, recognize you're an awesome cash flow machine that's only going to grow via acquisitions.
You got game - keep delivering on Telepresence and revolutionalize the data center.
Karl and Pam Lopker
Talk to Vivek and follow the same advice.
Larry Ellison
IBM's multi-billion dollar mainframe business is ripe for the plucking with some juicy margins. Sell non-core Sun businesses, and do your magic. Your stock will be $30 before end of next year.
There's blood in the water, don't let up and keep pressing.
Your consolidation call was timely, and unbelievably effectively done, but 2010 is the year to take Oracle back to a path of innovation. Stop focusing so much on cost-cutting, and unleash some entrepreneurialism within Oracle to drive it to a $300B market cap.
Lars Dalgaard
While you still can, and the Street hasn't figured you out, use your ridiculously lofty valuation and goodwill to acquire the technology edge you don't have but many think you do.
Leo Apotheker
Take solace in the fact you got a chance to be CEO, most don't.
SAP could be a platform for business efficiency - think about providing services that are not software-oriented in 2010. How about doing (across multiple SAP customers) supplier scoring, credit rating, and other benchmarking offerings?
Marc Benioff
Religion only takes you so far, sell to Oracle now while you can.
Keep it up - you're doing great!
Mark Hurd
Call it a career, before HP starts trying to win (and fails) against the big boys. Oracle still has the valuation and capital to make it happen.
Sam Palmisano
Buy SAP while people still think it's a premium asset.
Steve Ballmer
Hire Jeff Bezos as your replacement by acquiring AWS for a ridiculous sum.
Keep up your fiscal discipline, break the company apart, and DON'T go acquisition crazy
Time to retire.
Steve Jobs
Keep those doctors on retainer, at least until the tablet revolutionizes home entertainment a la the iPhone has done with mobile computing.
Steve Singh
Keep it up, you've got the magic and don't need to sell.and don't be afraid of an aggressive acquisition spree.
Vivek Randive
If you get a legit offer, don't be too proud, sell and move on.
Zach Nelson
The sooner you're honest with yourself about what your company is and can be, the sooner the market will treat you with a modicum of respect.
Lots of great advice there from some really smart, experienced people. If you have any to add, just put in your comment below or at http://dbmoore.blogspot.com/. Thanks!
SAP recently invited me (after I pestered a few people over there!) to join in the beta program for a new product/service called "12Sprints.com." According to the company, "12sprints is software as a service (SaaS) application that brings together people, business information, and analysis or decision techniques with the applications you use today to drive better decisions, meaningful outcomes and increased productivity." Basically, 12Sprints.com is an online collaboration space, hosting a few tools related to meetings, planning, and decisions.
12Sprints.com is a project from the Business Objects group at SAP, and seems to be related to a concept SAP previously called "Bridge Space." Bridge Space was a concept demo a couple of years back at SAP to promote immersive meetings, collaborative decision making tools, linking applications and data into planning and decision-making processes, and just generally making decisions more transparent, collaborative, process-oriented, data-driven, and actionable. 12Sprints.com brings some of this vision into being. This is not SAP GUI, the feeble NetWeaver collaboration tool attempts, or transaction code /ME21N. This is SAP being driven by new thinking and leadership out of the Business Objects team, and rethinking the business of SAP.
This blog entry is a brief review of 12Sprints.com after just a few hours of use. A tool like this really requires real-world use for an optimally useful evaluation, but I don't have an appropriate use case right now, so this more speculative review is all I can do at this point. I'd like to thank SAP for allowing me to blog about my experiences, though I have to take off a few kudo-points for being barred from using screen shots in my review. Regardless of this policy, based on my use, I'd give 12Sprints.com a solid B-minus (and I don't grade on a ridiculously inflated scale like that used recently on the Oprah show). This is a very good effort right out of the gate for the service offering. I'm extremely encouraged by SAP releasing this service in the way they did, which I believe is a first for the company - a very transparent, semi-public beta, where all users can see each others' comments, and where the community is clearly driving the future. If the product came with a significantly larger set of decision-making tools and templates, and if there were some clear link in 12Sprints.com back to SAP's bread-and-butter products, then I would be looking at a solid B+ (or higher!) grade.
Getting Started
Getting started with 12Sprints.com was pretty easy. I just followed the simple instructions in the e-mail invitation, and I was online in moments. The e-mail came with some suggestions on how to use the product, and the product offered a good deal of usability in helping me become familiar with the product. Interestingly, the welcome e-mail also solicits feedback from users in exchange for a chance to win one of several prizes. Not your grandma's SAP, for sure.
It's a good thing the product is very easy to use, because help is very sparse to non-existent for much of the product. While a social tools user would have no trouble picking up the basic use of 12Sprints.com, a less savvy user will struggle, and even a very experienced social tools user will almost certainly miss much of the capabilities of 12Sprints.com due to lack of instructions, tutorials, examples, and help.
In many ways, this tool reminded me of Google Wave. You type a comment in, and another user sees it right away. You can see who's online, what they're adding to the discussion, and can add things like Google Wave bots. Google Wave is also meant to be a new style of collaboration tool, like 12Sprints.com. 12Sprints.com has decent usability, with tools like hints that come back every time you do, until and unless you permanently dismiss them (novice mode). Another capability I liked was what I call the "briefing book," which shows an event trail of what happened in an activity since the user's last participation there. The tools provided for collaboration, decision making, assignment of tasks, sentiment management, etc. were nicely laid out, performant, and stable in my use.
Another way 12Sprints.com reminds me of Google Wave is that the system is extensible by developers. 12Sprints.com includes a RESTful API for extensions, which allows developers to build additional UIs for users, or to populate content from an application rather than just manually. It seems like basically anything a user can do from the UI, an application can do via the API.
Developers can also extend the system with new "business methods." Business methods are mechanisms used in the environment, such as a new visualization or new tool (e.g., MindMaps, chat, RSS/Atom feed, etc.). There are a good many business methods already included in the tool without any additional development. Ideas for new business methods can come from beta users or SAP, and can be implemented by beta users or SAP. As of 12/20/09, SAP had received 211 ideas (not just for new business methods) from the 12Sprints.com community, of which 150 have been accepted into the backlog (81 still pending), and 69 have already been implemented. Some examples of ideas implemented that came from beta user suggestions include the ability to upload an Excel file and turn it into a table, add pending "to do" items to the users' home pages, support attachments and links on comments, and a whole slew of usability items.
Summary
Sadly, another way the system reminded me of Google Wave was that it just didn't "click" for me the way e-mail, twitter, texting, Facebook, LinkedIn, and my Motorola Droid did. The system seems to be a solution in search for a problem. Why would I use this system, I kept asking myself. I think I would use this system if it were a collaboration tool attached to a business process in SAP, or a report in Business Objects. If there were business methods for retrieving data from Business Objects, or running an SAP transaction, then this would probably be a useful tool for an SAP user. I could imagine using a tool like this to allocate raises and bonuses, manage a discussion around invoice verification and approval (or rejection!), strategic sourcing decisions, or next year's budget, but only if it really worked dramatically better for me than the tools I already know how to use - e-mail, word processing, spreadsheet, and presentation tools.
In the end, 12Sprints.com seems like a good tool for planning and capturing meetings, and supporting collaborative planning and decisions. To really get the value out of this tool would seem to require a good deal of discipline. Just as a reminder, I only played with the tool a little, I didn't really get a chance to use the tool "in anger." Using the tool in a real corporate setting would almost certainly have resulted in more insight about the tool, and it is quite possible that I would be its biggest fan if I used it in that setting. But after playing with 12Sprints.com for a couple of hours, I have to wonder whether - if you had enough discipline for the tool to be of use to you, would you still need the tool?
Summary
There is a lot to like about 12Sprints.com. With this service, SAP is showing a refreshing openness, and a willingness to rethink "what business are we in?" It's almost certain (in my opinion, though I have no data to back this up other than my hunch and the product description) that SAP will be connecting 12Sprints.com "with the applications you use today" such as Business Objects analytics and reports, and SAP Business Suite transactions. Such a combination would create a powerful combination of business process and collaboration, which I believe would be the real birth of Enterprise 2.0, also attempted by Oracle with BeeHive and the social capabilities of the upcoming Fusion Apps. It will be interesting to see where 12Sprints.com takes SAP in the future, and vice versa.
I recently saw a video of Workday 9, and was not impressed with the apparent usability of one of the highly touted features of this release. I tweeted my impression, and got a quick and friendly response from the team at Workday. They didn't complain about my bias or lack of information. Instead, as a great company should, they opened up and accepted the feedback. They offered me (and some Enterprise Irregulars colleagues) a briefing on Workday 9, to bring us up to speed and to get more feedback from us. My comments that follow are based on this briefing.
A Little Background Workday is a company started by Peoplesoft's founder and some key Peoplesoft employees. Peoplesoft was a ground-breaking company in many ways, and the founders and employees of Workday clearly intend to surpass their previous accomplishments with this new venture. Peoplesoft strove to change the way employers engaged with employees, and they practiced what they preached in their own company.
My initial critique was based on a feature of Workday 9 called "The Wheel." At least, that's how I had seen it named in a number of blogs and news stories. Essentially, "The Wheel" is the "home page" for users of Workday 9. Here is a picture of "The Wheel."
Many modern applications have adopted a horizontal "tab strip" approach, where each tab represents a type of activity. Clicking on a tab typically brings up a screen with tasks related to the selected activity across the top just below the tab strip, with additional navigation or activities in a panel on the left (or right) of the screen, and with a large, rectangular workspace to the right (or left) of the navigation panel.
This "horizontal tab strip" approach is frequently used because it offers a very straightforward information architecture, and users can quickly and easily become (and remain) productive. This "L-shaped" layout pattern is used in business and consumer applications, including both browser-based and native client applications. Examples of web sites using this pattern in the consumer space include Blogger and Facebook, both with some variations on the theme. In the enterprise world, most portal-style applications use some variation on this pattern - an example from Salesforce.com is also shown here.
Unlike this familiar horizontal layout for the top level navigation, The Wheel is a role-based, circular menu. Activities are represented by icons around the edge of a circle (or ellipse, depending on your window size or aspect ratio). One benefit of an approach like The Wheel is that the user can see more options on one screen than with a horizontal layout. However, "more" is not always equivalent to "better." In this case, having watched the demo, I remain convinced that The Wheel is not an improvement in usability over a tab strip. The drawbacks of The Wheel, from my limited research and discussions with colleagues:
The Wheel makes it hard to predictably navigate to any particular activity. Humans navigate, particularly on computers, more easily in straight lines than in curves or circles. With a horizontal tab strip, you just keep moving to the right until you find your tab. With today's high resolution and wide-screen displays, this approach can include many tabs! With The Wheel, you'd have to move your mouse or trackball in a circular motion as you browse, and that is a harder motion to make (especially on my cluttered desk).
The Wheel may introduce significant usability problems for users when one or more new options are added to The Wheel, or taken away. All the learned muscle movements will have to be unlearned, because any change in the number of options will result in a new orientation for the other icons. This would not be the case in a tab strip, where you might go further or less far, but you at least don't have to change directions.
The Wheel uses a lot of screen space for a little functionality. The area between the window's enclosing rectangle and The Wheel - this space is wasted. Similarly, the workspace created inside the wheel also wastes the space between the inscribed rectangle and the enclosing ellipse.
Workday 9 Delivers Great Usability
That said, Workday 9 has delivered some great usability in virtually every other area I saw in the product.
When the user's mouse "hovers" over an icon on the wheel, a window pops up in the center (see the "Inbox" rectangle inside The Wheel in the Workday 9 screen shot above). This working space comes up remarkably quickly, and contains all the tasks and context needed for the user to be productive. This is great design. The same effect could have been accomplished without the ellipsoid Wheel, but enough on that topic!
Throughout the product, whenever the user is looking at data that can be linked to more detail, the data is a link the user can click to directly navigate to that detail. When looking at an employee in a report, the user can click on the employee's name and navigate to the information in the system this user can see about that employee, along with all the tasks this user can perform on that employee's information, such as giving that employee a raise or updating that employee's skills in the skills database. In the Projects screen shot shown here, you can see that each project name, the project owner, the project category, and even the number of employees working on the project are all links; clicking on the link navigates to the sensible destination to get more data, whether it is the details of the project, or the list of the employees working on the project.
Whenever the user is looking at a table of data in Workday 9, the user can export that data to Excel, sort, filter, and perform other operations on the data. This is extremely useful for status reporting, embedding in presentations, doing "what-if" analysis, and just making the system pleasant to use.
Summary
There are many other examples of great design in the user interface Workday 9. The visual design is good - appealing, speedy, and clear. The information architecture is well thought-out - goal-oriented, providing a reasonable set of appropriate options, and easily learned. The interaction design allows for a high degree of productivity.
A well-designed enterprise application speeds adoption, encourages frequent use, engenders better results with more use by individuals and by the enterprise, and eases the accomplishment of the system's goals. Usability is a key element of good design (along with good functional design), and usability is a quality frequently all too lacking in enterprise software.
Overall, Workday 9 is a great example of a design that is centered on making people very productive in getting work done - exactly what you'd expect from the crew at Workday. Congratulations! My hat is off to you - you've set a bar that will be hard for other enterprise software to exceed (but I plan to do so with my team at C3!).
Disclosures
I do not work for Workday
I do not take any money from Workday
My blog is not ad supported, and contains no ads from Workday
I do not work for any Workday competitor
I do not take any money from any Workday competitor
My blog is not ad supported, and contains no ads from Workday competitors
I have worked for at least two Workday competitors in the past (SAP and Oracle)
I admire great design, especially relating to usability, comprehensibility, and user productivity
I do not now use nor have I ever used Workday software, so my knowledge about Workday's usability, especially prior to the Workday briefing, was admittedly very light
I am not a user experience expert, just an interested novice
When you get your third request to discuss the outlook for 2010 for our industry, it must be "Holiday Prediction" time. With no further ado, and with two months left in the year, here are my predictions for the enterprise software world for 2010. The predictions marked in red with "Wild Card" are not really predictions, just outlandish guesses of what might happen.
Oracle releases Fusion Apps (for core functions, plus a few of the composite apps around it). Fusion Apps are missing tons of functionality, but work well with Oracle Apps Unlimited (legacy apps), so customers are comfortable with the upgrade. Oracle also continues to deliver some new functionality for Apps Unlimited, keeping those customers happy. Oracle delivers pre-packaged integration using AIA with Apps Unlimited products and Fusion Apps.
Wild Card: At OOW10, Oracle announces low-priced maintenance offering for SAP and pre-packaged integration with AIA to SAP 4.6 and 5.0.
SAP cannot convert many Oracle Apps customers to new SAP licenses, as they are happy to stay with what they have or to wait for or upgrade to Fusion Apps.
SAP ships Business ByDesign and the Apps are favorably received. SAP finds a nice niche for these apps in divisions of large SAP customers, displacing some legacy apps like Baan and Infor. SAP finds a way to achieve profitability for ByD when it introduces pre-packaged integrations from ByD at the division level to Business Suite at corporate. Customers see real value in ByD and the pre-packaged integration, which SAP sells for tens of thousands of Euro per connected ByD instance (per year).
SAP announces that it will incorporate several ByD innovations in Business Suite in enhancement packs starting by the end of 2010 and into early 2011.
Wild Card: SAP license revenue plunges, and margins start to suffer. Long term R&D is cut. By the end of the year, SAP agrees with user groups on specific actions to take to reduce TCO, to justify increasing maintenance fees, which come under increasing pressure.
Oracle license revenue slides, but margins are maintained as Oracle continues to cut back on Applications Unlimited faster than it grows Fusion Apps. Apps Unlimited staff have to compete with each other for few openings in Fusion Apps.
Microsoft stays in the Apps business, but as a distant "also-ran." Internal discussions begin about exiting the business or taking a significant new direction to try to re-energize the business.
IBM, which has really been in the Apps business all along, relaunches their Apps business based on project accelerators from Global Business Services, including via Blue Next.
Wild Card: IBM works hard to convince customers to go off SAP maintenance, remain on 4.6 or other old versions of SAP, where IBM takes over maintenance and develops custom composite applications around the FI/CO core. SAP bulks up consulting (but doesn't buy any consulting companies), and works hard with IBM's competitors to disadvantage IBM in SAP accounts. In the background, towards the end of the year, SAP and IBM begin merger discussions.
Cloud, SaaS, and open source become completely accepted in the enterprise, as companies start to outsource everything that does not deliver competitive advantage, and as integration technology improves. Pre-packaged integrations become common, with go-lives measured in days and weeks instead of months and quarters. Dozens of new Cloud providers enter the market. Substantial new enterprise SaaS solutions come to market in diverse new areas.
Many open source applications projects reach maturity for "edge" applications such as talent management and enterprise performance management, promoted by systems integrators like Wipro and IBM, with licenses that prevent commercial deployment by enterprises above a certain number of users without buying support from the integrator. These projects are used to contain Oracle and SAP Applications customers on old versions, buying support and maintenance from the integrator.
IT spending grows slightly, but with a focus on "new" things rather than maintenance. Spending on new computers (driven by Windows 7), mobile devices, "edge" applications (e.g., talent management, supplier management, and new analytics) grows substantially. Spending on application maintenance, custom application integration, application upgrades, database upgrades, and server upgrades drops precipitously.
Enterprise 2.0 backlash leads to significant cutting back on access to time wasters at work, like ESPN.com, Twitter, Facebook, and certainly LinkedIn. Questions about how you will get 20-something employees to give up their access to these tools go away as there are way too few jobs to go around.
Green and sustainability topics grow in importance as legislative/regulatory uncertainty grows worldwide, with some legislation passing and lots of new regulations put in place with no legislative action. Green IT goes mainstream.
Oracle completes the Sun acquisition, including mySQL. This turns out to be a non-event, as Oracle continues working with HP, IBM, and Dell.
Wild Card: Oracle also acquires Pillar Data. Oracle launches high performance cloud storage, with innovative integration with on-premise Oracle DBMS and content management services.
Basic economic assumption:
The jobless economy continues. New graduates are unable to find any work. Business profits soar as productivity soars. Commodity prices remain low, though not in dollar terms as the dollar continues to drop precipitously versus other currencies.
Wild Card: Government intervention grows, but grows in unpopularity while failing to deliver benefits to citizens. A change in governments looms in several large countries.
Wow - that turned out a lot more pessimistic and Malthusian than I thought it would! What do you think will happen in 2010?
According to Wikipedia, chutzpah is "the quality of audacity, for good or for bad". The award for "chutzpah of the week" has a clear winner, and it's only Monday!
The winner is Monty Widenius. Here's a guy who was significantly responsible for mySQL, but so were several others, not to mention the thousands of other contributors. He became very wealthy selling this work product to Sun, which would kind-a mean it's not his anymore. But here he comes back, claiming to speak for the mySQL community, with nary a mention of his personal financial stake in wresting control of mySQL away from its legal owners to whom he sold it!
He's now claiming that mySQL was always targeted at Oracle as its main "enemy," a statement that never appeared in mySQL corporate documents, in their documents in the sale to Sun, or in Sun's internal sales materials (to the best of my knowledge). According to this article (cited above and below), he said "[t]he largest and the most common rival was Oracle. In every deal we were competing against Oracle."From what I hear , that is a complete falsehood, and blowing out a statement like that is another example if his chutzpah. After all, mySQL competed with Oracle in a tiny fraction of Oracle's deals. Most use of mySQL came about by developers downloading it to get a free database (or a database optimized for horizontal scalability), and those same developers would have downloaded some other free database (e.g., PostgreSQL or Ingres) if mySQL did not exist.
Now, Monty has a new company that stands to retake control of mySQL and its community, if that control can be wrested away from its rightful owners by a clever combination of overzealous European regulators and manipulation of a gullible (or worse) press. And, lo and behold, here's a press release from Monty: "MYSQL FOUNDER OUTLINES SOLUTION: INSTEAD OF LETTING SUN SUFFER, ORACLE SHOULD SELL MYSQL." No doubt, the "suitable third party" he refers to in the blog/press release is Monty Program Ab. Chutzpah again.
So, why does the industry press lionize Monty? After all, he's a sell-out (literally!), who benefited financially from the work of many who worked for nothing (the mySQL community contributors), and who is trying to do so again. I guess chutzpah gets rewarded.
OracAlum, and president of SAP India and Southeast Asia, Ranjan Das passed away yesterday. He was so young and so very talented, and such a great friend to so many. He was just 42 years old, with so many passions. He loved exercising, film, and his family and friends.
A statement was released by SAP that says:
SAP is deeply saddened by the news that our colleague Ranjan Das has passed away suddenly today. This comes as a great shock to all of us within the SAP family and is felt most profoundly by every one of us. We will be sharing more information once we have had the opportunity to further understand the family's wishes. Our deepest sympathies go out to his family, friends and work colleagues," said Geraldine McBride, president for SAP Asia Pacific Japan.
Das (42) had over 15 years of experience in the business software industry, eight of which were spent in SAP. He co-founded SAP xApps, one of the fastest growing businesses for the company. He also played a pivotal role in the early adoption of SAP NetWeaver, Duet, GRC, and e-Sourcing.
I reached out to his wife but have not spoken with her yet. I'm so sorry for the loss, and will miss him terribly. Hug your friends and family today (and everyday).
Well, Larry finally told the world about Fusion Apps with some details. And he did it in Steve-Jobs-like "Oh, and one more thing" fashion at the end of the last big presentation at Oracle Open World 2009.
There are plenty of analysts posting plenty of analysis based on plenty of briefings and facts and NDA's, and I don't feel qualified or compelled to add my voice to that chorus. However, I've been doing some thinking about SAP Business ByDesign (ByD) and Oracle Fusion Apps (FA), and what might be the dynamics between these two offerings in the coming year(s).
ByD and FA have been in development for a very long time. Both have had huge amounts of R&D investment in them. Both build on even more years of investment in predecessors, and both are meant to use that experience and expertise with a much more modern technology approach.
As it turns out, based on information from the analysts, both offer suites of functionality with some significant gaps as compared to more complete "current generation" suites, particularly in areas like Human Resources and Manufacturing.
From a technology perspective, FA appears miles ahead of ByD. FA appears to have a very clean SOA architecture with separate orchestration and business process management, pretty good user interfaces, nice social features, RESTful API's, and a more standards-based (e.g., Java) orientation. ByD, however, likely will have more functionality than FA.
ByD is targeting "the mid-market" customer, which SAP has described in the past as being from several hundred million dollars in annual revenues, up to somewhere around one to two billion dollars in annual revenues. ByD has been available for more than a year to a very limited set of customers, and SAP has been saying it will roll out ByD to a wider audience in 2010. According to Larry Ellison's presentation at OOW, FA will hit the market, coincidentally or not, in 2010.
FA is targeting a variety of customer segments, but one notable segment is the installed based for the "Applications Unlimited" (or "legacy") applications such as JD Edwards, eBusiness Suite, and so on - a very large fraction of these customers are in what SAP considers to be in the mid-market. These customers will be facing the end of life for their applications, along with a paucity of innovation associated with those applications and sky-high maintenance costs, so they will be natural candidates to consider a move to FA over time.
Some of the analysis written about FA has indicated that a move to FA from a legacy Oracle application will involve a complete reimplementation - some data will migrate, but the processes will likely have to be implemented "from scratch." Given that these customers will be facing a reimplementation if they choose to "upgrade" to FA, it seems likely that they will also consider alternatives to a move to FA. For example, they may consider staying on their current products, but going off maintenance or switching to third part maintenance providers. However, there is another alternative that these customers are likely to consider: moving to a new product potentially from a different vendor.
You can be sure that SAP will be visiting these customers and pitching SAP solutions to them. Given the timing, and given that many Oracle customers are in what SAP considers to be the "mid-market," ByD will be the solution SAP will pitch to many of these customers. And if Oracle pushes FA further "up-market," you can bet SAP will bring ByD there as well.
If SAP goes head to head against FA using the current Business Suite product line, Oracle will clearly make a big deal over technology advantages in every competitive situation. While ByD is not as advanced technically as FA, ByD will be SAP's best response to FA. For a while, large customers will be best served by SAP Business Suite or Oracle's legacy apps, as large customers will have many requirements that will not be met by the relatively immature ByD and FA. Thus, initially, it appears inevitable that Oracle and SAP will be going head-to-head with these two products. So, what will happen when these products collide?
I think the most likely scenario is this: ByD in 2010 will be made to work well in a SaaS deployment model, and FA will have quality issues and functionality gaps and internationalization limits. If this scenario plays out, SAP may be able to convert a significant number of Oracle legacy applications customers over to ByD (and/or perhaps SAP Business Suite) in 2010 and 2011.
Some correspondents have questioned whether IBM can really compete with SAP and Oracle in the applications business using the approach I hypothesized. Using an approach like BPM BlueWorks, IBM Global Business Services consultants can share processes (and the code to implement the individual "tasks" in those processes).
To put this in some perspective, IBM Global Business Services has 190,000 employees, according to Wikipedia. While not all of them are coding, bear in mind that this number is on the order of 10x the number of developers at Oracle and SAP. In addition, IBM has a large software division and research labs, also able to support the creation of these processes.
IBM need not create the basic financial and human resource core processes. They don't even have to create the basic objects and the processes to maintain the connections between those processes. After all, those objects and processes already exist, for most customers, in their current, installed SAP or Oracle applications. Those cores do not need to nor do they benefit from change, which is why customers are so loathe to upgrade their cores. However, customers desire additional, high value processes on top of those cores - this explains the success of Siebel and i2 in the past, and Salesforce and SuccessFactors and Taleo and Lithium in the present.
As long as IBM can keep those stable cores in place, IBM can develop high value processes as composite applications using WebSphere/Lotus without investing in core ERP. Fortunately, IBM has a practice in place to take over running your existing enterprise apps, guaranteeing a cost reduction every year, and without the large periodic upgrade costs of staying current with SAP and Oracle.
In summary, IBM will compete with SAP and Oracle for applications business, but not by trying to replace current SAP and Oracle instances (the way Oracle and SAP compete with each other), but instead by building on them as a platform.
Would you like to know how IBM will compete with SAP and Oracle in the future? If so, check out IBM's BPM BlueWorks site. Create an account, and make sure you read the terms of service:
By posting Your Content (or portions thereof) to the Community, You hereby consent to provide Community users the ability to download, print, distribute, perform derivative works or otherwise utilize Your Content.' ...The above licenses granted by You in Your Content are perpetual and irrevocable.
Community users may create derivative works and use them. In fact, you could imagine that IBM would create, under appropriate open source licenses, business processes in their BPM suite, and allow IBM Global Services or customers to use them, provided they run on IBM's BPM suite.
Customers already have such models, created as they implemented their current ERP products in use. Many customers created these models in tools like ARIS or Visio, and it wouldn't take much to migrate those models to BPMN, the standard and open language notation used and promoted by IBM - the notation used by IBM's BPM BlueWorks community.
What would happen if IBM's consultants used this tool, together with a BPMN tool from IBM, to create a library of processes (composite applications) that can run on existing enterprise applications? IBM would be able to build - and sell - these applications to many customers through their services arm. Many of these composite applications would implement high-value, cross-"silo" processes, such as recall management, financial modeling, sales and operations planning. These applications would be designed to be cross-platform, running the process in a BPM system but integrating into "legacy" SAP and Oracle applications.
IBM could either leave the "legacy" applications in place, or replace their functionality over time. IBM could even develop services to allow you to keep the legacy applications in place, managed by IBM at far lower maintenance cost than what SAP and Oracle want from you, and promise you a never-ending library of composite applications to help you drive business innovation from IT. In fact, IBM could promise - and deliver - such applications at lower cost, faster, and with more innovative functionality than SAP and Oracle. SAP and Oracle wouldn't even know this was happening until it was a real threat to their maintenance revenue, upgrade process, and new application sales.
So, is this just speculation, or is this what IBM has been doing now for a couple of years?
Excellent analysis today from Cowen and Co. analyst Peter Goldmacher. I can't find it posted on their site (got it via e-mail), so I'm including the key extract below for those who might be interested. Enjoy!
Software: Maintenance Revenue: High Margin or High Risk?
Consensus View: Applications maintenance, fees for technical support and product update rights, is a $20B annual business with 80%+ margins. Maintenance revenue, which is approximately 50% of total sales for most apps vendors (Oracle, SAP, Lawson and Epicor), is a highly reliable, high margin, recurring revenue stream that provides earnings stability and enables margin expansion even if license sales falter. Companies with a high proportion of maintenance revenue should sell at premium PEs.
Our View: We believe that application software vendor maintenance fees are at risk. Our research indicates that companies continue to tighten their belts around IT spending, and ERP upgrades are not a priority. This is not a macro issue that we expect to diminish as the economy strengthens. We believe ERP upgrades, the primary motivation to pay maintenance fees, are on the wane because it's a mature market. Vendor investments in R&D are on the decline, innovation is lagging and redeployment costs are multiples of the license fee. As a result, customers are increasingly questioning the value of paying annual maintenance fees of 20% of the cost of the original license for the occasional use of technical support. We believe that as the value proposition around maintenance fees diminishes, there is significant opportunity for third party service providers to offer low cost tech support. While there are only a small number of these third party providers today, we believe that as Apps sales continue to decline, there is a significant over capacity of consultants with ERP expertise looking for opportunities to leverage their skills. We believe these dynamics will result in the creation of a number of businesses designed to chip away at the exorbitant revenues and margins associated with vendor maintenance fees.
Interesting, thoughtful analysis from John Keenan ...
I track the performance of the publicly-traded SaaS vendors and thought you might find it interesting. With the recent IPO of LogMeIn, there are 28 pure-plays. I track the financial performance for the company's last fiscal year and valuation performance on a quarterly basis (I use month ends of February, May, August and November).
Re: the financial performance, the story is growth and cash flow. For the last fiscal year, the SaaS vendors grew 31%, with on-demand revenue up 39%. I also track the 146 publicly-traded software vendors and their figures are total revenue up 16% and license revenue down 6.8% (all their growth is in maintenance and PS). It is clear that users are shifting their spend away from legacy perpetual models to SaaS models.
The 28 SaaS vendors averaged $160M in total revenue (14 were over $100M) and had an average operating loss of ($6.8M) - only 8 the vendors were profitable. However, their free cash flow was very strong and averaged $14.6M - 21 of the vendors were cash flow positive.
Spending on sales & marketing, R&D and G&A averaged 36.5%, 12.9% and 16.5% of revenue respectively.
Finally, while valuations have recovered in the past 6 months - interesting, the aggregate market cap for the 28 vendors is up about 29 % in each of the last 2 quarters - they are down 10% from August 2008 and 26% from the market's peak in October 2007.
Probably the most notable change is the reduction in valuations as a percentage of revenue. In August 2008, the valuations were about 6.1X trailing-twelve-months (TTM) revenue. As of August 2009, it's about 4.2X TTM revenue. In October 2007, it was over 10X TTM revenue.
If you want to follow up on this with the author, please comment here or send him a message to jkeenan with the domain name impacsus.com.
Vishal Sikka, SAP's CTO, was named a "Corporate Officer" by the SAP Supervisory Board. This is like getting "tenure" in an academic environment, and signals a significant increase in his authority, as well as a recognition of his accomplishments. Vishal really created the centralized architecture function at SAP, and has been very influential in all product groups at SAP. He is the first CTO in SAP's history, and the first person of Indian ethnicity to be appointed to a corporate officer role at SAP (as far as I know). This also creates a very real possibility that Vishal will be appointed to SAP's Supervisory Board (like the Board of Directors in American companies) in the future.
Congratulations to Vishal! The internal announcement follows:
Dear Colleagues,
I have the pleasure of announcing that the SAP Supervisory Board named Vishal Sikka an SAP Corporate Officer and a member of the SAP Executive Council at the end of July. This appointment recognizes Vishal's contribution in forming the Office of the Chief Technology Officer (oCTO) as a unit that provides technical leadership to the company and thereby helps SAP secure a competitive advantage in the field of enterprise solutions.
In addition, his appointment recognizes both the role that Vishal has personally played and will continue to play in architecting SAP offerings into Timeless Software, and as a key spokesperson representing SAP as a technology thought leader, both internally and externally.
Vishal will continue to serve as SAP’s Chief Technology Officer (CTO) and report to me. Prior to becoming the CTO of SAP in 2007, Vishal was the senior vice president of architecture and chief software architect at SAP, responsible for the road map and direction for the architecture of SAP's products and infrastructure. Before that, he was head of the advanced technology group responsible for strategic innovative projects.
Vishal holds a doctoral degree in computer science from Stanford University in California, and his experience includes research in automatic programming, information and application integration, and artificial intelligence at Stanford, at Xerox Labs in Palo Alto, and at two startup companies.
Do any of you who read this blog know anyone at Google who might care about this? I got the following e-mail tonight:
from Blogger to dennis.moore@gmail.com date Fri, Aug 21, 2009 at 12:27 AM subject http://dbmoore.blogspot.com/ - ACTION REQUIRED mailed-by blogger.bounces.google.com signed-by google.com
hide details 12:27 AM (6 minutes ago)
Hello,
Your blog at: http://dbmoore.blogspot.com/ has been identified as a potential spam blog. To correct this, please request a review by filling out the form at [URL redacted]
Your blog will be deleted in 20 days if it isn't reviewed, and your readers will see a warning page during this time. After we receive your request, we'll review your blog and unlock it within two business days. Once we have reviewed and determined your blog is not spam, the blog will be unlocked and the message in your Blogger dashboard will no longer be displayed. If this blog doesn't belong to you, you don't have to do anything, and any other blogs you may have won't be affected.
We find spam by using an automated classifier. Automatic spam detection is inherently fuzzy, and occasionally a blog like yours is flagged incorrectly. We sincerely apologize for this error. By using this kind of system, however, we can dedicate more storage, bandwidth, and engineering resources to bloggers like you instead of to spammers. For more information, please see Blogger Help: http://help.blogger.com/bin/answer.py?answer=42577
Thank you for your understanding and for your help with our spam-fighting efforts.
Sincerely,
The Blogger Team
P.S. Just one more reminder: Unless you request a review, your blog will be deleted in 20 days. Click this link to request the review: [URL redacted]
WTF? Yet another example of how a total lack of authentication and human decision making can result in strange and unsatisfying experiences for users. I have (according to Google's Feedburner) about 178 subscribers to this blog, more than double the number of two months ago. The blog gets almost 10,000 visitors in the past month, and just under 2,500 clicks through links posted on the blog in the same time period.
Is there anyone reading this who knows how Google determined that my blog is "spam?" Is there anyone reading this who can ask someone at Google to ensure this gets resolved in the right way? I don't get paid for this blog, and I don't put advertising on it (so I don't get paid by advertisers for it either), so I don't want to pay for my blogging service - does anyone have a suggestion of a different free blogging service I should be using instead of Google Blogger? I feel like I should move to a different service with my subscribers now before Google decides I am the prince of darkness. Although I have a lot more activity on Twitter and The OracAlumni Network than on this blog, I still like having the blog for the opportunity to occasionally post my harebrained, semi-econometric theories. Suggestions, advice, or help greatly appreciated!
Comments by Nicholas Carr (IT skeptic/critic/expert) and Hal Varian (Google's chief economist) got me thinking about enterprise applications, and why there haven't been any real killer apps for the enterprise for quite some time (since ERP?).
Hal Varian is a very impressive guy, with some very impressive thoughts, who appears to be be appropriately credited with perfecting a bunch of Google's algorithms and using them to drive business strategy. In the interview linked above, he commented a bit on data, it's value, and scale. Enterprise apps contain huge amounts of data, and the amount is continually growing. Strangely, much enterprise data is redundant - for example, when a business buys something from another business, both businesses capture the data about the transaction. Unlike in the consumer world, very little of the data is really analyzed in a way designed to increase knowledge, wisdom, drive strategy, or create value in any way. Using the example I just cited of a B2B purchasing transaction, the data is used to ensure the item is created, shipped, billed for, collected for, commissions paid, ledgers recorded, income tax paid, financial statements updated. The process is called "order to cash," and that seems to be the beginning and end of it - when "cash happens," that's pretty much the end.
Nicholas Carr's argument, in the link above, covers a lot of ground, but the really killer comment is:
"Ultimately, on the network, applications win if they get better the more people use them." [His italics]
Wow! That really got me thinking. Can you name an enterprise application that gets better the more people use it? And by better, I mean "better for the user." CRM may get better for the manager, and Purchasing might get better for the CFO, but does your CRM application get better for the sales or service person as more sales or service people use it, or as one sales or service person uses it more? Does your Purchasing application get better the more people request Purchase Requisitions?
I can think of only a very small number of enterprise applications that get better the more people use the application. SAP's Community Network (SCN) gets better the more people use it, because participation captures and propagates issues, solutions, and ideas. I'm sure SAP gets revenue because of SCN, but it is presumably hard to prove that fact. However, SCN is a community with a bunch of software supporting it, not an enterprise application per se.
Lithium is an enterprise application very similar to SCN - it is a SaaS system that creates communities ("Customer Networks," as Lithium calls them) for issues, solutions, and ideas. Lithium's customers can also cross-sell and upsell items to their communities within Lithium. The more users, the better this application gets.
LinkedIn also gets better with additional use, up to a point. However, LinkedIn is perhaps more vitamin than migraine medicine, and people always pay more to solve a real problem than for a "nice to have." SuccessFactors would see to have the potential to get better with use, but capturing job descriptions, relevant objectives, review language, and other related data, although I'm not sure if the system really does this. Probably some enterprise knowledge management tools get better with more use, although many of them seem to get overwhelmed when the use reaches even a modest level - you can't find any item because it is obscured by many near misses.
Think of all the enterprise applications you know - do any of them get better with additional use? Do they mine data to project trends? Do they capture text to predictively enter it for you next time? Do they alert you when data show a pattern from the past (like a customer becoming a bad credit risk, or an employee preparing to resign, or a competitor gaining an advantage)? Do your enterprise applications get better with more use?
Shouldn't they?
If you can think of any enterprise applications that get better with more use, please leave me a comment mentioning the application and how it gets better with use. Thanks!
There has been a lot of chatter about SAP's moves in the SaaS world, so I thought I'd chime in with my €0.02. I'll leave off most attributions/references below, as you can google the citations yourself with Bing. :) Nothing below is based on any insider or proprietary knowledge I may have or have had in the past (after working for SAP from 2001 to 2007).
SAP does not have a strong history in SaaS, and it does not have a great track record with its flagship effort there (Business By Design, or BbD). Nonetheless, SAP has some experience with SaaS via acquisitions of products/companies like Coghead and Frictionless Commerce.
Traditionally, SAP has held that SaaS was for small enterprises ("small" is what SAP calls anything below €500M per year in revenue or budget), and that large enterprises would not stand for off-premise software due to its difficulties in customization, integration, and security.
SAP has also held that SaaS and hosted are pretty much the same, and SAP has claimed that multi-tenancy is a red herring. Hard to believe, but SAP invented a convoluted architectural distinction called "mega-tenancy," which was basically single tenant in nature. Opponents argued that multi-tenancy was the only way to scale SaaS, at least in a way that was economically viable. Currently, SAP contends that BbD is ready to ship except that it is not yet profitable enough (aka not yet economically viable); SAP has yet to reveal publicly whether it still holds that multi-tenancy is not needed for SaaS viability. Incidentally, SAP's on-premise architecture is not multi-tenant (for most SAP products). It is no easy task to take a huge product and rearchitect it from single- to multi-tenancy.
For a long time, SAP called BbD the "business process platform," indicating that it was a good environment for building and deploying new processes not included in SAP's software. SAP also had a "technology platform" in NetWeaver (NW). John Wookey's new effort has been publicly stated as being based on the Frictionless Commerce code, not on BbD (but I believe Frictionless is based on NW), so SAP has chosen a different "business process platform" from the one the company has put so much effort and investment into. What does that say about BbD? Incidentally, Frictionless: multi-tenant.
Lest it seem I am all "gloom and doom" about SAP and SaaS, let me dispel that perception. John Wookey's strategy is quite brilliant. SAP's detractors claim that SAP cannot afford to move to the subscription pricing business model frequently associated with SaaS. Nothing could be further from the truth. Today, SAP's revenues are primarily NOT from software licenses. In fact, it is common for customers to get large discounts (say 80%) off license, followed by approximately 20% per year (based on list price) annual maintenance beginning in the second year of the agreement. This is equivalent to a 20% per year (every year, including the first) pricing for the customer, which is more or less a subscription model. With an enterprise license, it is not possible to recognize all the revenue up front if the customer pays SAP for any implementation services (not sure if SAP is not involved in the implementation, and not sure of the percentage of implementations in which SAP is involved), so SAP ends up recognizing over more than a one year period in many cases already. With SaaS, there would be no appreciable change in revenue recognition for SAP. However, for customers, there would be the potential of a much lower up front cost (less customization, less hardware and non-SAP software licenses), with much higher ROI, so presumably customers would adopt more software faster with SaaS than with only an on-premise option. And SAP is targeting large enterprise SaaS at "edge" applications, many of which customers were not buying from SAP in any case, so this gives the potential for additional revenue for SAP. Especially since customers are not buying SAP's on-premise software in droves anymore (down 40% year over year last quarter, I believe).
Just some Monday morning thoughts. Anything I missed, got wrong, totally blew? Let me know ... thanks!
Apparently, the EU is concerned about the possible anti-competitive potential of the Oracle acquisition of mySQL as part of Oracle's purchase of Sun. I contacted the EU, and they forwarded me a survey they are sending to Oracle's competitors who may be affected by the acquisition. There is a second survey they sent me for those who consider themselves to be customers who may be affected by the acquisition. For those who want to comment on the acquisition, the surveys may be obtained by contacting "Adrian.LUEBBERT@ec.europa.eu", and the surveys must be filled out and returned by August 13, 2009 (presumably Close of Business during CET).
Reading the surveys, I am struck by how naive or nefarious the author of the survey was. The questions are phrased in such a way as to justify action to prevent the acquisition from approval by the EU anti-trust regulators. For example:
In your view, do all database products compete with each other? Yes No
No room for "To some very limited extent." Or:
To your knowledge, are there any operating systems which would support exclusively databases offered by the same company as the company offering the respective operating system? For example, are there any operating systems of IBM or Microsoft that would only support IBM databases of Microsoft databases respectively?
How about "Are there any databases that run only on the maker's operating system?"
In any case, here are the two surveys for your own perusal. The first is the survey sent to competing vendors, and the second to customers who may be affected.
Vendor survey
I. INTRODUCTION
On 30 July 2009, Oracle Corporation (hereafter named “Oracle”) notified to the European Commission under the Merger Regulation (Council Regulation (EC) No 139/2004), their intention to acquire SUN Microsystems Inc. (hereafter named "Sun"; both Oracle and Sun will be named hereafter "the parties").
Under the Merger Regulation, the Commission has to assess the proposed transaction's impact on competition. To that end, it must examine in an in depth manner the structure of the markets in which the activities of the above‑mentioned companies overlap or are related to each other. It must gather data on the subject from the parties, but also from other market players, in particular customers and competitors.
Your detailed reply to the questionnaire is very important for us in examining the notified transaction. We would be grateful for any additional remarks you may wish to make concerning the potential impact of the proposed transaction on competition. Please feel free to send us any documentation, studies, articles, etc. on the relevant markets, which in your view may help us in our analysis. If you consider any of the questions irrelevant, please say so and give your reasons.
Please reply for all the companies in your group. With respect to financial data, please give the figures for 2008 (alternatively 2007 if no figures exist yet for 2008) and express monetary amounts, unless requested otherwise, in thousands of Euro.
All information which is clearly marked “confidential” will be treated as such[1].You are kindly requested to provide a non-confidential version of your reply.
The Commission is aware that answering the questionnaire may involve a considerable amount of work.We thank you in advance for your assistance and co-operation. If you have questions about the questionnaire, please contact any of the case handlers:
If you have any general queries or if you would like to receive the electronic copy of this questionnaire, please contact the case secretariat:
- Ms Marianna CSEH (phone: +32-2-298.42.37; marianna.cseh@ec.europa.eu).
We would encourage you to complete the questionnaire in electronic form. If you so decide, please send an e-mail with the following text in the subject line of the e-mail “Case COMP/M.5529 Oracle/Sun ‑ Request Q-Comp Databases in e-format” to the case secretariat from which you will receive the electronic copy. If you so request, you will receive a confirmation of receipt of your submission.
Please return your reply at the latest by 13 August 2009.
II. GENERAL DETAILS
1.Please give the contact details of the person we can contact in case we have questions on your reply:
Company:
Contact person:
Phone:
Position
Fax:
Address:
Country:
Company web-site:
2.Please give a brief description of your company's business in the field of databases, including in particular, the products and services sold by your company in this field.
3.Please indicate your net turnover in 2008 (or 2007 if not available for 2008 yet) in million EUR achieved world-wide and in the EEA[2] (i.e. total sales after deduction of value added tax).
II. QUESTIONNAIRE
A.Market definition
Relevant product market
In order to examine the competitive effects of the proposed transaction on the market, the Commission is required to define the “relevant product markets”. A relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the customers, by reason of the products’ characteristics, prices and intended use.
Oracle's and Sun's activities overlap in database products, more precisely in relational database management systems. Databases are software programmes designed to organise, store, analyse and retrieve information.
4.Please list your product offerings in the field of databases. By ticking the appropriate boxes, please also specify for each of your database products whether the product is proprietary or "open source", whether they can be deployed on Unix-based operating systems, Linux/Open Source Systems, Windows NT or other operating systems.
Proprietary v. Open Source
Operating system
Product
Proprietary
Open Source
Unix
Linux
Windows NT
Other
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5.Please list the most important characteristics of your respective databases (technical characteristics, efficiency, cost, suitability for any specific application, etc) that lead your customers to purchase these databases.
6.Please indicate whether there are technical or practical barriers to switching between databases.
7.Please indicate whether you provide technical support for:
9.Please provide your view on the way customers take purchasing decisions for databases. Which of the following statements is the most appropriate?
¨Database customers usually decide to purchase databases that best meet their needs AND are compatible with their existing server infrastructure and server operating system; or
¨Database customers usually decide to purchase those databases that best meet their needs AND THEN adapt their server and server operating system to the newly purchased database if necessary; or
¨Database customers usually take purchase decision about server, server operating system and database at the same moment; or
¨Other (please specify)
10.To your knowledge, are there any operating systems which would support exclusively databases offered by the same company as the company offering the respective operating system? For example, are there any operating systems of IBM or Microsoft that would only support IBM databases of Microsoft databases respectively?
11.In your view, is the choice of a database product dictated by the operating system(s) in use in a company? Are there databases that a company could not consider as substitutes because the operating systems in use in the company would limit the choice? Please elaborate.
12.Do customers use databases from different suppliers alongside each other, in particular proprietary databases alongside open source databases? Please elaborate.
13.If you offer open source databases, do you generate revenues from these databases? If yes, please explain the way you generate revenues (commercial licenses, support services etc.).
14.In your view, do all database products compete with each other?
YesNo
Please give reasons for your answer.
15.If you are of the view that only certain database products compete with each other, specify how you would delineate categories of database products that compete with each other and give reasons.
16.In your view, do open source database products and proprietary database products compete with each other?
YesNo
Please give reasons for your answer. If your answer is yes, please specify for which uses open source database products and proprietary database products compete. Please specify also which proportion of your sales of databases competes, i.e. which proportion of your sales of proprietary databases competes with open source databases and which proportion of your open source databases competes with proprietary databases.
Relevant geographic market
A relevant geographic market comprises the area in which the conditions of competition are sufficiently homogenous and which can be distinguished from neighbouring geographic areas because, in particular, the conditions of competition are appreciably different in those areas.
17.Do you see any reason why the geographical dimension of the market for databases should be less than worldwide? Please explain.
18.When selling a database, are there any geographical restrictions on the database license? Are prices different from one country/region to the other?
B.Market data
19.Please provide information on your revenues in 2008 in EUR '000 for your database products. Please distinguish between revenues from licenses and from service or support contracts. Please distinguish as well between proprietary and open source database products.
PROPRIETARY DATABASES
TURNOVER for 2008
(in EUR '000)
EEA
Worldwide
New licenses
Service
New licenses
Service
OPEN SOURCE DATABASES
TURNOVER for 2008
(in EUR '000)
EEA
Worldwide
New licenses
Service
New licenses
Service
20.Please provide information on your units sold of your database products in 2008. Please distinguish between proprietary and open source database products.
PROPRIETARY DATABASES
Units sold in 2008
EEA
Worldwide
OPEN SOURCE DATABASES
TURNOVER for 2008
(in EUR '000)
EEA
Worldwide
C. Competitive assessment
Competitors
21.In the context of tender processes and the conclusion of commercial agreements, which databases do you usually face as competitors? Which databases do you consider as being close competitors to your offering (please list the competitor for each of your product and indicate whether their products are proprietary or open source)? Please list the competitors form the closest competitor to the more distant.
22.Please – to your best knowledge – list Oracle's main competitors in the database market, including yourself. Please indicate whether there are different characteristics/abilities between these competitors. Please rate for each company from 1= "closest" to 10= "less closely" the intensity of competition) and give reasons for this rating. Please specify in which geographic area these competitors are active (e.g. worldwide, EEA, national markets).
Company
Characteristics and abilities
Intensity of competition
Reasons for rating
Geographic area
23.Please – to your best knowledge – list Sun's (MySQL) main competitors in the database market, including yourself. Please indicate whether there are different characteristics/abilities between these competitors. Please rate for each company from 1= "closest" to 10= "less closely" the intensity of competition) and give reasons for this rating. Please specify in which geographic area these competitors are active (e.g. worldwide, EEA, national markets).
Company
Characteristics and abilities
Intensity of competition
Reasons for rating
Geographic area
24.Do you consider that Oracle's database offerings, in particular its database 11g, and Sun's MySQL database offerings constitute direct substitutes from a customer's perspective (taking into account in particular pricing and functionality), and that they would act as direct competitors on the market? Please elaborate.
25.Do you consider that the Oracle database 11g Express Edition constitutes a substitute to MySQL? Please reason your view.
26.Do you consider that the Oracle database 11g Standard Edition constitutes a substitute to MySQL? Please reason your view.
27.Do you consider that the Berkeley DB constitutes a substitute to MySQL? Please reason your view.
28.It has been stated that MySQL is rather complementary to Oracle's database offerings than competing with Oracle's databases. Do you agree? Please reason your view.
29.If you are a company providing technical support for MySQL, in your opinion, what will be the impact of the transaction on your possibilities to provide technical support? Do you expect that you will be able to continue to provide technical support for MySQL if the proposed transaction is implemented? Under which conditions would it be impossible for you to continue to provide technical support? Are you in any contractual relationship with Sun for providing technical support for MySQL? If yes, could you please indicate the terms (e.g. length)?
30.Please indicate whether there are new entrants in the database market that may grow into future strong competitors (in particular open source offerings).
"Forking"
31.Please explain the process of "forking" MySQL with a view to entering the database market, especially as regards:
a)existing technical, legal and other obstacles, in particular relating to the MySQL trademark,
b)additional technical, legal and other obstacles Sun could pose to prevent a "forked" version from entering the market, in particular relating to Sun's partner agreements
c)the costs incurred upon an unsuccessful attempt to enter the market,
d)the time consumed by developing a "fork" and successfully entering the market.
32.In your view, would Oracle, as a result of the proposed transaction, have the ability to prevent forks of MySQL from being developed and from entering the database market?
33.It has been stated that the open source nature of MySQL eliminates potential for anti-competitive effects. Do you agree with this statement? Please reason your view.
34.In your opinion, how important is it for a company offering open source databases to also have the ability to issue commercial licenses, i.e. to apply the dual licensing approach chosen by Sun for MySQL? What are the advantages of such an approach?
35.Do you consider that offerings like Maria DB have the potential to grow as competitive force in the market for databases? Would such growth be accelerated if Oracle failed to continue developing MySQL or if it stopped the MySQL open source offering?
Future development of MySQL
36.Absent the transaction, how would you expect Sun to develop MySQL in comparison to Oracle's database products? Please elaborate.
37.Absent the transaction, how would you expect the competitive relationship between Oracle and Sun as regards database offerings to change in the next 3-5 years? Please elaborate, especially as regards pricing and functionality.
38.In your view, has Oracle's acquisition of Berkeley DB lead to:
¨Improvement of the product;
¨No change of the product;
¨Degradation of the product.
Migration of customers
39.To the best of your knowledge, will Oracle, as a result of the proposed transaction, be in a position to lock in customers of MySQL to Oracle's offering by directing MySQL customers wishing to switch to other databases towards Oracle's proprietary database offerings? Which would be the mechanisms that Oracle could use to direct customers wishing to switch? Are you also able to offer support services to MySQL that would direct customers wishing to switch to certain specific proprietary databases by facilitating the switching?
40.Please also elaborate on how a strategy to "lock in" customers would affect Oracle's/Sun's profits, your database software business and the pricing of database software and related maintenance services.
Vertical aspects
41.To the best of your knowledge, do you consider that Oracle, as a result of the proposed transaction, would be capable of modifying the operating system "Solaris" in a way that degrades its interoperability with database software other than Oracle's or Sun's?
42.Please also elaborate on how such changes to Solaris would affect Oracle's/Sun's profits, your database software business and the pricing of database software and related maintenance services.
D.Conclusion
43.Please describe in detail ALL possible effects and impacts of the proposed transaction on competition in the database market (segment) concerning e.g.:
a)your business
b)your product offerings
c)prices of your and other product offerings
d)product innovation
e)any other parameter?
Please give reasons for your answer.
44.Please provide any other comments that you may have on the proposed transaction.
***
Please remember to provide a non-confidential version of your reply!
THANK YOU VERY MUCH FOR YOUR ASSISTANCE!
[1]Cf. Article 17 of Commission Regulation (EC) No 447/98 of 1 March 1998.
[2]The EEA comprises the 27 Member States forming the European Union and the EFTA countries Iceland, Liechtenstein and Norway.
Customer survey
I. INTRODUCTION
On 30 July 2009, Oracle Corporation (hereafter named “Oracle”) notified to the European Commission under the Merger Regulation (Council Regulation (EC) No 139/2004), their intention to acquire SUN Microsystems Inc. (hereafter named "Sun"; both Oracle and Sun will be named hereafter "the parties").
Under the Merger Regulation, the Commission has to assess the proposed transaction's impact on competition. To that end, it must examine in an in depth manner the structure of the markets in which the activities of the above‑mentioned companies overlap or are related to each other. It must gather data on the subject from the parties, but also from other market players, in particular customers and competitors.
Your detailed reply to the questionnaire is very important for us in examining the notified transaction. We would be grateful for any additional remarks you may wish to make concerning the potential impact of the proposed transaction on competition. Please feel free to send us any documentation, studies, articles, etc. on the relevant markets, which in your view may help us in our analysis. If you consider any of the questions irrelevant, please say so and give your reasons.
Please reply for all the companies in your group. With respect to financial data, please give the figures for 2008 (alternatively 2007 if no figures exist yet for 2008) and express monetary amounts, unless requested otherwise, in thousands of Euro.
All information which is clearly marked “confidential” will be treated as such[1].You are kindly requested to provide a non-confidential version of your reply.
The Commission is aware that answering the questionnaire may involve a considerable amount of work.We thank you in advance for your assistance and co-operation. If you have questions about the questionnaire, please contact any of the case handlers:
If you have any general queries or if you would like to receive the electronic copy of this questionnaire, please contact the case secretariat:
- Ms Marianna CSEH (phone: +32-2-298.42.37; marianna.cseh@ec.europa.eu).
We would encourage you to complete the questionnaire in electronic form. If you so decide, please send an e-mail with the following text in the subject line of the e-mail “Case COMP/M.5529 Oracle/Sun ‑ Request Q-cust Databases in e-format” to the case secretariat from which you will receive the electronic copy. If you so request, you will receive a confirmation of receipt of your submission.
Please return your reply at the latest by 13 August 2009.
II. GENERAL DETAILS
1.Please give the contact details of the person we can contact in case we have questions on your reply:
Company:
Contact person:
Phone:
Position
Fax:
Address:
Country:
Company web-site:
2.Please give a brief description of your company's business, including in particular, the products and services sold by your company.
3.Please indicate your net turnover in 2008 (or 2007 if not available for 2008 yet) in million EUR achieved world-wide and in the EEA[2] (i.e. total sales after deduction of value added tax).
III. QUESTIONNAIRE
A.Market definition
Relevant product market
In order to examine the competitive effects of the proposed transaction on the market, the Commission is required to define the “relevant product markets”. A relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the customers, by reason of the products’ characteristics, prices and intended use.
Oracle's and Sun's activities overlap in database products, more precisely in relational database management systems. Databases are software programmes designed to organise, store, analyse and retrieve information.
4.Please list the database products in use by your company in the table below (indicating the name of the database, the name of the supplier, whether it is open-source or proprietary, the name of the company offering support for each database, the date of purchase and the operating system on which the database is running). Please describe the purpose for which your company purchased the database products and the main characteristics of the products (technical characteristics, efficiency, cost, suitability for any specific application, etc).
Database
Supplier
Open-Source (Yes/No)
Support supplier
Date of purchase
Operating System
Purpose and main characteristics
5.Does you company purchase technical support for:
¨MySQL;
¨Other open source databases (please specify).
6.If your answer to the previous question is yes, from which company do you purchase technical support?
7.Do you use databases from different suppliers alongside each other, in particular proprietary databases alongside open source databases? Please elaborate. For which purpose do you use these databases?
8.Please indicate the cost of owning the databases listed above and the support costs associated with them (indicate 2008 payments).
Database
Cost of license in 2008 (€)
Cost of support in 2008 (€)
9.For each of the products listed above, please indicate the competing products that would be suitable for replacing your current database products. Please describe briefly their main characteristics (strengths and weaknesses) and the factors that make the competing products suitable to replace the products you sourced instead.
12.More generally, what are the costs and the difficulties associated with switching databases?
13.How do you take purchasing decisions for databases? Which of the following statements is the most appropriate?
¨Your company decides to purchase databases that best meets its needs AND is compatible with the existing server infrastructure and server operating system; or
¨Your company decides to purchase those databases that best meet its needs AND THEN adapt its server and server operating system to the newly purchased database if necessary; or
¨Your company usually takes purchase decision about server, server operating system and database at the same moment; or
¨Other (please specify)
14.Is the choice of a database product dictated by the operating system(s) in use in your company?Are there databases that you could not consider as substitutes because the operating systems in use in your company limit your choice?
15.In your view, do all database products compete with each other?
YesNo
Please give reasons for your answer.
16.If you are of the view that only certain database products compete with each other, please specify how you would delineate categories of database products that compete with each other and give reasons.
17.In your view, do open source database products and proprietary database products compete with each other?
YesNo
Please give reasons for your answer. If your answer is yes, please specify for which uses open source database products and proprietary database products compete.
Relevant geographic market
A relevant geographic market comprises the area in which the conditions of competition are sufficiently homogenous and which can be distinguished from neighbouring geographic areas because, in particular, the conditions of competition are appreciably different in those areas.
18.Do you see any reason why the geographical dimension of the market for databases should be less than worldwide? Please explain.
19.When selling a database, are there any geographical restrictions on the database license? Are prices different from one country/region to the other?
B. Competitive assessment
Competitors
20.Please indicate by order of importance your five main suppliers for databases.
21.Please – to your best knowledge – list Oracle's main competitors in the database market. Please indicate whether there are different characteristics/abilities between these competitors. Please rate for each company from 1= "closest" to 10= "less closely" the intensity of competition) and give reasons for this rating. Please specify in which geographic area these competitors are active (e.g. worldwide, EEA, national markets).
Company
Characteristics and abilities
Intensity of competition
Reasons for rating
Geographic area
22.Please – to your best knowledge – list Sun's (MySQL) main competitors in the database market. Please indicate whether there are different characteristics/abilities between these competitors. Please rate for each company from 1= "closest" to 10= "less closely" the intensity of competition) and give reasons for this rating. Please specify in which geographic area these competitors are active (e.g. worldwide, EEA, national markets).
Company
Characteristics and abilities
Intensity of competition
Reasons for rating
Geographic area
23.For each of the databases in use in your company (as listed in question 4), at the time your company made the purchasing decision, please indicate in the table below which other competing databases you were also considering purchasing.Please indicate the reasons why you chose the database you are currently using.
Database in use
Competing databases considered at the time of purchase
Reasons for the choice
24.Do you consider that Oracle's database offerings, in particular its database 11g, and Sun's MySQL database offerings constitute direct substitutes (taking into account in particular pricing and functionality), and that they act as direct competitors on the market? Please elaborate.
25.It has been stated that MySQL is rather complementary to Oracle's database offerings than competing with Oracle's databases (i.e. in the sense that MySQL and Oracle targets different needs). Do you agree? Please reason your view.
26.Do you or would you use Oracle databases and Sun databases side by side for similar tasks? Please elaborate.
27.Do you or would you use Oracle databases and Sun databases side by side in your company for different tasks? Please elaborate.
28.Do you have plans to change your database products? If yes, please elaborate what are the reasons for the change.
29.If your company purchases technical support for MySQL from Sun and in case Oracle, after the transaction, increased prices for technical support of MySQL, would you be prepared to switch to another company providing such technical support services? If yes, to which company would you be most likely to switch?
30.If your company purchases technical support for MySQL from a company other than Sun, in your opinion, what will be the impact of the transaction on your possibilities to purchase technical support from a company other than Oracle? Do you expect that you will be able to continue?
31.Please indicate whether there are new entrants in the database market that may grow into future strong competitors to the current suppliers (in particular open source offerings).
Commercial MySQL license
32.Have you purchased a commercial MySQL licence? If yes, please describe the purpose for which your company purchased the commercial license. Why would a GNU General Public License v.2 not be sufficient for your purposes?
33.Please indicate the duration of your company's contract for the commercial MySQL license.
34.Could your company replace the commercial MySQL license by another commercial database license available on the market?
35.What would be the impact on your company if a commercial MySQL license would not be available anymore?
"Forking"
36.Please explain the process of "forking" MySQL with a view to entering the database market, especially as regards:
a)existing technical, legal and other obstacles, in particular relating to the MySQL trademark,
b)additional technical, legal and other obstacles Sun could pose to prevent a "forked" version from entering the market, in particular relating to Sun's partner agreements
c)the costs incurred upon an unsuccessful attempt to enter the market,
d)the time consumed by developing a "fork" and successfully entering the market.
37.In your view, would Oracle, as a result of the proposed transaction, have the ability to prevent forks of MySQL from being developed and from entering the database market?
38.It has been stated that the open source nature of MySQL eliminates potential for anti-competitive effects. Do you agree with this statement? Please reason your view.
39.In your opinion, how important is it for a company offering open source databases to also have the ability to issue commercial licenses, i.e. to apply the dual licensing approach chosen by Sun for MySQL? What are the advantages of such an approach?
40.Do you consider that offerings like Maria DB have the potential to grow as competitive force in the market for databases? Would such growth be accelerated if Oracle failed to continue developing MySQL or if it stopped the MySQL open source offering? In particular, would your company consider using Maria DB?
Future development of MySQL
41.Absent the transaction, how would you expect Sun to develop MySQL in comparison to Oracle's database products? Please elaborate.
42.Absent the transaction, how would you expect the competitive relationship between Oracle and Sun as regards database offerings to change in the next 3-5 years? Please elaborate, especially as regards pricing and functionality.
43.Does your company purchase any open source products from Oracle? If yes, how do you assess Oracle's support for and commitment to this open source product?
44.In your view, has Oracle's acquisition of Berkeley DB lead to:
¨Improvement of the product;
¨No change of the product;
¨Degradation of the product.
Migration of customers
45.To the best of your knowledge, will Oracle, as a result of the proposed transaction, be in a position to lock in customers of MySQL to Oracle's offering by directing MySQL customers wishing to switch to other databases towards Oracle's proprietary database offerings? Which would be the mechanisms that Oracle could use to direct customers wishing to switch?
46.Please also elaborate on how a strategy to "lock in" customers would affect Oracle's/Sun's profits, your database software business and the pricing of database software and related maintenance services.
Vertical aspects
47.To the best of your knowledge, do you consider that Oracle, as a result of the proposed transaction, would be capable of modifying the operating system "Solaris" in a way that degrades its interoperability with database software other than Oracle's or Sun's?
48.Please also elaborate on how such changes to Solaris would affect Oracle's/Sun's profits, your database software business and the pricing of database software and related maintenance services.
49.If Oracle purchases Sun, the newly formed company will have the possibility to offer to its customers a fully integrated stack, from hardware to middleware and enterprise application software, and including operating systems and databases. Please indicate whether you consider that Oracle/Sun will be in a position to foreclose its competitors in the different layers of the stack thanks to this characteristic. What impact could such vertical integration have for customers?
D.Conclusion
50.Please describe in detail ALL possible effects and impacts of the proposed transaction on competition in the database market (segment) concerning e.g.:
a)your business
b)prices for database products
c)product innovation
d)any other parameter?
Please give reasons for your answer.
51.Please provide any other comments that you may have on the proposed transaction.
***
Please remember to provide a non-confidential version of your reply!
THANK YOU VERY MUCH FOR YOUR ASSISTANCE!
[1]Cf. Article 17 of Commission Regulation (EC) No 447/98 of 1 March 1998.
[2]The EEA comprises the 27 Member States forming the European Union and the EFTA countries Iceland, Liechtenstein and Norway.
John Chambers
Mark Hurd 
Sam Palmisano 
