News Analysis: Spinnaker Expands JD Edwards Support With Versytec Acquisition

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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Versytec Acquisition Addresses Growing Demand For JD Edwards Support

Denver, Colorado based Spinnaker Management announced on March 6th, 2012 its acquisition of competitor Versytec.  For those who remember their third party maintenance (3PM) history, Versytec was among the first firms to announce third-party maintenance services within a year after PeopleSoft acquired JD Edwards in July 18, 2003.  Constellation estimates that Nashua, New Hampshire based Versytec had between 35 to 40 active 3PM customers.

Third-party maintenance describes support and maintenance offerings delivered by non-OEM providers. These vendors can provide a range of options from basic break/fix to bug fixes, performance optimization, tax and regulatory updates, and customization support. Keep in mind, 3PM does not provide access to upgrades and future versions of the OEM’s product. One big driver is the lower cost of delivery, as much as half the cost of the original vendor’s pricing.  Today most customers pay in maintenance and support the equivalent of a new license every 5 years without achieving the value.  For an average JD Edwards customer that upgrades every 15 years, that’s three times the cost of the original license cost.  In the latest Constellation research report, third party maintenance is one of many strategies to free up millions for customers to fund innovation.

The Spinnaker-Versytec deal is important for a few reasons:

• Many JD Edwards customers seek alternatives to Oracle’s pricey maintenance fees. Software ownership costs continue to escalate as vendors accelerate their efforts to capture support and maintenance revenues.  From inquiries, surveys, and conversations on the ground, many Oracle JD Edwards World and EnterpriseOne ERP customers seek options to buy-time as they consider whether they upgrade or migrate from their current version.  Why?  Most JD Edwards customers run stable environments and do not gain any value from the Oracle one-size fits all 22% support policy.  Most customers seek phone support and tax and regulatory updates.
• The market needs more options and choices in the third party maintenance market. Many OEM vendors have gone to the extreme to eliminate third-party options for their customers.  This anti-competitive behavior takes away choice for the customer. A bulked up Spinnaker creates a viable organization that has the critical mass to compete with Oracle.   The combined entity provides third party support services to an estimated 100 160 JD Edwards customers across the globe.
• Spinnaker Support offers a different approach to third party maintenance. Spinnaker couples its third party maintenance options with consulting services providing a one-stop shop for JD Edwards customers.  Spinnaker also differentiates in its download methodology of customer entitled IP from Oracle.  Spinnaker provides customers with a checklist of what to download prior to migration off Oracle support.

The Bottom Line: Users Must Advocate for Third-Party Maintenance Rights Across the Technology Stack

Vendors continue to conspire to remove third-party maintenance as an option for their customers. What’s extremely disturbing is how vendors are working hard to prevent customers from having third-party maintenance options. The notion of perpetual software license rights should include the right to self-support software or engage in a third party to provide tax, regulatory, and additional updates. As many vendors try to close up these loopholes, customers are left in a no-man’s land position of being forced into de-facto maintenance contracts with only the vendor.

End users need to band together and collectively demand clear rights to third-party support options. Based on survey data, most already believe or feel that 3PM should be a right.  Otherwise, users will face a situation similar to automakers forcing drivers to only go to them for maintenance. If some of the industry’s largest systems integrators actively entered the third-party support market, it would effectively disrupt the balance of power and put more money into the hands of the end-users and the system integrators.

Figure 1. Visualizing the High Costs of Support And Maintenance

(Right-click to see full image)

Your POV.

Need help with your software contract or working out the rationale for third party maintenance?  Contact us throughout the vendor selection or negotiation process.  We can help with a quick contract review or even the complete vendor selection.  We provide fix-fee and gain sharing arrangements.

Let us know your experiences.  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

How can we assist?

Buyers, do you need help with your apps strategy and vendor management strategy?  Trying to figure out how to infuse innovation into your tech strategy? Ready to put the expertise of over 1500 software contract negotiations to work?  Give us a call!

Please let us know if you need help with your next gen apps strategy efforts. Here’s how we can help:

• Providing contract negotiations and software licensing support
• Evaluating SaaS/Cloud options
• Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployments”
• Designing innovation into end to end processes and systems
• Comparing SaaS/Cloud integration strategies
• Assisting with legacy ERP migration
• Engaging in an SCRM strategy
• Planning upgrades and migration
• Performing vendor selection

Related Constellation Research

Scavo, Frank & Wang, R. “Big Idea: Constellation’s Business Value Framework.” Constellation Research, Inc.  January 31, 2012.

Wang, R. “Best Practices – Three Simple Software Maintenance Strategies That Can Save You Millions” Constellation Research, Inc. March 7, 2012

Wang, R. “Best Practices: Why Every CIO Should Consider Third-Party Maintenance.” Constellation Research, Inc. August 7, 2012.

Wang, R. “Market Overview: The Market For SAP Optimization Options.” Constellation Research, Inc. May 11, 2011.

Wang, R. “Best Practices: The Case for Two-Tier ERP Deployments.” Constellation Research, Inc. February 28, 2011.

Related Resources And Links

20120318 Research Summary: Best Practices – Three Simple Software Maintenance Strategies That Can Save You Millions

20100419 Tuesday’s Tip: Dealing With Pesky Software Licensing Audits

20090714 Research Summary: An Enterprise Software Licensee’s Bill of Rights, V2

20101214 Tuesday’s Tip: Dealing With Vendor Offers To Cancel Shelfware And Replace With New Licenses

20100308 Monday’s Musings: Decoupling Support From Maintenance – What Apps Vendors Can Learn From Microsoft Dynamics

20100222 Monday’s Musings: Why Users Should Preserve Their Third Party Maintenance Rights

20100104 News Analysis: SAP Revives Two-Tier Maintenance Options

20090210 Tuesday’s Tip: Software Licensing and Pricing – Do Not Give Away Your Third Party Maintenance And Access Rights

20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

20091222 Tuesday’s Tip: 10 Cloud And SaaS Apps Strategies For 2010

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091102 Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider

20091006 Tuesday’s Tip: Why Free Software Ain’t Really Free

20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings

20080909 Trends: What Customers Want From Maintenance And Support

20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models

20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession

20091012 Research Report: Customer Bill of Rights – Software-as-a Service

20090910 Tuesday’s Tip: Note To Self – Start Renegotiating Your Q4 Software Maintenance Contracts Now!

20090721 Tuesday’s Tip: 3 Approaches To Return Shelfware

20090127 Tuesday’s Tip: Software Licensing and Pricing – Now’s The Time To Remove “Gag Rule” Clauses In Your Software Contracts

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact sales (at) ConstellationRG (dot) com.

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

Copyright © 2001 – 2012 R Wang and Insider Associates, LLC All rights reserved.

Tech Vendors: Not All Bad, Not All Good

President, Computer Economics and Strativa, Inc.
Computer Economics and Strativa, Inc.

Frank Scavo is skilled at formulating and communicating IT strategy, developing the business case for new systems, and facilitating the selection of enterprise systems, such as ERP, CRM, and supply chain management. He is also an expert in benchmarking IT spending and staffing levels for end-user IT organizations. Frank was one of the first tech bloggers, beginning in 2002 with his launch of the Enterprise System Spectator providing independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them. Frank has been quoted as an IT expert in numerous business and industry publications such as the New York Times, Wall Street Journal, Computerworld, CIO Magazine, ZDnet, eWeek, Datamation,…...

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There’s something I’ve noticed over the years that bothers me. That is, the tendency for industry observers to take unqualified positions for or against certain technology vendors. My feeling about this runs deep, so, hopefully, this post will help others understand why I sometimes react the way I do in my comments on public forums such as Twitter and blog comments.

No technology vendor is 100% “good”—there is always at least something that is not so good. Likewise, no vendor is 100% “bad”—there are always positive attributes. But with some commentators, certain vendors can do no wrong and other vendors can’t do anything right.

If you are someone who always rises up to defend certain vendors, it makes me question your objectivity. This is especially true if you have some sort of commercial relationship with that vendor, whether it is advisory work you have done for them in the past, former employment, or some other connection. But in other cases, even without any commercial relationship, it appears some simply have favorites.

Likewise, if when you hear a positive report about a vendor, you cannot help but criticize, I also question your objectivity. I’ve said in the past, if you can’t say something bad about a vendor, don’t say anything at all.

Now let’s get specific and look at some examples of what I mean.

Apple

Apple is at the top of its game these days, and nowhere is there more unabashed enthusiasm. By market capitalization, Apple is now not only the largest technology vendor: it is now the largest company in the world. Over the past several years, Apple has disrupted entire markets (e.g. music and smartphones) and it has created entirely new ones (e.g. tablet computers). It popularized the concept of an “App Store,” which now everyone is imitating.

It wasn’t always like this. Many of Apple’s most devoted fans are too young to remember a time when Apple nearly failed. It fired Steve Jobs and many were calling for Apple to license its Macintosh operating system to other computer makers—in other words, to imitate Microsoft. Thankfully, Jobs came back, and Jobs had his own ideas. Today, 16 years later, Apple is going from strength to strength. I admire Apple.

So, can Apple do no wrong? Just consider Apple’s business practices that at least border on, if not cross over into, unfair competition. For example:

• Apple’s iBooks Author EULA, which appears to restrict paid distribution of "works" created with the software to Apple’s iBookstore only
• Apple’s proclivity to block apps that compete with Apple’s own products or services
• Apple’s refusal to approve an e-book for sale in its iBookstore because it had “too many links” to Amazon, a competitor
• The US Department of Justice’s plan to sue Apple (and others) for price-fixing on e-books

Just substitute the name Microsoft for Apple in the above bullets and imagine the media reaction. But because Apple is “cool,” Apple gets a pass.

Microsoft

Microsoft is the technology firm that many observers still love to hate. Years ago, with a near-monopoly in desktop operating systems, Microsoft faced relentless attacks from media, governments, and competitors. Apple’s desktop market share remained tiny, except in a few markets, such as education and graphic arts. Linux showed promise, but never gained traction as a desktop OS.

Microsoft still has a dominant (though less so) position in desktop PCs. Its developer tools are widely adopted, and its position in the data center continues to grow. It’s also had success with its game platform. But in the biggest growth markets—mobile and cloud applications—Microsoft lags industry leaders, such as Apple and Google. In other words, Microsoft continues to hold a dominant position in slow growth markets. The Microsoft haters see it as justice served.

I am neither a Microsoft lover nor a Microsoft hater. In my view, Microsoft Windows and Office are bloated and difficult to use (one close family member still doesn’t understand the right mouse button). Windows 8 doesn’t look to be an improvement either.

On the other hand, I feel some of the criticism that Microsoft receives today is undeserved. Merely mentioning Microsoft to some analysts provokes a visceral response, almost revulsion. Yet, in some respects, Microsoft is starting to become the “good guy.” In terms of privacy, I am much more comfortable using Microsoft’s Bing search engine than I am in using Google, who I fear is building a personal dossier on me. Microsoft’s Dynamics line of enterprise systems have good functionality and user adoption.

So, with Microsoft, I see some “bad,” but I also see some “good.”

SAP

SAP is a vendor that many in the enterprise software market love to hate, and I stand as second-to-none in terms of my criticism of SAP. Go to my blog, The Enterprise System Spectator, and do a search in the right hand column on SAP. To save you some time, here are some examples: my mocking of SAP for whining about price cuts; my post after post after post criticizing SAP's maintenance fees; and my hammering of SAP for fighting third-party maintenance at the same time it was offering 3PM to Oracle customers.

So, is SAP all “bad?” Certainly not. I have interviewed SAP top executives, its CEOs, and some of its board members. I can say, without a doubt, that SAP’s leaders care about its customers and that they struggle to find new and better ways to improve business value. They recognize that the TCO of their Business Suite is too high. They know that cloud providers such as Workday and Salesforce.com are eating their lunch. They also recognize that mobility apps are essential and are trying to turn the ship to provide better support for small developers. Finally, they used a skunk-works approach to develop an in-memory computing technology (HANA) that could potentially disrupt the relational database market and transform many business applications.

Will SAP be successful on any of these initiatives? Who knows? But with the largest installed base of any enterprise system provider, I hope for the best—not for the sake of SAP or its shareholders—but for the sake of SAP’s customers.

Oracle

Here’s a vendor that is hard to love but deserves respect. Once again, I stand second-to-none in my criticism of Oracle. Over the years, I’ve written about Oracle's excessive margins on software maintenance; the unhappiness of its installed base; its penchant for creating fear, uncertainty, and doubt; its mockery of its competitors; and its lack of openness.

On the other hand, Larry Ellison is a visionary. He had the foresight to be a large early investor in Salesforce.com and NetSuite long before cloud computing was fashionable. Apparently he knew he was better off making those investments in start-ups rather than trying to develop cloud applications within Oracle, where they would likely lack focus.

Furthermore, around the turn of the century Ellison saw that the enterprise software marketplace was fragmented and overdue for consolidation. Then, he acted on that insight and took advantage of it. I predicted that Oracle’s bid for PeopleSoft would fail, but I was wrong.

In terms of execution, Oracle is nearly flawless. I might mock co-CEO Safra Katz's comments on conference calls, but I have heard Oracle employees praise her ability to get things done.

Finally, on the technology front, I personally know individuals working in Oracle product management. They are some of the smartest people I know, and they are going deep into certain industry sectors. Oracle’s latest product, Fusion, might just be the last great new on-premise enterprise system ever to be developed. From the little bit I’ve seen of it, the user interface is outstanding and the embedded collaboration and business intelligence capabilities are noteworthy. I also like what I hear about Oracle’s public cloud initiative, although I’m waiting to see how it plays out in terms of pricing, terms, and conditions.

Cloud Vendors

Now we come, not to one vendor, but to a whole category: cloud providers. I am a huge proponent of cloud computing. In 2006, I wrote a report for Computer Economics on the business case for software as a service, and in 2009 I wrote of the inexorable dominance of cloud computing.

But as I’ve said in the past, “You don’t get a pass, just because you’re SaaS.” The technology is one thing, but the vendor’s behavior is another. Yet, some industry analysts cannot seem to bring themselves to criticize certain cloud vendors. Why not? When vendors misbehave, do they not deserve to be called out, or is cloud a get-out-of-jail-free card? Many of the executive leaders at NetSuite and Salesforce.com came out of Oracle. Do you think that background and experience have any influence on how they do business in their current positions? If you can criticize Larry Ellison for unfairly bashing the competition but you can’t criticize Marc Benioff for doing the same thing, then I have to question your objectivity.

This is by no means a complete list. I could go on with IBM, HP, Amazon, Infor, and many others. None are all good, and none are all bad.

Let's Be Fair

In some ways, the situation is like our political scene. Over the years, political discourse in the US and in other parts of the world has gotten more and more polarized. A political leader from “our side” must be defended from all attacks. Likewise, a public official from the other side of the aisle can never do anything right. What matters is not what is said, but who said it. This is wrong. It shouldn’t be this way in political discourse, and it shouldn’t be this way among industry observers.

Now, I accept that a vendor’s own employees and business partners may take strong unqualified positions, especially those in a sales, marketing, or top management role. But I don’t think it’s appropriate for those of us that advise technology buyers to be uncritical fans or relentless critics.

This doesn’t mean that when it comes to specific situations we shouldn’t take a position. Buyers do need us to say, “For this particular need, this vendor is good and that vendor is not good.” We have to make the tough calls. There have even been times where, because of problems with certain vendors, that I have refused to consider them in any new deals. But I try not to become hardened in my viewpoint. I try to always hope for improvement.

We all have our biases, including me. But can we all make an effort to recognize them and try to be fair?

Research Summary: Best Practices & Three Simple Software Maintenance Strategies That Can Save You Millions

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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Forward And Commentary

Software ownership costs continue to escalate as vendors accelerate their efforts to capture support and maintenance revenues. Some vendors have gone to the extreme to eliminate third-party options for their customers. This best practices report examines three strategies to free up unnecessary costs to fund innovation and new projects.

A. Introduction

On average, IT budgets are down from 1-5 percent year-over-year, yet software support and maintenance costs continue to escalate ahead of inflation. Hence, continued pressure on IT budgets and a growing need for innovation projects have top business and technology leaders reexamining their software support and maintenance contracts for cost efficiencies.

Based on experience from over 1500 software contract negotiations, Constellation suggests three approaches to reduce the cost of software support and maintenance. Key strategies include third-party maintenance, shelfware reductions and unbundling maintenance contracts as part of every organization’s tech optimization strategy. Successful implementation can lead to savings from 10-25 percent of the IT budget, freeing up cash to fund innovation initiatives.

B. Research Findings – Why Every Organization Should Consider Third-Party Maintenance, Shelfware Reductions and Unbundling Maintenance Contracts

Most organizations suffocate from the high and hidden cost of support and maintenance. On average, Constellation’s surveys reveal global IT budgets trending down from 1-5 percent year-over-year since 2008. Consumerization of IT, rapidly changing business models, and aging infrastructure have exposed the high cost of software support and maintenance. Because most organizations allocate from 60-85 percent of their budget to keeping the lights on, very little of the budget is left to spend on new projects (see Figure 1).

Organizations can unlock millions by considering third-party maintenance (3PM), reducing shelfware, and keeping support and maintenance contracts unbundled. Each strategy on its own creates opportunities to drive cost savings. All three strategies combined, provide a roadmap for funding innovation.

1. Third-party maintenance (3PM) delivers the most immediate cost savings and opportunity for innovation. Third-party maintenance describes support and maintenance offerings delivered by non-OEM providers. These vendors can provide a range of options from basic break/fix to bug fixes, performance optimization, tax and regulatory updates, and customization support. Keep in mind, 3PM does not provide access to upgrades and future versions of the OEM’s product. One big driver is the lower cost of delivery, as much as half the cost of the original vendor’s pricing.  The report shows a survey of 268 respondents and why organizations choose 3PM and who the key vendors are.
2. Reduction of shelfware remains a key pillar in legacy optimization strategies.  Shelfware (i.e. purchased software, not deployed, but incurring annual maintenance fees) is one of the biggest drains on operational expenses for enterprises. The simple definition of shelfware is software you buy and don’t use. For example, an organization that buys 1000 licenses of Vendor X’s latest ERP software and uses 905 licenses, becomes the proud owner of 95 licenses not being utilized. That’s 95 licenses of shelfware because the user will pay support and maintenance on the license whether or not they use the software or not.  The report details 4 successful and proven approaches.
3. Unbundling maintenance contracts prevents future vendor mischief. About a decade back, vendors would offer support and maintenance as two separate line items on their contracts. Support would run about 5-10 percent of the license fee and so would maintenance. Keep in mind, average support and maintenance fees were under 15 percent back then. Unfortunately, many users have expressed a growing and concerning trend with support and maintenance contracts. Vendors concerns about support and maintenance contract retentions have led to new initiatives to consolidate contracts. At first glance, this may appear to be proactive and beneficial to customers, but the report details three rationales vendors provide and three strategies how to avoid bundling.

Figure 1. Visualizing the High Costs of Support And Maintenance

(Right-click to see full image)

The Bottom Line: Users Must Advocate for Third-Party Maintenance Rights Across the Technology Stack

Vendors continue to conspire to remove third-party maintenance as an option for their customers. What’s extremely disturbing is how vendors are working hard to prevent customers from having third-party maintenance options. The notion of perpetual software license rights should include the right to self-support software or engage in a third party to provide tax, regulatory, and additional updates. As many vendors try to close up these loopholes, customers are left in a no-man’s land position of being forced into de-facto maintenance contracts with only the vendor.

End users need to band together and collectively demand clear rights to third-party support options. Based on survey data, most already believe or feel that 3PM should be a right (see Figure 5.) Otherwise, users will face a situation similar to automakers forcing drivers to only go to them for maintenance. If some of the industry’s largest systems integrators actively entered the third-party support market, it would effectively disrupt the balance of power and put more money into the hands of the end-users and the system integrators.

C. Report Links

Learn the secrets to saving millions.  Find out how to win against any software vendor including IBM, Microsoft, Oracle, SAP, Infor, Lawson, Epicor, Exact, Salesforce.com, etc..   Buy the full research report on the Constellation Research website.

Your POV.

Need help with your software contract?  Contact us throughout the vendor selection process.  We can help with a quick contract review or even the complete vendor selection.  We provide fix-fee and gain sharing arrangements.

Let us know your experiences.  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

How can we assist?

Buyers, do you need help with your apps strategy and vendor management strategy?  Trying to figure out how to infuse innovation into your tech strategy? Ready to put the expertise of over 1200 software contract negotiations to work?  Give us a call!

Please let us know if you need help with your next gen apps strategy efforts. Here’s how we can help:

• Providing contract negotiations and software licensing support
• Evaluating SaaS/Cloud options
• Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployments”
• Designing innovation into end to end processes and systems
• Comparing SaaS/Cloud integration strategies
• Assisting with legacy ERP migration
• Engaging in an SCRM strategy
• Planning upgrades and migration
• Performing vendor selection

Related Constellation Research

Scavo, Frank & Wang, R. “Big Idea: Constellation’s Business Value Framework.” Constellation Research, Inc.  January 31, 2012.

Wang, R. “Best Practices: Why Every CIO Should Consider Third-Party Maintenance.” Constellation Research, Inc. August 7, 2012.

Wang, R. “Market Overview: The Market For SAP Optimization Options.” Constellation Research, Inc. May 11, 2011.

Wang, R. “Best Practices: The Case for Two-Tier ERP Deployments.” Constellation Research, Inc. February 28, 2011.

Related Resources And Links

20100419 Tuesday’s Tip: Dealing With Pesky Software Licensing Audits

20090714 Research Summary: An Enterprise Software Licensee’s Bill of Rights, V2

20101214 Tuesday’s Tip: Dealing With Vendor Offers To Cancel Shelfware And Replace With New Licenses

20100308 Monday’s Musings: Decoupling Support From Maintenance – What Apps Vendors Can Learn From Microsoft Dynamics

20100222 Monday’s Musings: Why Users Should Preserve Their Third Party Maintenance Rights

20100104 News Analysis: SAP Revives Two-Tier Maintenance Options

20090210 Tuesday’s Tip: Software Licensing and Pricing – Do Not Give Away Your Third Party Maintenance And Access Rights

20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

20091222 Tuesday’s Tip: 10 Cloud And SaaS Apps Strategies For 2010

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091102 Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider

20091006 Tuesday’s Tip: Why Free Software Ain’t Really Free

20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings

20080909 Trends: What Customers Want From Maintenance And Support

20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models

20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession

20091012 Research Report: Customer Bill of Rights – Software-as-a Service

20090910 Tuesday’s Tip: Note To Self – Start Renegotiating Your Q4 Software Maintenance Contracts Now!

20090721 Tuesday’s Tip: 3 Approaches To Return Shelfware

20090127 Tuesday’s Tip: Software Licensing and Pricing – Now’s The Time To Remove “Gag Rule” Clauses In Your Software Contracts

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact sales (at) ConstellationRG (dot) com.

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

Copyright © 2001 – 2012 R Wang and Insider Associates, LLC All rights reserved.

Constellation Research Announces Research Theme Details – The Future of Work

Infor and Salesforce.com: More Than a Barney Relationship

President, Computer Economics and Strativa, Inc.
Computer Economics and Strativa, Inc.

Frank Scavo is skilled at formulating and communicating IT strategy, developing the business case for new systems, and facilitating the selection of enterprise systems, such as ERP, CRM, and supply chain management. He is also an expert in benchmarking IT spending and staffing levels for end-user IT organizations. Frank was one of the first tech bloggers, beginning in 2002 with his launch of the Enterprise System Spectator providing independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them. Frank has been quoted as an IT expert in numerous business and industry publications such as the New York Times, Wall Street Journal, Computerworld, CIO Magazine, ZDnet, eWeek, Datamation,…...

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Last year, Infor's CEO Charles Phillips took the stage with Salesforce.com's Marc Benioff to announce a partnership between their two companies. Coming in the midst of all the other announcements during Dreamforce, it would be easy to miss the significance of this one.

Now, with another announcement today, there is another step forward, which should be seen in light of the mutual commitments that Infor and Salesforce are making to each other:

• Out-of-the-box integration. Today's announcement is for a new software product, Inforce Everywhere. This is a native Force.com application that will make back office data from Infor's various ERP systems available to users within Salesforce.com's CRM applications. It also makes key Salesforce.com entities available within Infor ERP, as shown in the graphic nearby. See today's press release for more details. Additional products in the Inforce series are due out over the next 18 months.
• Reseller relationship. As announced at Dreamforce, Infor is now a reseller of Salesforce.com's Sales Cloud and Service Cloud, one of only three third-parties to attain this status. (The other two are Intuit and Dell.) This means that Infor can now sell SFDC and deliver first-level support to Infor's own customers.
• Financial commitment. Also, as announced at Dreamforce, Salesforce.com has become a financial investor in Infor. Salesforce has skin in the game.

Taken together, these three commitments mean that the partnership between Infor and Salesforce.com is much more than the typical tech industry "Barney Partnerships" (I love you, you love me) that never go much beyond the press release and perhaps a few joint deals.

On the surface, the two may appear to be strange bedfellows: Infor, commonly seen as a roll-up older enterprise software companies, and Salesforce--the hot young leader of a new breed of cloud apps providers. But dig a little deeper and you can see how this relationship--which has real and substantial commitments--makes a lot of sense for both parties and for their joint customers.

What's in It for Infor?

By teaming with Salesforce, Infor gets immediate credibility in cloud computing. Rather than build its own true cloud-based sales or customer service functionality, Infor joins forces with the leader in this market space.

There's not much product overlap. Interestingly, although Infor has dozens of products in its portfolio, it does not have a best-of-breed CRM offering. Several of its ERP offerings, such as LN and Syteline, have their own SFA offerings, but those are limited to customers of those ERP systems. Its one standalone CRM product, Epiphany, is more of a marketing automation solution (and, in fact, will be the focus of a future product in the Inforce series).

Finally, Infor now becomes an option for Salesforce.com's many CRM customers who are looking for ERP solutions. Because Salesforce does not offer a complete business suite, cross-referrals from Salesforce can be an attractive sales channel.

What's in It for Salesforce?

Though not immediately apparent, the benefits to Salesforce.com may be even greater. For further growth, Salesforce needs new channels. Moreover, with over 70,000 customers, Infor's installed base is a large market. In terms of ERP revenue, the No. 1 player (SAP) and No. 2 (Oracle) are both fierce competitors to Salesforce, leaving Infor (No. 3) as the largest available option. (Microsoft, also with a large ERP installed base, is likewise a head-to-head competitor with Salesforce.com). The more I think about the larger market dynamics, the more Infor appears to be a great choice for Salesforce. The fact that Salesforce is putting its money where its mouth is (i.e. becoming an Infor investor) is further evidence that Marc Benioff views this relationship as strategic. On a side note, Benioff will be speaking at the Infor's annual user conference in Denver this year, in April.

What's in It for Infor Customers

Of course, Infor customers and prospects now will have an option to go with the market leading solution for cloud CRM. Furthermore, today's announcement of out-of-the-box integration will make the decision easier. Many ERP users choose Salesforce.com today, but I have seen first-hand that integration concerns do produce friction in the sales process. Salesforce and its implementation partners have some good answers for how they will handle integration, but generally each deal is a custom integration, raising uncertainty about the effort and cost.

What Inforce Everywhere does, in my mind, is to make ERP the system of record for Salesforce.com entities that should be managed in ERP: customers, contacts, quotes, orders, shipments, invoices, payments, and returns. Most problems with ERP/CRM integration involve duplicate and redundant data. If Inforce Everywhere works as advertised, it takes away buyer concern about integration and offers a 360 degree view of the customer to users of both CRM and ERP.

What Could Go Wrong?

Although overall I'm positive about the Infor-Salesforce partnership, it's important to take a balanced view. So what are the potential pitfalls? I can think of several.

• Will Infor's direct sales and partner channel be eager to resell Salesforce.com? Selling traditional software licenses carries large up-front commissions and recurring maintenance revenue. Other traditional vendors have had a hard time making the transition to selling subscriptions. It's easier if there is a completely separate sales channel for cloud, but I haven't heard that Infor is planning that. If so, how will Infor overcome the inherent disincentives to selling Salesforce?
• Will Infor's customers really be a large market for Salesforce? The 70,000 customer number may be a bit misleading, as a significant percentage of those customers are on older versions of Infor products that will not be able to take advantage of Inforce Everywhere (which uses Infor's new lightweight ION middleware for integration.) Furthermore, Inforce Everywhere today is only available for Infor's LN (formerly Baan) and its distribution systems (A+ and SX.e). Infor's XA (formerly MAPICS), Syteline, and Visual are scheduled for Q2 this year, followed by S21, Sun Systems, LX, M3 (formerly Intentia), and Adage integrations later this year and next year. (Interestingly, I do not see Lawson's S3 on the roadmap that Infor shared with me last week.) When taken together, this means that the addressable market for Inforce Everywhere is less than meets the eye, at least for today.
• Will Salesforce.com customers choose Infor over other options? Infor is not the only ERP choice for Salesforce customers, and Salesforce's relationship with Infor is not exclusive for ERP. In fact, there are other ERP providers--notably Rootstock and Kenandy--that are built purely on Force.com. If one counts more narrow providers, such as FinancialForce and Glovia, the options multiply. With the exception of Infor's Syteline as a cloud-based offering, all of Infor's ERP solutions are traditional on-premise or, at best, hosted offerings. How attractive will these be to Salesforce.com customers that have made a commitment to cloud computing?

Although there are several obstacles to success, I see great value in this partnership. Infor's customers now have an interesting and compelling way forward for CRM and for cloud computing generally, while Salesforce.com has a great opportunity to do an end-run around SAP and Oracle to gain mind-share with a large body of installed ERP customers.

I look forward to hearing the experience of some early adopters of Inforce Everywhere at the Inforum conference in April.

Related Posts

How to Become a Chief Innovation Officer (Re: Infor's Integration Strategy)
New details on Infor's Lawson acquisition

Executive Profiles: From Transaction To Engagement – Michael Park, Microsoft Business Solutions

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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Welcome to a new series of interviews for 2012 with business leaders making the move from transaction to engagement. The interviews provide insightful points of view from a customer, industry, and vendor perspective.  We’ll be taking limited interviews throughout the year for publication as we also try to catch up on the Disruptive Tech Leaders series.

Michael Park, Corporate Vice President of Microsoft Business Solutions

Biography

Michael Park is the corporate vice president of Microsoft Business Solutions (MBS) sales, marketing and operations at Microsoft Corp. MBS develops and markets Microsoft Dynamics, a line of simple to learn and use enterprise resource planning (ERP) and customer relationship management (CRM) applications which bring together a broad array of Microsoft software and online services to deliver end-to-end business solutions for customers. Microsoft Dynamics is designed to work the way people and organizations work, enable them to make more informed decisions, and is delivered through a global network of partners with deep industry expertise.

Park is a software industry veteran with more than 20 years of experience in key leadership roles, most recently as head of Microsoft’s U.S. Small and Midmarket Solutions & Partners (SMS&P) Group leading sales, marketing and partner professionals, including U.S.-based Microsoft Dynamics partners, serving more than 6 million business customers.

Prior to joining Microsoft in October 2005, Park held key leadership positions with major companies such as SAP where he defined the market strategy for the company’s service-enabled business applications platform and built the infrastructure of people, processes and systems for small and mid-sized businesses. He also defined product strategy and pioneered Siebel Systems Inc.’s first vertical CRM solution for consumer products and life sciences. Park began his career in sales and brand management at Procter & Gamble.

Park has an MBA from Harvard University and a bachelor’s degree in economics from the University of Rochester.

The Interview

1. Consumerization of IT (CoIT) is playing larger role in the daily lives of workers and the workforce. How do you see this shift playing out?

Michael Park (MP): Ray, it comes down to people. In our case, it’s making business applications easier for people to consume. If people can’t do their jobs better, then the technology isn’t delivering on its promise. Why? People are the heart of every business and you have to empower them for success. What’s happening on the consumer side is that people are getting their hands on some really exciting technology that is easy for them to use and this is getting those in the enterprise thinking. People want to work with anyone, anywhere, on any device; they want to be connected. And even though running an enterprise requires complex technology, this trend is forcing us to address the customer experience. It is where the rubber hits the road– the power button is the training manual. It has to be that easy for everyone.

2. In this new shift from transaction to engagement, what changes within organizations from culture, to process, to technology do you anticipate happening in the next three to five years?

(MP): I think this shift will put enormous pressure on IT to deliver effective technology and flexibility at low cost to the end users. Business apps will need to enable the connected state; anytime, anywhere, through any device. These new apps must support how people work and the fact that they want to work collaboratively and communicate with other people, systems and data both internally and externally. Simply rendering forms and lists doesn’t cut it anymore. Apps of the future are connecting people across organizational boundaries, across the business ecosystem and across cultures, time zones, and languages. Culturally it means that employees will be impactful if they can actually use the applications they implement the way they expect them to work. This leads to better context upstream and downstream which helps you not only make better decisions but have better ideas about how you can move the business forward. And that is also where flexibility comes into play. Business applications will need to be flexible enough to change, create, and refine themselves on a different order of magnitude than what’s previously been possible and this needs to go hand in hand with ease of use.

So in the next three to five years, if we give the software the ability to do this, employees will be in a good position to make decisions and deliver impact. When an employee or employer is making a difference, it’s the highest level of impact and accomplishment. If all your apps can help that happen then you are on your way to becoming a dynamic business and leveraging the full power of what your people can do.

3. How are your customers and partners addressing this larger trend in the market?

(MP): I’m seeing a fundamental shift in how people think about IT as a strategic asset. I’ve been in the business for the better part of 20 years. When I spoke to CFOs, our conversations used to be about business process connection and control. Now, CFOs would rather know if this solution can deliver immediate value and if end users will adopt it. At the end of the day, the system has no value if no one uses it. Our customers are moving more and more in this direction. We support our customers to – consume as they need it, justify the value along each step of the way, rapidly iterate, drive for end user adoption and satisfaction; this is fundamentally different from the way enterprise software was sold ten years ago. Sadly there are still players out there trying to do it the old way but I think they will have to adapt or die.

Seriously, why should we lock our customers in, forcing them to have shelf ware that they can’t possibly take advantage of over the next 5 years? We’re training our partners to make this shift as well. We’ve been on the journey to transform our channel for the past couple years; focusing them on repeatable IP, vertical differentiation, incredible customer service, and focus on speed and agility to generate profitability. The future of business applications is less about writing code and more about declarative modeling to close the last mile of the business requirements. As you know, a lot of people talk about this but few understand how big this transformation is.

4. How is your company designing and building services or creating policies to address this?

(MP): Business applications of the past have been wrought with dismal end user satisfaction, high expense and low adoption. In the past, it was about company control. Today’s business applications have to empower and inspire individuals. Studies show that engaged employees stay for what they give, not for what they get. When you make impact, that’s how you get the best satisfaction, which improves your overall culture, and the energy within your company.

Microsoft starts by helping individuals make that impact through pervasive connections and the power to drive the business. In the history of business applications, this is the challenge between line of business and IT’s ability to respond. This gap is a high point of friction. How can IT support the needs of business in this environment? We are in a new economic reality and businesses need to be more agile than ever before. This puts a lot of tension on the friction line. To ease this tension, we focus our design on delivering business applications along 3 unique dimensions:

1. Make people more proactive through business applications which are more proactive. Think about where we’ve come from – transactions. Engagement only happens when the apps are smart enough to help users have insights they didn’t have before. Or when we automate the mundane tasks so that end users have the power and insight to see where they can go or what they can do. Our approach is moving beyond the transaction to insight and corresponding action as well, all within the application. Most systems today are still largely transactional with another BI system that you need to punch out to in order to get the insights and then there is really no path to action.
2. Support connected organizations. People need to be connected internally and externally—we are just at the cusp of what is possible in this realm. We need to look at connecting the right people, with the right systems, and the most telling data. Take all the data that exists. The Big Data strategy needs to help our customers reach new insights, while staying connected with consistency across devices and platforms.
3. Instant on workloads and suites. Let’s free people from the grip of legacy business applications. Cloud is important but it’s more than just the cloud that gets us there. Let’s give people the power of choice for public cloud, private cloud and\or on-premises based on how they need to consume software. Let’s give customers the option to deploy specific business workloads (sales productivity, expense reporting, treasury management, etc.) incrementally or deploy a comprehensive suite with unprecedented speed and value. In large enterprises, let’s allow customers to use operational workloads such as two-tier ERP to surround an existing legacy ERP system in HQ. This is a more effective way to dealing with globalization and serial expansion. Delivery by the workload level provides an incredible amount of agility. Once you put the first workload in, you simply turn on the next one and guess what? It just works! This is a profoundly different approach from today’s choices of keeping the spaghetti bowl of point solutions tied together or consuming the elephant of an enterprise suite to only use 5% of the functionality.

These are 3 areas that Microsoft is uniquely suited to deliver due to our explicit commitment to simplicity and agility in all things we do, our cloud innovation which gives customers the power of choice in terms of how to utilize cloud, and leveraging the consumerization of IT through our assets like Bing, Kinect, Office, Windows etc. combined with the power of Microsoft Dynamics to create truly compelling experiences that drive end user adoption and lowers training costs.

5. A lot is happening in disruptive technologies and business models. If you weren’t doing what you were doing today, what would you pursue next?

(MP): There are two things that I have a deep passion for. One is being able to make a material impact in helping others achieve their success. The second is redefining the status quo through creativity and innovation to find a better way. Education is an area that still begs for more and being able to empower and equip students with the knowledge and leadership skills by which to succeed would be a dream.

6. What’s your favorite innovation of all time or what’s been most inspirational to you?

(MP): Ray, it was 1980 and it was called the TRS80. Remember that one? It was a real beauty. The spreadsheet is a close second; I’ve been happily creating concept to reality in them ever since…

Your POV

What do you think? Got a question for Michael? Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

To be considered for From Transaction To Engagement Innovators series, please reach out to Elaine (at) ConstellationRG (dot) com.

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact sales (at) ConstellationRG (dot) com.

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, see the full client list on the Constellation Research website.

Quark Summary: What Every CMO Needs To Know About The Six C's Of Customer Engagement

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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Forward And Commentary

CMO’s seeking to avoid the desensitization that comes with the adoption of new media will want to quickly deploy the Six C’s of Customer Engagement.

A. Introduction

Social media effectiveness for brands and enterprises will rapidly mirror the trends that email and web sites experienced during the late 1990?s to early 2000?s.  In fact, social media adoption has passed ubiquitous usage and has mostly begun the process of relevant deployment.  Avoidance of  Phase 4 Desensitization can be avoided by applying the Six C’s of Engagement (Figure 1.)

B. Research Findings

Recent early adopter surveys identify five key phases of social media adoption:

• Phase 1: Eager early adopters. Users eagerly experimented in the newness of the medium.   Early adopters attempt to apply the medium to everything.
• Phase 2: Ubiquitous usage. Rapid adoption put the medium in the hands of the masses.  Adoption exceeds 50 million users.
• Phase 3: Relevant deployment. Brands and enterprises apply the medium to the right business use cases and processes.
• Phase 4: Desensitization and fatigue. Inundated with marketing, bombarded with irrelevant content, and tired of the newness of the medium, customers begin tuning out.
• Phase 5: Rejuvenation. Maturation of the medium ushers an improved era of engagement apply the Six C’s of Engagement.

The Six C’s Of Customer Engagement provide strategies to overcome desensitization and fatigue

1. Community. Location for engagement.
2. Content. Topics that drive engagement.
3. Context. Relevance that create engagement.
4. Catalysts. Events or actions that facilitate engagement.
5. Currencies. Monetary and non-monetary exchange of value behind engagement.
6. Cadence. The frequency of interaction

Figure 1. The Six C’s of Customer Engagement Overcomes Desensitization And Fatigue

The Bottom Line: Apply the 6 C’s of Engagement Or Be Left Behind

The brands and enterprises who apply the Six C’s of engagement in the next 6 to 12 months will avoid mass alienation among existing customers and potential prospects.  Application of the 6?s should align with existing business processes and lead to quantifiable outcomes.

C. Report Links

The report is part of Constellation’s Unlimited Quark library and will be made available for purchase after March 23rd, 2012.

Your POV

What strategies and tactics are you using to drive engagement?  How do you measure success.  Add your comments to the blog or send us a comment at R (at) SoftwareInsider (dot) org or R (at) ConstellationRG (dot) com

Please let us know if you need help with your Social CRM/ Social Business efforts.  Here’s how we can assist:

• Assessing social business/social CRM readiness
• Developing your social business/ social CRM  strategy
• Vendor selection
• Implementation partner selection
• Connecting with other pioneers
• Sharing best practices
• Designing a next gen apps strategy
• Providing contract negotiations and software licensing support
• Demystifying software licensing

Related Research:

• Best Practices: From First To Worst – Continental In A Post United World, Lessons In Next Gen Customer Experience
• Monday’s Musings: Seven Basic Privacy Rights Users Should Demand For Social Business
• Monday’s Musings: Balancing The Six S’s In Consumerization Of IT
• Monday’s Musings: A Working Vendor Landscape For Social Business
• Product Review: Google+, Consumerization of IT, and Crossing The Chasm For Enterprise Social Business
• Monday’s Musings: Using MDM To Build A Complete Customer View In A Social Era
• Monday’s Musings: Mastering When and How High End Brands Should Use Daily Deal Sites Such As Groupon
• Best Practices: Applying Social Business Challenges To Social Business Maturity Models
• Research Summary: Software Insider’s Top 25 Posts For 2010
• Best Practices: Five Simple Rules For Social Business
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Research Report: Next Gen B2B and B2C E-Commerce Priorities Reflect Macro Level Trends
• Tuesday’s Tip: Applying The Five Stages Of Adoption Towards SCRM Projects
• Monday’s Musings: Avoiding Failure In Social CRM Projects Requires Ecosystem Coordination
• Research Report: The 18 Use Cases of Social CRM – The New Rules of Relationship Management
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

Copyright © 2001 – 2012 R Wang and Insider Associates, LLC All rights reserved.
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