Announcing this year’s Keynote Speakers – Connected Enterprise 2012 #CCE2012

Constellation’s Connected Enterprise brings together the brightest minds to discuss the present and future of innovation, technology, and society, and is quickly establishing itself as the must-attend conference for pioneers, innovators, and early adopters.  Continuing this tradition, we have brought together an accomplished group of dynamic visionaries to deliver this year’s keynote addresses on November 9th through 11th at the St. Regis Monarch Beach in California. Check back frequently as we update information about our keynote speakers. 

Keynotes include:

Love Goel

Chairman and CEO, GVG Capital

Love Goel is considered one of the most innovative and transformational business leaders of our time. Goel is known for transforming iconic brands and companies into digital market leaders, for building 5 of the world’s top 10 multi-channel companies, and for pioneering many of the most innovative digital business models.

He sold his first software company at age 12, helped launch Apple’s digital and retail business, transformed Macy’s from the world’s largest and most profitable department store retailer into the world’s largest multi-channel retailer, and became a top Silicon Valley CEO building three billion-dollar internet companies from scratch –all by his late 20’s.

Today, he is Chairman and CEO of GVG Capital Group, the premier global private equity firm focused on digital and multi-channel transformation. He has acquired 25 companies, created $30 billion in shareholder value, and advised 100+ market leaders including Ama- zon, Wal-Mart, BMW, Nike, and Cargill. He is a globally sought after thought leader, key- note speaker, media personality and governance expert, and serves on numerous corporate and non-profit boards. He has lived and worked in North America, Europe and Asia, and is a Henry Crown Fellow of The Aspen Institute.

 

 

Tom Kelley

General Manager, Ideo and Author The Ten Faces of Innovation 

A leading speaker, Tom Kelley addresses scores of business audiences on how to use innovation to transform a business's culture and strategic thinking. Kelley helped manage IDEO with his brother, IDEO founder and chairman David Kelley, as the firm grew from 20 designers to a staff of more than 500 people. During that time, he has been responsible for diverse areas such as business development, marketing, human resources, and operations. Kelley is the author of two best-selling books, The Art of Innovation (2001) and The Ten Faces of Innovation (2005).

 

 

 

 

 

 

 

 

Dr. Michael Mandelbaum

The Christian A. Herter Professor and Director of American Foreign Policy, The Johns Hopkins University School of Advanced International Studies and Co-author, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back

Michael Mandelbaum is one of America’s leading authorities on international affairs, known for his ability to explain the meaning and consequences of complicated global developments and trends. In 2010 Foreign Policy magazine named him one of the "Top 100 Global Thinkers."

The World Affairs Councils of America named him one of the most influential people in American foreign policy.

 

 

 

 

 

 

 

 

 

 

 

 

 

Linda Rottenberg

Co-founder and CEO, Endeavor Global

Linda Rottenberg is considered one of the world’s most dynamic and respected experts on entrepreneurship, business opportunities in emerging markets, and innovative leadership for the new economy. For years, she has motivated audiences of Fortune 500 managers to think like entrepreneurs and is often sought out for her ability to understand new trends in global business. 

Dubbed “Ms. Davos” in 2011 by Business Insider, Rottenberg served as co-chair of the World Economic Forum (WEF) on the Middle East and currently vice-chairs the WEF Entrepreneurship Council.

As the CEO and Co-founder of Endeavor, Rottenberg pioneered the field of High-Impact Entrepreneurship, the global phenomenon of using high-growth business to transform economies.

 

 

 

 

 

 

 

 

 

In addition to inspirational keynotes, Connected Enterprise will host best practices panels that will feature the semifinalists from the 2012 SuperNova Awards, Constellation's award winning analysts, and additional guest speakers to be announced.  To find out more information about Constellation's events or to qualify for the SuperNova Awards go to http://www.constellationrg.com/events/

The New Technology Elite: A Book and Author Review

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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My friend and associate Vinnie Mirchandani has written his second book, The New Technology Elite: How Great Companies Optimize Both Technology Consumption and Production. I asked Vinnie if I could write a review, and he provided a pre-release copy of his book.

I’d gotten bits and pieces of the book from Vinnie’s blog posts and excerpts he released on LinkedIn. But getting a look at the entire book is a whole other experience.

In this post, I'd like not only to review the book--I'd like to also review the author.

A Curious Mind

For regular readers of the Spectator, Vinnie needs no introduction. I’ve been quoting and linking to him for years, even before I met him in person, around 2007. Since then, we’ve become friends. Among industry analysts, Vinnie is someone I consider like-minded.

At the same time, though, Vinnie is something of a strange cat. As a former Gartner analyst and PwC sourcing executive, his background is in enterprise software and vendor management (his blog title, Deal Architect, gives that away).

But over the past several years his focus has shifted to technology innovation more generally. Ever restless, he launched a second blog, New Florence, New Renaissance, I suspect, to help him on his flights of fancy outside the walls of enterprise IT. This has taken him far afield into areas such as nanotechnology, healthcare IT, sustainability, consumer electronics, mobility, and dozens of other corners of technology innovation. From time to time I try to scoop him, by sending him a link to some cool new application of technology, when I spot it. But generally, he’s not only spotted it himself: he’s also written about it. I still try, though.

Vinnie’s interests led to his 2010 book, The New Polymaths: Profiles in Compound-Technology Innovations. There he chronicled dozens of case-studies of organizations that are leveraging a wide range of technologies to solve the world’s grand challenges and improve our lives. Now in his second book, The New Technology Elite: How Great Companies Optimize Both Technology Consumption and Production, he weaves more case-studies into a larger story.

In Vinnie's view, some organizations that are, historically, buyers of information technology, are now turning into technology providers—as they embed new technology into their products and services. Virgin America, 3M, GE, and UPS are examples. At the same time, leading technology providers, such as Apple, Google, Amazon, and Facebook are becoming examples of best business practices, such as in their data center operations, retailing units, and supply chains. He then presents a framework for understanding what these organizations have in common: their 12 key attributes.

He concludes by examining the outside influences affecting these organizations, including the regulatory environment, their impact on society at large, and the ability (or lack thereof) of sell-side financial analysts to understand it all. Lest one think Vinnie is an unabashed technology enthusiast, these last three chapters strike a counterbalance—it’s not all positive.

A Disorienting Experience

Reading the book leads to one overriding impression: the pace of technology change is unprecedented. Sure, we all know this, generally. But, most of us really don’t.

The danger for anyone in a business leadership position today is to not recognize new entrants arising from outside traditional markets. At the same time, it’s no longer enough to look at best business practices within one’s own industry. Often, it’s players in other markets that are setting the bar higher. This is a problem for today’s market leaders, their customers and suppliers, and the analysts that cover them.

Vinnie’s fast-paced writing style matches his subject matter. Just one example: in Chapter 15, Vinnie discusses how quickly GPS technology evolved from in-auto dashboard systems, to standalone GPS devices, to smartphone apps—in less than a decade. He then launches into a discussion about technologies that are being embedded in home appliances, enabling them to connect to smartphones, tablets, and other devices and how this is leading to Samsung—a consumer electronics company—to take market share away from appliance market leaders, such as Whirlpool and Kenmore. He then jumps to an analysis of how difficult it is to forecast demand for new products such as Amazon’s Kindle, or Nintendo’s Wii.

If you have attention-deficit disorder, Vinnie’s book is for you. He piles on examples one after another, barely giving time to take a breath. For the rest of us, it is disorienting. But it serves a purpose: to give the reader overwhelming evidence of the magnitude and pace of the changes taking place in all industries.

A Positive Example

Although his book is on new technologies, Vinnie’s research style is definitely old school. Today too many so-called industry analysts take the lazy way, getting nearly all of their information from vendor briefings and press releases, writing analysis that regurgitates vendor PR talking points, and rarely speaking directly to customers. As a result, they have no original insight.

Vinnie’s way requires more work, but it’s more rewarding: Do your homework, pick up the phone, talk to those at the center of the action, and learn something new.

Then, take a position. Those who engage with Vinnie on Twitter or in blog comments know that Vinnie doesn’t hedge his views. From time to time, I get into debates with him. Although sometimes I don’t agree with him, I respect that he doesn't arrive at a position lightly, and that his opinions are research-based. He doesn’t shoot from the hip. (At the same time, though, I do see an evolution of his thinking in the final version of the book, as compared to some of his earlier blog posts on the same subjects.)

So, there’s much to learn from The New Technology Elite. Moreover, there’s a lot to learn in imitating the author’s example.

The New Technology Elite can be pre-ordered from Amazon. My copy is already on order. It is now scheduled to ship in March, 2012.

Monday's Musings: Beyond The Three V's of Big Data Viscosity and Virality

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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Revisiting the Three V’s of Big Data

It’s time to revisit that original post from July 4th, 2011 post on the the Three V’s of big data.  Here’s the recap:

Traditionally, big data describes data that’s too large for existing systems to process.  Over the past three years, experts and gurus in the space have added additional characteristics to define big data.   As big data enters the mainstream language, it’s time to revisit the definition (see Figure 1.)

1. Volume. This original characteristic describes the relative size of data to the processing capability. Today a large number may be 10 terabytes.  In 12 months 50 terabytes may constitute big data if we follow Moore’s Law.  Overcoming the volume issue requires technologies that store vast amounts of data in a scalable fashion and provide distributed approaches to querying or finding that data.  Two options exist today: Apache Hadoop based solutions and massively parallel processing databases such as CalPont, EMC GreenPlum, EXASOL, HP Vertica, IBM Netezza,  Kognitio, ParAccel, and Teradata Kickfire
2. Velocity. Velocity describes the frequency at which data is generated, captured, and shared. The growth in sensor data from devices, and web based click stream analysis now create requirements for greater real-time use cases.  The velocity of large data streams power the ability to parse text, detect sentiment, and identify new patterns.  Real-time offers in a world of engagement, require fast matching and immediate feedback loops so promotions align with geo location data, customer purchase history, and current sentiment.  Key technologies that address velocity include streaming processing and complex event processing.  NoSQL databases are used when relational approaches no longer make sense.  In addition, the use of in-memory data bases (IMDB), columnar databases, and key value stores help improve retrieval of pre-calculated data.
3. Variety.  A proliferation of data types from social, machine to machine, and mobile sources add new data types to traditional transactional data.  Data no longer fits into neat, easy to consume structures. New types include content, geo-spatial, hardware data points, location based, log data, machine data, metrics, mobile, physical data points, process, RFID’s, search, sentiment, streaming data, social, text, and web.  The addition of unstructured data such as speech, text, and language increasingly complicate the ability to categorize data.  Some technologies that deal with unstructured data include data mining, text analytics, and noisy text analytics.

Figure 1. The Three V’s of Big Data

Contextual Scenarios Require Two More V’s

In an age where we shift from transactions to engagement and then to experience, the forces of social, mobile, cloud, and unified communications add  two more big data characteristics that should be considered when seeking insights.  These characteristics highlight the importance and complexity required to solve context in big data.

• Viscosity – Viscosity measures the resistance to flow in the volume of data.  This resistance can come from different data sources, friction from integration flow rates, and processing required to turn the data into insight.  Technologies to deal with viscosity include improved streaming, agile integration bus’, and complex event processing.
• Virality – Virality describes how quickly information gets dispersed across people to people (P2P) networks.  Virality measures how quickly data is spread and shared to each unique node.  Time is a determinant factor along with rate of spread.

Figure 2. The Five V’s of Big Data

The Bottom Line: Big Data Provides The Key Element In Moving From Real Time To Right Time

Context represents the next frontier as we move to intelligent systems.  Big data systems and techniques will provide the key infrastructure in delivering context within business processes, across relationships, by geo spatial position, and within a time spectrum.  As engagement systems make the shift to experiential systems, expect context to provide the key filter in improving signal to noise ratios.  Big data provides the context required to move from real time to right time.

Catch Constellation’s Big Data Coverage From VP and Principal Analyst – Neil Raden

Upcoming Report: Analytics in the Organization: Types, Roles and Skills

“Analytics” is a critical component of enterprise architecture capabilities, though most organizations have only recently begun to develop experience using quantitative methods. This report discusses the role of analytics, why it is a difficult topic for many, and what actions you should take. It lays out the various meanings of analytics, provide a framework for aligning various types of analytics with associated roles and skill sets needed.

Blog Post: What Is a Data Scientist (and What Isn’t)

Big Data doesn’t happen by itself. Because the tools and techniques are different from traditional Data Warehousing/Business Intelligence approaches, big Data requires different skills. This role has become known as the Data Scientist. Have a look at analyst Neil Raden’s take on the data scientist.

Watch for the following:

• Here is all my stuff: Select what you like:
• Understanding Data: Mechanical MDM, Ontology, Machine Learing
• Future of IBM’s Watson
• Tainted Truth: How to Read Statistical Research
• noSql: The End of the Relational Database
• Analytical Platforms: Revenge of the Relatioal Database
• Next Wave of BI
• The Data Scientist
• Planning and Performance Management Supercharged with ANalytics
• Hadoop vs. ETL vs. ELT
• CEP: From Product Class to Wider Application
• Real-Time Decision-Making: Where It Fits
• Are Rules-Based Management Systems Dead?
• Skills Checklist for Big Data
• Skills Checklist for Business Analytics
• Interactive Data Visualization
• Let the Gorillas Write the Script: Forget Requirements
• Data Warehouse Rescue: What to Do with your Legacy Warehouse
• BI Rescue: What to Do with your Legacy BI

Your POV

What business problem will require you to start with Big Data?  What are the key outcomes?  Where do you expect to move the needle?   Add your comments to the blog or send us a comment at R (at) SoftwareInsider (dot) org or R (at) ConstellationRG (dot) com

Resources

• Monday’s Musings: The Three V’s of Big Data
• Research Report: Rethink Your Next Generation Business Intelligence Strategy
• Monday’s Musings: Balancing The Six S’s In Consumerization Of IT
• Monday’s Musings: A Working Vendor Landscape For Social Business
• Research Report: The Upcoming Battle For The Largest Share Of The Technology Budget Part 1
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Best Practices: Five Simple Rules For Social Business

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.
Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Customer Experience!

“New” Genesys Demonstrates Renewed Energy at Analyst Conference

Constellation Orbits
Constellation Research, Inc.

Elizabeth is a well-recognized industry-leading analyst. She was previously Vice President and Principal Analyst at Constellation Research.  Prior to Constellation, Elizabeth spent eleven years at Forrester Research as vice president and principal analyst.  She has managed large consulting projects for business and government organizations and provides technical insight and guidance to business and government organizations on their communication issues. Prior to her role as an industry analyst with Communication Initiatives and Forrester Research, Elizabeth held senior management positions with IBM, ROLM and Siemens ICN where she was a senior manager for strategic planning and alliances. Expertise Elizabeth’s expertise includes in-depth knowledge of unified communications,…...

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Genesys unveiled its marketing plans at its industry analyst conference with much enthusiasm, as it transitions to a private company.  Private equity firm Permira recently finalized its acquisition and fortunately for Genesys, its brand remained intact from the 2000 earlier purchase by Alcatel Lucent. Throughout the event Genesys emphasized its commitment to engage with its customers and extend its brand as a premier brand in customer service.  Genesys plans to continue its strong focus as an innovative software provider for contact centers and cross channel interactions, while also providing solutions in adjacent markets.  It rightly considers mobile and social as two major growth opportunities.

For its game plan Genesys plans to leverage its global partners to expand its market reach and build closer relationships with its customers.  Initiatives also include growth across its product lines, continued expansion of cloud services and introduction of additional software solutions. Genesys also plans to assist companies support their non-contact center employees and drive back office worker productivity through intelligent workload distribution (iWD) application. 

Having watched Genesys over the years, I think the management team has a strong grasp on the market and renewed energy to deliver leading-edge solutions for its customers.  To continue its momentum Genesys need to extend its fervor to its business partners and customers.  This means supporting the decisive changes occurring in customer care and cloud services, as well as making the right choices in its expansion plans.  Genesys is off to a good start as a private company and hopefully will get the support needed to grow through product diversification in adjacent markets and strong partnerships.

Poor Quality Audio in a Recorded Microsoft Lync Web Conference

Alumni: Constellation Research
Constellation Research

Dr. Brent Kelly is a Vice President and Principal Analyst at Constellation Research and President of KelCor, Inc. He focuses on the unique intersection of unified communications, social business, cloud services, video and mobility.  Dr. Kelly provides strategy and counsel to key clients including Chief Information Officers, Chief Technology Officers, investment analysts, venture capitalists, technology policy executives, sell-side firms and technology buyers. Prior to joining Constellation, Dr. Kelly served for 10 years as a partner at Wainhouse Research where he was the primary author of most of the firm’s unified communications reports and forecasts. Dr. Kelly is a regular presenter at Enterprise Connect (formerly VoiceCon), the communications industry trade show where his well…...

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Constellation adds AMP's Innovation Chief, Annalie Killian to Board of Advisors

Monday's Musings: Why Customers And Prospects Expect Clearer Rules About Content Marketing

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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Original Mission Improves Engagement Through Relevancy

Content marketing re-emerges as a hot topic and trend in improving engagement with existing customers and prospects.  Marketers can improve the likelihood of engagement through the creation and sharing of relevant information.  Typical delivery formats include advertorials, emails, branded websites, white papers, webinars, podcasts, and field marketing events.  Content marketers believe that educating a customers with high quality information will improve the likelihood of a sale due to brand association with expertise and thought leadership.  Content marketing is a powerful and effective approach when done well.

Many Marketers Will Abuse The Model As Marketer Objectivity Standards Go By The Way Side

As with all techniques, content marketing has the potential to improve brand relevancy and conversion.  However, when applied to social media, there is greater room for abuse.  Why? The speed of social media and the lack of rules creates a confluence of forces leading many content marketers to quickly blur the limits of objectivity.  How? By placing biased marketing content and associating with a known, objective, and trusted brand.  It’s happening with paid blogs, paid tweets, purchasing Facebook likes, thinly veiled advertorials in trusted magazine brands, and biased white papers disguised as objective research.

Though many will claim that a new generation could care less about objectivity, selling out on standards will create short term gain at a more punishing long term loss of trust.  In today’s social businesses, trust is the new social currency.  Without trust based on our actions, we destroy the basis for engagement and relationships.  In fact the newness and pureness of social media is what draws users to engage.  If marketers deafen the channel with the equivalent of ‘junk mail”, spam, and telemarketing in the guise of content marketing, the recipients will hit another level of social overload and disengagement.

The Bottom Line: Three Simple Disclosure Rules Can Improve Content Marketing In A Social World

As expected, a high level of ethics and self-policing is required to prevent abuse.  To keep content marketing as an effective tool, a few ground rules should be put in place to ensure that trust is not broken:

1. Sponsored content should be clearly stated upfront. Recipients should know that the material is sponsored.  If embedded within the broader content of a trusted source, marketers should call out what’s sponsored.  Placing the words “Advertorial” in small font is misleading.  Not noting that content is sponsored in a webinar is misleading. 
2. Sponsor affiliations should be easily identifiable. The company sponsoring content should prominently display or verbally indicate their name. Hiding the company name until the last page of a document is misleading.  Stating the sponsor name in a rapid voice in a podcast as part of the “small” text is misleading.
3. Paid relationships should be openly noted. Recipients have a right to know the paid relationship status between the marketer and the channel.  This level of disclosure is key to ensuring trust.

Your POV

Agree or disagree with the disclosure rules?  Got one to add to the mix? Are you trying out content marketing?  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:

• 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.
Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Customer Experience!

Mischaracterization of Multitenancy in an SAP-sponsored Blog Post

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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In an SAP-sponsored post on ZDnet, SAP employee Eric Lai attempts to identify "four big problems" with multitenancy in cloud applications. As I am writing a soon-to-be published research report on cloud ERP, I was interested to hear Eric's take on the subject.

By way of definition, in a software-as-a-service application, the term multitenancy refers to an application architecture where a single instance of the system's application code and database serves multiple customers.

Please read Lai's entire post, as, in the interest of space, I will not quote from it extensively.

Lai gets off to a good start:

Anyone can see how much more efficient [multitenancy] is versus the old server hosting model, where the ratio of server:customer is 1:1. Even using today’s Red Hat-type virtualization, each server can cram fewer users/customers onto itself than a true multitenant service.

Besides their efficiency, multitenant services can scale easily. Both of these mean lower costs for the hosters/software vendors, and, potentially, lower prices for customers.

No argument there. But then he quickly goes downhill. He first draws a distinction between consumers and enterprise customers, which have "much more rigorous requirements." He then presents his four objections to multitenancy.

1. "It's Inflexible."

Here, Lai doesn't really make a flexibility argument as much as a security and privacy argument. He points to privacy laws in some European regions that require data in some circumstances to be stored locally. But this is not an argument against multitenancy--it's an argument in favor of local data centers. A single-tenant system provider will need to build local data centers in the regions it serves, just as a multitenant provider will need to do so.

He then argues that multitenant systems might allow competitors on the same system to see each other's confidential information. I agree that IP theft is an increasing problem, especially with organized gangs of cyber-criminals in Eastern Europe and Asia, who in some cases may have the endorsement of their governments. (See, for example, this report.) But I do not know of a single cases where one tenant on a multitenant system was able to access the data of another customer on the same system. Tellingly, Lai provides not a single reference of such a confidentiality breach.

2. "It's Less Secure."

He now makes the security argument again, from a different angle. Here he argues that a multitenant database gives a careless database administrator, or a malicious hacker, the opportunity to compromise, with one breach, the data of multiple customers rather than just a single customer. He overlooks the fact that if a DBA is careless with one database, he or she would probably be careless with multiple databases. Likewise, if a criminal is able to gain access to a single customer's database in a secured data center, he or she will probably be able to gain access to many or all of the customer databases in the same data center.

3. "It's Less Powerful."

Here the argument is that the capabilities of the platform-as-a-service providers do not match the capabilities of traditional database tools. He points to Salesforce.com's database.com, Google App Engine, and Windows Azure as examples. Here, I find Lai's argument similar to that of Larry Ellison, head of SAP's arch-rival, Oracle.

In response I would point to the testimony of the head of development of one new enterprise SaaS provider. This individual came from a traditional enterprise software development and has now built sophisticated enterprise applications on both NetSuite's platform and on Force.com. He told me recently, "Frank, you wouldn't believe how easy it is to develop on these platforms. Things that used to take us months [at vendor X], we can now do in weeks or days."

Although I am no longer into software development, I am willing to stipulate that the newer cloud platform-as-a-service (PaaS) environments do not have all of the features and functions of traditional on-premise application development environments. (So also, in the old days we couldn't do as much with third-generation procedural languages, such as COBOL, as we could in assembler language. And, we couldn't do as much in 4GLs as we could in third generation.) But a PaaS removes an enormous amount of development work, by abstracting database, middleware, and user-interface functions, allowing the developer to focus on business logic. Furthermore, if (as I believe) PaaS is a disruptive technology, we should expect its capabilities to improve over time, and increasingly able to take on jobs that formerly could only be done by traditional tools.

4. "It May Be More Costly."

Here he doesn't mean the cost to the customer, but the cost to the ISV who wants to move from a traditional on-premises software product to a cloud offering. He is arguing, in essence, that it is cheaper for the vendor to simply host his traditional product as a single-tenant offering (i.e. changing nothing) than to rewrite it as a true multi-tenant SaaS offering.

As an advocate for enterprise IT buyers, I have to ask, will that hosted offering will be less costly for customers? Lai doesn't say. But in his introductory paragraphs (quoted earlier), he indicates that multitenancy offers "lower costs for the hosters/software vendors, and, potentially, lower prices for customers." So he has contradicted himself in his own post.

A Puzzling Position

Finally, what I find strange about this SAP-sponsored blog post is that it seems to contradict SAP's own position relative to Business ByDesign (ByD).

ByD is a full multi-tenant ERP offering for SMBs. It is a well-known fact that SAP's first attempt at ByD employed a single-tenant architecture, similar to that proposed by Lai in his blog post. That iteration was not successful in that, according to SAP spokespeople, they could not get that approach to scale cost-effectively. So, SAP took an extra two years or so and rewrote ByD as a completely multi-tenant application. The system is rolling out in multiple geographies worldwide, in local data centers where required, presumably with security and privacy measures commensurate with SAP's high standards for customers. The system is cost-competitive with other SaaS ERP offerings and has grown quickly to over 1,000 customers at the end of 2011.

SAP now has such confidence in its ByD platform that it has made it the platform for developing its line-of-business applications, such as Sales OnDemand and Travel OnDemand, for its large enterprise customers--presumably the ones with the most demanding security and privacy requirements.

Now, at the top of the post, ZDnet does make the disclaimer, "Eric's views are his alone and do not necessarily represent those of SAP." Still, as I mentioned, I find it puzzling that Lai's views appear to be closer to Larry Ellison's than those of his employer.

I am waiting for SAP's rebuttal to its own sponsored post.

Update: Eric Lai responds in the comments below.
Update, Feb.23: Please read the more detailed response on SDN by Sybase's Eric Farrar.

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