Product Review: SAP's Recalls Plus App & The Crossover From Enterprise To Consumer Begins

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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SAP’s First Consumer App Addresses A Key Consumer Concern

At midnight pacific time, February 15th, SAP launched its first ever consumer app – Recalls Plus. This consumer app, downloadable for free on Apple’s app store, was developed from one of the world’s leading enterprise software companies (see Figure 1.)  SAP’s first foray into the consumer world will surprise many customers, influencers, and observers.  In fact, in an exclusive conversation with Rishi Diwan, who’s the product owner for the new consumer apps team, he reinforced SAP’s seriousness to enter the market, apply lessons learned, and reiterate.

The basic concept of Recalls Plus is elegant and brings the age old, manual and cumbersome process of tracking consumer recalls to today’s world of engagement systems (see Figure 2.)  With a rich and elegant user experience, consumers can quickly see the latest recalls and share details within social networks (see Figures 3).

In addition, the solution allows consumers to track recalls on individual products, categories of products, and food allergens on their iPhone (today) and other mobile devices (tomorrow) (see Figures 4, 5, and 6.)  More importantly, this consumer app touches the customers of SAP’s customers and provides a missing piece in the customer loyalty angle by providing real-time alerts (see Figure 7.).  By proactively outreaching with end consumers, SAP can help its direct customers build long term loyalty and improve customer engagement.

Figure 1. Sign In Screen Easily Works Like Any Other Consumer Mobile App

Figure 2.  Tracked Recalls Show Up On The Initial Home Screen

Figure 3.  Recall Details Provide Key Information And Allow For Collaboration

Figure 4.  Users Can Easily Create Their Own Watch Lists

Figure 5. Watch Lists Can Be Created By Product And Allergen Categories

Figure 6. Watch Lists Can Be Created By Age Groupings

Figure 7.  Recalls Keeps Consumers Updated With Alerts

Enterprise Class SAP Technology Powers Recalls Plus

Underneath the hood of Recalls Plus is a front end created in Objective C in a native iOS environment and a persistence layer powered by HANA.  SAP uses HANA here to track the analytics and big data required for modern engagement systems.  Key questions such as how users share, when are peak usage times, what events trigger virality, what types of patterns can be determined from recall categories, and detailed segmentation analysis require the power of an in memory database.  On the privacy front, SAP’s applied enterprise class privacy and security requirements.  SAP does not store personal information.  Users can deactivate at anytime and all data is removed.  As expected, SAP’s compliant with European data privacy requirements.

The Bottom Line For Consumers (Buyers): Expect More Enterprise Vendors To Provide Enterprise Class Consumer Apps

Instead of waiting for the consumer grade apps to invade the enterprise, Salesforce.com’s Chatter product and their Social Enterprise launch kicked off the first shot by an enterprise software vendor to go after the consumer space.  SAP’s Travel On Demand offering and SAP’s new Consumer Apps offering Recalls Plus also shows the same innovative spirit to capture consumers.  As Consumerization of IT creates a convergence in the market place, expect more enterprise vendors to go after consumers and grow new markets.  The importance of enterprise class and professional grade applications will provide these vendors an advantage, so long they understand the key elements of design thinking and consumer user experience requirements.

The Bottom Line For Vendors (Sellers): The Land Grab For Active Users Accelerates

For some time, SAP’s management team has publicly stated that it was on track to achieve a goal of 1B customers by 2015.  Most observers felt that this was a big, hairy, and audacious goal (BHAG), probably not achievable and designed to rally the troops and maybe the stock price.  Why? Up until now, SAP’s strategy included traditional acquisitions such as Business Objects for big data and analytics and Sybase for mobility platforms.  These large acquisitions brought in new users but not at a pace that would achieve the magic goal of 1B.  Meanwhile, the efforts to grow out the edge applications in the OnDemand Large Enterprise proved to be slow to market.

However, it wasn’t until the Travel On Demand product launch and the move to acquire the largest base of users through Success Factors that SAP finally had the ingredients to achieve the 1B users goal.  Now as SAP applies a design thinking approach to product strategy, the development teams can build applications that have consumer appeal.  More importantly, if SAP continues to address  four of the five major trends in consumer tech – big data, social, mobile, and cloud, SAP has the tools to enter the consumer market and achieve the 1B user target.

Your POV

Are you ready to try Recalls Plus?  Will you buy consumer apps from SAP?  Expecting more vendors to jump in?   Add your comments to the blog or send us a comment at R (at) SoftwareInsider (dot) org or R (at) ConstellationRG (dot) com

Resources

• News Analysis: The Implications of Oracle’s Taleo Acquisition
• News Analysis: SAP Buys SuccessFactors for $3.4B Signals SAP’s Commitment To Cloud, HCM, and Social
• SAP Conference Call Replay With Bill McDermott and Lars Dalgaard
• News Analysis: Oracle Buys RightNow For $1.43B
• 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
• Product Review: Google+, Consumerization of IT, and Crossing The Chasm For Enterprise 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!

Research Summary: Best Practices: Consolidated CRM Deployments Drive Paths to Modernization And Social CRM (SCRM)

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

As with any maturing product category, CRM applications have evolved over time from point applications to best of breed solutions to end-to-end suites. This report examines some common styles of modernization as CRM emerges from the systems of transaction era to the systems of engagement era and beyond.

A. Introduction

With the average CRM deployment nearing the end of their useful life, over 85 percent of line of business executives and CIOs intend to upgrade their CRM systems in the next 24 months.  Why? Customer expectations and a slew of innovative solutions have changed the delivery of customer centricity. Key factors include the need to adopt disruptive technologies, complete the customer view, and achieve business value.

Constellation’s latest survey of over 200 CRM decision makers highlights a trend to consolidate the CRM core as organizations chart four paths to CRM modernization.  The four paths – stay with status quo, move to shiny new CRM, consolidate and augment, and modernize and surround with best-of-breed – represent pragmatic approaches to achieve customer centricity.

Regardless of approach, Constellation recommends that executives approach CRM modernization with a lens that accounts for including tangibles, intangibles and contingencies in the calculations of business value. Using the Constellation Business Value Framework, organizations can quickly compare the four paths of CRM modernization and determine the most appropriate path.

B. Research Findings – Best Practices Indicate That a Consolidated Core Is the First Step to Modernization

Among 203 respondents, the majority (85.7 percent) intends to make significant efforts to modernize their CRM efforts in the next 24 months (see Figure 1.). The four paths to modernization include:

1. Stay with status quo (14.3 percent). Organizations may choose to continue business as usual. The catalysts for change include major events such as new business models, merger and acquisition, or regulatory requirements. Status quo includes keeping the system as is. Most organizations in this category have either really good adoption or overbought and barely take advantage of existing capabilities. Backers of the status quo scenario find little business value justification and line of business support in making any changes. Many line of business executives and CIOs gain peace of mind knowing that their CRM landscape remains consolidated on one or two platforms and can deliver the power of an integrated core.
2. Move to shiny new CRM (21.2 percent). Organizations may choose to stay with their existing vendor to avoid any mass changes in training, adoption and implementation costs. Another popular option will be to do a full out rip and replace. The financial wonks will weigh the cost of a reimplementation against the cost of doing nothing – status quo and making an upgrade with an existing vendor. CIO-led organizations will want the power of an integrated core and minimize point solutions.
3. Consolidate CRM and augment with best-of-breed (37.9 percent). Organizations may choose to consolidate their CRM environment and surround with best-of-breed applications. SaaS applications and CRM point solutions now play a key role in enabling extensibility to CRM customers. Augmentation with third-party solutions with an integrated core not only ensures that business users gain critical functionality, but also provides users with leverage in future contract negotiations. With CMOs and line of business executives in the front office taking back IT budgets, expect CIOs to argue for consolidation of the core as a call for sanity in overall IT strategy.
4. Upgrade CRM and surround with best-of-breed (26.6 percent). CRM deployments typically run a five to seven-year life cycle. With the last big set of implementations in the 2004 to 2005 era, almost 50 percent of organizations plan an upgrade. Many line of business executives want to upgrade their core CRM system and then modernize their integrated core by adding best-of-breed apps on top of CRM. This option resonates best with line-of-business-led organizations and those with rapidly changing business models and dynamic businesses.

Figure 1.  Get To SCRM By Taking The Four Paths To CRM Optimization

The Bottom Line: Plan For Apps Ownership Maturity

As CRM technologies mature and fall in line with existing well-defined business processes, expect the five stages of apps ownership maturity to take place.

• Point solutions. These offerings represent specific features and solutions to address significant problems.
• Applications. These offerings bring together feature sets and point solutions together to address specific work loads and use cases for departments.
• Best-of-breed suites. These offerings solve larger sets of business problems across different departments.
• Consolidated end-to-end solutions. These offerings address workloads and business problems across the enterprise.
• Verticalized offerings. These offerings solve broad end-to-end workloads for specific industry vertical-use cases across the enterprise.

C. Report Links

See what the top challenges CRM buyers face.  Understand how to apply Constellation’s Business Value Framework to CRM consolidation.  Find out what Microsoft Dynamics CRM, Oracle Siebel, Salesforce.com, and SAP customers should do as they modernize to support SCRM.   Buy the full research report on the Constellation Research website.

Your POV

Are you moving to Social CRM?  Ready to upgrade your current CRM system and need help.  Want to design your next generation customer experience.   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: 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
• News Analysis: Salesforce.com Acquires Radian6 For $316M
• Monday’s Musings: Q1 2011 State of Social CRM and CRM From An EMEA Point Of View
• 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: Constellation’s Research Outlook For 2011
• 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
• News Analysis: Jive Fills Warchest, Ready to Battle Enterprise Software Giants And IPO?
• Tuesday’s Tip: Applying The Five Stages Of Adoption Towards SCRM Projects
• News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM
• News Analysis: Biz360 Acquisition Signals Attensity Group’s Move Into Social CRM
• 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
• News Analysis: Siperian Acquisition Vaults Informatica Into An MDM Leadership Position
• News Analysis: Jive and Radian6 Partner – Great For Business, But Could Fragment IT Systems
• Event Report: Salesforce.com Pushes Social CRM Technology — But Don’t Expect Companies To Be Successful With Tools Alone
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Personal Log: Altimeter Group – Helping Organizations Bridge The Technology Obsolescence Gap
• 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!

Glovia Returns to the ERP Market

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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An ERP sales professional, whom I've know for many years, recently called to let me know he'd taken a new job with Glovia International. I indicated that I hadn't heard anything about Glovia recently. Maybe now I could get an update.

So he arranged a briefing with James Gorham, who heads up Glovia's North American business, for me and two of my senior associates at Strativa, Bob Gilson and Nick Hann.

A Long History

Glovia's roots go back to the 1970s, when Xerox Computer Services launched a time-sharing application for manufacturing companies. The product went through several iterations and was eventually relaunched in client-server form in 1990 as Xerox Chess. The company was acquired in 2000 by Fujitsu, who renamed it Glovia.

For many years, Glovia has been a well-respected mid-market ERP solution for automotive manufacturers, aerospace and defense contractors, capital equipment makers, and other industries. In the past, when I was looking for solid functionality for project-based manufacturers, Glovia would be one of the first to come to mind.

But, as just mentioned, that changed about two or three years ago, when Glovia suddenly fell off my radar. I knew they were still in business--I just never saw them in deals or even in press releases. They wouldn't even respond to my inquiries.

In our briefing with Gorham, we soon found out why. Glovia had undertaken a deliberate strategy three years ago to pull back, abandon all new sales efforts, and invest in rewriting the entire product.

Retrenchment Strategy

Glovia system had been developed in McDonnell Douglas's PROIV 4GL language, which though a good language, was not a platform with a wide developer base. They spent two years to rewrite the product with a service-oriented architecture, migrating the business logic to .NET, developing a new user-interface in Microsoft Silverlight, and providing a full deployment of web services with over 140 integration points. The latest version of Glovia runs on Oracle's database and is being released for Microsoft SQL as well.

Now here's the interesting part: during this retrenchment period, Glovia was profitable and actually grew, through organic growth of its existing customers adding new plants, new acquisitions, and new users. So, retrenchment turned out to be a good strategy during recessionary times: kill off marketing and net-new sales, redouble your service and support for your installed base, and invest in rewriting the product for a relaunch.

This retrenchment strategy (my term) could only work because Glovia had an enviable position as the incumbent for some very large and loyal customers, beginning with its corporate parent, Fujitsu, which deploys Glovia in 43 factories. Fujitsu had the resources to support any fall-off in Glovia's business, but as it turned out, Fujitsu's deep pockets weren't needed. Xerox (Glovia's former parent) is still a customer, as are several other large and well-known global brands, such as Panasonic, Dell, Carrier, Bridgestone, Avery Dennison, Honda, Honeywell, Phillips, and General Electric.

So, now the rewrite is complete. The functionality offered by Glovia for its target manufacturing industries--which was already well established--has grown even more impressive.

• It offers heavy visualization, with real-time graphical information flow.
• There is support for assemble-to-order and engineer-to-order, with "available to X" planning calculations, such as available-to-order, to-make, to-buy, and to-service.
• Production scheduling and optimization is granular down to the minute.
• There is load-balancing at all levels of production: the plant, cell, machine, skill, and person.
• The supply chain planning capabilities allow synchronization of supply to demand or demand to supply.
• Lean thinking permeates the execution functions, with the Toyota Production System natively embedded in the product.
• For defense contractors, there is the necessary "borrow-and-payback" functionality as well as pegging to contract.

The rewrite also gave Glovia the opportunity to build mobility apps, which appear much further developed than many larger and better known competitors. Apps include work orders, financial apps such as expense reporting, purchase requisition approvals, and executive dashboards. Glovia even provides device management capabilities. Apple's iPhone and iPad are supported, as well as Android devices, Blackberry, and Windows Phone. Everything is developed in HTML5 and available through the appropriate apps store (e.g. iStore).

There are even some nods to social business: Glovia gives engineers at different links in the supply chain the ability to collaborate. Planners also have visibility into customer and supplier engineering changes and inventory positions. Integration with Microsoft's Sharepoint is also provided.

What about the Cloud?

These days, no briefing is complete without asking about cloud options. Glovia offers an on-premise deployment (of course) as well as an on-demand option. Although the on-demand version is currently a simple hosting arrangement, when Microsoft Azure is ready for enterprise applications, Glovia will be able to host its system on Microsoft's cloud, assuming customers demand it.

Separately, Glovia has built a set of manufacturing modules on Force.com to inter-operate with Salesforce.com's CRM system. These are full multi-tenant SaaS applications that provide functionality for product configuration, order management, inventory, manufacturing, invoicing, purchasing, and returns. These are separate and independent from Glovia's flagship G2 system.

My own view is that Glovia's current support and stated direction for cloud computing is probably sufficient for now in light of the industries and size of organizations that it targets.

Where is Glovia Headed?

Behind us in Glovia's conference room was the obligatory "customer wall," with logos of Glovia's largest and most well-recognized customer names. My associate Nick Hann asked, "Three years from now, what will that wall look like?"

This led to an interesting discussion. Customer attrition during the retrenchment period was surprisingly low: a loss of any of these large customers would have been huge, and in fact none were lost. The sales team is now expanding to focus on new deals in addition to incremental sales into the installed base. There are also some resellers being added strategically for certain vertical industries.

Will Glovia be successful as it transitions from retrenchment to new sales? So far, some signs are promising. There are some big names in the sales funnel, including one Fortune 100 company. Interestingly, many of these new sales opportunities have come out of introductions by existing customers.

But will that be enough? The market is crowded, as Gorham noted, with SAP and Oracle gunning for the top tier of customers and Infor, Epicor, and IFS hungry for the mid-market and individual facilities of large multi-nationals. Syspro, Consona, and QAD also play in some markets and industries.

The markets that Glovia competes in are not under-served. In addition to the traditional players that Gorham identified, I would be concerned about newer cloud ERP providers: specifically Plex, which has a big bulls-eye on the automotive sector, NetSuite, and SAP's Business ByDesign.

Nevertheless, circling back to the retrenchment strategy: I like Glovia's story. How to leverage a recession to retrench and recover. In warfare, retreat is sometimes a good strategy, and in Glovia's case, the retrenchment appears to have paid off.

I hope Glovia's success continues, because buyers can only benefit by having a greater number of well-qualified choices.

Related Posts

Oracle acquires leader in project management systems
Made2Manage acquiring ETO vendor Encompix

News Analysis: The Implications Of Oracle's Acquisition Of Taleo

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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Catch my colleague Yvette Cameron’s point of view here. She covers Future of Work for Constellation Research, Inc.

Oracle Plays Catch Up With Public Cloud Ambitions

On February 9th, Oracle announced its intention to acquire Dublin, CA based Taleo for $1.9B.  Taleo is a cloud based talent management software provider with 5000 customers and 1400 employees.   Key take aways to consider:

• Moves by SAP and Oracle intend to compete with next generation cloud HCM companies. Taleo provides recruiting and on boarding, performance management and goal setting, compensation, succession, and learning and development.  This complete suite tied to reporting and analytics is designed to streamline human resource operations and employee career management across retail and hospitality, travel, healthcare, media and entertainment, financial services, technology, and energy and mining.  Marquee customers include Starbucks, Starwood, Hyatt, JP Morgan Chase, HP, Dell, Conde’Nast, United, American Airlines, Tesora, Blue Cross blue Shield, and Sutter Health.to customers.
  
  Point of View (POV): Oracle sees advantages in acquiring a leading player in the talent management space .  For years, both Taleo and SuccessFactors ate into Oracle’s existing customer base for talent management.  Consequently, other cloud based HCM and HR Tech vendors such as Ceridian, CornerStone OnDemand, FairSail, Kinexa, UltimateSoftware, and Workday continue to attract line of business customers looking for innovations not being delivered by their core HCM providers (i.e. Oracle, PeopleSoft, SAP).  More importantly, cloud computing if properly designed can improve the pace of innovation delivered to customers.

• Oracle continues to buy its way into a public cloud. Oracle continues to react to buyer sentiment and preference for cloud based solutions with this second major acquisition in what they term the “public cloud” space.  Oracle purchased RightNow for $1.43B on October 24th to address its gaps in customer service solutions.  The Taleo purchase addresses a gap in Talent Management solutions that rival SAP plugged with its recent acquisition of Success Factors for $3.4B .
  
  Point of View (POV): These defensive plays indicate a realization that Cloud delivery emerges as the predominant option for applications. Based on Oracle’s current road map, one can expects Oracle to acquire its way into many other edge applications not listed on its Public Cloud road map (see Figure 1).  Some other applications could include social business solutions, expense management, learning solutions, pricing management, identity management, and mobile device management.   However,  Oracle’s public cloud acquisition strategy so far lacks a key requirement – a choice for multi-tenant architected solutions.  While both RightNow and Taleo have some modules that are multi-tenant, in most instances, these applications have been delivered in single tenancy or in multi-instance. Multi-tenant solutions will provide clients with the most efficient upgrade path and lowest long-term cost structure.  The lack of a public strategy to address this issue remains a significant concern for customers and industry observers.

Figure 1. Oracle’s Vision For A Public Cloud

Source: Oracle Corporation

• Seats matter most in a world of CoIT. Oracle hopes to gain massive cloud scale through Taleo’s 74 million transactions per day and 240 million candidates on Taleo Talent Exchange.  The sheer number of users is massive.
  
  POV: Unlike CRM or ERP, the play for HR is all about acquiring the biggest base of users – employees.  With consumerization of IT (CoIT) in full swing, the goal is to grab as many users upfront and then over time cross-sell them into other edge applications which converge between enterprise and consumer.  Why?  The new strategy among the enterprise apps vendors is land and expand. The largest active user bases will win the war of attrition.

The Bottom Line for Customers: Goodbye On-Premises, Hello Cloud World!

The large legacy transactional application vendors see the future and they realize they must play ball in the world of cloud, innovation, and engagement.  Customers can expect more acquisitions in edge applications as these large vendors determine what the right mix between on-premises solution, multi-instance solutions, and true multi-tenant applications.  While this war wages on, expect the cloud wars to extend out into other legacy areas that impact platform as a service (PaaS) and infrastructure as a service (IaaS) layers.  These categories include database, security, storage, identity, and application management.  Advice to customers and prospects:

• For Taleo customers who have Oracle products. Stay calm.  Oracle has acquired another one of your favorite best of breed companies.  As with the past 50 acquisitions, Oracle has a plan and has successfully proven its integration strategy.  However, this time make sure you get all the concessions you need from Taleo before the close of the deal.  This means new licenses, product feature requests, and a reduced maintenance and support fee.  Make sure you do not bundle your contract this time.  You regretted it last time and you will again this time.
• For Taleo customers who have SAP products. You have a choice now.  You can go to SAP or you can stay with Oracle.  Make sure you get all the concessions you need from Taleo before the close of the deal.  This means new licenses, product feature requests, and a reduced maintenance and support fee instead of Oracle’s usually higher fee.
• For prospects.  See how the market plays out.  Start by considering your enterprise apps strategy and determine who’s on your consolidated list of vendors.  Build your plan against a consolidated core in ERP, CRM, etc.  Then figure out where Taleo fits in your surround with best of breed or augment with best of breed strategy.  If you buy, do it before Oracle closes the deal.

Related Resources

20120209 Bersin Associates – Josh Bersin “Oracle buys Taleo”

20120209 BusinessWeek – Aaron Ricadella “Oracle Buys Taleo for $1.9 Billion, Adds Human-Resource Tool”

20120209 IDG News Service – Chris Kanaracus “Oracle Buying Taleo for $1.9 Billion in Direct Hit at SAP”

Related Research

• Understand The Many Flavors Of Cloud Computing

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.

ShoreTel and M5 Networks... a Match Made of Necessity?

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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ShoreTel announced on 1 February, 2012 that it was acquiring M5 Networks, a New York-based provider of hosted communications solutions for the SMB space.

I understand the motivation for M5 to sell the company - it needed access to more capital, a larger brand, and more feet on the street. I'm still trying to get my arms around what this acquisition does for ShoreTel. Where are the synergies?

In an analyst briefing, the executives of both companies stated that there is no intention of integrating the two product lines to gain some efficiencies of scale in R&D. M5 will begin deploying ShoreTel phones (in addition to its current Cisco lineup) and the ShoreTel mobility solution, while the M5 Call Conductor will likely be re-branded as a ShoreTel product. In addition, ShoreTel will make the M5 Call Conductor available to its VAR and VAD network. But is this enough synergy to justify an acquisition that took $85 million of ShoreTel’s available $115 million cash reserve plus additional stock and payouts that could total $160 million.

ShoreTel's chief executive, Peter Blackmore, correctly stated that if ShoreTel waited until it developed everything in-house, the market would have passed it by. The company has been trying to get there for at least 2 years. Unhappily, the ShoreTel premises-based PBX was not architecturally designed to be a cloud-based, multi-tenant, highly scalable platform. In addition, there are the OSS/BSS/CSS capabilities necessary for a successful cloud service that ShoreTel just didn't have.

M5 has a passion for customer satisfaction that matches ShoreTel's, and M5 has a good management team. But these characteristics are not unique to M5 in the hosted UC space.

What's left, at the end of the day, is that ShoreTel must try to grow the M5 business significantly without cannibalizing its premises-based sales. I think this is going to be slightly more difficult for ShoreTel than some of its competitors who have both on-prem and hosted offerings simply because the underlying technologies are so different. The technologies themselves compete. And, until 1 February, M5 was fearful of ShoreTel as a competitor, a mindset will be hard to shake as M5's direct sales force tries to achieve new quotas. Furthermore, we have seen that VARs and VADs that are primarily box movers may have a difficult time with the recurring revenue model. Given that these VARs and VADs will not host the M5 service themselves, but will be more like agents and local break/fix maintenance people, it is not clear that the recurring revenues from the hosted service will be as compelling to them as the premises-based sell with its attendant hardware margin and services revenue. 

ShoreTel has bet the farm on this acquisition.  This isn't a match made in heaven, nor is it a shotgun wedding. It is sort of a match of necessity. ShoreTel has heretofore been “the little engine that could” in the on-premises telephony market. We’ll see if it can make similar progress in the even more crowded hosted UC space.

Executive Profiles: Disruptive Tech Leaders In Cloud Computing – Brad Smith, Intuit

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 an on-going series of interviews with the people behind the technologies in Cloud Computing.  The interviews  provide insightful points of view from a customer, industry, and vendor perspective.  A full list of interviewees can be found here.

Brad Smith, President and Chief Executive Officer of Intuit

Biography

Brad Smith became Intuit’s president and chief executive officer in January 2008, culminating a five-year rise through the company where he successfully led several of its major businesses. Intuit is a leading provider of business and financial management solutions for small and mid-sized businesses, financial institutions, consumers and accounting professionals, and is consistently ranked as one of the most-admired software companies and best places to work.

As the company marked its 25th anniversary in 2008, Smith celebrated the past while creating a strategic vision that recognizes important market shifts that will serve as growth catalysts for Intuit’s future. Among the most significant trends is the accelerating shift to a “connected services” world, where people and businesses increasingly go online to manage their lives, and abandon the traditional paper-based, human-produced, brick-and-mortar bound services of the past. Intuit is uniquely positioned to take advantage of these trends and help drive the shift to a connected services economy.

In the midst of this change, Intuit’s mission remains enduring: To be a premier innovative growth company that improves its customers’ financial lives so profoundly that they can’t imagine going back to the old way. The company’s strategy builds on this sense of purpose and foundation of success, while capitalizing on the current market shifts to accelerate Intuit’s business performance.

Before being named CEO, Smith was senior vice president and general manager of Intuit’s Small Business Division. Appointed to this position in May 2006, Smith was responsible for the company’s small business division which included the portfolio of QuickBooks, Quicken and Payroll products, serving 7 million small businesses. Before moving to the small business division, he led the company’s Consumer Tax Group in San Diego from March 2004 through May 2005. The group produces TurboTax, the nation’s leading consumer tax preparation software.

Smith joined the company in February 2003 as the vice president and general manager of Intuit’s Accountant Central and Developer Network in Plano, Texas. Previously, he was senior vice president of marketing and business development at ADP. Smith also held various sales, marketing and general management positions with Pepsi, Seven-Up and Advo, Inc.

Smith earned his master’s degree in management from Aquinas College in Michigan and a bachelor’s degree in business administration from Marshall University in West Virginia.

The Interview

1. Tell me in 2 minutes or less why Cloud Computing is changing the world for your customers

Brad Smith (BS):

Ray this plays in our favor. We see the old paper-based, human produced bricks and mortar economy quickly shifting to connected services. As you get more devices in people’s hand and the digital generation coming of age growing up with PlayStations, iPods, and iPads, the shift is inevitable. People are going online to manage their lives. Here are some interesting anecdotes:

Historically our challenge with small businesses was getting them out of a shoe box. Now you have more and more of small businesses starting up. They see opportunities to save time and money. We have one million customers on SaaS solutions in small business. Customers gain a tremendous win. They get better value in terms of the ability to discover additional products and services, and they get anytime access online or with a mobile device. Overall, they gain a higher lifetime value for their customers.

Take the tax business, 75% of the filings are online. The fastest growing product for us is Intuit Online Payroll. Everything is happening in the mobile phone. Our customers preference is that they want data in the cloud, and they want to have proof that it’s secure. They want to, and can get access to multiple devices, anytime and anywhere. This is transforming our customers and their lives.

2. What makes cloud computing disruptive?

(BS): This is where I’ll give you 3 anchor points:

1. From a social perspective cloud allows a massive base of users and employees to get involved to create the value. I’ll talk about Brainstorm.  Two of our newer employees, Tad and Vlad, identified that we had a problem. Employees had lots of great ideas but they didn’t necessarily go anywhere because people didn’t know about them. So they invented a tool called Brainstorm. It’s a tool for employees to log ideas, comment on ideas, find ideas to work on, and mobilize teams to implement. We now can answer each other’s questions. Brainstorm allows us to collaborate in 60 cities. This used to happen only in a conference room. Since its launch, employee contribution has fueled more than 5,500 ideas which have materialized into nearly 250 new products or features that have been launched in the commercial market.

2. From a mobility point of view, here’s what’s opening up our eyes. Six billion people in the world and two billion have access on the PC but guess what? Five billion are walking around with a phone. This is crossing the digital divide. We’ve got a whole new set of services for people who didn’t have access. For years we’ve had a vision since Scott bought TurboTax – the 10 minute tax return. Now, 60% of Americans can use their iPhone, take a picture of their W-2, and in the 1040 EZ we can pull the info off the picture and pull it into the return. This is SnapTax. Isn’t that amazing? Mobile also allows us to use sensory capability and GPS for helping someone find the right deal. Take a picture of a receipt and it’s loaded in QuickBooks. We now redefine how data is entered for the customer.

3. From a global view, it’s so much easier to take a service to multiple countries and localize the offering to meet a customer’s needs. Cloud enables both social contribution and user contribution. Cloud makes it easier for us to provide services a customer wants. Mobile, tablet, and iPad can easily access the data in the cloud.

Cloud is changing business models, reaching a broader array of customers and enabling them to participate in the process.

3. What is the next big thing in Cloud Computing?

(BS): Ray, cloud computing is about putting the power of data at the center. Two key components drive the next big thing – privacy and security of that data. You have to trust and earn the trust of the customer to do things that benefit them. Companies like LinkedIn and Facebook are trying to learn how and what the right way to use this kind of information. The first point is ensuring the stewardship of the data.

The second point is how do you use this data to create more customer value? One example is what we’ve done for the QuickBooks franchise- in particular; QuickBooks Online trends for small businesses. A four person florist in Boston can now compare their cost of goods and see whether or not they have a better or worse performance with a similar business in another city. It can be lonely as a small business owner without having someone to talk to. One powerful way to improve customer value is to take the data, aggregate it, and anonymize it. One of the big things we’re focusing on right now is, can we get to a unique and common identity so that we can find all this information for you and we can know who you are and all the different pieces of your life and treat it with the right privacy.

4. What are you doing that’s disruptive for Cloud Computing?

(BS): First and foremost cloud is helping us change how we serve our customers and how we create value. Imagine completing a tax return with minimal data entry. Think of a product like the one we have India called Fasal, where 70% of Indian small businesses are farmers. We took the text capability on the phone and help farmer’s to see what wholesalers are paying at farmer’s markets. Armed with that data, they can figure out which farmer’s market to go to sell produce and gain a 20% yield.

We are creating platforms for innovation. Just before I took this call, Scott Cook, our CTO Tayloe Stansbury, and a few entrepreneurs, were talking about how we extend our Intuit Partner Platform so we can maximize the value for our customers. Our goal is to bring it together to do what customers want. This includes features such as single sign on, common billing, and seamless integration. Delivering this type of capability in a platform is highly disruptive. Why platforms? It’s the top developer want – access to millions of customers.

5. Where do you see technology convergence with Cloud?

(BS): We’re starting to see, lots of debates. Is it private cloud, public cloud? Often we talk about this, but it really isn’t an “or.” In fact, we see it as an “and.” Corporate clouds will converge. For example, we have a strategic alliance with Microsoft. We’re taking the Windows Azure platform for the SMB for cloud apps and combining their assets with ours to create 750,000 development firms to go after a common set of problems. Our two companies have agreed to partner even though we compete. But now we can go after common opportunities.

In another case, we have a partnership with Salesforce.com. Marc and the team have built further up-market. However, as we started to see more overlap, we took a look at how best to serve these customers. QuickBooks is where I spend my time. Salesforce agreed to port over to the Intuit Partner Platform. The end result is an easier way for users to manage Salesforce customer information alongside their QuickBooks data.

We also see convergence of the mobile device and the physical wallet. NFC and the ability to exchange information with mobile phones for P2P payments. This is all happening before our eyes. We have an interesting angle as we move from the leather wallet to the mobile wallet. Smart wallet is at the heart of transactions. Do they have money? Can we track limits? Is there a saving opportunity with a different brand?

What’s funny is we are headed down a path we couldn’t get to if the cloud hadn’t come. In the early days of Quicken, Scott was trying to avoid entering data twice. You keyed it into software. We tried to key things in Quicken and then synced to your bank account. Then we said wow, what about the shift from never entering data twice to never entering data at all? Mint.com changed things for us– they had a never enter data model. Now the shift is from do it yourself, to do it for me. Can you imagine technology doing it for us? We are headed down this path and things like artificial intelligence are much more real now.

6. If you weren’t focused on Cloud Computing what other disruptive technology would you have pursued?

(BS): Two thoughts immediately come to mind. First, I have a tremendous passion for education. Take the success of Kahn Academy and the TED conference, which is transforming our educational system. Emerging economies are become developing economies and it tracks with how well their education systems are performing. This is ripe for opportunity.

The second one is around energy. I don’t think it’s as simple as green or clean. It’s a fundamental issue facing the globe. We can get there with education.

7. What’s your favorite science fiction gadget of all time?

(BS): My all time favorite is the StarTrek Transporter. I wish I could get to West Virginia and see a Marshall University football game and then have it bring me back to the Bay Area.  I need a beam me up app.  The newer one is funky.  Imagine if you had a midlife surrogate to pick the body you want, the look you want, and be in perfect shape and have your surrogate do what you wanted. Beats the p90X.  Right now the surrogate is my favorite!

Your POV

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

The Tech Vendor series is closed.  To be considered for the Business and Tech 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.

Copyright © 2011 R Wang and Insider Associates, LLC All rights reserved.

Constellation January Highlights

Press Release: Constellation adds Award Winning Outsourcing Analyst Phil Fersht to Board of Advisors

Avaya Flare - The Real Story is What's Under the Hood

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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