8
Oct

ISVs should operate with realistic assumptions about enterprise consumer appetite for product updates and software assurance

An important plank in the floor boards supporting most product plans for enterprise software is an assumption about enterprise consumer willingness to implement product updates, and, in turn, purchase software assurance. Therefore, early stage ISVs should ensure they are operating with correct assumptions about both of these points. Here are some points to think about:

Product Updates

More likely than not enterprise consumers will implement product updates at a very slow pace. The pace at which they actually consume product updates (both free and paid) depends on just where in the office automation apparatus an ISV’s product plugs in. We argue enterprise organizations consuming software products for very large computing platforms (for example, IBM Notes, Microsoft SharePoint, Oracle, etc) will be especially slow to implement. It is simply very difficult for these organizations to implement a separate upgrade/update policy for software serving as an add-on to a larger solution. Any/all updates are more likely to happen when they are coordinated with plans to implement updates to the host software platform.

Software Assurance

Assuming enterprise consumers, more often than not will decide to purchase software assurance (aka annual maintenance) is a safe assumption. But this assumption can be better fortified when promotion efforts for software assurance emphasize something other than an opportunity to implement new features, which will only be available in future versions of a product. The real emphasis for promotion for assurance should be on the importance of a specific product, within the enterprise computing architecture for a specific organization. This emphasis is legitimately important as one’s product has been assimilated within a core enterprise computing platform. If the customer is committed to maintaining the overall computing platform, then assurance should be provided to one’s product as a now important component of the overall platform, itself.

Opt for Cloud Delivery as a SaaS and Solve Both Problems

Opting for a cloud, SaaS delivery method for one’s product certainly removes most of the obstacles between enterprise consumers and the benefits designed to be delivered via product updates. When an ISV controls the timing of when updates are applied (which is entirely the case for software delivered via cloud subscription), then consumers can be confidently expected to realize the benefits in keeping with one’s product plan.

The question of whether or not software assurance makes sense for one’s enterprise consumers is also completely removed. If enterprise consumers maintain SaaS subscriptions, they are maintaining software assurance.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

19
Sep

How to Evaluate the Impact of Gartner’s Magic Quadrant on the Fortunes of Early Stage ISVs

Early stage ISVs are not likely candidates for Gartner’s Magic Quadrant. So anyone interested in specific technology genres covered by Gartner with Magic Quadrants should plan on digging deeper if a list of all important players is to be compiled.

The CMS Wire blog recently provided a list of some of the most important criteria Gartner reviews before deciding to include an ISV in a Magic Quadrant ranking.

In a post titled Gartner Names Wise Choices for Workplace Social Software. Here are some of the criteria:

  • An ISV must employee at least 80 people, worldwide
  • ISVs with gross product sales less than $12 million, in the specific technology genre covered by the Magic Quadrant, will not be considered
  • Neither will any ISV with a customer list of less than 20 paid organizations representing 5K paid users

In this writer’s opinion, Gartner’s Magic Quadrant is more of a curation of ISVs worth consideration by larger businesses, than anything else. A listing in the “Leaders” quadrant by no means identifies an ISV as particularly “innovative”. It may be helpful to think of the ISVs in this top right sector of the famous Gartner Magic Quadrant graph as the most widely adopted of the ISVs included in the ranking, with, perhaps, an extensive set of features.

Early stage ISVs should neither expect to be included in a Magic Quadrant, nor, in this writer’s opinion, agree to be considered for inclusion in one of these rankings. Technology consumers are not often aware, neither as to the criteria Gartner applies as one of these Magic Quadrants is assembled, nor as to how Gartner applies one of these rankings. So early stage ISVs passed over, but mentioned, are oftened incorrectly considered “also ran” entries.

Maintaining an under the radar posture is preferred. It may even make more sense to continue to decline opportunities to participate in a Magic Quadrant ranking after achieving the critical mass required of each participant. Why risk inclusion in any quadrant other than Leaders, given consumer misunderstanding of what the rankings actually mean.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

8
Sep

It Pays to Spend Time in the North American Sales Team at Oracle

On Tuesday, September 2, 2014, Brian Womack, for Bloomberg, reported a Google announcement of a name change on one of its product lines. “Google Enterprise” became “Google for Work”. The executive quoted in Womack’s article, titled Google Renames Enterprise Unit to Target Growing Market, was Amit Singh, President of Google Enterprise. In this brief report, Singh is quoted as pointing to the market in front of the new product as “one of the big growth opportunities for Google”.

But, in this writer’s opinion, of even more importance than the announcement is the professional background of the announcer, himself, Amit Singh. Readers should note Singh joined Google back in 2010, when he left his position as a Vice President of Sales at Oracle, North America, to become the President of Google Enterprise. A quick review of his public profile on LinkedIn produces more detail about the roles Singh played for Oracle. He was part of the North American sales team, responsible for the Northeast.

So it is safe to assume Singh reported into Keith Block, President of Salesforce.com, when Block held the position of EVP North America for Oracle. Perhaps during his time at Oracle he had some opportunities to work with Judson Althoff, now President of Microsoft, North America, who, from 2002 to 2013 held the position of Senior Vice President at Oracle, Worldwide Alliances, Channels and Embedded sales.

What early stage ISVs should glean from all of this overlapping experience for individuals presently at the top of some prominent lines of business for 3 of the leading mature technology businesses in the United States, today, is the very narrow path, forward, of truly successful sales and marketing talent for the larger business market for software. It is no small fact each of these three executives spent a considerable amount of time in management positions at Oracle.

A successful experience set marketing and selling software solutions to these businesses is very distinct from a similarly successful experience set selling to SMBs, or to consumers. The present positions of each of these three individuals is a tribute to how well Oracle mastered the processes required to attain the position it has held as a premier supplier of software to these markets.

If a business model requires the type of sales and marketing expertise possessed by Messrs Singh, Block and Althoff, then limiting the scope of applicants to Oracle, SAP, EMC, and, perhaps, IBM may make the most sense. The best way of digging deeply into the backgrounds and personalities at hand, of course, would be retained search.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

4
Jun

Succeeding at Enterprise Software Sales Still Requires Sales People Who Can Do Something More than Just Present Products

During the 2014 Technology, Media and Telecom Conference, hosted by JP Morgan, Judson Althoff, President of Microsoft, North America made clear the importance of “consultative” skills, rather than product presentation, to the success of sales of Microsoft software to enterprise business.

The North America software business, for Microsoft, per Mr. Althoff’s remarks, produces approximately “$25 billion across 8,000 folks” (quoted from a transcript of Sterling Auty’s interview with Mr. Althoff, which took place during the 2014 JP Morgan Technology, Media and Telecom Conference).

Like any other component of Microsoft, the North America business has been in transition. Presently the sales team works with a set of products “down to three or four Microsofts instead of 22 Microsofts when [Mr. Althoff] started from a product standpoint”. (ibid). Mr. Althoff characterized the world of the “22 Microsofts” as a terrain filled with silos, which often worked at cross purposes. The “One Microsoft” reorganization, in his opinion, which Steve Ballmer articulated over a year ago, is still ongoing and promises to alleviate a lot of the drag which beset the company under the “tyranny” of these product silos.

The sales process, as well, has changed. Mr. Althoff’s remarks described the old selling process, where Microsoft sales personnel would “try to dream up a big data project together [with customers]”. The driver behind this type of effort clearly was what I have referred to in this blog as “solution without a problem” syndrome.

According to Mr. Althoff, this approach has been changed. Now “we try to coach our sales force not to have a singular starting point, and show up with a canned pitch, but rather be much more consultative in our approach to understanding” (ibid) the challenges prospects and customers are facing.

He then went on to emphasize the importance of industry understanding to a successful software sales process: “[i]t varies quite a bit by industry, financial services, healthcare, and manufacturing.” (ibid). This response is entirely inline with comments made by Keith Block during yet another technology day sponsored by an investment bank — this time Piper Jaffray’s Media and Telecommunications Conference, March, 2014. Mr. Block emphasized the almost critical importance of sales personnel maintaining an accurate understanding of the software requirements for specific industries, if they are to succeed.

Bottom line: despite the apparent simplicity of a new set of consumerized IT software products, usually served from the cloud, the enterprise software selling environment is still highly complex. For both Microsoft, Salesforce.com, and, I would argue, Oracle (the past employer of Mr. Block and Mr. Althoff), sales personnel with demonstrated success selling complex products are still the most likely to succeed.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

3
Jun

Is There a Best Background for an Enterprise Software Business Manager?

Justin Althoff is Microsoft’s President for the North American Market. Mr. Althoff was recently interviewed by Sterling Auty, Software Technology Analyst at JP Morgan. The interview took place on May 20, 2014, during JP Morgan’s Technology, Media & Telecom Conference. Mr. Althoff prefaced his remarks with some biographical notes: he has been at Microsoft for a little more than a year, spent 14 prior years at Oracle, and, before, at EMC. What is the significance of Mr. Althoff’s background, given his role at Microsoft?

I am asking this question for a couple of reasons:

  1. I spent seven years in the contract consulting and executive search business, from 1994 to the end of 2001. I placed a lot of talented individuals at IBM Corp, D.E. Shaw & Co., First Rain, and Duck (now On2). So I tend to listen as individuals recount background experiences
  2. I spent some time last week reviewing Salesforce.com’s most recent quarterly earnings webcast and took a look at the background of Salesforce’s current President and vice chairman, Mr. Keith Bloch, who, coincidentally, spent a lot of time at Oracle.

There is one other notion I have come to believe in, which is also motivating me to look further at the importance of background: this “truism” goes as follows: the same small set of people take on all of the senior responsibilities for software products targeted to specific markets (in this example, enterprise markets for productivity software). Any changes are really a matter of musical chairs. An example of this truism, at work are all of the ex Lotus sales folks, late of IBM, who somehow ended up at Microsoft selling SharePoint.

Bottom line? I’m not sold on the value implicit to following this “truism” for the businesses doing the hiring. When I consider Salesforce.com and Microsoft Dynamics CRM as direct competitors, I do not take much heart identifying the same experience set, and, in all likelihood the same methods, and style, at work for each of the President’s heading up these organizations.

But I certainly understand the importance of familiarity with a market and its participants as a metric for judging the suitability of specific candidates to head up a software business like Microsoft North America. I am merely questioning what the right depth of this “familiarity” experience ought to be, especially when the role also requires, to a significant degree, a successful track record as someone who disrupted outdated IT approaches and solutions sometime in the past.

I am not sure I know the answer to this set of questions, but I am very comfortable pointing to them as important points of consideration for ISVs doing the hiring.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

19
Feb

VMWare CEO Pat Gelsinger Claims It’s Still All About Costs for Enterprise IT CIOs

VMware’s CEO Mr. Pat Gelsinger participated in a panel discussion during the last day, February 13, 2014, of Godman Sachs’ Technology and Internet Conference. Mr. Gelsinger was joined, for his presentation, by Mr Don Duet of Goldman Sachs, Co-Chair of IT for the firm.

Readers can visit the VMware investor’s website to register to listen to the complete webcast of this panel discussion.

Mr. Gelsinger’s opening comments touch on a couple of points CEOs of early stage ISVs with big ambitions ought to think about. These include:

  • planning for the inevitable transition, from a particularly favorable stage of business ” . . . when you’re golden that long, everything you touch turns to gold” (quoted from Mr. Gelsinger’s opening presentation in this webcast) to one where business success is harder to achieve.
  • how to manage partners. Mr. Gelsinger notes: ” . . . we just finished our Partner Exchange Conference here in San Francisco . . . where we said ‘here are our focus areas and if you don’t get it (right to our partners), then I’m going to tattoo them on your forehead.” (ibid)

But his observations about how VMware’s enterprise customers are grappling with on premise computing vs. public, private, and/or hybrid clouds, are, for me, even more worth a listen.

Software Defined Data Centers (SDDCs)

Gelsinger categorizes the market for SDDC solutions as one of the two focuses of VMware over the next near term. The other important trend is the market for hybrid cloud computing solutions.

If readers are not familiar with this SDDC concept, Patrick Kerpan, CohesiveFT wrote an article on this topic for Wired Magazine back in January 2013, Software-Defined Data Centers: Built for the Cloud, Modern Apps, which is worth reading as it defines the concept.

Gelsinger claims enterprise organizations continue to develop software for on premise use (he points to an approximate 10-15% CAGR). But the growth rate of this need is dwarfed by the growing demand for cloud alternatives (he points to an approximate 40% growth rate for these solutions).

He categorizes the SDDC approach as ” . . . about the on premise . . . ” (ibid), and the off premise trend is ” . . . about the hybrid cloud . . . ” (ibid)

The familiar driver, for most of the CIOs Gelsinger has spoken with, is entirely financial: ” . . . how do I reduce the cost of what I’m doing today . . . and how do I build the infrastructure needed for what I’ll be doing tomorrow.” (ibid). Another nice nugget from this presentation is the estimate of the relative size of a typical IT computing budget, vs. the broad operating expense for one of VMware’s typical customers — 3%. Gelsinger presents this figure during his opening remarks.

On the topic of VMware’s product category, he makes the following claim ” . . . no technology has been more helpful for reducing the cost of today’s footprint . . .[than virtualization] . . . and we’re going to do that for everything you do in the data center . . . ” (ibid)

My advice? Product managers at early stage ISVs should continue to focus on collecting as much data about computing costs for their customers as they can. At the same time, the imperative for them is to use Marketing Communications media to demonstrate how their solution(s) significantly contribute to a reduction in these costs.

As Pat Gelsinger demonstrates during this webcast, those ISVs capable of framing a convincing argument for their products around enterprise IT computing cost reduction, still have the advantage.

If your organization can use a re-alignment of its marketing communications around cost topics, and you lack the internal resources to handle the effort, please contact us.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

5
Feb

Let’s Not Over-Emphasize Cloud When We Talk About Microsoft’s New CEO, Satya Nadella

Many popular writers are reporting on the appointment of Satya Nadella as the new Microsoft® CEO. Most of them have chosen to focus on Mr. Nadella’s expertise as the leader of Microsoft’s cloud products group. But Mr. Nadella’s responsibilities also include the role of head of the enterprise products group. Server sales for this group were some of the most profitable business the company generated in its latest quarter.

Microsoft® has introduced Satya Nadella to the world via a web page titled Satya Nadella. Anyone with an interest in the company should visit the page, and, in particular, take a few moments to watch each of the four videos included on it.

The longest of these videos is an interview with Mr. Nadella. The other three videos provide personal opinions about Mr. Nadella’s appointment as the new CEO of the company from Bill Gates, Steve Ballmer, and John Thompson, the new Chairman of the Board.

When I watched the interview with Mr. Nadella, I was most taken not by the mention of the importance of the cloud and mobile computing as markets Microsoft has somehow overlooked, or failed to address successfully. Rather, I was taken by his focus on the pressing need to renovate the organizational structure of this very large business, soon to employ 160K people across the world (once the acquisition of the Nokia handset business is finally completed).

The point I got clearer than any other was Mr. Nadella’s perception of the near term imperative of liberating the potential for technical products/services innovation. Somehow the organizational structure of this business has stifled innovation. Mr. Nadella seems determined to change the structure. At the same time, he is also clearly interested in making Microsoft a more enjoyable place to work.

So the takeaway for me, about the most pressing needs the business faces, is the need for organizational change. The board of directors has chosen to address these needs through the appointment of Mr. Nadella.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

22
Jan

Is Blackberry Firing Up the Enterprise Software Market for Mobile Device Management?

Citron Research thinks Blackberry will capture the dominant position in the enterprise market for Mobile Device Management (MDM) solutions. Enterprise business and comparably sized organizations in the public, and not-for-profit sectors need MDM solutions to successfully, manage secure remote data communications between smart phones and tablets and internal networks and data sources.

In a research report titled BlackBerry: Why the Shorts and Analysts Have it Wrong
Citron looks at a $15 Target – Minimum
Citron Research argues BlackBerry has been misunderstood by investment analysts and the financial news media. They also like the appointment of John Chen as the new CEO, and his stated intention to transform the company.

There can be little doubt of the depth of consumer interest in an effective MDM solution. Demand for tablet computers is strong. More low cost windows tablet computers are coming to market. At the same time, in April, 2014 Microsoft® will stop supporting the Windows XP® operating system. Some portion of today’s market for windows tablets can likely be attributed to enterprise customers replacing laptop Windows XP PCs. This portion looks to grow even further post April. So Enterprise IT organizations have a burning need for an effective MDM solution.

With regards to smartphones, the lower end of the market is broadening, while the capabilities of leading products in the category is increasing. Once again, Enterprise IT will look to leading MDM solutions to help them protect the internal users looking to communicate with internal networks with consumer grade android, windows, and iOS smart phones.

Citron’s presentation is certainly compelling, but conspicuously absent from the list of BlackBerry’s competitors for this business is IBM. One can convincingly argue IBM is more embedded into enterprise software markets than BlackBerry, and possesses the quality sales force required to service customers. On December 18, 2013, just 2 days prior to BlackBerry’s quarterly report, and Mr. Chen’s conference call, which Citron thinks “[a]ny serious investor in BlackBerry should read . . . ” (quoted from Citron Research’s report on BlackBerry. I’ve provided a link to the full report earlier in this blog post), IBM announced its acquisition of Fiberlink Communications and its MaaS360 MDM application.

A careful study of the landscape of the enterprise software market for MDM solutions should certainly include mention of offers from more appropriate competitors to BlackBerry under Mr. Chen — namely IBM, Microsoft, Oracle, SAP, Verizon and AT&T. Each of these businesses possesses the enterprise software sales teams and experience to make Blackberry’s transformation a bit harder to accomplish.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

13
Dec

Is Enterprise Business Losing Patience with Technology Requiring User Adoption?

In mid December, 2013, Avon Corporation formally decided to abandon a substantial technology project — to build a new order management system, with SAP software, for its field representatives — despite an investment, to date, of approximately $125M USDs. In an article titled Avon’s Failed SAP Implementation Reflects Rise of Usability, Steve Rosenbush, Deputy Editor of NewsCorps’ CIO Journal notes “People who are accustomed to using simple, well-designed applications in their personal lives have no patience for disappointing technology at work.”

Mr. Rosenbush’s use of the term “disappointing” is worth some review. SAP, the contractor responsible for building this system, claims the system performs to plan, so what does Mr. Rosenbush mean by “disappointing”? I think Mr. Rosenbush is trying to convey a summary of the impression of the Avon user community in Canada, which provided the first test case for this new system. In this context I’m confident “disappointing” is synonymous with “counter intuitive” or “difficult to use.”

If I’m correct, then what we have in this example is a well publicized example of a substantial enterprise customer pulling back from the type of investment of time, resources and money required to convince personnel to use a new piece of software, or even a complete system. This work is usually called “user adoption” and almost always accompanies big systems after they are implemented. Since “user adoption” can take years to work, the price tag is often high.

In Avon’s case, according to published reports, the costs even amounted to staff replacement expenses, since personnel opted to leave the business, altogether, rather than comply with requirements to use the new system. So this news should be an important indicator for SAP’s competitors: Microsoft, Oracle, IBM of a clear limit on what enterprise customers will be willing to do, going forward, to motivate personnel to use systems — regardless of the theoretical value they can deliver to an organization.

With Mr. Rosenbush’s use of the term “disappointing” clarified, I’ll go on to say his point about usability, which takes up the remainder of his article, makes a lot of sense. “Usability” is actually at the core of many of the arguments for cloud computing and the BYOD phenomenon, AKA consumerization of IT.

ISVs need to digest this news and build demonstrations of “usability” into their sales process if they hope to retain competitive position with enterprise customers like Avon.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

12
Nov

Microsoft Q1 FY 2014 Sales of Enterprise Software for On Premises Data Centers Are Surprisingly Robust

Per Microsoft’s Q1 FY 2014 earnings report, sales of enterprise software for on-premises data centers were surprisingly robust. Server product sales grew by 12% over the same quarter, FY 2013. This performance should provide market analysts with reliable indication of the true pace at which enterprise business is moving office computing over to multi-tenant public cloud alternatives.

The actual pace of enterprise adoption of public cloud, multi-tenant subscription offers appears to be significantly slower than public perception. The reasons for the slower pace, in my estimation, include:

  1. A widening gap between enterprise security standards and “the” cloud “norm”
  2. New features only available via traditional client server, on premises server systems; for example, databases (Microsoft SQL Server) and business intelligence applications (SQL Server Reporting Services, Power View and Power Pivot for Excel 2013)
  3. Renewed consumer interest in an expanded on-premises data center. Today, in 2013, the typical enterprise data center is much more efficient as the result of 6+ years of ongoing optimization since the start of the great recession in the United States in 2007
  4. A growing appetite for data gathering and business intelligence computing solutions, particularly for publicly traded enterprises. These applications have delivered substantial returns to consumers, meaning better data, which they have used to formulate more effective strategies to increase operating profits in often challenging sales environments

The importance of the first of these reasons, the security issue, cannot be overstated. Few enterprises will risk entrusting proprietary data, and the computing procedures required to produce it, to today’s cloud systems. They certainly will consider using cloud systems for redundancy, and will sanction staff use of them as BYOD continues to grow in popularity. But the corporate “crown jewels” aren’t going to leave the on-premises data center anytime soon.

Industry analysts may want to reconsider mature ISVs, meaning Microsoft, Oracle, EMC, SAP, IBM, etc. These businesses look to produce more profits over then next few quarters than estimated.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved