The pros and cons of benign neglect

 Oracle’s “Applications Strategy Update” is a series of presentations scheduled around the world in the coming months.   A better name for the series might be “Topics of local interest to some of Oracle applications customers”.  Each meeting seems very narrowly targeted such as the dinner event last week in Seattle that focused on Insurance.  A quick scan showed that very few of them will be relevant for JDE customers.   This latest minor slight is another example of Oracle’s practice of making little effort to market directly to our community. 

There are still well over 5,000 JDE customers around the world generating a modest and slowly growing profit for Oracle.  This is nice, but not enough to command any real attention.  Oracle executives remain focused on finding major new sources of growth and on strategies that will transform the IT industry.  They correctly assume that the JDE community will be satisfied with the scraps that fall off the table as a giant feast is prepared. 

The issues that consume almost all of Oracle’s top-level attention include: 

• Using the Sun acquisition to replace IBM as the premier “one stop shopping” IT vendor.
• Emerging from a highly competitive pack as the top BI vendor.
• Using Fusion Applications to leap ahead of SAP as the top application provider.
• Building on the market lead the database franchise has established.
• Winning the middleware war versus Microsoft and IBM.
• Filling out the various product portfolios through acquisitions.  

As far as I can tell, JDE leader Lyle Ekdahl and his team are largely being left alone as those steering the ship focus on the big challenges listed above.  This is not as bad as it sounds because the JDE team has an adequate R&D budget and the freedom to spend it on anything that fits within the framework of the grand strategy.  At the same time, almost no effort or money is allocated for JDE specific marketing. 

Under Oracle, the JDE customer base has remained stable and loyal so the policy of benign neglect does not appear to have had a major negative impact.  A case could be made that a small investment in JDE marketing might lead to even more positive results, but no one seems inclined to try to argue that with Ellison. 

My own company just helped convince a manufacturing company to replace one of the outdated Infor ERP suites with JDE applications.  The case for JDE was extremely strong but SAP nearly won the business anyway – not because it offered a good alternative but because of unfounded doubts about JDE that the SAP sales team was able to cultivate.  In this case we were able to prevail, but I wonder how many other times the absence of visible support for JDE from Oracle top management has led to losses. 

The lack of marketing air cover and the general policy of benign neglect are frustrating in sales situations but in a perverse way it actually has some benefits.  When Lenley Hensarling was in charge of the JDE franchise he once confided in me that his personal strategy was to maintain a very low profile within Oracle.  He aspired to enhance the franchise as much as possible while calling little attention to it internally.  His belief was that “help” from high above might cause more harm than good. 

The grand initiatives that Oracle has undertaken during the period since JDE became part of its product line have overall been positive for us.  They include Applications Unlimited, Application Integration Architecture and the acquisition of Siebel, G-Log, Demantra and many others.  Even the development of Fusion Applications has had a indirect but positive impact that should grow over time. 

It has slowly become apparent that Oracle’s act is to focus on creating technologically elegant products and then let customers figure out for themselves if they want to buy them.  This is not the way most management consultants would suggest running a company, but it is Ellison’s way and it is hard to argue with his track record.  I am therefore willing to live with benign neglect as long as it continues to be combined with indirect benefits that more than compensate. 

As always, other thoughts or opinions are welcome.

 

EU approves the Sun deal

The winter of Larry Ellison’s discontent is now made glorious summer by this Union of Europeans – or in modern English (not my badly twisted Shakespearian quote): the European Union (EU) has finally officially approved the acquisition of Sun by Oracle. 

Those wanting to hear the king’s own interpretation of what this means can tune into an Oracle webcast next Wednesday January 27. 

The EU had blocked the Sun deal just before Oracle OpenWorld last September.  That did not stop a somewhat annoyed Larry Ellison from inviting Sun founder Scott McNealy to make a bittersweet appearance at OpenWorld but it did seriously limit what any of the Oracle executives could say about the implications of becoming a hardware company.  Ellison has said many times in the past that he did not want Oracle to get into the hardware market.  It will be interesting to hear his explanation of why now is the right time to reverse that longstanding policy. 

The official quote from EU Competition Commissioner Neelie Kroes was “I am now satisfied that competition and innovation will be preserved on all the markets concerned. Oracle’s acquisition of Sun has the potential to revitalize important assets and create new and innovative products.” 

“The commission’s in-depth investigation showed that although MySQL and Oracle compete in certain parts of the database market, they are not close competitors in others, such as the high-end segment.  Given the open source nature of MySQL, the Commission also assessed Oracle’s ability and incentive to remove the constraint exerted by MySQL after the merger and the extent to which this constraint could, if necessary, be replaced by other actors on the database market.” 

The EU also decided “The proposed transaction would raise no competition concerns in respect of the licensing of IP rights connected with Java.” 

Technically, Oracle is also looking for legal approval from China and Russia but is confident enough that they will fall in line this week to schedule the webinar next week. 

As this important story continues to evolve count on The JDE Advisor to make sense of it for you.

 

Sun will shine shortly

A deal with the European Union (EU) that will allow Oracle to acquire Sun Microsystems seems to now be in place.  Formal approval could come any time now.  Oracle put on a full court press by having a large number of its largest European customers tell the EU that the deal was good for them.  More importantly the EU forced Oracle to commit to a David Letterman style list of the top ten things it will do to insure that the mySQL open source DBMS will survive and prosper under Oracle control.  Those of you that care can see the full list of Oracle promises at the bottom of this posting. 

The implications of the completion of the Sun deal for the JDE community are indirect but still profound.  The first thing it does is to start to free up Oracle’s top management team to think about other matters. The upcoming announcement of Business Intelligence 11g will be one of them along with the long awaited arrival of the first wave of Fusion Applications. 

The Sun acquisition will take more energy and effort to absorb than any previous one.  The near term focus after the deal closes will be to get the necessary staff reductions in Sun over with and then to stabilize sales.  The period of uncertainty that is now ending led to a major loss in market share as IBM, HP and other Unix vendors took full advantage of the reluctance of Sun customers to buy while things were up in the air. 

It is hard to imagine that the once very friendly relationship with IBM will ever recover, especially since Ellison is almost certain to launch a major counter-attack as soon as possible after the deal formally closes.  Oracle’s even closer HP relationship will clearly take a hit as well but should remain cordial.  It is almost certain that IBM will continue to be portrayed as the villain in whatever marketing campaign gets launched. 

It seems safe to predict that an Oracle sales rep (likely one now working for Sun) will eventually come calling to try to talk you into considering Sun hardware.  Before that can happen the sales forces will need to be integrated and new product offerings will need to be created.  It is hard to see all that being accomplished before the next OpenWorld in September.  Oracle will likely limit the amount of information it provides about how the combined company is going to work until then, partly because it will take that long to figure out exactly what the plan going forward is going to be. 

As promised, here are the ten specific promises Oracle made regarding mySQL: 

1. Continued Availability of Storage Engine APIs. Oracle shall maintain and periodically enhance MySQL’s Pluggable Storage Engine Architecture to allow users the flexibility to choose from a portfolio of native and third party supplied storage engines. 

MySQL’s Pluggable Storage Engine Architecture shall mean MySQL’s current practice of using, publicly-available, documented application programming interfaces to allow storage engine vendors to “plug” into the MySQL database server. Documentation shall be consistent with the documentation currently provided by Sun. 

2. Non-assertion. As copyright holder, Oracle will change Sun’s current policy and shall not assert or threaten to assert against anyone that a third party vendor’s implementations of storage engines must be released under the GPL because they have implemented the application programming interfaces available as part of MySQL’s Pluggable Storage Engine Architecture. 

A commercial license will not be required by Oracle from third party storage engine vendors in order to implement the application programming interfaces available as part of MySQL’s Pluggable Storage Engine Architecture. 

Oracle shall reproduce this commitment in contractual commitments to storage vendors who at present have a commercial license with Sun. 

3. License commitment. Upon termination of their current MySQL OEM Agreement, Oracle shall offer storage vendors who at present have a commercial license with Sun an extension of their Agreement on the same terms and conditions for a term not exceeding December 10, 2014. 

Oracle shall reproduce this commitment in contractual commitments to storage vendors who at present have a commercial license with Sun. 

4. Commitment to enhance MySQL in the future under the GPL. Oracle shall continue to enhance MySQL and make subsequent versions of MySQL, including Version 6, available under the GPL. Oracle will not release any new, enhanced version of MySQL Enterprise Edition without contemporaneously releasing a new, also enhanced version of MySQL Community Edition licensed under the GPL. Oracle shall continue to make the source code of all versions of MySQL Community Edition publicly available at no charge. 

5. Support not mandatory. Customers will not be required to purchase support services from Oracle as a condition to obtaining a commercial license to MySQL. 

6. Increase spending on MySQL research and development. Oracle commits to make available appropriate funding for the MySQL continued development (GPL version and commercial version). During each of the next three years, Oracle will spend more on research and development (R&D) for the MySQL Global Business Unit than Sun spent in its most recent fiscal year (USD 24 million) preceding the closing of the transaction. 

7. MySQL Customer Advisory Board. No later than six months after the anniversary of the closing, Oracle will create and fund a customer advisory board, including in particular end users and embedded customers, to provide guidance and feedback on MySQL development priorities and other issues of importance to MySQL customers. 

8. MySQL Storage Engine Vendor Advisory Board. No later than six months after the anniversary of the closing, Oracle will create and fund a storage engine vendor advisory board, to provide guidance and feedback on MySQL development priorities and other issues of importance to MySQL storage engine vendors. 

9. MySQL Reference Manual. Oracle will continue to maintain, update and make available for download at no charge a MySQL Reference Manual similar in quality to that currently made available by Sun. 

10. Preserve Customer Choice for Support. Oracle will ensure that end-user and embedded customers paying for MySQL support subscriptions will be able to renew their subscriptions on an annual or multi-year basis, according to the customer’s preference.

 

The future of JDE user groups

During 2009 the JDE community had the opportunity to attend around a dozen different events including Collaborate, Oracle OpenWorld, regional Quest events and local user group meetings.  In virtually all of them attendance was down versus previous comparable events. My company was one a small number of organizations that participated in all of them.  We will be selective about what we go to this year. 

Even though 2010 will likely be a stronger year for most businesses than 2009 we believe that willingness to send people to off-site meetings will not increase significantly.  Most of you will therefore be fortunate to get approval to attend even one of these events this year. 

The first casualty of the new economic reality will likely be the local user groups.  2010 could be the last year that most hold regular meetings.  Some of the regional meetings are also in danger of extinction.  The Northeast regional conference seems to have the best chance for long-term survival.  While Oracle OpenWorld will probably continue be held long after the Sun explodes, in the next few years its appeal as a venue for JDE customers will likely continue to diminish. 

The biggest question mark is Collaborate.  2009 attendance was negatively impacted by more than just the economy – holding it in May in Orlando was not ideal and swine flu concerns were at a high point.  In spite of all this the show was still modestly successful.  A return to Vegas this coming April will almost certainly help but may not bring attendance back to the 2008 level. 

Quest is doing a good job of coping with adversity.  Much of its revenue comes from these events.  It is therefore putting much more energy and creativity into making events, especially Collaborate, more attractive and worthwhile.  A program of active and aggressive promotion of Collaborate is underway. 

If you have only the time, budget or political capital for one off-site event this year Collaborate should be at the top of your list.  It offers a rich variety of quality presentations, an outstanding vendor expo that includes many Oracle and JDE experts on every offering of interest, and lots of opportunity to compare notes with others that face the same challenges you do.  It has also frequently been a venue where Oracle makes important announcements.  I hope to see lots of you there.

 

2010 predictions

Next week we will reach the point when days finally stop becoming shorter.  Since the era when our ancestors lived in caves this has been a time of year to abandon pessimism and to celebrate the coming of better times.  No time in my 40+ year career has been as frustrating as 2009, a year when businesses everywhere have been overly cautious about investing in anything non-essential.  The season inspires me to believe that we have reached a low point and that better times will soon be with us. 

With that in mind, I offer a set of predictions for 2010 – something I have done on occasion in the past with some modest success.  Fortunately, I wisely chose not to attempt it during the chaos that was taking place at the end of last year. 

I will confine my speculation to subjects of interest to the JDE software community.  Don’t look for a guess as to when Tiger will play his next golf tournament, who will win Best Actress, or by how many degrees the earth’s temperature will rise.  Here goes: 

1. The Sun deal will close, but only after major mySQL concessions – even selling it off if necessary.  A flurry of new appliance offerings will follow during Oracle’s next FY starting in June.
2. Cloud computing hype will rise, but adoption will be limited within our community.  BI will be one area where it will start to catch on.
3. Loyalists will embrace IBM’s Power 7 servers coming in Q1.  It is a little late, but IBM will finally make a strong financial case for running all types of applications under the i Operating System (aka OS/400). 
4. Oracle Business Intelligence 11g will be heavily promoted when announced early in 2010 but it will take until at least 2011 for it to have much appeal within our community.
5. Fusion Applications will arrive very quietly in 2010 because the first wave of customers has already been signed up.  Oracle will wisely wait for the pioneers to shake it down before unleashing a major sales campaign.  The first big push for Fusion will likely come no sooner than the next OpenWorld.
6. IBM and SAP will quietly explore a merger but the obstacles (including regulators and executive egos) appear to be too great to overcome.  If a wedding does occur, an epic battle with Oracle for control of the universe will ensue.
7. JDE installations will grow significantly in emerging markets.  This will more than offset any net losses in mature markets.
8. The visibility of BI vendor MicroStrategy will increase greatly.  It would not be a surprise if the last independent BI provider finally gets bought.  In the meantime watch for many value-conscious JDE accounts to become customers.
9. Complaining about Microsoft will greatly diminish as Vista becomes widely used.  Sadly, nothing likely to surprise or delight us seems to be in the pipeline for 2010 either.  This is a shame since the IT market badly needs more innovation.
10. Oracle will play small ball in 2010 choosing to digest what it has already eaten rather than to undertake another large-scale acquisition. 

Why not join the fun and offer some predictions of your own?  The worst that can happen is that you will be wrong.

Unless some big news hits the wires this will be my last posting for 2009.  Have a happy and safe holiday season and a great start to a new and better decade.

 

Why don’t more JD Edwards customers manage by the numbers?

At OpenWorld Oracle executives promoting Business Intelligence pushed the notion that there is a huge pent up demand for pre-built analytic applications.  That may be true, but as my company calls on JDE customers we find that Oracle is making an underlying assumption that may not yet be valid.  That assumption is that the executives running businesses that use JDE applications are pre-disposed to “manage by the numbers”. 

Many companies constantly measure a large number of different facets of their business. Doing so has been popular since at least the 1950’s when AT&T, the largest company in the world at the time, adopted it as a key management principle.  Advocates of this approach believe that to measure is to improve. The metrics they use to judge performance have come to be known as key performance indicators.  The best practitioners have a metric to gauge how each facet of their operation is performing.  Some complex businesses employ thousands of these metrics. 

The emergence of BI in the 1990’s provided those who liked to manage by numbers with their dream tool.  In the early days of BI, each business needed to define its own specific metrics and then create the associated reports. Over time, pre-built metrics along with reports, displays and dashboards started to become available. 

The Siebel acquisition propelled Oracle into this new market.  The result was the family of offerings now known as Oracle Business Intelligence Applications or OBIA.  So far, giant organizations have been the main source of OBIA sales.  The more modestly sized organizations that form the heart of the JDE market have not yet tended to participate. 

At Open World I asked one of the Oracle executives how many JDE customers were using OBIA. His answer was none so far.  The lack of sales can partially be attributed to the newness of this offering in the JDE market, its current limitations, and a relatively high price.  These reasons do not fully explain the lack of interest, however. 

Our experience working with hundreds of JDE customers indicates that the norm is to base decisions more on experience and instinct than on a detailed use of metrics and analytics. There are certainly exceptions to this, especially at the top end of the user base.  More often, however, sophisticated metrics have not been employed in the past partly because there has not been a practical way to report them.  Just as importantly, doing so has not yet become a part of the management culture. 

As a first step, it is usually necessary to educate executives on how and why management by numbers is superior to using instinct.  Well-designed analytic applications can have a major positive impact on results, but only if they are used effectively.  Assuming that all organizations inherently want and know how to use detailed metrics to make decisions is a mistake. 

Oracle will only succeed in penetrating the JDE base with OBIA when it finds a way to sell the concept of management by numbers to those not yet inclined to apply it and then to teach them how to do it effectively.  Historically, Oracle has seen its role as the builder of software and not as the provider of management solutions.  As long as it remains in that mode the success of OBIA in our community will be limited. 

If any of you have decided to buy one of the OBIA products I would love to hear about it.  Feel free to share your experiences.

 

A difficult year draws to a close

2009 has been a difficult year on many levels for both individuals and businesses.  From a personal point of view I am glad that it is almost over.  My business could actually finish the year with higher revenues than in 2008 but making that happen has involved much hard work and some good fortune.  Continuing interest in our Business Intelligence offerings has saved the year for us.  At the same time we saw how extremely difficult it now is for those of you trying to obtain funding for worthwhile projects.

IT departments everywhere spent 2009 playing defense – fighting budget cuts, being forced to lay off good people, and working to keep important projects alive.  Fortunately, we get the sense that the worst appears to be over and that a degree of normalcy may be starting to return.

In the 1990’s IT investments were one of the main drivers of productivity gains.  The fear of having software blow up when Y2K arrived was one trigger for that investment.  Major innovations in PC technology, processors and storage, and the emergence of the Internet as a business tool were huge factors as well.  For some reason, the past decade has seen very few dramatic IT innovations.  I don’t count the emergence of Twitter, Facebook or do-everything cell phones as game changing ways to improve business productivity.

The vendors that our community cares most about (Oracle, Microsoft, IBM) have mostly spent the past decade buying up other IT vendors.  It is hard to think of an important innovation that came out of the R&D efforts of any of them, especially in 2009.  They all have remained nicely profitable this year largely through tight control of costs.  None of them has done anything memorable recently in terms of exciting new offerings or thought leadership.

Microsoft had the most big announcements of the major vendors in 2009 led by the introduction of Windows 7 and the Bing website.  Neither seemed to generate all that much excitement among the people that I talk to.  Windows 7 seems to mostly fix the mess that Vista turned out to be and Bing struck me as a nice but largely futile attempt to attack Google.

IBM made the biggest play for thought leadership with its expensive “smarter planet” series of ads.  They were polished and professional as usual, but did not seem to offer much that users of JDE software could put to practical use.  Other than encouraging a greater sense of optimism about the future impact of IT, IBM delivered relatively little this year in terms of innovative new offerings we could actually use.

Among the major vendors, Oracle has done the most in the past 10 years to re-invent itself.  Its transformation was accomplished almost entirely by acquiring and sewing other businesses together.  Oracle appears to be better at selecting and integrating acquisition targets than its major competitors, but it is a shame that so far not much has resulted that has broad appeal to our community.

For years Oracle has been promising us something truly new in the form of Fusion Applications, but its arrival has been postponed until sometime in 2010.  It also became clear at OpenWorld that whatever innovation arrives with Fusion Applications will not likely be available to our community in a form we can use for some time to come.

While Santa appears to have mostly left coal under the tree for us in 2009, I cannot help but feel that things will be better in 2010.  A number of you have told me that funding for new projects for 2010 has survived the budget review process so far.  Interest remains strong in technologies that have the potential for fast payback, including my personal favorite BI.

I am sure some of you can point to exciting new offerings that just have not come to mind for me.  Such thoughts are welcome as are comments on the attitude toward IT investment within your business.

 

More thoughts on AS/400 and World

 

Every time I do a posting that comments on the sad fate of AS/400 (aka iSeries, System i or Power Servers) many passionate responses come in.  Rather than respond to each one separately I will use this posting to expand on and clarify the previous one.

First, I share your collective frustration with what has happened to this once great product line.  Some of you clearly are not aware of my background. I became the very first public advocate for the AS/400 product line in 1986 through a series of speeches and white papers that introduced its code name ‘silverlake’ to an unsuspecting world.  During the following 20 years I was the author of more than 50 white papers about AS/400 with a combined circulation of over 2 million copies.  A very high percentage of the predictions and observations I made about AS/400 and its successors proved over time to be true.  Whether I like it or not, my name will be associated with this product for as long as anyone remembers it.

The information I have about the Power product line and what it offers to those running OS/400 applications comes directly from people still working with IBM and many who have retired or left.  It would be unfair to name them but have no doubt about the accuracy of the characterizations I offer.

In 1999 IBM made the de facto decision to start cutting back on investments in AS/400 that led to a steady decline in the installed base, revenues, and profit contribution to IBM.  By 2008 all that was left was a guest operating system maintained by a handful of programmers that ran on the Power server platform.  Not a single person within IBM is currently dedicated full time to market or even to oversee the unique needs of this community.  By design, IBM intentionally followed the roadmap it used to phase out OS/2 to handle the wind down of the AS/400 / iSeries.

I know how hard all of this is to take emotionally for those of us familiar with all the things that made this product exceptional.  We know how reliable, easy to program and operate,and elegantly designed the product is.  Our love of it, however, has not stopped IBM from making a business decision to harvest this product for whatever profits it can make.

Having said all this, the Power family of servers remains a fine product line with or without OS/400 (some call it i5OS) as one of the guest operating systems.  It is a great platform on which to run those applications, including World, for as long as anyone cares to.  While few OS/400 and RPG specific enhancements should be expected in the future, it is reasonable to assume that the Power servers on which they run will continue to improve significantly as time passes.  In this sense the environment that those running World experience will become steadily better.

I have never suggested that those with code, including World, running in this environment need to rush into doing anything else.  Keep using it for as long as you like.  The point of the article was to report on the fact that the installed base of World customers is steadily declining and to comment on the implications of that decline over time.  I am sorry to be the conduit for unwelcome news, but my goal is to provide insight and observations that are not obvious or available elsewhere.

Those with other information or opinions remain welcome to continue to express them.

 

World slowly fades away

More than 15 years after it was “replaced” by OneWorld (now know as EnterpriseOne) the World version of JD Edwards is finally fading away.  The customer base has fallen to under 1,000 organizations worldwide and the rate of replacement is accelerating.  The surprise is not that this is happening but that it took this long to occur. 

A hard core of rabid loyalists remains.  Emotionally they find the slow demise of a product they have bonded with disheartening.  Much of the loyalty is tied to the server environment they still refer to as AS/400.  It is equally hard for loyalists to accept that IBM long ago abandoned them as well.  All that is left of the once mighty AS/400 franchise is that its operating system is one of three options available with IBM Power servers.  Sadly, very little is being spent by IBM enhancing that operating system or its RPG development environment. 

Not surprisingly, a high percentage of those replacing World choose EnterpriseOne.  The next most common scenario is to standardize on an ERP platform used by other groups within a large enterprise.  SAP and Oracle eBusiness Suite are common alternatives when this happens. 

Occasionally, Oracle’s own applications sales force will convince a World customer to move to eBusiness Suite.  Some times this is because Oracle has chosen to have its ERP platforms specialize by industry and eBS is a better fit.  More often it is because Oracle’s application sales force is more familiar with eBS.  Before being pressured into choosing eBS it is appropriate to make sure that the case for EnterpriseOne has been fairly presented. 

Oracle no longer maintains a separate group in Denver overseeing the World community.  One organization looks after the needs of the entire JDE customer base.  John Schiff, the last executive responsible for World, still keeps an eye on the special needs of this community but it is only one of his responsibilities. 

There is no plot afoot within Oracle to drive customers off World.  Oracle will happily collect maintenance payments from World customers for many years to come.  Don’t, however, expect Oracle to spend more on product improvements than it collects in maintenance fees.  Future World enhancements will thus be constrained by whatever a slowly shrinking development team can accomplish. 

There is no reason for those who are getting exactly what they need out of World to rush to replace it.  At the same time, World is technologically obsolete and will never catch up.  Realists will accept that at the point where major improvements are needed replacement will almost certainly be the right choice. 

Three or more years from now Oracle Fusion may become the preferred option for World replacement.  In the meantime, EnterpriseOne remains the obvious choice.  It is my company’s experience that moving from World to E1 can be less expensive and difficult than many customers imagine. 

The greatest impediment to replacing World is often custom enhancements.  Retiring them can be painful and expensive, but maintaining them and living without improvements that otherwise would be available is usually a worse choice.  The longer replacement is postponed the deeper the hole can get, especially if additional customizations are made as time passes.  Those stuck in this downward cycle need to find a way out. 

If you are struggling with a decision as to when or whether to replace World let us know.  We can point you to many resources that might make the decision easier than you imagine.

 

Oracle priorities and where JD Edwards fits in

OpenWorld provided a good feel for what seems to matter most to Oracle’s top management.  I can’t claim to be perfect at reading their minds, but there was an abundance of evidence available on which to base an opinion.  Safe in the knowledge that it won’t be 100% right (but confident that it is not far off) here is my list of the things that Oracle management currently cares most about: 

1. Closing the Sun Microsystems acquisition (nothing else comes close).
2. Leveraging the Sun assets: hardware, an OS, Java and possibly mySQL.
3. Offering appliances (hardware/software combinations) to grow database share.
4. Pulling ahead of IBM in the middleware market (owning Java will really help).
5. Taking command of the Business Intelligence market (IBM again is the main foe).
6. Pushing SAP into second place in the applications market. 

While not at the top of the list, the strategy to take over leadership in applications remains important.  It in turn has four key elements: 

• Buy up the best of breed applications in key market segments.
• Integrate these acquired “edge” applications into the portfolio under AIA.
• Bring Fusion to market as a third generation ERP application suite.
• Build market share on top of the “Applications Unlimited” portfolio. 

“Applications Unlimited” is, of course, Oracle jargon for its second-generation ERP suites including eBusiness Suite, PeopleSoft and JDE.  The role JDE plays is to keep SAP out of key market niches and to provide a welcoming set of future prospects for everything else that Oracle sells.  In this role, the JDE customer base is neither vitally important nor too insignificant to care about. 

With many bigger things to worry about Oracle top management is currently inclined to largely leave the JDE management team alone.  This lack of intense focus from top management is probably a good thing.  Plans to spend the modest (but adequate) amount of R&D funds available to directly enhance JDE applications are largely controlled by Lyle Ekdahl and his team.   As long as the franchise continues to thrive, Ekdahl’s team is unlikely to get a great deal of unwanted attention. 

Besides providing new features and functions in releases, Ekdahl is intent on offering us the full bounty of the Oracle cornucopia – database, middleware, edge applications and the incorporation of new software being developed as part of the Fusion project.  Oracle’s executive compensation plan does not directly reward Ekdahl for doing this but it is the most direct way of achieving his most important goal – keeping the JDE franchise happy, healthy, and on the ranch.

 

 

Oracle’s run at Sun Microsystems slowed down

The European Commission formally issued a Statement of Objections yesterday listing its reasons for not approving the acquisition of Sun Microsystems by Oracle.  There was really only one – concern that Oracle would reduce support for the mySQL open source database management system and thereby reduce competition.  Oracle’s proprietary 11g DBMS is the market leader so on the surface the accusation seems understandable. 

Oracle thought it was home free last summer when the US Justice Department approved the acquisition.  This endorsement remains Oracle’s strongest argument for approval.  The formal statement yesterday was not a ruling, just a formal written summary of the reasons for holding up approval.  An official ruling is likely months away.  This gives Oracle time to argue its case and line up additional support, but comes at a high price. 

Sun Microsystems has been losing an average of $100 million dollars per month during the delay.  Sales that might otherwise have gone to Sun are being awarded to IBM, HP and other competitors.  The server market share that is Sun’s most valuable asset is slowly being eroded during the delay. 

It is hard to imagine Oracle giving up easily on this deal.  If it must, Oracle may agree to sell or spin off mySQL.  Ironically, mySQL was a fairly recent acquisition by Sun and only a minor consideration in the value of Sun to Oracle.  A time consuming fight over this part of the deal could cost Oracle far more than owing mySQL will ever bring in.  In order to get the deal closed soon Oracle will therefore likely agree to whatever restrictions the EC demands. 

Closing the Sun acquisition (with or without mySQL) is Larry Ellison’s top priority.  Doing so has the potential to change the competitive structure of the IT industry.  The outcome of this fight between Oracle and the EC will have a profound impact on the JD Edwards community because it will define what kind of a company Oracle is in the future. 

As developments occur we will continue to report them.  Once a final resolution occurs we will assess the long-term implications for our community.

 

 

Lyle Ekdahl takes charge of Oracle’s JD Edwards franchise

Lyle Ekdahl can be serious when he needs to be as the photo here demonstrates.  He also loves a good sight gag and punch line.  Ekdahl was the obvious choice to oversee Oracle’s JD Edwards franchise when Lenley Hensarling left this summer in terms of experience and knowledge of our market segment.  His selection was also the popular one.  A significant percentage of those who have a strong interest in the JDE product line know him from the many entertaining presentations he has made in recent years.
 
There is not likely to be any radical shift in strategy or product direction under Ekdahl since he played a major role formulating the current game plan.  The biggest change might be one of style – Ekdahl is a more engaging, energetic and entertaining personality than Hensarling.   The wise old master craftsman has moved on leaving room for the talented and fun loving young apprentice to take over.  Fasten your belts and keep arms and legs inside the ride – this should be fun.
 
Lenley and Lyle worked together for six years.  During that time they steered the JDE product line through its most perilous era.  They began working together during the period when PeopleSoft was making something of a mess of the JDE franchise as it fought Oracle’s attempts to take over. After the acquisition took place, there was widespread speculation that Oracle would sell or spin off JDE. Instead, the product line prospered.  The way that Hensarling and Ekdahl leveraged each other’s strengths was a big reason behind the reversal of fortunes.  After a dramatic few years, JDE has settled into a nice niche within the Oracle applications portfolio.
 
Ekdahl does not have a very complicated mandate. His job is to keep the current installed base happy, profitable and inclined to buy more from Oracle. Adding new installations, especially in underserved markets is also a goal as is minimizing defections. The 6,000+ organizations that use JDE applications around the world generate hundreds of millions of dollars in revenue per year at a nice profit.  Job number one is simply to keep the franchise healthy.
 
There are practical limits on what can be spent enhancing the JDE applications themselves. This is not a serious problem since the product line is mature and has few important missing elements.  As a result, improvements are increasingly focused on the needs of narrow segments of the customer base.  Recently announced features targeted at the fashion industry are a good example.
 
The bulk of the investment in improvement is focused on integration with and leveraging other Oracle products and technologies.  Oracle’s total R&D budget exceeds $3 billion per year.  Ekdahl constantly looks for ways to bring the value of that investment to our community.  This is the big benefit that being part of something much larger brings.
 
Stay tuned for more musings on the next stage in the evolution of JDE that Lyle Ekdahl is now overseeing.  As usual, there is much more to report but I am out of time and space for one posting.

 

Business Intelligence – more observations from OpenWorld

An informative session I attended at OpenWorld was the roadmap for Oracle Business Intelligence Applications (OBIA).  I was only able to comment briefly on it in the October 22 posting.  This posting will expand on what I learned. 

OBIA is the unpronounceable acronym Oracle has chosen for a family of products that it first inherited when Siebel was acquired.  They each consist of a set of display screens and printed reports.  Each one summarizes, analyzes and presents data from one facet of an organizations operation such as the sales function.  The data being analyzed originates within an ERP or CRM application and is then transformed and connected to the analysis tool called Oracle Business Intelligence Enterprise Edition Plus or OBIEE+. 

OBIA originally was called Siebel Analytics and included individual applications for five CRM functions: Sales, Marketing, Loyalty, Price, and Service and Contact center.  The OBIA family is continuously being expanded.  In the ERP space it also includes Financials, Procurement and Spend, Supply Chain and Order Management, Projects, and Human Resources.  

OBI Applications take data extracted from ERP, CRM and other sources and help to make sense out of it by organizing and summarizing the data in useful and creative ways.  Much of this is done through the development of analytics – insightful numbers that are derived from data extracted from the source applications.  Analytics are often ratios such as Inventory Turns, Days Sales Outstanding or Revenue per Employee.  The presentation of results is highly graphical and often includes dashboards. 

At Collaborate in May Oracle announced the availability of connectors for E1 financial applications making it possible for those on release 8.12 or 9.0 to obtain the OBIA Financial application.  At OpenWorld a connector for World 9.0 financial modules was announced.  Connectors that will enable JDE customers to obtain the other OBIA applications will be emerge over time, but no schedule was offered. 

According to one of the executives I spoke to, no E1 customers have yet installed the OBIA Financial application.  We believe this is more due to current limitations in the offering than its potential usefulness.  The relatively high cost of the OBIA/OBIEE+ combination also appears to have limited sales opportunities in a tough market. 

At the moment, it is also necessary to obtain a limited use license for the Informatica ETL tool to use OBIA.  Support for Oracle’s own Data Integrator (ODI) ETL tool will eventually come but no schedule has been announced. 

OBIA also currently requires periodic refreshing of the data warehouse that serves it meaning that the data being analyzed is not always current.  Oracle recently acquired Golden Gate Software as a means of eventually adding a real-time updating capability to its BI product line.  Realistically, it will likely be 2011 before the resulting real-time updating capability is integrated within OBIA and OBIEE+. 

Oracle’s BI experts also admitted that the OBI applications usually represent a starting point.  Major customization of them is normally done before they are fully utilized.  Once complete, BI applications can become an important tool for interpreting the meaning of operational data and using the results to make better decisions. 

Some of the conclusions drawn from what I learned at OpenWorld were: 

• OBIA is an important component of Oracle’s BI strategy.
• The number and sophistication of OBIA applications will grow over time.
• One of the OBIA applications is now being offered to JDE customers on newer releases but none have yet installed it. Other applications will come over time.
• Oracle will add real time updating over time along with support for the ODI tool.
• In the near term, high overall cost will inhibit sales in our community.
• The functionality of OBIA will be built into Fusion.  Some customers may wait a few years to decide if switching to Fusion is the better path to full BI capability. 

There is much more of the Oracle BI story to cover.  Future postings will deal with its many other facets.  Over time, I hope to put all the pieces together coherently.  I ask those that follow this blog to be patient since assembling and presenting this complex story takes time.

 

EnterpriseOne 9.0 Update 1 now available

The first complete update to EnterpriseOne Release 9.0 is now officially available.  It comes approximately one year after the introduction of 9.0.  A number of features and reports have been added but most of them will only appeal to a small subset of our community.  In general, improvements to the base JDE modules are becoming increasingly narrowly focused due to the maturity of the product.  The big exciting new capabilities are increasingly arriving as add-on “edge” applications such as Oracle Transportation Manger or are part of the BI infrastructure that is implemented outside of JDE. 

To learn more of the details about 9.0 Update One go to https://support.oracle.com/CSP/ui/flash.html and search on 948962.1.  Note that this is the new My Oracle Support web site that went live for JDE customers in August. Update One to 9.0 could trigger another wave of upgrades but not because of any specific features it contains.  This is because some organizations follow an informal rule to avoid upgrading to a major new release until a full update comes out.  Such a practice is commonplace with Microsoft products because of the all too frequent high levels of bugs in major releases.  There was a time many years ago when the quality of JDE software was not predictably high.  JDE customers who follow the “wait for an update” rule are often those who were burned in the past. 

Since Oracle has taken over, the quality of JDE releases has improved significantly.  Concerns about early adoption of new releases will likely diminish over time as it becomes clear that they can be trusted.  We think that the capabilities provided by the release should be the key to deciding when to upgrade, not concerns about quality.

 

IBM’s Information On Demand conference

When IBM puts on a conference you can count on it to be well organized and informative.  Information On Demand (IOD) 2009 is following the classic IBM formula perfectly.  My only disappointment has been the lack of any dramatic news or the introduction of major new concepts.  Most of what I have heard so far is a repeat of the messages and jargon from last year. 

IBM always aspires to provide thought leadership and in the area of information management it continues to try harder than its competitors including Oracle.  IBM tells a more complete and compelling story than any other vendor.  The products and services which support the story are always sound but are not always at the leading edge. 

The IBM story line starts with the assertion that its mission is to help create a smarter planet – one that is more efficient, that better uses and conserves resource, and that is sustainable for generations to come.  Who could argue with such lofty goals?  The story goes on to point out that the world is becoming more instrumented, interconnected and intelligent.  This refers to the explosive growth in sensors, meters and other sources of data that in turn are increasingly connected to the internet and that frequently have a great deal of local processing capability. 

The vast and growing number of data sources and local intelligence is increasingly being used to monitor and influence events as they occur.  The real time data being generated is increasingly being combined with historical data to form powerful data warehouses.  Data modeling and analysis tools then come into play to turn the mountains of data into understandable information which can lead to more informed decisions.  Over time those decisions become the foundation for improved business process. 

IBM calls this chain of events “information-led transformation”.  Its philosophy is that organizations need to first plan an information agenda, build a technological platform to collect and organize all the data, and then use tools like its own Cognos and SPSS products to facilitate the analysis and decision-making. 

IBM is so convinced that information-led transformation is a “next big thing” that it has set up a new business unit within its services unit staffed with 4,000 consultants.  It should be no surprise that most of the success stories offered so far in support of these ideas are among very large organizations or ones in highly data intensive industries. 

We agree broadly with the IBM view of the way in which information technology will shift its focus from operational applications to more data analysis intensive uses.  These grand ideas will have increasing appeal to the JD Edwards community over time when it becomes ever easier to put them into practice quickly and at a reasonable cost.  Future postings will continue to report on what IBM, Oracle and many vendors are doing to make the vision IBM has done a nice job of articulating into concrete solutions that can be installed and put to use.

 

A bad week for IBM

IBM CEO Sam Palmisano’s horoscope for all of last week must have read “don’t leave the house”.  Perhaps the worst week during his tenure began Sunday night the 11^th when Sun founder Scott McNealy and Oracle CEO Larry Ellison kicked off OpenWorld with an all out assault on IBM.  The two of them were like a professional wrestling tag team as they found a variety of creative moves to slam IBM to the mat. 

Early this year IBM had carefully done its due diligence before making an offer to buy Sun.  When McNealy and the Sun board turned it down, Oracle rushed into the void and bought Sun for what appeared to be only a slightly higher price.  It seems safe to surmise that McNealy did not want the company he founded to fall into the hands of those who had done the most to subject Sun to the embarrassment of a forced fire sale. 

As reported here multiple times before, Oracle and IBM have been enjoying a long period of peaceful coexistence.  Watching Oracle succeed in buying Sun for essentially the same price that it bid must really gall IBM’s senior management team.  It responded with an all out attack on the increasingly vulnerable base of Sun customers.  The resulting campaign was obviously successful enough to really annoy Ellison since it diminished the value of Sun after the price had been set.  The ambush at OpenWorld was his response. 

Palmisano must now strongly regret not closing the Sun deal.  Oracle has been transformed from a sometimes friend and cordial competitor into the most serious threat IBM has faced in many years.  In an era when IBM continues to narrow its market focus by exiting lower margin businesses, Oracle has suddenly decided to make a run at becoming the kind of one stop shopping vendor that IBM was a few decades ago at the height of its power.  It is not yet certain that Oracle will succeed, but along the way an enormous amount of heartache for IBM is almost certain. 

If the Oracle attacks were not enough, the week ended with Bob Moffat, the executive that ran IBM’s hardware business being arrested for insider trading.  The allegation is that he passed information obtained during IBM’s abortive attempt to acquire Sun on to a hedge fund manager.  Moffat has been suspended from all duties at IBM. 

Moffat’s arrest was a huge shock to me personally.  I have had the opportunity to spend quite a bit of time with many IBM executives including Moffat over the past 20 years.  In almost every case the people I dealt with at IBM were impressive and conducted themselves admirably.  IBM impresses me as the least likely place where something like this would occur.  If the allegations are proven to be true, I have to believe that this was an aberration – one employee deciding for unfathomable reasons to ignore IBM’s strong cultural focus on ethical behavior. 

Financially, IBM is having a great year having announced strong Q3 results and followed up by projecting even better performance in Q4.  Instead of celebrating this great accomplishment, Palmisano now has to survey all the damage caused by the failed attempt to acquire Sun. 

This coming week I will be at IBM’s Information on Demand conference and will report on what I discover.  Hopefully, next week is a far better one for IBM than last week was.

 

Reflexite wins Oracle Enable the Eco-Enterprise Award

JD Edwards EnterpriseOne customer Reflexite Corporation of Avon Connecticut was one of 15 organizations that won Oracle’s “Enable the Eco-Enterprise” award at OpenWorld last week.  As the CEO of the firm that installed the software at Reflexite I had the honor of accepting the award on behalf of Reflixite, whose CIO was unable to attend.  Tom Hughes, CEO of WTS was also honored as the Oracle partner firm that provided hosting services for the JDE software that Reflexite uses to run its business.
 
This award is meant to recognize organizations that use Oracle products in ways that improve the environment.  As a company that offers a variety of reflective coatings and related products, Reflexite has always been sensitive to the environmental impact the materials it uses to produce its products.  This concern extends to making efforts, using information obtained from EnterpriseOne, to minimize its environmental impact through energy savings, reduced paper usage, and waist elimination.
 
The awards were presented by Oracle Board Chairman Jeff Henley as an indication of the importance Oracle places on being environmentally responsible.  A panel of executives provided a summary of some of the things Oracle was doing itself to enhance and protect the environment.

 

Fusion – Further reflections

OpenWorld is over, but the full notebook I brought back will take weeks to put into postings.  This one will expand on the first glimpse of Fusion Applications provided by CEO Larry Ellison himself.  First the basic facts. 

Fusion Applications is the first attempt by a major software vendor to create a complete suite of applications using Service Oriented Architecture (SOA) design principles.  It is the brainchild of Oracle software executive Steve Miranda who has overseen much of its development over more than four years.  The first wave of working applications will hit the market sometime in 2010 and will include financial, distribution and human capital management modules.  The family of applications will continuously be expanded over time to include manufacturing and much more.  It is not clear when or if special industries such as banking or retail will be included.  Fusion Applications are intended to be a next generation of ERP software and are targeted directly at SAP. 

Oracle has gone to great pains to assure users of its JDE, PeopleSoft, Siebel and eBusiness Suite applications that none of them will ever be forced to convert to Fusion if they do not care to.  The term “applications unlimited” was coined to capture this notion.  At the same time, Oracle clearly hopes that the new applications will prove so compelling that many current customers will one day decide to make a transition that Oracle promises will be an easy one. 

At OpenWorld a first glimpse of what is coming was provided, much as Hollywood producers create a trailer to get us to want to go to a film arriving months from now.  The little we saw was very enticing and, of course, far too little on which to form a solid opinion.  The handful of screens shown were visible for too little time to prove the claims made by the presenters.  We will assume for now that everything that was said is true.  The claims made were exciting: 

• The SOA foundation enables a level of integration never before achieved.
• Business Intelligence is seamlessly integrated into all of the applications.
• A new interface that focus user attention on exception processing. 

Ellison showed a chart with the names of around 50 well known businesses that have provided input on specifications.  From this I surmise that the first wave of customers for these applications has already been established and that few if any outside of this inner circle will get their hands on them until well into 2011.  It will thus be 2012 or beyond before we have answers to some fundamental questions: 

• Does the cool technology underneath translate into real user benefit?
• How hard will it be to get these applications up and running?
• Is built-in BI a killer feature or just something impressive in a demo? 

The starting point for the functional design was eBusiness Suite.  It seems safe to assume that the second wave of sales (after the pioneers already signed up) will come from this user base.  It is therefore hard to imagine a serious effort to convince current JDE customers to switch to Fusion Applications before 2013 at the very earliest. 

Oracle needs Fusion Applications installed and working at some prestigious accounts as soon as practical as a means of reversing SAP’s momentum in the applications market.  I suspect it will be quite successful in causing those businesses considering a new ERP platform to wait and take a careful look.  We are aware of a small number of businesses that have JDE within their application portfolios that are considering a move to SAP.  The news that Fusion is coming may put many such projects on hold for now. 

As in previous postings I remain skeptical about the impact Fusion Applications will have on the JDE customer set over the next 3 to 5 years.  At the same time, I am excited to see Oracle introducing a new generation of applications and see no reason why it won’t be successful. 

The greatest impact on our community will be indirect.  The SOA foundation means that Fusion Applications are being created out of re-usable software building blocks.  SOA connectors have already been built into the newer releases of EnterpriseOne so that elements of Fusion can be easily incorporated into it over time.  Most of you will therefore experience a gradual inclusion of an increasing amount of software developed for Fusion into your existing applications without experiencing anything more traumatic than a release upgrade.  For us, Fusion might better be named “infusion”. 

More thoughts on this important topic will come at time passes.

 

More Open World observations

Oracle finds a way to make each OpenWorld conference quite different from all the others.  This year the huge crowds were gone and little that was unexpected or all that dramatic was formally announced.  At the same time it became crystal clear that when complete, the Sun Microsystems acquisition will propel Oracle into a very different role in an industry that it now hopes to seriously disrupt. 

The conference opened with Sun Microsystems founder Scott McNealy recapping the glorious history of Sun (leaving out any explanation of why it was necessary to shop the business around).  When he brought Larry Ellison on the stage, an explanation of how the two businesses might fit together seemed likely.  Instead we got a detailed view of the first joint product offering along with promises not to dump any of the key technologies that Sun will bring to the combined entity.  The big surprise was a vitriolic attack on IBM that left no doubt as to who is now at the top of Ellison’s least favorite competitor list. 

Ellison returned to the stage Wednesday afternoon for his scheduled annual keynote and as noted in a previous posting he provided the first look at the long awaited Fusion Application suite.  Even that, however, had to wait until he spent more than 30 minutes once again hyping hardware – this time a second generation of a high-end storage and processing engine tuned to run Oracle’s database and anything that uses it at blinding speeds.  It was abundantly clear that at this instant in time Ellison is personally fascinated with the prospect of shaking up the hardware market and that other issues interest him less. 

The Fusion discussion was fascinating and will be the subject of a number of future postings after I do some more homework.  To net it out, the first production release of Fusion Applications will arrive next year, likely by summer.  Finance, Distribution, HCM and CRM will be included on day one but not Manufacturing.  The main selling points offered were: 

• As the first true SOA built app suite Fusion will be exceptionally easy to integrate.
• Business Intelligence will be built in and will not require an external infrastructure.
• A new user interface will focus the attention of users on dealing with problems and exceptions. 

None of the opinions I offered a few weeks ago about the impact of Fusion on the JDE community were changed by what Ellison presented this week.  I do not believe that Fusion will represent a viable alternative to JDE until 2012 for nearly the entire installed base. 

I have lots more information from OpenWorld to share so stay tuned.  It will take me a few weeks to get it all digested and turned into posting so please be patient.

 

Open World JDE news

 Lyle Ekdahl (Oracle’s new JDE development executive) kicked off the JD Edwards specific sessions Monday morning.  Sadly, now that he has been promoted he can’t bring the zaniness to these presentations that once was his trademark.  The best he could do was pass out little bags of candy.  There was no big news to be shared, but lots of tasty little tidbits (not counting the M&Ms). 

Little of general interest was formally announced.  For example, BI connectors for World 9.2 were introduced for Financial modules only.  Something of potential interest to a very small segment of the community.  Likewise, the items on the list of things under development for next year was largely items that, while cool, only appeal to niche segments.  For example a new JDE module will be introduced for the unique needs of apparel businesses featuring capabilities such as size, style and collections. 

About 200 of the faithful showed up leading me to guess that the total turnout of JDE partisans for all of OpenWorld could not be much over 1,000 since this was the most important JDE specific presentation. 

Gee whiz factoids offered included: 

• Net new license revenue continues to grow even in the face of recession.
• Japan has been a surprisingly strong market recently.
• 79% of E1 accounts are now on release 8.11 or above.
• 14% of E1 customers are on 9.0.
• 18% of World customers are on 9.1 or 9.2.
• 35 JDE people have come to OpenWorld (not counting a marketing dude). 

Privately, Lyle told me that not much will change as a result of the transition from Lenley Hensarling.  I ran into Lenley on the street.  He was there meeting a prospect for his new start up venture and not as an attendee.  Lenley seemed excited about his new challenge. 

No one from JDE land can or will comment on Ellison’s big Fusion news coming Wednesday afternoon.  I doubt if they know much yet anyway.  Stay tuned – more news coming.