November 29, 2006
Nicholas Carr, Vinnie, Jason, Phil , David and several others have picked up on the McKinsey Report about SaaS.
For ages I have been trying to figure out what SaaS is. I’m still no clearer, and I have read masses of posts, analyst reports, marketing materials and irregulars emails. It seems there are different forms of SaaS, including the highest forms of SaaSdom, “pure” and “true” SaaS.
Jason asks an important question.
How did McKinsey define SaaS? — Put 20 technologists in a room and ask them to define SaaS, and you’re going to get at least a dozen different answers. Is SaaS any software solution that’s provided in a hosted environment? Is multi-tenancy a necessity? Is subscription pricing requisite? If McKinsey doesn’t tightly define SaaS to the CIOs surveyed, the potency of this data loses much significance.
This is my problem with SaaS. What is or isn’t “allowed” to be called SaaS seems so arbitrary. Have a look at the wikipedia entry. A good bit of it is about what SaaS isn’t.
I’ve mentioned the Monty Python Spanish inquisition before when discussing the high priests of SOA, but it may be appropriate here too.
I never expected the SaaSquisition. Haaa! Nobody expects the SaaSquisition
The unique property of SaaS is that it is hosted and that is multitenant..
Haaa! the 2 unique properties of SaaS are that it is hosted, multitenant and subscription based..
Haaa! the 3 three unique properties of SaaS are that it is hosted, multitenant, subscription based and uses AJAX
Haaa! the many unique properties of pure and true SaaS are that it is hosted, multitenant, subscription based, uses AJAX , REST, RSS , is completely brand new, is bought by the lob, requires no training, isn’t tainted by the evil dark side of on-premise, sells virally without a salesforce, has a seasonal release cycle and knows the secret SaaS handshake.
Make no mistake, here in starship enterprisey we see the SaaS wave. There are some great solutions out there in the “cloud” I see some HR executives buying SaaS offerings instead of deploying in-house applications simply because the in-house IT is too busy doing “mission-critical” supply chain stuff to talk to the HR folks. Successfactors is vendor benefiting from this.
SAP’s approach to SaaS is cautious to date, but it would to foolish to imagine that we are ignoring it.
I find the talk about “hybrid”, “pure” Saas and “true” SaaS very Peoples Front of Judea. I’m tired of all this purity stuff.
David is uncomfortable with my assertion that SaaS is bureau rebranded,
Of course there are still some who question whether SaaS is just an old idea with new marketing spin. In recent dialogue another Irregular, Thomas Otter of SAP, believes that SaaS is simply bureau computing from the 60s and 70s, or ASP from 5 or 6 years ago rebranded. I’ll argue the case for the differences another time, but the key thing is that these sorts of multi-tenanted, hosted (true SaaS) solutions are set to become a much bigger component of the average company’s solutions portfolio in 2007.
Show me what is a) new AND b) unique and I’ll repent, kill a goat and join the cult. The technology has moved on since punchcards, but the business model has not changed. AJAX, SOA etc are not the sole preserve of the SaaS vendors.
SaaS is simply the latest evolution of the bureau. This is a fine thing. Using the term bureau in the 1990′s was uncool, so the term ASP was born. Many ASP’s slipped on the 2000 banana skin. New players needed a new name, something to distance itself from the ASP days, and something hip that would make hosted applications cool again. As much as I hate the 2.0, 3.0 game, SaaS is Bureau3.0. There is nothing wrong with running a bureau well -recently ADP marked the 32nd Consecutive Year of Dividend Increases.
ADP, not Salesforce.com is the largest SaaS provider.
In 1949, when one of Henry Taub’s two partners in their joint venture chose to leave because growth was simply too slow, Henry decided to buy out the remaining partner. Although he was only 21 years old at the time, he never made a bigger business decision in his life. So, for the sum of $6,000, he became the sole owner of the small enterprise that offered, for its day and age, an unprecedented service — but up to that point had only one client. The business was called Automatic Payrolls, Inc. It manually processed company payrolls —providing everything from doing the calculations to preparing the checks and the payroll register.
The idea for the service actually belonged to Henry. As the story goes, one day he was visiting a nearby company. A key employee had taken ill, the payroll wasn’t done, and the workers weren’t paid on time. Company managers, who knew nothing about doing payroll, abruptly put aside their other duties, and together
they finally got the payroll out. Henry was astonished at the disruption that was caused. Employees were angry. Managers were frustrated. Productivity suffered. All because a key person wasn’t available to prepare the payroll.
He wondered how many other companies faced similar crises, because a payroll wasn’t done on time. From that observation
came the unique idea that launched Automatic Payrolls. He would offer a payroll preparation service that any business could use. One that was not only accurate and dependable, but also affordable.
Sounds exactly like the SaaS promise to me.
Read the history of ADP here. You’ll see that they do a lot more than just payroll.
November 28, 2006
Posted by Thomas Otter under SAP
Blogging is a good way to meet folks that you probably wouldn’have met otherwise. I’ve met Frank, Sig, Craig and James via blogging, and yesterday I got to have a coffee with Roman. He is working in the new product introduction team at SAP, where he helps figure out how to get the new toys rolled out to the field. It is one thing building new stuff, it is another thing figuring out how to get consultants and sales colleagues upto speed. We need more folks that build bridges between the development world and the business world.
Next time he is over from Palo Alto we will need to do a beer. 10 minutes in the coffee corner isn’t enough.
I have masses of respect for folks that blog in English when it isn’t their home language. Check out his blog. The reading list alone makes it worth the visit.
Technorati tags: SAP
November 28, 2006
Posted by Thomas Otter under life in general
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The blogsphere is riddled with folks that argue that blogging will kill off journalism. Slagging off the NYT is hip.
Like Nicholas Carr, I’m not convinced.
My good wife is a journalist by profession, and now a blogger of domestic bliss, Germany and literature. She was a crime reporter on the streets of Johannesburg in the early 1990′s. She had a tough job, but the toughest part of the day was dealing with the editor. He would take copy that he felt was badly written or researched and destroy it. In a movie he could be played by a hybrid mashup composite of Charles Bronson, Clint Eastwood, Russell Crowe with a telephone and Lynne Truss.
Jason Wood pointed the irregular mailing list to the article here on Venture beat. Auren Hoffman wrote it. He is the CEO of a start up.
Big companies are losing their “A” players and they’re struggling to attract “B” players. In an industry where everything is about people, large tech companies are in trouble because they are losing the talent war
Jason’s response is here.. He politely demolishes the post. He has more patience than I do.
Businessweek covered this issue sometime ago, and they do the normal journalistically boring things like interviewing people and studying market statistics…
There is something ironic in this quote from Businessweek
While the Internet leaders snatch up top tech talent, that creates headaches elsewhere. Some startups, for instance, say the talent drain has made their own hiring more difficult. Joe Kraus, a co-founder of early portal Excite and now the CEO of collaborative software startup JotSpot, says Google has been especially tough to go up against. “If you’re talking to someone great, they’re invariably talking to Google, and they often have an offer.”
Ask Joe who he works for now.
If Venturebeat and peers are the new newspapers, then I think they need to hire an editor.
November 28, 2006
Posted by Thomas Otter under HR Technology
Just read Jason’s post. He is unhappy about software vendor mudslinging, and I agree with him. I’ve suggested that the software industry should remember-learn some manners. My marketing guru mate John would probably agree too.
Here is a quote from Jason’s post.
I recently heard a story where one of the larger vendors in the talent management space sent a prospective client a complete slide deck regarding the weaknesses of one of their top competitors including a statement saying the vendor was due to get acquired any day. FUD (Fear, Uncertainty and Doubt) in its greatest sense. With the increased pace of M&A in the space, some may consider this a brilliant move. I think it downright stinks!
It is a valid issue to raise the long term viablity of a competitor. Ask any customer of a recently acquired vendor whether this is important or not. However I don’t think is cool to suggest something that isn’t. That is I believe, called lying.
Understanding competitor strengths and weaknesses and positioning against them is good business, but mailing a slidedeck of FUD isn’t. That is dumb. I’ve got lots of slides from customers saying this is what the other guys say you can’t do. This makes the next deal so much easier.
If you are going to unethical and lie then don’t compound it by leaving any evidence….
Jeff Nolan posted a thoughtful post a few weeks ago about the Oracle-SAP tiffs.
The old rules like never talk about your competitor, as a primary strategy, are also out. While it is prudent, IMO, to not run the kind of full page ads that Oracle has been using against SAP (indeed, SAP did a pretty extensive survey of CIOs and IT decision makers and found overwhelming support for the argument that these ads were actually hurting Oracle by reinforcing biases against the company), I do think companies in mature markets need to run more aggressive anti-competitor campaigns. These will involve everything from websites to blogs to YouTube videos. The point is that you have to position against your competitor aggressively, protect your flanks from them doing the same, and fight to remove all the competitive oxygen from the room before you get there.
Yet undermining competitors by whatever means possible is not a new thing, so Jason’s call for a return to the good old days of true and fair competition is wistful at best.
The term mudslinging seems to have from US Politics, and it is not a recent invention. The election of 1864 was particularly vicious, and it is from there that the term became widespread.
The election of 1884 was pretty mean too.
Sadly, it seems that negative advertising actually works.
Iacoboni’s brain imaging research from the 2004 presidential campaign revealed that viewers lost empathy for their own candidate once he was attacked.
Technorati tags: HR
November 27, 2006
Continuing my thoughts and ramblings on Intangibles.
Dennis and I have been discussing the need to do a better job of valuing intangibles for sometime. He picks up on the debate on IFRS.
He has the advantage of being an accountant, I merely talk to accountants and HR types about technology stuff. I am also the son of an accountant.
Accounting methods are good at valuing things like plant machinery. Accountants have developed sophisticated techniques, such as depreciation to apportion their cost and value over the life of the asset.
The accounting function has mostly done a good job of making sure monies are collected and paid on time, and that what is told to the investors and the taxman is accurate. (there are the occasional slips though) They have been doing it since Caesar’s time, improving the process on the way with techniques such as double entry bookkeeping and discounted cashflow analysis. For this they should be applauded.
Yet modern accounting faces a problem. Most of the value of a business today is not in plant or machinery. It is in the fluffy stuff like IP, Brand, and god forbid, Human Capital. Measuring the contribution that people bring to the business is becoming more important than ever.
But actually, this challenge is not new, just more obvious.
Though your balance-sheet’s a model of what balance-sheet should be, Typed and ruled with great precision in a type that all can see;
Though the grouping of the assets is commendable and clear,
And the details which are given more than usually appear;
Though investments have been valued at the sale price of the day,
And the auditor’s certificate shows everything O.K.;
One asset is omitted – and its worth I want to know,
The asset is the value of the men who run the show.
Bowman, Archibald 1938. “Reporting on the Corporate Investment”
Journal of Accountancy, May 1938 p. 399.
The only thing I would alter would be to replace men with people. Accounting hasn’t got this right yet….
HR and Accounting professionals, instead of sniping at each other, ought to work closer together.
If we don’t line management will continue to see both professions as a bureaucratic overhead.
Dennis makes this point.
But I also hope to see a real partnership between finance and HR. I see a natural affinity between HR and finance yet to date, it’s a relationship that has not been explored in the blogs or among the academic literature. | recently conversed with a financial controller who understands how financial metrics are important to HR professionals who are helping sales people figure out travel management packages on behalf of clients
There is a rich vein of HR research on measuring human capital. I’d like to see Fitz-enz on the reading list for both HR and Accountants. I’m meeting up with Peter Howes, CEO of INFOHRM next week. He is the smartest guy on Human capital analytics I know. HR executives are beginning to wake up to the power that accurate data, well analysed, gives them. This is good for business here in enterpriseyland. Good data requires sound, solid transaction systems….
Last week at the SAP HR conference in Germany, the SAP CFO spoke how the changes in the finance function at SAP are mirroring the changes in HR. Interesting times. Once the slides are online, I’ll provide a link..
November 22, 2006
Posted by Thomas Otter under Irregulars
This may be a bit disjointed……..
I’m “Fresh” from the UK user group meeting in Birmingham, where I spoke about ERP2005, the room was packed. Lots of interest in Duet and Muse. It was great to catch up with customers and partners. One of the best things that these sort of events is introducing customer A to customer B. So many customers underestimate what they can learn from each other. The SAP HR business in the UK is very busy, and growing. Partners have cross trained PeopleSoft consultants onto SAP, so this is a good indicator of market trends.
I got home yesterday in time to see the kids, but then I was up early to drive to Nürnberg for the SAP-Kongress für Personalmanagement. There are about 1400 people here. 45 partners are exhibiting. It is good to be lurking and listening rather than presenting.
I’m sitting here in the keynote address from Michael Kleinemeier, the President of EMEA Central (DE, CH, AU, BENELUX).
It is great to see management present in German, so often I see them in English, and it is tough to be sparkly in a second language. In German Kleinemeier has the room laughing. What impressed me the most so far is that he is doing the demos himself! He has done a demo of Duet, and showed the new HR administrator role. Pretty cool that he has taken the time to learn a demo script in Q4. If the MD can do an intro demo, then every account manager should be able to do the same.
Claus Heinrich, SAP’s board member responsible for internal HR spoke next. He explained how SAP HR department functions, and the role technology plays to support it. Lots about talent management and shared services. Later there is a focus session on the executive dashboard that Henning and co use, so I’ll attend that. HR at SAP is by no means perfect, but we are doing lots of stuff well.
The SAP HR market in Germany is really strong, despite the talk by many of a saturated market.
The message from customers is not so much where is the next great thing, but on execution and simplification. I have several meetings planned with large German Globals who are expanding their successful German shared service centres across Europe, or even globally. Talent management has moved from talk to action too.
I’ve not seen many analyst types here. (If they are any reading this that are here, then drop me an email) The US centricity of much of the analyst research does concern me, as coverage of the European markets is generally weaker. The word global is bandied around with abandon, but I rarely read anything that provides in depth insight about the market here. Asumptions made in the US or even the UK don’t always translate across the pond to the continent.
I would have thought presentations about e-recruiting at Audi, The German Army on talent management, shared services at Swisscom and Lufthansa, Performance Management at BASF, Learning management at Schindler, Dresdnerbank on the future of HR, Commerzbank on talent management, HR transformation at Continental and organizational development at the METRO Group would be interesting.
These are all world class firms doing great stuff with our software. Not hype, but HR executives talking about their business.
The first presentation tomorrow morning is from the SAP CFO, Werner Brandt. He will be talking to 1400 HR folks, the Topic: The transformation of the finance function as a model for HR transformation. I’m looking forward to this, as it is exactly what I have been talking about for a while. Dennis, I’ll send you the slides.
November 21, 2006
This picks up on one of the themes from the Dave Ulrich session last week.
Dennis and I have been chatting about intangibles for some time, and I have a queue of posts planned on the topic. (please don’t switch off your feed) I was going to write something about how HR needs to learn from finance about business cases and ROI, but then I realized that marketing could be another “role” model.
Intangibles are those things that accountants find difficult to measure.
Marketing folks don’t. They confidently state that the value of the Brand is 23,24 billion. There are league tables of brands , and according to the Millward Brown Optimor study.
“This is the first study that goes beyond financial data and ‘expert opinion’ to include in-market insights about a brand’s strengths and momentum from potential customers,” said Andy Farr, Executive Director at Millward Brown Optimor and lead researcher on the study. “It proves that investing in brands is key to a company’s long-term success.”
Joanna Seddon, EVP, who heads up Millward Brown Optimor globally added: “We’ve seen that strong brands can create very real financial value in many ways. The best brands drive revenues and profits, reduce risk and cost of entry into new markets and attract talented staff to companies.”
No doubt there is some theory behind how these values are derived, yet one study values coca-cola’s brand at 41 billion, another at 67 billion… biggish gap.
Based on the Interbrand report. SAP has a brand value of 10,007 billion dollars , Nokia 30 billion dollars, Coca Cola 67 billion dollars. Business Week plots these, Bonus plans and careers of marketing directors are linked to them. There was lots of jubilation in the marketing department when SAP moved up 2 places in the ranking.
According to marketing, brand is the magic dust that differentiates company a from company b. The brilliant marketing though, is not just to the external market. It has been internally. Marketeers have got CEO’s and CFO’s talking about the value of the brand to analysts. Marketeers use these numbers to position the value of the marketing function, and the need for it to have more budget. They have clearly linked the value of the brand to describe gap between the EPS of companies in similar industries with similar financial fundamentals. Marketing are masters at deriving numbers from vagueness and selling them inside the organization. Respect is due.
If the marketing department ran HR, they would do exactly the same with Human Capital. Imagine the marketing department was responsible for recruitment, never mind all the cool adverts and the employee branding, what would they do with a well proven statistic like interviews only have a low correlation with good hires compared with assessment centres and formalised testing? Or what about the strong causality between employee engagement and customer satisfaction? I suspect the CEO would be talking how recruitment is strategic and how we are moving up the XYZ recruitment rankings.
Much of HR theory is built on solid empirical study. We know lots about motivation, yet organisations continue to use salary as a blunt instrument for reward. Personality theory has a deep and solid base, yet so much of team management is done on manager gut feel.
Maybe what we need to do is hire some marketing people into HR. Let them loose on all the fabulous statistics we have in HR. Get some help in building the business case for better HR investment.
Just a thought…. If you have examples of HR building business cases for investment based on intangibles then please drop me a note.
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