10.25.04
Posted in IT Governance, IT/Business Alignment at 2:12 am by Tony Baer
In the past couple years, the perceived impact of IT on the world has seesawed. First, we were scared that things would fall apart after the dawn of the new millennium. When they didn’t, conventional wisdom was that IT no longer mattered.
Call us jaded. When we first stumbled across a session at this year’s Gartner Symposium entitled “The End of the IT Department,” our first reaction was we’d heard it all before. But curiosity got the better of us, and we ended up hearing the kinds of provocative arguments that stimulate thought, rather than Crossfire-style knee-jerk reactions.
Neil MacDonald, the Gartner analyst leading the research, opened by reviewing findings of CIOs losing influence. Since 2002, nearly a quarter of them stopped reporting to the CEO, with most CEOs ranking IT at the bottom half of their concerns. Adding insult to injury was anecdotal evidence that IT is becoming a drag on corporate change. In the 70s and 80s, the system was typically down when you needed it. Today, it’s probably obsolete by the day it goes live because IT couldn’t keep up with all the changes happening to the business.
Looking a decade out, MacDonald predicted a dramatic redistribution of IT tasks. While strategy, administrative, architecture, and vendor management tasks remained internal, he predicted that software development, maintenance, IT operations, and support would be automated or outsourced. Excluding technology strategy and architecture, remaining tasks would be absorbed into the business units. The result? By 2015, the IT organization would shrink to about 15% of its current size, barely large enough to justify retaining a CIO.
Although we question some assumptions, such as the likelihood of application development being automated, MacDonald’s arguments about absorption of IT into the business are compelling. As the logical extension of well-known arguments for IT to better align, MacDonald foresees today’s business systems analyst morphing into tomorrow’s process architects. While IT professionals are logical candidates, with more powerful, graphical process management tools, people from the business side could also vie for the same jobs.
Yet, the notion of the IT organization disappearing is all too redolent of 19th century notions to close the Patent Office. As we’ve said time and again, because IT can embed the intellectual property of an enterprise, technology innovation won’t end, and with it, the need for visionaries who can understand the competitive advantages that new technology can contribute across business units. No single operating unit is likely to own such knowledge.
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10.05.04
Posted in Enterprise Applications, Technology Market Trends at 2:11 am by Tony Baer
With the U.S. District Court vindicating Oracle’s position that the ERP market is still quite competitive, the $64,000 question is who’s left standing to challenge SAP and Oracle.
While the knee jerk instinct is to yell “Microsoft,” for now, their presence is at best vague and latent. Today, the occupant of the coveted runner-up slot is SSA Global, a $400 million four-year old company formed out of the ruins of a bankrupt predecessor. With new management and funding secured in 2000, the company embarked on a scavenger hunt of roughly a dozen other faded ERP properties. Then they acquired add-on apps in more active markets like supply chain scheduling, customer relationship management, corporate performance management, and product management. And with financial discipline, they accrued 12 quarters in the black and are now on the verge of an IPO.
So far so good. For now, SSA Global remains a distant fourth (soon to be third), trailing the apps business of a combined Oracle/PeopleSoft by roughly 10x. But raw numbers are deceiving, because SAP/Oracle/PeopleSoft markets in the Global 2000 are pretty saturated, whereas SSA’s midmarket base is still growing. Of course, to be realistic, midmarket numbers will never approach those of 1995 – 2000, but if it’s profitable, who’s to complain?
However, if SSA is to become the great white hope for ERP depends on whether it can execute a hat trick that no other predecessor has pulled off before: converging multiple ERP products. The problem? ERP is broad and complex, making brute force virtually impossible. Then you have the challenges of devising an integration architecture and migration path, not to mention convincing your customers that in the long run it will be cheaper for them to move on. At this point, it gets awfully tempting to look at viable rivals like MAPICS who already have a couple stable products in place.
SSA Global claims the difference this time around is that standards like Java and web services exist. And then there is IBM WebSphere, a critical mass middleware product, which means SSA doesn’t have to waste resources developing tools or integration frameworks, and has a ready ecosystem of IBM business partners to tap.
So SSA’s road map is to (1) develop two parallel next-generation ERP products, one for iSeries and the other for the UNIX/Linux base; (2) promise continued support for existing legacy customers; and (3) make migration as cheap as possible, by waiving license fees. To make this work, they’ve got to avoid drowning in red ink supporting countless versions of obsolete products, and they’ve got to work out migration paths that reduce customer pain. Then there’s the question of a hosted SalesForce.com strategy, which somebody in this space is bound to try.
Nope, we’re not picking favorites at this point. But at least SSA has decent financials, and that can’t be ignored. We won’t say that anything is impossible, but if SSA Global is to vindicate the hype, that’s what it must pull off.
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