Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Enterprise IT Archives

Survey Warning: Millennials Will Shun Tech-Laggard Workplaces

Workplace 02444

Millennials will leave jobs that use technologies “not up to their standard” and they prefer to have “high-tech perks” than free food and ping pong, according to a global survey commissioned by Dell and Intel. 

The Future Workforce Study questioned almost 4,000 employees in 10 countries working at various sized businesses. It found:

Story continues...

NetSuite and iCharts: Enterprise Apps As Data Integration Platforms


iCharts founder and CEO Seymour Duncker

The future calls for enterprise apps becoming aggregators of trusted IT micro-services from many sources   — does that mean they can become effective data integration platforms? A low-cost path to Big Data’s promises of profitable business insights?

Story continues...

Gary Bloom Interview: Big Data Driving Booming MarkLogic Sales

GaryBloom 720

When I first met Gary Bloom more than 15 years ago he was second to Larry Ellison at Oracle, and when he jumped to run Veritas, I was one of the first reporters to interview him. Then came a short stint at Symantec, eMeter, then consulting with private equity firm TPG. With over 30 years in key positions he’s become one of Silicon Valley’s top business leaders.

Since 2012, Bloom has been CEO of MarkLogic, a fast growing Silicon Valley database company riding the hot wave of interest in NoSQL databases such as MongoDB, as large organizations attempt to mine their diverse stores of big data for business insights. 

Relational databases still run at the core of every large business but they are seen as too limited and too structured for the digital business world where there is a need for highly scalable, highly adaptable database architectures that can easily add unstructured data sources, run on clusters, and support complex web sites — without first mapping all the data into the correct rows and columns of a relational database. 

Story continues...

Data Masking Saves CIO Jobs And Makes IT Heroes

Halloween 3

Working at Delphix, a virtual technologies startup in the heart of Silicon Valley, I've been learning a lot about enterprise software and the challenges facing global corporations as business becomes ever more digital. 

Data security is critical and its importance was underscored by the recent RSA Conference in San Francisco -- the world's largest gathering of computer security experts. About 40,000 people -- a jump of nearly 20% compared with last year -- attended its awards ceremonies, hundreds of presentations, and demonstrations from thousands of vendors of data protection technologies.

But if you bought everything at RSA would your organization be completely secure? 

Story continues...

Geoffrey Moore: Does IT Matter? Are Apps Important?


Geoffrey Moore's 1991 book "Crossing the Chasm" was incredibly influential in the tech sector with more than one million copies sold and it gave birth to the Chasm Consulting Group.

Story continues...

The Software Defined Megacorporation - Why IT matters

IMG_0470 (1).jpg

There's a new business reality that few companies know about. If you want to be a player in global markets you will need a top-notch IT department. It won't be the same as the current one but whatever you do, don't buy the hype that you can just use off-the-shelf technologies and that the cloud makes IT departments obsolete.

Business edge will be defined by IT edge. IT matters and the performance of your IT department matters a lot.

The following is from my ZDNet column: IMHO:

The IT department will be transformed from a slow changing cost center and into a vibrant, creative organization essential to every business competing on a global scale.

More than ten years have passed since the publication of the book, "Does IT Matter? Information Technology and the Corrosion of Competitive Advantage" by Nicholas Carr, the former Executive Editor of the Harvard Business Review.

Few people disagreed with Carr's argument. In a world where every large company has the same IT systems, the same ERP apps, the same IT infrastructure, the same commodity hardware, no one has a strategic advantage.

Carr was right but that was then...

Story continues...

Computer Pioneer Alan Kay Says Tech Industry Ignores The Future



I was at SAP in Palo Alto earlier this week to see computer pioneer Alan Kay give a talk and also to meet with him for an exclusive interview.

I’ll have more on the interview coming up. I just uploaded the video of his talk here: Alan Kay @ SAP - YouTube

Alan Kay is a computer pioneer, he was part of the the Xerox PARC team of about 30 researchers who developed many of the key concepts of the PC and notebook. Here he talks about the lack of forward thinking in technology design and innovation.

He advocates designing products for how we expect to use technologies decades from now instead of trying to replicate old technologies.

He also talks about system thinking rather than discrete products such as apps and hardware, the goal is integration and collaboration among our technologies because that’s what’s important for humans: more collaboration.

He also mentions that Steve Jobs missed a lot when he visited Xerox PARC and replicated the graphical user interface and mouse — he didn’t see the computers were all connected, used Ethernet, and they connected to the nascent Internet then called ARPAnet. Steve Jobs missed half of it and didn't see that the computers were all networked "because he's a visual guy."


'Leaders aren't afraid to be wrong' Says LinkedIn's Head Designer Amy Parnell


Above, LinkedIn's Head Designer Amy Parnell interviewed by Adam Leventhal CTO of Delphix.

The recent Delphix Tech Talk series featured Amy Parnell, Director of User Experience at LinkedIn. Adam Leventhal, Delphix CTO interviewed Amy on several key topics that helped surface some of the best practices she has developed at LinkedIn over the five years she's worked there. She leads more than 60 designers.

Here's the link to the WebEx video recording of her excellent talk: Amy Parnell @Delphix Tech Talks

Some of the key points that stood out for me:

Story continues...

Delphix Raises $75m Led By Fidelity And Wins Recognition In Top IT User Awards


 Delphix HQ in Menlo Park.

Delphix, (my employer) is building some excellent momentum with the announcement of $75m in funding led by Fidelity Management and Research, with new investors Credit Suisse and The Kraft Group. This follows recent recognition in two top IT awards from Computer Weekly and Computing (I used to work for Computing).

Story continues...

Beating A Path For Innovative Technologies


I came across a great interview by Danny Palmer at Computing, with Mike Lear the CIO of City Index, which provides spread betting services to tens of thousands of financial markets traders.

Faster delivery of apps is key in the competitive market for financial data that City Index provides but so is data accuracy. Testing is extremely important especially since customers can complain to government regulators.  

Story continues...

Delphix Boost From Gartner IT Cloud Migration Report


Delphix received a big boost today recognition from Gartner, which placed Delphix in the top Leader's quadrant in its latest Magic Quadrant for Structured Data Archiving and Application Retirement. It's key in cloud migration projects, a complex and risky move made far simpler with Delphix and it's great to get the recognition from Gartner.

Story continues...

The Challenge For Innovation In The Enterprise: No Category -- No Budget

Corporations spend a lot of money on IT and some of that money is spent on new products from innovative IT startups.

But it's a hard slog for those startups when they have something truly innovative to sell because who do they sell it to when there is no category for what they have? Who holds the budget for something that didn't exist until a year or two ago?

There's budgets for databases, servers, for networks, and hundreds of other IT components. But where are the budgets for as-yet unknown technologies that could be transformative across the entire business?

Story continues...

Actian And The Search For The Enterprise Hadoop User


I attended a very worthwhile roundtable this week, organized by Actian, a Big Data business analytics company. It was a very good mix of analysts, investors, media and users.

Story continues...

Coca-Cola's Chief Innovation Officer "Cracks The Code" On Startup Success: Storytelling

IMG 7737

Alan Boehme, CIO and Chief Innovation Officer at Coca-Cola Company, spoke at IDG's CIO Perspectives conference in San Francisco. Maryfran Johnson, Editor-in-Chief of CIO Magazine, introduced him by saying he had "cracked the code" on startups.

I was skeptical there would be much from Coca-Cola after the fallout from the innovation of "New Coke" in 1985 but I was wrong. It was a surprisingly interesting presentation and refreshingly frank in places.

Story continues...

Birst: Business Analytics Starts With Clean Data—GIGO

IMG 7140

I had an interesting media roundtable meeting with Birst, the cloud-based business analytics company that recently raised $65 million in a Series F, and a total of $156 million.

Major VC firms such as Sequoia Capital and Hummer Winblad, are backing the company as it seeks new customers and battles for a dominant position in cloud-based analytics.

Jay Larson, CEO (above) is 25-year industry veteran of SAP, Oracle, SuccessFactors, and Jive Software. He says the business opportunities for Birst are extraordinary.

Story continues...

Secure Islands: Protecting Corporate Data As Soon As It's Created


Secure Islands, a privately held Israeli computer security company, opened its US HQ earlier this year in New York City. The company is confident in repeating the success it has enjoyed in Europe,  here in US enterprise security markets, with its approach to data protection.

Its technology automatically classifies and if required, encrypts sensitive data upon creation, as opposed to when it leaves the organization, which is traditionally how encryption has been managed.

This process, which it calls "Data Immunization," enables organizations to set classification polices which are automatically applied when a file or email is created. If encryption is required, the protection stays with the data wherever it ends up.  This way, if it is stolen, no one can read the data except the intended readers. 

I recently spoke with Aki Eldar, co-founder and CEO of Secure Islands. Here are some of my notes:

Story continues...

'Clean Cloud' Panel: Silicon Valley Giants Agree On Green Energy


Sustainability gurus from Facebook, Yahoo and Ebay all agreed that green energy is good for their users and good for the planet, on a panel Tuesday evening in San Francisco at the Commonwealth Club of California.

The "Clean Cloud" event was part of The Commonwealth Club's sustainability initiative, "Climate One." Its goal is, "Changing the conversation about energy, economy and environment" by broadcasting live events featuring local business leaders and advocacy groups.

The panel was moderated by veteran TV and radio presenter Greg Dalton, and founder of Climate One, and will be shown on Northern California stations KRCB TV 22 and heard on PBS radio station KQED.

Story continues...

Cybereason: A Reason To Watch Cyber Attacks In Real Time


Cybereason is a Boston based security startup that offers clients the ability to reveal a cyber attack in their corporate networks in real-time and not shut-it down -- at least not right away. 

The company's approach to security is based on the assumption that hackers will find a way into the corporate network someway anyway, so any attacks have to be detected in real-time otherwise once they are inside they can lurk for months or years.

The three founders worked together in Israel's military cyber espionage Unit 8200, which is the single largest unit in the Israeli Defense Forces and performs similar activities to the National Security Administration (NSA) in the US. 

Here are some notes and observations from my conversation with Lior Div, CEO of Cybereason:

Story continues...

Datameer Says Hadoop Is Making Big Gains In The Enterprise

Untitled 19

Stefan Groschupf, CEO of Datameer speaking at a media roundtable at 25 Lusk.

I was at a media roundtable earlier this week hosted by Datameer, which runs business analytics on Hadoop databases hosted as a service. Hadoop is a fascinating story because its simplicity pays off in its speed and agility. It's very easy to spin-up new databases and you can run analytics on data that isn't structured in relational databases.

With more data analyzed, it means more chances of getting accurate predictions and insights.

Castlight GigaOm Panel And SAP's 450 Designers...


Om Malik (right), founder of GigaOM at SF Jazz Center

I had lots of great feedback this week from my participation on panel organized by Castlight Health, a San Francisco based startup focused on making healthcare choices easier for employees. Design is tremendously important when it comes to the complex subject of healthcare where employee decisions can have life or death outcomes. 

The GigaOm Roadmap conference had the theme of "Invisible Design" and my job on the Castlight panel was to provide some context and a long view from my perch as a Silicon Valley watcher, and my many years as a beat reporter covering enterprise tech.

Story continues...

Greenpeace Questions AMZN Green Data Center

Amazon's claims that its German data center is carbon neutral is a good step forward for the "dirtiest" cloud operator but show proof, says Greenpeace:

Greenpeace Senior Energy Campaigner David Pomerantz said: "While we would like to trust that Amazon's new [Frankfurt, Germany] facility will actually be powered by renewable sources, Amazon's refusal so far to disclose any data about its energy use makes it difficult for customers or the public to accept the company's claim on good faith alone."

"If, however, Amazon is buying renewable energy credits or carbon offsets while continuing to power its Frankfurt facility with coal or nuclear energy, then its latest data center will continue the company's track record as the dirtiest major cloud computing provider."

Greenpeace estimates that more than 60% of Amazon Web Services computing capacity comes from Virginia in the US, where 97% of the electricity is coal, gas, and nuclear. 

Greenpeace report: Clicking Clean: How Companies are Creating the Green Internet. 

Scenic Vista: Tibbr - The $10bn Jewel In The $4.3bn Tibco Sale

Vivek 1

Tibco CEO and Founder Vivek Ranadivé. [Tibco is a founding sponsor and a former sponsor of Silicon Valley Watcher.]

Tibco Software agreed to be taken private in a $4.3 billion sale to Vista Equity Partners, a private equity firm specializing in software firms.

Tibco is one of Silicon Valley's oldest tech companies and its technologies are used to power real-time data systems such as those used by banks, stock exchanges, and news networks -- Reuters once owned 49% of the company. 

Michael Calia, reporting for the Wall Street Journal, writes that Tibco had spent much of the summer examining its options before deciding on this strategy:

Story continues...

Exclusive: Japanese Giant NTT's Stealthy Global Ambitions Via Silicon Valley


NTT Group senior strategist Tsunehisa Okuno outlines NTT's future.

NTT Group, Japan's $112 billion communications giant, unveiled ambitious plans for expansion by leveraging its strengths in global communications infrastructure, its aggressive investments in its IT services division, and in the rapid monetization of key technologies and services created by its new Silicon Valley based research center, NTT Innovation Institute.

I was the only journalist at a recent strategy briefing at NTT's research and development center in Palo Alto. The company's representatives laid out an ambitious plan to grow out its overseas business into a $20 billion annual revenues operation by the end of its 2016 fiscal year (March 2017), a 33% jump from this year's projected $15 billion.

Story continues...

A Nevada Developer Creates Fingerprint Wordpress Login

Sec blog banner lay 03

I recently received this note from Pablo at Secsign Technologies... It looks like an interesting application especially for the enterprise market where security is a never ending battle. 

Story continues...

The Perils Of A Multiscreen Enterprise - Dell Software Evangelist Jason Moody


Jason Moody (above) an evangelist for Dell Software's Enterprise Mobility Management group, spends most of his time meeting with large enterprises and finding out how they are faring with the rapid fragmentation of employee technology.

Bring your own device has been a major headache for IT departments, and is further fragmenting into "wear your own device." Here's some notes from our conversation:

Story continues...

San Francisco's First Look At New Microsoft CEO

Satya Nadella 01898

It was “Day 52” for Microsoft CEO Satya Nadella and his first visit to San Francisco as head of the software giant. The local media were out in full to see him as he introduced Office on the iPad, and speak about the importance of Microsoft’s “Mobile First” and “Cloud First” strategies.

Story continues...

Big Data Roundtable: Retailers Discover Connection Between Weather And Sales

HornDinner 3

I attended the Actian's Big Data roundtable earlier this week. I was thrilled to be sitting next to Terry Garnett (far left) from Garnett & Helfrich Capital, a very savvy buyout firm that has managed to carve out some great companies from inside larger organizations.

Also at the table: Dave Engberg, CTO of Evernote; Avanish Sahai, VP at Salesforce; Ray Wang, principal analyst at Constellation Group, and analysts from IDC and Cowan. Here are some of my notes:

Story continues...

GoodData's Roman Stanek: 'Big Data' Is Not Enough


It was good to catch up with Roman Stanek, CEO and founder of data analysis startup GoodData. There's some interesting news coming up that I can't talk about just yet.

We talked about Big Data and how the term is sounding very stale. Not only does it already sound so 2013, it's also so 1993, because we've both been hearing IT companies talk about Big Data for more than two decades -- and in the same way as they do today. We spoke about how it is time for a new term in 2014.

Story continues...

Asian Coal-Fired Smog Is Corroding Server Farms - Intel Concerned

9711994296 7393b069d0 o

Above, Anil Kurella, Intel failure analysis engineer, prepares boards for corrosion testing.

That smog that hangs so heavily in the air in China, India, and other countries in Asia isn't just bad for human lungs, it's corroding server boards and connectors and creating a "surprising" amount of damage reports Intel

Sulfur in air pollution from masses of coal-burning power plants is causing damage to server boards which are being returned to Intel. The irony is that the servers are being destroyed by the very same electricity they need to run their computing tasks. The more electric power they consume, the more the pollution gets worse. 

Story continues...

Enterprise Security Startups Are Booming - So Why Is Security Getting Worse?

Eastwick dinner 10

I attended a dinner organized by Eastwick Communications that featured several of their security clients and a security industry analyst. The discussion grew ever more interesting as the wine glasses emptied and refilled. Here’s my notes from the evening:

Story continues...

GE Software Extends Common Platform For Industrial Internet Apps, Adds Partners

GEEngine  1 of 1

Last year I visited GE Software -- the Bay Area's largest startup -- General Electric's new software research center in San Ramon. It was hotter than 110 degrees and I vowed never to complain about San Francisco's cold summers.

The new business group has about 700 engineers and is primarily focused on the industrial Internet, or the "Internet of things." It has an ambitious roadmap. One of its goals is to use Big Data to help its massive jet engines (above) run more efficiently and reliably.

This week it revealed Perdix, a single common platform designed to be used for many different types of industrial systems monitoring and analytics, rather than the thousands of separate, incompatible systems that are in use today. 

Story continues...

No U-Turn: Microsoft - Nokia Deal Imposes Ballmer Strategy On Next CEO

Ballmer  1 of 1

Microsoft's acquisition of Nokia's business groups leaves little room for the next CEO to choose a different strategy from the current "devices and services" focus of outgoing CEO Steve Ballmer.

Story continues...

Giving Microsoft Free Advice: The Best So Far…And My 2 Cents

Ballmer  1 of 1

There has been rush from people (journalists and bloggers) who have never run a lemonade stand or any business, to give copious free advice to Microsoft [$MSFT] in the wake of CEO Steve Ballmer's resignation. 

I read some of them, the best one so far is from John Gapper at the Financial Times. His advice is simple: 

Story continues...

Amazon AWS - An Unbeatable Cloud Competitor?

When Amazon cuts prices on its cloud services everyone else follows – and sometimes their share price also gets cut.

David Linthicum in his Cloud Computing column writes: The proof is in: Amazon fully controls the cloud

Story continues...

As Business Risks From Spies And Hackers Rise, OpenText Offers To Bring Cloud Services In-House

OpenText  1 of 1

OpenText, based in Waterloo, Ontario, is betting that CIOs will want to reduce their organization's use of cloud-based services and bring them in-house because it will eliminate complexity, risk, and cost.

The company specializes in enterprise information management systems. It recently announced its Web Experience Management (WEM) software suite designed to help enterprises boost their marketing and sales through more effective web sites and digital marketing. OpenText believes it makes more sense to run the software in-house.

I recently met with Kevin Cochrane (above), CMO of OpenText. Here are some notes from our conversation:

Story continues...

Rethinking The Cloud - The Need For Cloud-Jumping Enterprise Applications

Google-funded CliQr helps enterprises move any application to any cloud. Turning cloud providers into commodity services.

By Gaurav Manglik, CEO CliQr Technologies

For many businesses the promise of cloud computing has been the ultimate paradox. What company can argue with having access to almost infinite, third-party supplied and staffed information technology resources on-demand, topped off with a utility billing model that allows companies to only pay for what they use?

Story continues...

From Big Data To Chief Of Data - The C-Suite Opens Up

Skytree, a vendor of business analytics software, commissioned a survey that found nearly one in five companies have opened up their C-suites to Chief Data Officers, and about one quarter have created data science departments.

The survey also found that even though many companies have data scientists, more than 60 per cent of them have a poor knowledge of advanced data analytics techniques.

The full survey is here: 2013 Big Data Analytics Report | Skytree – Machine Learning on Big Data for Predictive Analytics

- - -

Automated data analysis is certainly cheaper than paying a salary but, there's no one to fire if the box gets it wrong.

SpiderOak: A Simple Best Solution To Privacy In The Cloud

SVW Spideroak

I recently met with Ethan Oberman (above) CEO and co-founder of SpiderOak, a cloud based data storage service used for backups or syncing data. It promises a very high level of security because everything is encrypted -- SpiderOak has no idea what you are storing.

This is the same strategy that Kim Dotcom, the infamous founder of Megaupload has recently taken with his latest storage venture Mega. Megaupload was shut down by US authorities because it is alleged that it stored huge quantities of pirated movies and other copyrighted materials.

Here are some notes from my conversation with Ethan Oberman:

Story continues...

SAP Analytics Goes To The Superbowl

SAP, the enterprise business software company, plans to showcase its business analytics technologies and its HANA real-time platform, during the run up to the Superbowl by applying them to the National Football League's selection process for the Fantasy Player of the Year.

It has created a live dashboard at that publishes statistics around the top eight finalists.

Story continues...

Identropy Focuses On Cloud And User Interface Design For Identity Management Edge

Identropy recently launched its SCUID Identity Management system, which takes an interesting approach in reducing the considerable costs of integrating and deploying such systems within the enterprise.

I can't count how many times I've been pitched about identity management systems over the past two decades and it's still happening to my great surprise because you'd think it would be a standard solution intrinsic to every enterprise environment.

Clearly, it's not easy to produce an ID management system that works well, or that doesn't have high implementation and admin costs. And with the added complexity of semi-open but always-connected corporate IT systems, there's a universe of identity tasks that have to be handled outside the firewall, in addition to the traditional internal needs of large organizations.

I recently spoke with Ranjeet Vidwans, VP of Marketing and Business Development about how SCUID was developed and how the cloud and a core focus on user interface design promises a breakthrough in ID management systems.

Here are some notes from our conversation:

Story continues...

SAP Launches Real Time Business Apps Suite

Hasso Plattner

SAP, the world's largest business software company, launched a suite of enterprise business applications running on its real-time platform HANA, that it says provides massive increases in performance and advanced analytics capabilities.

The company provides most of the world's largest business groups with enterprise IT applications used to run their core business operations.

Hasso Plattner (above), SAP co-founder and chairman, announced the business software suite at SAP's Silicon Valley Research campus, as part of a global launch in New York, and Frankfurt, Germany.

He said that the increase in business app performance is so great that SAP had been accused of "hype" by sceptics. Some applications can run several hundred percent or more faster on the HANA platform, largely because the underlying database technology is loaded into massive solid state drives.

"This will change how our customers do business and they are very excited," he said. "We are even winning over startups, they are saying that they never thought they would be working with SAP."

Story continues...

Tufin: Rethinking The Enterprise Security Model

I recently spoke with Ruvi Kitow, CEO and co-founder of Tufin Technologies, which provides firewall policy management tools for very large companies.

Tufin is interesting because it is rethinking the way firewalls should be managed. It's because of rise in the number of applications being produced by enterprises.

Firewall administrators are spending more of their time dealing with application related change requests. Yet the app developers know little about firewalls and potential conflicts, or security holes. Earlier this year, Tufin launched SecureApp, a suite of admin tools to help manage this important security relationship between apps and firewalls.

This application centric approach to enterprise security is a different way of thinking about security. Here are some notes from our conversation:

Story continues...

Intel Itanium Will Merge With Xeon line, HP Announces Mission Critical Systems

The Intel Itanium microprocessor architecture will be merged with Xeon microprocessors sharing essential on-chip features but will remain a distinct product, in a bid to reduce development costs and guarantee continued support.

Intel also announced a new Itanium microprocessor designed for high-end mission critical systems such as HP's co-announced Integrity Superdome 2 high-end servers.

Story continues...

Tibco: 'Everything Is Different' In IT Enterprise

Chief Marketing Officer Raj Verma.

I recently returned from Las Vegas and Tibco Software's user conference, TUCON12. It was a good place to catch up with Tibco, one of my most loyal and longtime sponsors.

This year the theme was: "Everything is different. How do you prepare for the future when everything keeps changing?"

The need for an agile IT infrastructure that can respond in real time and also anticipate what's coming next is more important than ever.

Tibco's technologies live in the very heart of large corporations' IT systems, they tie many different systems together, and they also unite employees and partners into social enterprises that unlock the tremendous stores of knowledge and experience already within organizations.


Tibco's Tibbr social network app has more users than Yammer, which was bought recently by Microsoft for $1.2 billion. Yet often, Tibco doesn't receive the recognition from the stock market for the value of its business groups.

Ram Menon, president of Social Computing at Tibco (above) says that Tibbr is a strategic asset that has become a vital component in its stack of enterprise IT technologies and there are plans to expand its usefulness. In November a new version of the Tibbr suite will be opened up to external developers. He says that people are the real API of an organization and Tibbr is the best expression of a company's top asset.

Mr Menon said that Tibbr is finding new users all the time, including by police authorities. Jay Grant, Secretary General of InterPort Police, (above, speaking with Ram Menon), said that Tibbr allows police to quickly span the globe with information that can be used in real time to stop terrorists and smugglers.

David Kirkpatrick, (above) formerly a senior editor at Fortune, and now heading the Techonomy conference, moderated several panels at TUCON12.

The panel on Big Data featured: Justin Eggart, General Manager GE Energy; N.X. Morini Bianzino, Senior Manager at Accenture; Sandeep Dadlani, Head of America at Infosys; Fabrice Pizzi, Chief Information Security Officer at Eiffage; Michael Swartz, Strategy and Business Development at Perkin Elmer. A key takeaway was that "Big Data" is less important than the right data at the right time. Context of data has been a key theme at Tibco for many years.

James Murren, Chairman and Chief Executive Officer of MGM Resorts International.

John Shewell, Director, Product Management at McKesson Provider Technologies delivered some very scary statistics about the cost of healthcare in the US and the need for technologies that can anticipate where care is needed. He said that about 5% of patients consume about 50% of healthcare costs.

Tibco announced support for Tibbr from Dropbox, COO Dan Levin above.

Scott McNealy, co-founder of Sun Microsystems, now chairman of Wayin also spoke at the conference (video below).

More info:

Vivek Ranadivé - Real Time With Vivek - Forbes

TIBCO: The Dark Horse of Enterprise Social Software? - Forbes

Tibco's Tucon is an Event About Events

Big Data is watching a million fireflies | Successful Workplace

TUCON® | Streaming - Day One

TUCON® | Streaming - Day Two

The TIBCO Blog

Tech Trailblazers: Awards For Enterprise Tech Startups

Friday is the deadline for entries to Tech Trailblazers, which will award prizes to startups in nine enterprise tech categories: big data, cloud, infosecurity, mobile, networking, storage, sustainable IT, emerging markets and virtualization.

Rose Ross, founder of Tech Trailblazers, describes the awards as "a kind of Startupworld focused on enterprise IT."

The prizes consist of about $50,000 worth of services, "Exclusive coaching, mentoring and development from VCs, financial experts, and leading CTOs within large industry-vendors in their technology area."

Two runners up in each category will also receive prizes. All entrants will receive some form of services valued at about $3,000 per company. The total prize fund is estimated at $1 million in value.

The winners will be announced December 3. Entry costs $295 for the first category, additional entries are $150 each. There are 34 judges.

How to Enter | Tech Trailblazers

GE Software: A Massive Startup In The Bay Area

One of the largest startups in and around Silicon Valley is GE Global Software in San Ramon, California, a brand new division of giant General Electric, built from scratch into an organization of 400 engineers, growing to as many as 800 software engineers and researchers by year end.

Betting big on software is a key business strategy for GE. The business group's annual revenues were more than $142 billion in 2012. In 2008 they were nearly $180 billion. Software businesses have high profit margins especially if they can be applied across a large user base. 

Software is a far more scalable business than services, which are constrained by staff numbers. And software can be used to help scale some types of services and save on staff costs, all great reasons for GE to invest in software. 

Its goal is to create a unique asset, a cutting edge software group capable of supporting the many varied business groups that make up GE's industrial conglomerate. From monitoring jet engines to building sustainable energy projects, the breadth of GE's software needs cross a wide spectrum of applications.

It will require common software platforms that can integrate many different applications, plus development of cutting edge user interfaces, and the integration of hundreds of tools and third party technologies.

It's a massive undertaking that's being led by William Ruh, vice president and director of the Software group. He was formerly vice president at Cisco Systems, where he headed global development of services and solutions.

I visited GE Software at it's headquarters in San Ramon (above), a place that locals like to describe as being half-way between San Francisco and Silicon Valley, (if you head 30 miles east of both).

Here are some notes from my meeting with Mr Ruh (photo top).

Story continues...

Is CliQr The Key To Google's IT Ambitions?

CliQr Technologies today emerged from stealth mode with the announcement of a cloud based service that can port large enterprise applications to any cloud platform in under one day.

If the Palo Alto based startup can deliver on its promise it could result in significant IT cost savings. Enterprise applications are notoriously difficult to rewrite for cloud platforms and their performance can be unpredictable.

Story continues...

Advice From A Top VC: Big Data Insights From 'Cloud' Companies And The 'Death Of McKinsey'

Silicon Valley VC firm Emergence Capital Partners was an early investor in and now works exclusively with cloud-based startups primarily focused on business customers. Gordon Ritter writes that they can learn a lot from consumer services companies.

By Gordon Ritter

Consumer internet companies have always been good at harnessing behavioral data from their customers to serve their customers better (and help themselves in the process). Many enterprise cloud companies have the same opportunity but have not focused on the importance of this data.

Story continues...

HP Labs Breakthrough In Data Center Power Use

Researchers at HP Labs said they have developed a way of managing energy use in data centers that can save as much as 30% in power costs while at the same time lessening dependance on power utility grids through the smart use of local reusable energy sources.

Story continues...

Iceland's Green Computing Cloud - Renewable Energies Fuel Data Centers

(Steam rises from the Svartsengi geothermal plant in Iceland.)


I've long been interested in Iceland's potential to become an important platform for server farms because of its natural abundance of geothermal sources, and its position mid-way between N. America and Europe. As the carbon-content of computing becomes more important as a competitive edge, Iceland clearly has a future role to play.

By Intel Free Press

It does not sit in London, Tokyo, Beijing or New York. It is not humming along deep inside a corporate skyscraper.

No, one of the world's newest supercomputers - and apparently among the world's greenest - was recently fired up inside a low-slung grey building with red trim on a windswept plain outside Reykjavik, Iceland.

Story continues...

Former Senior Oracle Exec Gary Bloom Heads Mark Logic

Gary Bloom has been named CEO of Mark Logic, which returns him to his database roots. This is an interesting appointment and shows that the board of Mark Logic is trying to spruce up the database company and either dress it up for sale or try to expand it's business.

He was at one time considered a possible successor to Larry Ellison, founder of Oracle. Mark Logic is used in several interesting media publishing applications.

Here's Mr Bloom's history:

Former vice chair and president of Symantec Corporation, where he led the company's line of business organizations and corporate development efforts. Gary joined Symantec through the company's merger with Veritas Software where he was the chairman and CEO. Before joining Veritas, Gary held senior executive positions at Oracle. During his 14-year career at Oracle, Gary led Oracle's database business, worldwide marketing, support, education, and alliance organizations, and was responsible for mergers and acquisitions.

I interviewed former CEO David Kellog: Mark Logic's David Kellogg - Creating Media From Unstructured Content - SVW

Thought Leaders: JP Rangaswami - Chief Scientist At recently held its Cloudforce conference. I caught up with its Chief Scientist JP Rangaswami, who's based in the UK.

Story continues...

Lessons For HP From Outgoing IBM CEO

Sam Palmisano, the departing CEO of IBM, told Steve Lohr, of the New York Times his game plan for the company can be captured in answering four questions:

Story continues...

Tibco's CTO Matt Quinn: "I'd Do This Job For Free"

(I'm in Las Vegas this week attending Tibco's user conference. Tibco is a founding sponsor of SVW and has been a strong supporter of my work for many years.)

Tibco Software is an interesting company, it is doing extremely well, it's on track to report nearly $1 billion in revenues this year. Its software helps enterprises integrate their IT systems, analyze data in real-time, and deploy social business software. It's a complex mix of many important technologies central to the core of very large businesses in financial services, telecoms, energy, retailing, and more.

Yet few people in Silicon Valley have heard of Tibco, even though it's located right at the heart of the valley, next to Hewlett-Packard in Palo Alto, and its founder and CEO Vivek Ranadivé has been here for more than three decades and is well connected with its top movers and shakers.

Story continues...

Business Technologies That Shook The World...

Dell has produced an interesting infographic about important business technology achievements, a very large infographic. [Is it too large? How long can you go before you need an infographic to explain it...?]

Hat tip John Barnes.

Story continues...

Marc Benioff Seems Like Larry Ellison...

Dreamforce 2011 has taken over downtown San Francisco, closing down streets, just like Larry Ellison's Oracle World.

Story continues...

ServiceSource Finds Billions Of Dollars In Service Revenues

ServiceSource is in a sweet spot in that the move to cloud computing and sofware as a service drives a growing need for tools that help companies manage recurring service revenues such as maintenance contracts.

Story continues...

Altimeter Group: Dealing With Deaf Corporations... Who's Listening?

(Charlene Li, founder of Altimeter Group listens to Patrice Lamothe, CEO of Pearltrees.)

I have a soft spot for the Altimeter Group, a pioneering band of consultants founded by the impressive Charlene Li, with a mission to educate corporate America about the value of listening and engaging with customers.

It's tough work. Wednesday evening we heard Susan Etlinger, Industry Analyst at Altimeter, speak about her latest research and lamenting the fact that most corporations have no frameworks or methods in place to make sure that everyone "listens" to customers. There's no incentive built into company cultures to "listen."

Story continues...

Consumerization Of IT: Intel Allows Staff To Use Their Macs

(It took a while - first pilot program was in 2006 but Intel's IT department has now OK'd the use of Apple computers - Aaron Tersteeg (above) took part in the first pilot program.)

By Intel Free Press

Putting Apple MacBooks to work behind the corporate firewall is something many small Silicon Valley startups may have been doing for years, but it may be less likely inside larger, established companies that rely upon heavily protected enterprise networks to manage email, store documents and dispatch software to employees around the world.

That is about to change inside Intel.

Story continues...

Pervasive Software: Betting On A Big Data Hadoop Future

I recently met with Mike Hoskins, EVP & CTO of Pervasive Software, based in Austin, Texas. It's an interesting company that combines a large legacy database management system with developing technologies for big data applications around the Hadoop database.

Here are some notes from our meeting:

Story continues...

Is Cisco's Management By Committee To Blame For Woes?

Over the past couple of years Cisco has shifted management responsibilities to internal committees, as many as 59 or more.

John Chambers, CEO, has spoken about how it was initially difficult for him to change from the traditional top-down management structure. But he also said that the collaborative approach to management was working and making Cisco into a better competitor.

But was this assessment correct?

Therese Poletti, columnist at Marketwatch believes that the committee structure is not helping Cisco and should be ditched. And she found an analyst that agreed.

"That structure makes sense on paper, but you just wonder if people are spending too much time collaborating and in meetings," said Brian White, an analyst with Ticonderoga Securities.

..."People at Cisco are constantly going to meetings and a lot of PowerPoint presentations," said White, who has a buy on Cisco. "I just wonder if everyone has the time to innovate as much as they would like or as much as the company would like. You are constantly shuffling around from meeting to meeting."

Cisco should ditch committee structure Therese Poletti's Tech Tales - MarketWatch

Cisco spokeswoman Karen Tillman told Ms Poletti that the committee structure would be reviewed by Cisco but would likely not be changed. "But I think what will change is the accountability."

Product managers etc, can be fired but it is tough to make a committee accountable and fire the lot. Maybe Mr Chambers will make an example of a committee or two in that way -- as a motivator for the others.

However, can management by committee, or councils as they are known internally, really work for a tech company dealing with fast moving markets?

Cisco is a large company, which naturally slows its reaction time. And committees are not known for speeding up decision making. Combining the two appears to be very risky indeed.

Dell Boosts Cloud/Service Investments By $1bn

Dell this morning said it would invest $1 billion in expanding its solutions and services group especially in cloud and virtualization IT.

Steve Schuckenbrock, President of Dell Services said that the $1 billion does not include M&A. Dell has made several acquisitions over the past year. It recently said it would consolidate its N. California acquisitions within a new Silicon Valley Research and Development Center.

Story continues...

Will HP Buy Or Merge Its Way Out Of Trouble?

Some analysts believe that Hewlett-Packard's new CEO Leo Apotheker, will use acquisitions to help bolster Hewlett-Packard.

Christopher Baum, at Software Advice, takes a look at 14 possible acquisition targets.

HP Mergers & Acquisitions: Who's Next?

It's an interesting list but I disagree with several of the choices especially his top choice: SAP.

Story continues...

Microsoft Considered Green Server Farms In Iceland

I've been intrigued by Iceland and its large reserves of geothermal energy, which is essentially zero-carbon power; and by its location: mid-Atlantic between North AMerica and Europe.

You'd think this would make it a great location for large server farms, especially since it now has high speed trans-Atlantic data links.

Story continues...

Plaxo Moves Out Of Social Networking

Plaxo is phasing out its social network features as it prepares for a major relaunch on March 16 (details later) and moves back to its roots: managing users address books.

Story continues...

This Is What The Internet Looks Like...

PEER 1, an IT hosting provider, has produced a visual interpretation of the Internet. It identifies 19,869 autonomous system nodes with 44,344 connections.

The sizing and layout of the autonomous systems are based on their eigenvector centrality, which is a measure of how central to the network each autonomous system is: an autonomous system is central if it is connected to other autonomous systems that are central. This is the same graph-theoretical concept that forms the basis of Google's PageRank algorithm.

The Map of the Internet image layout begins with the most central nodes and proceeds to the least, positioning them on a grid that subdivides after each order of magnitude of centrality. Within the constraints of the current subdivision level, nodes are placed as near as possible to previously-placed nodes that they are connected to.

Map of the Internet 2011 | PEER 1 Hosting Blog

IBM Invites Thousands To "Social Business Jam" - Business Debate Or Lead Gen?

IBM uses "Jams" online meetings that can include tens of thousands of employees to brainstorm around specific subjects, and it often talks about how they are very successful.

IBM is planning a "Social Business Jam" from February 8 to 11, inviting thousands of "leaders" from outside of IBM to look at the evolution of business.

Story continues...

Tibco Launches tibbr: Social Computing For The Enterprise

Vivek Ranadivé, (above) CEO of Tibco Software today launched tibbr, described as a social computing tool for the enterprise.

It uses a similar approach to Facebook and Twitter that allows staff to "follow" each other and subscribe to specific subjects within the corporation.

The tibbr software is available as a cloud-based service or in-house for $12 per user per month.

A key feature is that tibbr allows users to "follow" a specific subject rather than having to follow a person and see everything that they publish.

"I like to follow Shaq on Twitter but I'm not interested in what Shaq had for lunch. But I am interested in what he has to say about basketball games," said Vivek Ranadivé, founder and CEO of Tibco.

Tibco said it has filed for patent protection around this idea of subscribing to subjects rather than people.

Story continues...

Talent Wars: Salesforce Builds On Its Momentum With Rangaswami Hire has been on a tear this year with financial results exceeding Wall Street estimates; a massive expansion of its headquarters in San Francisco; a gift of $100 million to build a Children's hospital; and now: luring JP Rangaswami, Chief Scientist at UK Telecom giant BT to assume the same position at Salesforce.

Larry Dignan, writing at ZDNet, reports:

...Rangaswami will contribute to the company's product strategy and be an evangelist for cloud computing around the globe. Rangaswami will focus on European customers and preaching real-time collaboration.

...In a statement, CEO Marc Benioff said Rangaswami has "the rare talent of being able to see what the future should be, knowing what it takes to get there, and the enthusiasm to make it happen."

Mr Rangaswami's Telco background should be useful to Salesforce as it seeks to expand its business. Telcos around the world are moving into offering cloud-based IT applications and services to enterprises.

Softbank, the Japanese Telco, recently made a deal to offer Broadvision's cloud based Social Business suite to Asian corporations.

Giovanni Rodriguez, Chief Marketing Officer at Broadvision, said: "That's a very smart hire by Salesforce, it will help expand the "social" side of its business. JP is very good at starting trouble and getting people to talk about key concepts."

Mr Rangaswami is a well known blogger writing on confused of calcutta - a blog about information (and food).

He has also been spending considerable time in SIlicon Valley because he is on the board of Ribbit, an innovative web telephony Silicon Valley startup that BT acquired in mid 2008 for $105 million.

He has driven innovation within BT by opening up the BT communications platform to third-party developers. Last summer I visited BT's operations in London and met with key researchers.

(Please see: UK Diary: Tuesday - It Never Rains But It Pours . . . More BT Innovation - SVW)

Marc Benioff, the CEO and co-founder of Salesforce continues to do well in positioning the company on the commercial edge of the expanding wave of cloud computing growth and its acceptance by large enterprises.

He has built San Francisco's largest technology company.

Broadvision Relaunches Clearvale, Takes on Jive Directly...

Broadvision has relaunched its Clearvale social business platform; allied with Softbank, the Japanese telco; and has begun a marketing campaign that targets rival Jive Software.

Earlier this year, Broadvision reinvented itself as a social business platform that lets enterprises create multiple social business networks.

[Please see: Broadvision Reboots Its Business As A Collaborative Enterprise Platform - SVW]

The second generation Clearvale platform features new capabilities that allow businesses to use Clearvale as a platform for selling their services, called Clearvale Paasport, (for platform-as-a-service).

Giovanni Rodriguez, CMO at BroadVision, said, "The new capabilities of Clearvale will allow businesses to sell their services through the cloud. Softbank is one of our largest business partners and it plans to sell a lot of telco services using Clearvale Paasport. We believe that selling applications through the social layer will be a very successful business strategy for our customers."

Pehong Chen (pictured above), CEO of Broadvision, hopes to raise the company's profile in social business by targeting rival Jive Software in a series of ads, and a micro-site around the idea of "No Jive Talk."

Broadvision is part of an emerging group of companies that are targeting social business applications in the enterprise. As businesses around the world try to harness the powerful virality of social networks, Broadvision and others, are bring the tools and platforms to the enterprise. It is potentially one of the largest trends within enterprise software for this decade.

PwC Shares Its Insights Into The Cloud And Enterprise IT

Last week I attended an event organized by PricewaterhouseCoopers, featuring some of their top tech consultants.

Here are some of my notes:

Phil Garland: This is an interesting time to be a CIO. Traditionally, the CIO has had three roles: managing operations, managing vendors, and innovation and strategy. The focus on these three roles tends to vary depending on the economy, the state of the market, etc. There has been a shift in the past 12 months towards looking at the CIO to drive innovation within the organization.

Story continues...

PwC: Latest Trend Is Hackers Targeting M&A Information

I popped into PricewaterhouseCooper's event on trends in enterprise IT (full report coming). During the presentations from top PwC advisors, Gary Loveland, head of the Global Security practice talked about "advanced persistent threats."

These are large scale, persistent security probes of corporations, very similar to those attacks on Google and other large companies reported earlier this year. They are very sophisticated attacks and very targeted, collecting information about corporate security systems over a long period of time and probing for specific types of data.

Mr Loveland said that most of these attacks can be traced to China or North Korea, but that organized crime groups are also involved and sometimes mask their tracks by making it seem as if they come from other countries.

He said that a recent trend is in collecting data related to possible mergers and acquisitions data. Such insider information would allow stock traders to make large amounts of money buying options on public companies. Acquisitions typically provide a premium of 20 to 40 per cent over the trading price of a stock.

Juniper Moves Into Mobile Security As Malware Attacks Jump 250%

Juniper Networks announced that it has moved beyond the router and extended its business to providing mobile security systems including the world's first global threat and research center focused on mobility.

The move follows corporate adoption of smartphones and the need to manage security across all devices connected to the corporate network.

The Junos Pulse mobile security suite provides several dozen security applications, such as being able to wipe data remotely if a device is lost or stolen; and protect against persistent malware threats.

The company said that its new Juniper Global Threat Center will provide 24/7 monitoring of security threats due to research that shows malware threats focused on mobile devices have increased 250% since 2009.

Additional research findings:

- Nearly 80 percent of users access their employer's network without their employer's knowledge or permission and 59 percent do so every day.

- Analysis of Android Market applications capable of malicious activity showed that 1 out of every 20 applications requested permissions that could allow the application to place a call without the user's knowledge.

- A Fortune 15 company found that 5 percent or 25,000 of its mobile devices were infected with malware.

- A 250 percent increase in malware from 2009 to 2010.61 percent of all reported smartphone infections were spyware, capable of monitoring communication from the device.

- 17 percent of all reported infections were text message Trojans, which charge fees to a device's account holder.

- More than 76% of consumers surveyed use their smartphones or tablets to access sensitive personal or business information, including: 51% to enter or modify passwords; 43% to access banking or credit card statements; 30% to access utility bills; 20% to share financial information such as credit card numbers; 18% to access employer's proprietary information; 17% to access medical records; and 16% to share social security numbers.

- Of the 16 countries surveyed, India (90%) showed the highest level of user concern for mobile security issues, followed by Brazil and Russia (88% each), Germany (86%) and China and Italy (both at 85%). Respondents in Hong Kong (70%), Belgium/Netherlands (74%) and the US and Japan (77% each) were the least concerned by comparison.

- Business and personal use varied by region and country, with personal use dominating in Canada (72%), Japan (70%), France (67%) and most other countries. China, Russia and Brazil were the leading exceptions with 75%, 65% and 61% combined business and personal use respectively -- and Belgium/Netherlands reported the highest business-only use (12%).

- Responses varied even more widely on the question of accessing employer networks without the employer's knowledge or permission. Smartphone/tablet users in the US were the most conservative, with only 52% admitting to unauthorized access. Brazil, Russia, Japan and Italy were the most aggressive, with 94%, 93%, 90% and 90% respectively admitting to unauthorized access.

- Password protection levels were fairly consistent across countries, with only 10% to 20% not having passwords -- with the exception of US respondents, where 25% reported not being password protected, and India and Singapore where only 8% and 6% reported not being password protected.

- Concern levels about specific threats were also fairly consistent, with the exception of India and Brazil where concerns about phone/data loss (84% India, 75% Brazil), parental controls (77% India, 72% Brazil) and identity theft (87% India, 82% Brazil) were well above the norm. Russia and Singapore were also well above the norm for phone/data loss (68% Russia, 79% Singapore) and identity theft (82% each), though within the normal range of concern about parental controls (55% Russia, 47% Singapore).

- Respondents in the US were among the least concerned -- only 43% for phone/data loss, 43% for parental controls and 46% for identity theft. Belgium/Netherlands was less concerned on phone/data loss, with only 41%. Japan was less concerned on one threat, with 40% for parental controls.

The survey was conducted via global omnibus surveys by phone and online during October 2010 with more than 6,000 smartphone and tablet users from a pool of 16,000 consumers across 16 countries, including the United States, Canada, Brazil, UK, France, Germany, Italy, Netherlands, Belgium, Russia, China, India, Australia, Hong Kong, Singapore and Japan. The survey was conducted by KRC Research and Synovate on behalf of Juniper Networks.

- - -

Webcast of launch.

BitTorrent Close To Launching Live Streaming Technology

Tuesday evening I attended a media roundtable at Boulevard in San Francisco with top executives from BitTorrent, which invented the popular file sharing technology that has about 80 million monthly users.

Here are some notes from my evening:

- BitTorrent has been working on a live streaming technology for two years and now it is almost ready to be rolled out. The company expects to launch it by the end of this year. It is described as very robust. [I wonder if it could cut down on the practice of sharing illegally copied music or movies if you can watch content through live streaming. Also, you could effectively host your own YouTube, you wouldn't need to upload video to a hosting site.]

- The company is trying to distance itself from the use of BitTorrent by those sharing files of illegally copied music and movies and show the commercial sector that it can be used to solve significant issues around distribution of large files across the entire Internet. It did consider changing its name.

- BitTorrent doesn't know very much about how people use its technology. It says it doesn't want to collect too much information because it doesn't want to encroach on user's privacy.

- It is looking into launching a service that helps connect like minded BitTorrent users. It has the capability to message each user.

- The BitTorrent technology is not very privacy-friendly because of the peer-to-peer connections it is easy for anyone to find out the IP addresses of people sharing a specific file. But using BitTorrent through a VPN connection does improve user privacy.

- BitTorrent this week launched an App platform and it is also working with artists to power a shared film festival, and also with TED to distribute videos.

BitTorrent Debuts 'Apps' Sneak Peek

BitTorrent Spotlights Artists in New Pilot Program

BitTorrent Delivers Unique Media To Users Through Two New Apps

- The company changed its protocol earlier this year to avert a problem in which ISPs were blocking BitTorrent file sharing because it was taking up too much bandwidth. The new protocol automatically detects if bandwidth is in short supply and slows down the transfer until more bandwidth is available. This can speed up file sharing because there is no blocking.

- The number of users has jumped from 20 million monthly two years ago to as much as 100 million during some months. Much of this growth has come from emerging economies, such as Russia, where more than 50% of Russian males between the age 18 to 34 years use BitTorrent.

- BitTorrent "democratizes the Internet and brings the 'cloud' to the edge."

Foremski's Take: I was impressed with the BitTorrent team and I see the technology as almost a fundamental part of the Internet infrastructure. It solves many key problems in terms of moving large data files, such as high res video, between Internet users. There are many legitimate uses -- not the piracy that some BitTorrent users are involved in.

The clever approach to making sure that BitTorrent files do not tie up vast amounts of Internet bandwidth shows that the company is striving hard to be a good citizen and improve the usefulness of its technology.

- - -

I met with Eric Klinker, CEO
Bram Cohen, Chief Scientist and Co-Founder
Simon Morris, VP of Marketing and Product.

Company Overview

Management Team


Oracle Targeting Chip Companies - Will Microsoft And Google Follow Suit?

Back in January I wrote about Apple's A4 microprocessor, the result of its acquisition of PA Semi, more than 2 years ago, for $278 million. At the time I asked where is MSFT and GOOG's custom chip projects? [The Mysterious Apple A4 Chip - Where's MSFT's and GOOG's Chip?]

Now Oracle says it is looking to acquire chip companies too.

The San Francisco Chronicle reports: Oracle looks for chipmakers to acquire

"You're going to see us buying chip companies," Ellison said this week at Oracle's annual meeting in San Francisco. Acquiring chipmakers would extend Oracle's push into computer hardware, initiated in January with its purchase of Sun Microsystems Inc., a server manufacturer.

Ellison said he wants to follow the approach of Apple Inc. CEO Steve Jobs by owning more of the intellectual property that underpins computer chips.

...Oracle may buy a semiconductor company with technology for servers, said Doug Freedman, an analyst at Gleacher & Co. in San Francisco. Potential targets include AMD, IBM Corp.'s chip division and Nvidia Corp., he said.

Building custom chips provides several advantages. A company can embed proprietary technologies that gives its systems key advantages and make it difficult for rivals to copy.

General purpose chips such as those available from Intel, the world's largest chipmaker, offer powerful computing performance but because those chips are available to anyone, it encourages "me-too" competitors.

Custom chips provide an additional barrier to competition and the opportunity to charge premium prices and resist commoditization.

Salesforce Will Extend Chatter Beyond The Enterprise

Marc Benioff, CEO of Salesforce, said that there are plans to extend the Chatter social collaboration tool beyond the enterprise and include business partners and others.

He did not say when this capability would be ready but more details are expected at the company's Dreamforce conference in early December.

"Right now you can add people from outside of the organization but it's not that easy, you have to give them a special ID. We will make it easier to extend Chatter beyond the organization, to business partners, customers and others," said Mr Benioff.

He said that Chatter has been very well received by Salesforce customers. Steve Gillmore, Salesforce's chief blogger, said that Chatter has been used internally in conjunction with the broadcast of a high-level management meeting.

"Chatter provides a very intimate experience and one that is very comfortable. It's different from the use of Facebook and Twitter because everyone is one the same page," said Mr. Gillmore.

Several large customers spoke about the use of Chatter. Rajiv Tibrewala, Senior Manager in Enterprise & Portals at McAfee, the computer security firm, said, "It takes some courage from the leadership of the company because employees do ask some tough questions but it's great to get those questions out into the open."

Salesforce held its press conference outside of the Oracle OpenWorld user conference in San Francisco. Larry Ellison, an investor in Salesforce has begun to talk about cloud computing but Mr. Benioff said that Mr. Ellison doesn't understand the cloud.

"Larry thinks that the cloud means buying a large computer, or running virtualization software. The cloud is not a box, and virtualization software is simply virtualization software, it is not the cloud. We offer services that don't require a starting price of $1 million, that you can try and test yourself, and that offer security and performance straight away. Our services are optimized from the very start."

He said that Salesforce is doing well and expanding into overseas markets. The company will soon open a data center in Japan followed by one in London.

HP Backs Off Oracle Confrontation As Its Value Slides

Hewlett-Packard has backed down in its suit against Mark Hurd, former CEO of HP and now co-president at Oracle:

HP and Oracle Corp. today reaffirmed their long-term strategic partnership and the resolution of litigation regarding Mark V. Hurd's employment at Oracle. While the terms of the settlement are confidential, Mr. Hurd will adhere to his obligations to protect HP's confidential information while fulfilling his responsibilities at Oracle.

HP had filed a civil suit against Mr. Hurd that claimed, "Hurd will be in a situation in which he cannot perform his duties for Oracle without necessarily using and disclosing HP's trade secrets and confidential information to others."

HP has lost considerable value since the departure of Mr. Hurd, losing $6 billion or more than 6% in market cap to $89.3 billion. Oracle has jumped by $22 billion, or 19% to $138 billion over the same period.

It clearly cannot afford a long and protracted disagreement with a key business partner which might further damage its value.

The announcement comes at the beginning of the Oracle OpenWorld conference, which attracts tens of thousands of IT buyers to San Francisco.

The settlement certainly appears to be a defeat for HP. In a story about deal making in the current issue of The Deal, JMP Securities LLC analyst Pat Walravens says:

"There is no better executive who understands the competitive landscape than Mark Hurd. Oracle now has a general who has an exact blueprint of the enemies' battle plans."

That can't be good for HP. There is no way that Mr. Hurd can not use his competitive knowledge.

- - -

Please see: Updated: Could Hurd + Oracle Acquire HP? - SVW

Interview: Zach Nelson, CEO Of NetSuite - The Last Great Software Market...

I recently caught up with Zach Nelson, CEO of NetSuite, a cloud computing company that offers CRM to mid-sized companies. The company is enjoying a surge in business thanks to the downturn and a growing realization among companies about the many benefits of cloud based IT.

Mr. Nelson is a 20 year Silicon Valley veteran. He has worked at Oracle, Sun Microsystems, and McAfee/Network Associates.

Here are some notes from our conversation:

- We have benefited from the recession. Companies have long known that they are spending way to much on maintaining their CRM systems and now the recession has pushed many to the cloud. We have had four quarters of accelerated business.

- I see tremendous opportunities in our markets, I see it as one of the last great software markets because no one vendor dominates the market. The largest companies own between 10 and 20 per cent shares and that's the same the world over.

- SAP is moving into this area with its Business ByDesign but it has a long way to go. We've been at it for ten years, we have a ten year head start. You can't just port your software to the cloud, you have to completely rewrite it. But that's just one small part of what you have to do, you have to figure out the data center issues. SAP is used to mailing a disk and getting the customer to set it up on their data center. It's not that easy. Also, the deal sizes are smaller.

- Social media capabilities will eventually be built into all software. We are adding such features, to help CRM data become more social. But we don't charge extra for that. Making customer data more accessible within corporations makes a big difference, it enables users to run their own reports, for example.

- Security is no longer the issue it used to be. Ten years ago it was the first question from customers but now it is the last one because we have more than 6600 customers. The top question is how does it solve my business problem? ANd it is a different question in each industry. We have many different versions focused on different industry sectors, and we help companies customize the application.

- We have made two acquisitions in the past and we will look at others so that we can gain domain experience. But we don't spend any time worrying that we may be a target.

- Our largest challenge is how do we reach the Fortune 5 million? If your target is the Fortune 500 you can hire a salesforce. But when you are trying to reach the Fortune 5 million you have to adopt different tactics. The deal sizes are smaller but you still have to offer services that help customize the application.

- Smaller companies aren't much different from larger companies, they have similar problems to solve but different resources.

- Large companies are using NetSuite for their overseas operations. It's far easier to deploy. We see a lot of demand at the departmental level.

- The Internet is very important to businesses and if you don't have the Internet in the core of your business you will lose out to competitors.

- We want to become the Salesforce of the medium sized business market, that's the opportunity.

Updated: Could Hurd + Oracle Acquire HP?

Several weeks ago I asked if Oracle might try to acquire Hewlett-Packard, and I speculated that Oracle could hire Mark Hurd, the ousted CEO of HP, for the job of integrating the company.

At least one half of that scenario has occurred with Oracle saying late Monday that Mark Hurd has replaced Charles Phillips as co-president of Oracle.

Is the stage now set for Oracle to mount a bid for HP?

- HP remains leaderless and that makes it vulnerable to be acquired.

- HP would provide Oracle with enormous and highly profitable consolidation opportunities with its Sun Microsystems acquisition.

- An Oracle/Sun/HP plus the 45 plus other acquisitions over the past 10 years, would make a company capable of competing against all of IBM. It would create a West coast versus East coast tech rivalry that would span the globe.
(Chart is from Stephen Jannise at Software Advice.)

However, an acquisition of HP by Oracle would be terrible for HP staff and for Silicon Valley's already high unemployment rate. Tens of thousands of people would lose their jobs (especially all the anti-Hurdists at HP).

HP has a market value of about $93 billion compared with about $95.3 billion in the wake of Mr. Hurd's departure. Oracle stands at $121 billion, a $5 billion increase over the same period.

Yes, it is a big pill to swallow however, it would enable Larry Ellison, CEO and co-founder of Oracle to perform an end run in the massive global IT market and also leave a substantial legacy on his upcoming retirement.

If there is one thing we know about Larry Ellison is that he is motivated by big goals. Is this one too large for him?

That's for him to decide.

UPDATE: If Oracle is serious about going after HP it will begin a campaign of trying to devalue HP in a war of words. This may have already begun.

This morning HP said it had sued Oracle over the employment of Mark Hurd in a civil complaint that he has violated prior agreements to keep HP trade secrets confidential.

Oracle responded with:

“Oracle has long viewed HP as an important partner,” said Oracle CEO Larry Ellison. “By filing this vindictive lawsuit against Oracle and Mark Hurd, the HP board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees. The HP Board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace."

HP could lose large amounts of business. The announcement was made after the close of markets. It will be interesting to see how investors react on Wednesday.

It will be interesting to see if Oracle makes further comments about HP that could lead to a loss of investor confidence in the company.

- - -

Please see: Could Mark Hurd end up at Oracle? Therese Poletti's Tech Tales - MarketWatch

Therese Poletti speculated that Mark Hurd could end up at Oracle just hours before the news was announced.

Could Mark Hurd end up at Oracle? Therese Poletti's Tech Tales - MarketWatch

Last week, a little-known analyst quietly unearthed some interesting news about Oracle. Ryan Hunter, an analyst with Wedge Partners, a firm with offices in Edgewood, Colo., and New York, wrote in a report that Charles Phillips, co-president of Oracle, has lost some of his turf, and speculated he could be on his way out.

Phillips, an Oracle co-president along with Safra Catz, was replaced as the head of global business units by Bob Weiler, a former CEO who came in via an Oracle acquisition, Hunter said. Weiler is the former CEO of Phase Forward, a developer of applications for life sciences and health care acquired by Oracle in April for about $685 million. The change leaves Phillips responsible only for sales and marketing, Hunter said.

"Usually when you see this type of boardroom shuffle, it's not a positive sign," said Hunter. "Oracle said they are just reshuffling the deck but they didn't really justify it." Hunter added that if Phillips were to depart, it would not be a big negative for Oracle.

Also, Wall Street Journal caught wind of it on Sunday:

Mark Hurd in Talks With Oracle -

McAfee Mystery: Intel CEO Prioritizes Security Via Charlie Rose

There has been much written about why Intel offered an astonishing $7.7 billion for McAfee, the PC anti-virus maker.

I've been an Intel watcher for more than 25 years and I'm struggling to make sense out of this deal.

I've also been reading other Intel watchers trying to make sense of the deal. The most recent attempt is by Jon Stokes at Ars Technica: Why Intel bought McAfee

His article doesn't answer the headline but here is a fascinating snippet:

At the most recent Intel R&D day, Intel CTO Justin Rattner did a Q&A session with the press in which he was asked something to the effect of, "What do you spend most of your time working on these days?" Rattner didn't hesitate in answering "security."

He then told an anecdote about how he was watching Intel CEO Paul Otellini being interviewed by Charlie Rose, and Otellini told Rose, "I've given our company a charter to make [security] job one." Rattner laughed and told us that this statement seemed to come from out of the blue, and it took him and other Intel execs by surprise. But from that day forward, Rattner was focused on security.

Wow. Is this how Intel's CEO sets priorities within the company? Is this how he communicates Intel strategy? Through Charlie Rose?

Justin Rattner is head of Intel's research labs. You would think that he would already know what his priority should be directly from the top and not from a TV show.

How did Mr Otellini communicate to the company that its charter was "to make security job one"? Yet for one of Intel's top execs, and his colleagues, it came "from out of the blue."

What's going on at Intel? Does anyone at Intel, apart from Mr Otellini, know?

BroadVision Launches "Clearvale SecondFloor" Speaker Series

Wednesday evening BroadVision launched the Clearvale SecondFloor speaker series focused on thought leaders in enterprise 2.0. Clearvale is BroadVision's name for its collaborative enterprise platform.

Charlene Li, founder of the Altimeter consulting group, was interviewed by Pehong Chen, CEO of BroadVision. The event was video recorded by, the Chinese Internet giant, on the second floor of BroadVision HQ in Redwood City.

The series is the creation of Giovanni Rodriguez, CMO of BroadVision.

Here are some notes from the evening:

- Charlene Li spoke about her new book Open Leadership: How Social Technology Can Transform the Way You Lead.

- She spoke about her upbringing in Detroit as the daughter of parents from Taiwan and Hong Kong. She said she felt very much an outsider, living in the heart of a working class community of Polish, Irish and Italian. But this outsider feeling has proved useful to her career in being able to gain insights into companies and trends.

- Charlene Li worked for many years as a reporter. She joined the San Jose Mercury in 1993 and went to Boston where she helped run local newspapers. She has been passionate about communities for 14 years.

-Pehong Chen has a large following in China for his video interviews with CEOs and key thought leaders. He asked questions about Ms. Li's book and about the importance of being "open."

- Charlene Li said having an open leadership requires a change in culture and it can be done slowly and it can start small. Create a "sandbox" and then gradually expand that sandbox to include more and more of an organization.

- She said management has to give up the concept of control. It's not anarchic, it takes discipline to not try to control everything. She gave the example of the US navy allowing 8 bloggers to visit the USS Nimitz and freely wander around talking to anyone. The Navy wasn't trying to control the bloggers and the service men, it knew that its personnel had the discipline and the training to say and do the right things.

- Charlene Li said that middle management is often the most resistant to change because they are squeezed in the middle and they have trouble with the loss of control.

- She spoke about Facebook and the privacy issues and that within a few years we won't have the same concerns, we will get used to the fact that we are tracked and the data is shared. We are only 5 years into the Facebook "era." Caller ID caused a huge privacy storm when it was introduced, yet today caller ID is seen as helping to protect our privacy and we don't pick up the phone if it is an unknown caller ID.

- Customer Relationship Management (CRM) now has a chance to live up to its name and be what it says it is "relationship management" rather than transaction tracking.

- Business is about people. B to B is really about B to P and P to B. There are lots of Ps.

- I asked if it is too late for some companies to change because they are vulnerable to what I call "new rules enterprises" new businesses unencumbered by legacy culture and legacy ways of doing business. These are faster moving, more agile organizations. Ms Li said that businesses have 3 to 5 years to start changing their culture and way of doing business otherwise, yes, they will not survive, customers will flock to more open competitors.

- Pehong Chen said that in his experience, once people within an organization "get it" and the benefits of social media in enterprise 2.0, even a little, change happens quickly.

- - -

Please see my recent interview with Pehong Chen:

Broadvision Reboots Its Business As A Collaborative Enterprise Platform

Who Will Oracle Target Next In M&A? How About HP...

Stephen Jannise, ERP market analyst at Software Advice, has put together a poll asking who's next on Oracle's M&A list. [NasdaqGS: ORCL] Oracle Mergers & Acquisitions: Who's Next?

He has a chart of Oracle's acquisitions over the past five years:

He has made a few educated guesses on who could be next, concentrating on some of the larger potential targets. And Oracle's acquisition of Sun Microsystems expands the potential field beyond enterprise software companies.

He has divided the choices up into the following:

Fairly Straightforward Ideas

  • Teradata
  • . This data warehousing and business intelligence (BI) play would check a lot of boxes, augmenting Oracle's strength in databases and BI. Moreover, Teradata brings strength in key verticals. At 21x P/E, the price might work.

  • Informatica
  • . Another data warehousing play, Informatica would complement Oracle's leadership in database and business intelligence. While the deal would be bite-sized, Oracle would have to eliminate a lot of costs to make it accretive.

  • . Like the BEA Systems deal, TIBCO would bring the benefit of adding a middleware market leader while also bolstering the Fusion story. With a P/E of 34x, this is another deal where Oracle would have to cut costs deeply.

    Messy, But Potentially Profitable

  • Computer Associates
  • . Computer Associates was a consolidator long before Oracle ramped up its M&A efforts. Of course, that history comes with some messy situations along the way. The deal could work financially given CA's modest valuation at 14x earnings, but might not be worth the stress or integration.

  • Sungard
  • . This very large applications vendor and its various business units bring leadership positions in a range of vertical markets. The company was taken private a few years ago by savvy private equity investors, so an exit event is likely just over the horizon. However, Sungard brings a large services organization that might not be Oracle's thing.

  • Infor
  • . Infor is another major applications consolidator backed by smart private equity. The company is similar to Oracle in that its M&A strategy is engineered for healthy profits; however, Oracle may not be willing to take on such substantial integration challenges in the applications layer.

    Bold Moves into the Network Layer

    Most people will tell us that these ideas are crazy. They are far afield from Oracle's traditional markets and too expensive. We agree, but stranger deals have happened (e.g. eBay/Skype).

  • Research in Motion
  • . This one is far fetched, but given the massive popularity of mobile applications, we had to throw it in. RIM has the strongest enterprise presence of the various mobile players, so it would be an ideal target. The valuation metrics might be doable, but the size may be hard to digest.

  • Juniper Networks
  • . An acquisition of Juniper would be a bold move into the network layer of the stack. If Oracle wants to play in that market, Juniper is the strongest target (Cisco is too big, too expensive). Of course, Juniper isn't cheap and cost synergies would be hard to come by given limited overlap.

  • F5 Networks
  • . If Oracle wants to strengthen its application delivery and data center story, F5 would be an interesting step. The company's application delivery and networking systems would provide a growth vehicle in the networking layer.

  • Brocade
  • . Like F5, Brocade would be a strong addition to Oracle's data center and enterprise campus network offerings. However, like Juniper, Brocade is not the cheapest option listed here, as it currently sits at a 29x P/E

    Pricey Buys in Hot Markets

  • VMware
  • . It's tough to come up with a financial scenario where this deal gets done, but its fun to think about. VMware is benefiting phenomenally from the growth of the virtualization market it pioneered. This would be another huge boost to Oracle's data center offerings.

  • EMC
  • . This data storage behemoth would be a huge addition to Oracle's presence in the servers and storage layer of the stack. We think Oracle would love to own this market leader, but it may well be too big and too expensive at a 29x P/E.

  • . An acquisition of Salesforce has been rumored before, but the success of this SaaS leader may have put it out of reach. Salesforce would catapult Oracle to on-demand leadership, but it comes at a steep price. Oracle would be more likely to wait until Salesforce stumbles some day.

  • Allscripts
  • . The healthcare market is hot as providers adopt electronic health records (EHRs) to meet government requirements. Allscripts is the biggest player in the EHR market and is a consolidator itself. Its recent move to acquire Eclipsys, as well as its rich valuation, might take Allscripts off the table.

    You can place your vote here: Oracle Mergers & Acquisitions: Who's Next?

    Foremski's Take:
    It's a pretty good selection. But there is one company that is missing: Hewlett-Packard [NYSE: HPQ].

    Yes, it is a big pill to swallow: In terms of market cap Oracle is about 22% larger at nearly $116 billion compared with $95.3 billion for HPQ. But the consolidation opportunities with Sun are quite large and must be very tempting. Also, a leaderless HP makes it very vulnerable.

    Plus: Larry Ellison is a fan of Mark Hurd -- he could bring him back to integrate HP/Sun/Oracle.

    An Oracle/HP combination would create a formidable competitor to IBM. It would bolster HP's service group and its troubled middleware and software groups.

    But it would be devastating to Silicon Valley's already hard hit employment picture -- tens of thousands would lose their jobs.

    Interview - Engine Yard: John Dillon Former Salesforce, Hyperion CEO

    I had a fascinating conversation this morning with John Dillon, CEO of Engine Yard, a startup with an agile application development platform that is sold as a service. It's one of the quickest ways to develop online applications -- if you were planning to build the next Facebook or Twitter, you'd likely use Engine Yard.

    Engine Yard is growing fast: 70% growth from Q1 to Q2 in 2010. Among its customers are many familiar names: Orbitz, Nike, Howcast, Zendesk, Groupon, and over 1,000 more.

    Engine Yard's development platform is based on Ruby on Rails and integrates more than 40 open source technologies. It enables developers to quickly create applications and then deploy them on cloud services such as Amazon, with more coming. (Amazon has a 5% stake in Engine Yard.)

    Mr. Dillon is a Silicon Valley veteran and a serial entrepreneur. He worked at Oracle, ran Salesforce until 2002, and then Hyperion Solutions, and has been involved in many other companies.

    He describes the current state of the IT market as very exciting because it is extremely disruptive: software as a service and cloud based infrastructures, combined with agile software development and deployment; are set to revolutionize IT.

    He compares what is happening in enterprise software markets to the introduction of the PC and its disruptive effect on the entire computing industry.

    Here are some notes from our conversation:

    - Applications can now be developed and deployed in weeks, they can be made to be disposable after a year or two. When they are cheap to develop it doesn't matter if they are used just for a short time.

    - In a similar way that Salesforce was able to sell to departments and bypass IT departments we sell in the same way. There are lots of small development shops that can be contracted to develop applications.

    - When applications can be developed so quickly, you can "throw stuff against the wall" and see what sticks.

    - Ruby on Rails is very scalable -- it acquired a reputation as not being scalable because a few companies had some problems a couple of years back. But it is not true, and Ruby on Rails 3.0 is amazing.

    - Todays' best application developers are more like artisans and craftsmen than technologists. You see them at conferences and they look hip -- they don't have pocket protectors.

    - Developing applications the traditional way, you have big issues in deployment. You call up the IT department, they want to know how many servers will be needed, how they should be configured, what numbers of users you expect, what the peak loads will be, etc. But often you don't know those answers, you don't yet know how the apps will be used. Today, you can just add more cloud infrastructure services as you need them, it's a much better development and deployment environment.

    - Yes, you could use the same open source technologies we use, but we've already done the integration for you. We can do it faster, better and cheaper than you can -- so why wouldn't you want to use our platform? If we can't do it faster, better and cheaper then we don't deserve your business.

    - About 50% of capex in the US is spent on IT -- after all, we don't build factories here anymore. Using cloud based services converts CapEx into OpEx -- it's a much more efficient use of capital. Why would you want to construct another data center to expand your business? For most companies, it doesn't make sense.

    - We give back to the open source community, to around 40 different open source projects.

    - The cloud is the wave and we are the surfboard.

    - Cloud computing will result in a lot of M&A. Once the big boys figure out what is going on -- and they will -- there will be a major land grab.

    Additional Info:

    Ruby on Rails Blog | Engine Yard

    AppCloud Demo

    JRubyConf 2010

    News & Press | Engine Yard

    Robert Scoble talks with Engine Yard.

    IDC: Boom In Global IT Spending Forecast Despite Short-Term Economic Concerns

    International Data Corporation (IDC) raised its forecast for global IT spending in 2010 because of very strong growth in the first half of this year.

    Companies are catching up with infrastructure investments following a very weak 2009. Servers and other vital equipment are being replaced in the US and European markets, while emerging economies are making large investments in new IT systems.

    IDC estimates that global IT spending will be $1.51 trillion in 2010 - 6% growth in constant currency. The largest growth will be in hardware - up 11% to $624 billion; software will be up 4%; and services revenue will improve by 2%.

    From IDC:

    - U.S. IT markets will grow 5% this year, recovering from a 4% plunge in 2009.

    - Western Europe is expected to post IT spending growth of 3% in constant currency.

    - Japan is on course for growth of just 0.5%.

    Emerging economies will have the strongest growth:

    - China is expected to grow 21% in constant currency.

    - Russia 17%.

    - Brazil 14%.

    -India will be up 13%.

    However, IDC analysts are concerned that robust IT spending could be derailed by fragile US and European economies.

    Stephen Minton, vice president of Worldwide IT Markets and Strategies at IDC:

    We stand in the middle of two powerful and opposing forces. On the one hand, the very real pent-up demand for new IT investment, which has driven the solid recovery in the first half of 2010 and which will hopefully continue into 2011.

    On the other hand, the potential loss of confidence in a global economy which remains extremely vulnerable to any further escalation of the European debt crisis or a deterioration in the U.S. stock market. The next three months will be crucial to determining which of these scenarios is more likely; in the meantime, IT vendors should plan accordingly by understanding the potential impact on their near-term revenues.

    Foremski's Take:

    Despite the real concerns about fragile economies, much of the IT spending is necessary to keep IT data centers running. Many companies postponed upgrades last year and in 2008 but the lifespan of servers and other IT equipment cannot be extended indefinitely.

    If IT equipment isn't replaced there is a real danger of massive IT failures. Spending on IT will have to happen even if the economy is weak otherwise many companies simply won't be able to stay in business because of failing data centers.

    Last year, Gary Budzinski, senior VP at Hewlett-Packard's Services Group, told me that if companies didn't start replacing aging IT systems, they would start to break down in large numbers.

    The coming "big crunch" - IT systems will start failing on a large scale

    Things tend to break after a while...There's a big crunch coming," says Mr Budzinski. Companies will start to experience ever greater IT failures unless they start buying new hardware.

    Mr Budzinski's group is paid to make sure client systems continue to run. As those systems age, HP increases its fees for maintenance, until they reach a point where new hardware is less expensive than trying to keep the old systems running.

    The 8 Truths Of Enterprise IT...

    Enterprise IT is notoriously conservative and resistant to any changes. Yet the enterprise IT market is massive and it's a market that is primed for change because of many innovative technologies.

    However, it can be a very frustrating experience for companies targeting the enterprise IT market. Jake Sorofman, chief marketing officer for rPath, which provides solutions for automating system deployment and maintenance across physical, virtual and cloud environments, shares his theories on what makes enterprise IT tick.

    Guest post by Jake Sorofman. (

    1. Drift happens - Complex software systems are rarely consistent or what they ought to be. They drift and morph in definition over time as patches are applied, updates are made and IT personnel tunes, tweaks and fiddles. These changes are typically untracked, and IT rarely knows precisely what is running. When they're initially deployed, systems are opaque. Over time, they're complete mysteries.

    2. Change hurts - IT fears and avoids change because of a Law of Unintended Consequences that hangs over the data center. At the heart of this law is the reality that deployed systems and their dependencies are poorly described and documented. When change happens, stuff breaks. This is why, on the topic of change, IT tends to channel Ross Perot: "If it ain't broke, don't fix it."

    3. IT abhors a vacuum - As the cost of computing drops, workload demand increases. This is the force behind VM sprawl and the attendant growth in management costs. Like nature, IT abhors a vacuum. When space is made available, it's quickly filled in. (Perot may call this "a giant sucking sound.")

    4. Demand follows the path of least resistance - Like it or not, enterprise IT competes with a marketplace of alternatives. When alternatives offer comparatively better options in price, performance and availability, workloads will follow the path of least resistance. Public cloud is a perfect example of this phenomenon at work: IT organizations that fail to transform will surely watch in vain as workloads, following the path of least resistance, escape to the cloud.

    5. Dependencies grow geometrically - Software is more diverse than ever, comprising an unthinkable array of custom, commercial and open source options. This means that developers have more resources to ply their craft, and IT is utterly mired by complex, interdependent and constantly changing systems. It's made worse by the ongoing abstraction of IT, from managing discrete single-use piece parts to the composition of reusable services. The network of interdependency is massive and--much of the time--poorly understood.

    6. So does scale - Each subsequent architectural advancement leads to an increase in scale. Scale exploded as mainframe gave way to client-server and client-server gave way to web. Today, we're seeing x86 architectures, virtualization and cloud are all driving growth in the volume of systems that need to be managed.

    7. Proportionally, budgets will always contract - Operating budgets cannot keep pace with growth in IT scale, so even when the top-line budget is growing, the budget per managed system is always contracting. IT will always be forced to do more with less--forced to find new ways to change the economics of scale.

    8. Complexity is the mother of reinvention - When IT complexity reaches the frontier of existing tools and processes, IT must reinvent. Containing complexity is like holding back a tide. The only way forward is through reinvention, embracing new tools and approaches for dealing with IT complexity at scale.

    So that's it--eight IT truths as I see them. What truths do you see?

    Learn more about rPath at, follow rPath on Twitter at @rpathand contact Jake at [email protected].

    (If you have a guest post you'd like to publish on SVW please send it to foremski at gmail.)

    Interview With SAP Co-CEO Jim Hagemann Snabe

    SAP, Europe's largest software company, posted strong revenues and earnings for its fiscal Q2. The results bode well for US IT spending. SAP also said it had completed its acquisition of Sybase.

    Eric Savitz at Barrons reports:

    SAP (SAP) posted Q2 revenue of 2.894 billion Euros, up 12%, or 5% in constant currencies, and ahead of the Street consensus at 2.75 billion. Software revenue at the German software giant was up 17%, or 5% in constant currencies, while software and software related services revenue was up 16%, or 8% in constant currencies. EPS of 46 Euro cents was one cent below the Street, as operating margin of 27.8% came in about a point below expectations.

    The company's results showed strength in the U.S., with software and software-related services revenue up 18% in the U.S. in the quarter on a constant currency basis, but Japan down 9% on the same basis, and EMEA ex-Germany down 1%.

    For the full year, the company sees software and software-related service revenue up 9%-11% at constant currencies. The company said it expects to grow 6%-8% excluding the acquisition of Sybase. Non-IFRS operating margin is expected to be 30%-31%, up from 27.4% a year ago at constant currencies.

    I spoke with Jim Hagemann Snabe, co-CEO of SAP this morning. Here are some notes from our conversation:

    - We benefited from some tail wind from currency effect but revenues were strong.

    - We did more than 10,600 deals in the quarter. It shows that we have become a strategic choice for many companies.

    - This Friday we will make our cloud offering Business byDesign available. We delayed it a year so we could make sure we got things right. We want to redefine the category and we now have a category killer. Our cloud offering will be ahead of many legacy clouds.

    - At the moment, the cloud computing market is very narrow in its scope. We hope to change that over time.

    - Mobile data is very important and that is something that Sybase will offer. We have a great iPad application (see video below.)

    - We want to be the best supplier of hybrid solutions. Not everybody needs cloud computing.

    - There is a massive data explosion happening. Data is doubling every 18 months. Companies want to run everything in memory, they want their analytics to run in memory. This will become the next generation cloud. Speed will become very important.

    - Business byDesign will offer the best TCO (total cost of ownership) savings. But it will be a while before it makes a significant contribution to earnings. We want to make sure we have the best offering, we want to get reach before getting rich. We want great references so that we won't have to push the service but benefit from "pull."

    There's a Lot of IT in Brazil: Brasscom And The South American IT Industry

    I'm spending this week in Brazil at a conference organized by the world's largest IT analyst firm Gartner, and sponsored by Brasscom, (Brazilian Association of Information Technology and Communication Companies)

    South American IT companies have started cropping up on my radar screen over the past year so I'm keen to find out more about this sector.

    This week I will be reporting on what is happening in Brazil, and also in Argentina, and Chile.

    I spoke with Richard Matlus, senior VP of Outsourcing at Gartner. He said Brazil and other Latin American countries are becoming important in key sectors such as providing infrastructure outsourcing support services.

    He speaks to lot of users of these services. He says that US companies like working with Latin American companies because:

    - The quality is very good. He doesn't recommend India for prime time zone outsourced infrastructure support services.

    - It helps a lot that the time zones in South America are so close to the US, this means that the prime times are covered in the same time zones. If most of your customers are in a certain time zone, you can have your best quality people working in the same shift, which is very important for customer satisfaction.

    Mr Matlus says that this is one of the largest cited advantages among clients. His clients tend to use teams in India for the other two less important daily shifts.

    - South Americans speak good English but, more importantly, they also have a better at understanding the culture of the US -- that makes a very big difference in terms of management and the quality of support.

    I also spoke with Ricardo Asse, a senior advisor for Brasscom, (Brazilian Association of Information Technology and Communication Companies).

    Here are some notes from our discussion:

    - Brasscom has been around for 6 years but it is now hitting its stride in the last couple of years, with lots of members and it is better focused on helping to promote Brazil's IT industry.

    - Sao Paulo (where the Brasscom/Gartner conference is located) is the South American HQ for nearly every major US corporation, IBM has been here more than 60 years. There is a long tradition of working with US companies.

    - Brazil, Argentina, and Chile are discussing cooperating in an umbrella organization to co-promote each other's IT sectors.

    Mr Asse says that each country has strengths in technology and IT. There is much to be gained from aligning those IT resources into a united organization that can work with multinational companies across a broad spectrum of services.

    I'll have more South American based posts all this week...

    Who Will Be The First "Fair Trade" Tech Company? It's The New "Green"...

    There's a tremendous opportunity waiting to be grabbed. There's a Wikipedia page waiting to be written.

    "The first Fair Trade tech company was ..."

    I'm certain that the Fair Trade concept will be applied to electronics, and it's just a matter of when that will happen. I'm convinced it will happen not because it's a good idea but that it's a potentially profitable idea.

    Let me explain my thinking. Our digital gadgets and gizmos are becoming very cheap, almost disposable - yet the working conditions for millions of workers in the global electronics industries are deplorable. Even though they often work in bunny suits, in super clean, well lighted work places, those jobs are highly stressful and often unhealthy.

    Lets not forgot that those bright, sanitized work places, those clean work clothes, and filtered air conditioning, is not for the workers, it's to protect the electronics from the humans. The wages are poor and the work is grueling.

    Fair Trade electronics could help tens of millions of people around the world without making much difference to our wallets. We could easily alleviate a lot of suffering without much suffering on our part, we could afford to pay a bit extra.

    Noble goals are important but what will drive the growth of Fair Trade electronics is that it will be an excellent way to make money. It's a great way for companies to differentiate themselves in the market place.

    Consider this: All technology products trend towards becoming commoditized - that's just how things work. How do companies fight commoditization? It's done through differentiation.

    - Companies such as Apple do it through design. Take a commodity product, say an MP3 music player, and apply a great design. Design drives sales and it is a high profit value add.

    - A lot of computer companies these days proclaim how green they are, how eco aware they are, and how their products use less energy, carbon, etc. "Green" drives sales and it's a high profit value-add.

    - Fair Trade electronics is another way companies will be able to differentiate themselves from competitors. Fair Trade will drive sales and it is a high profit value add.

    Yes, companies will be able to make money out of Fair Trade electronics and make a difference in the world- it's one of the wonders of capitalism.

    Fair Trade applied to the electronics industry will also be incredibly transformative because the supply chains are huge.

    Think of a laptop and how many companies were involved in the sourcing of the components of a hard drive, the motherboard, making the chips, the glass for the screen, the plastic for the keyboard, the springs in the keys, the capacitors, the resistors, and on and on...

    To make a Fair Trade laptop would require hundreds if not thousands of companies in the supply chain to have Fair Trade certified work places. So, if a company such as Dell or HP were able to build just one electronics product, a Fair Trade laptop, it would revolutionize a massive sector of the world's electronics industry.

    And once a supplier has a Fair Trade manufacturing facility it can then also supply Fair Trade components for a vast array of other Fair Trade electronics products.

    The first Fair Trade tech company will revolutionize the entire industry. Who will it be?

    Dirty Little IT Secrets: Our Privacy Is Protected By Massive, Inefficient Corporate IT Systems

    There has been lots of chatter about data privacy but fortunately, the ineptitude of IT systems is a protective factor. Take a look at this amusing tale from my ZDNet colleague Dennis Howlett.

    Dennis is an Englishman living in Spain. He tells of trying to make changes to his account at Vodafone Spain. Vodafone Spain saps my will to live

    Each time you call, it seems necessary to go through a grinding series of questions that include the number you are calling from (they don't have caller ID?), providing your passport or residency number, your password and bank name. Then you have to slowly and carefully explain the problem. At least twice.

    ... Vodafone claimed they have no record of my landline number or that I have requested that service. Duh? I have SMS messages telling me they activated the service on my mobile. I"m staring at them. 'We have no record.'

    ...Knowing what it is like dealing with anything that smacks of government or utilities, I pack every piece of paper I can think that will successfully identify me as the person I say I am. At the Vodafone shop I get the same answer. No record.

    Thinking laterally, I ask if there is anything registered to the new DSL service and oh by the way, can you search against THAT phone number? Bingo! Up pops the details Vodafone said it didn't have.

    It turns out that when I acquired my Vodafone mobile, I gave my passport number. When I applied for DSL etc, I gave my NIE (resident's) number because that is what it asked for. Vodafone doesn't match these and cannot alter what it now sees as the master identifying record locator. So now it seems I have two accounts.

    It's a frustrating story but in a way, it is uplifting in the context of data privacy. Vodafone is a large IT user with massive data centers, yet its databases can't handle a simple match between just two pieces of data.

    The dirty little secret of enterprise IT systems is that while they do store a lot of data, they are terrible at using that data. Relational database systems are extremely difficult to query, it can take weeks to design and run set of queries against the data. All major corporations have these relational database systems.

    We thus have a large measure of protection from egregious uses of our personal data because of the inefficiency of corporate IT systems.

    And this situation won't change anytime soon, even though far more efficient database technologies are available (such as Mark Logic). No company wants to mess with its core database systems -- a lucrative secret that Oracle discovered a long time ago.

    Companies will rip out and replace servers but they will do everything they can to keep their databases intact -- it's core to their business.

    Facebook, Google, and many others, are using specialist databases, some that they've developed themselves to overcome the limitations of relational database systems. But, because those databases are customized for their unique uses, it is very difficult to map their data against data in other types of databases. Using people's personal data to sell products and services is very difficult.

    So, while we do need to be concerned about the commercialization of our personal data, and campaign for tougher controls, the likelihood that corporations will be able to use all that personal data in a meaningful way is very low. Data goes in, but getting it out in a useful way is shockingly difficult.

    There is even more good news: inefficient database systems will continue to dominate the Fortune 1000 for many years. Database architectures have to remain the same because they have to maintain backward compatibility.

    It could be said that the biggest defender of our data privacy is Oracle and its massive installed base of relational database systems.

    Mark Logic's David Kellogg - Creating Media From Unstructured Content

    David Kellogg is a veteran of the IT industry, he was key in growing Business Objects into one of the most successful French IT companies.

    His current position as CEO of Mark Logic, is a challenging job because of the unique database technologies the company represents. It's an approach to structure unstructured content -- a holy grail for many companies.

    Mark Logic has several media companies as customers because it's technology enables them to pull together content from several sources in order to create new types of media products and services.

    The company's chief architect is Christopher Lindblad, the architect of Infoseek's Ultraseek Server technology, which is used by Autonomy, the largest UK enterprise software company.

    I recently met with David Kellogg, here are some notes from our conversation:

    - It used to be that Silicon Valley companies would be good customers for databases and other software but these days they all use open source software and they don't want to by anything. But there are many large companies that do buy software and that benefit greatly from Mark Logic.

    - Our goal is to be the Oracle of unstructured information.

    - Relational databases are very inflexible. We use a hybrid approach that combines search technology with an unique database technology.

    - A lot of companies are having to develop their own database architecture because relational databases are too slow. Our database technology can quickly deal with a wide range of unstructured data.

    - One of our media customers, in the medical publication sector, is able to repurpose its content in order to create an interactive platform that helps radiology personnel to identify diseases, by stepping them through the identification process based on thousands of images and other information. Once you build one such application, it is easy to deploy it against new sources of content.

    - We also have customers in the intelligence community.

    - We believe that our technology is potentially disruptive, if you use it to build your business rather than Oracle, you can run queries very much faster.

    - We face a challenge in that companies need to acquire the skills to use our technology but once they do, they see a quick payback.

    - So far, we are growing at a faster rate than Oracle was at the same stage.

    - - -

    Mr Kellogg is also an avid blogger and always has unique insights into industry events and topics.

    Here is his take on explaining unstructured information:
    The Information Continuum and the Three Types of Subtly Semi-Structured Information

    Here is his analysis of the SAP acquisition of Sybase:
    Thoughts on the SAP Acquisition of Sybase: In Search of Credibility

    Additional info:

    MarkLogic Server Overview

    MarkLogic Server Flash Demo

    Media customers

    - - -

    Please see: Every Company is a Media Company - EC=MC - the transformative equation for business.

    Broadvision Reboots Its Business As A Collaborative Enterprise Platform

    Broadvision today announced a collaborative business platform, Clearvale, and a partnership with Softbank, a major Japanese telecommunications company.

    The move is part of Broadvision's attempts to reinvent itself and reverse a long decline in revenues. The company was once one of the high flyers of the dot com boom with its portal and web commerce platforms used by some of the largest corporate web sites.

    Now it is seeking to move beyond the web site and become a major platform for collaborative business processes that combine internal and external teams. Broadvision describes Clearvale as the "first network of networks."

    About 4,000 companies have been beta testing Clearvale.

    I recently met with Broadvision founder Pehong Chen, here are some notes from our conversation:

    - It's very easy for a department to start using Clearvale. It's like when blogging first started, you needed to install the software and do a lot of work before publishing your blog, now there are many hosted platforms where the set up is easy and there are existing templates. That's what we offer, easy setup.

    - There are others, such as Jive that claim similar capabilities but they require a lot of IT work to set up, our solution needs zero IT time. People can immediately start using it.

    - The project started off as a skunk works in China two years ago. We soon saw that we had a powerful platform and that this could become a major business for us.

    - Business is changing, it's important that everyone has a stake in the business and Clearvale enables that, it pulls together staff and helps organize around a common vision.

    - Many surveys of HR have shown around 40% of people leave companies because they don't understand the vision. That's about $38,000 in losses per employee, if you can save just ten exits, that's nearly $400,000, a substantial sum. Clearvale helps retain staff it's worked great for us.

    - Clearvale can also be used for tasks such as SOX compliance by farming out the tasks needed to prepare for audits. We use it internally and it saves us a lot of money.

    - Clearvale is designed for bottom-up use, it doesn't require any IT involvement. It's a cloud based platform with excellent security.

    - We are partnering with Telcos such as Softbank in Japan as resellers. Telcos want a service that they can use that challenges Microsoft in the enterprise. Telcos can offer enterprises one bill for multiple IT services.

    - We also have a mobile app for Clearvale.

    Foremski's Take:

    Broadvision is making a bold move that reinvents its business. The Clearvale platform looks impressive but it will be difficult to gauge how quickly businesses will start using it. Established business processes are notoriously difficult to change and they usually only change when an organization is going through a lot of pain.

    However, businesses know that they need to move towards more collaborative business processes to take advantage of the productivity gained internally, and from working with external partners.

    We are still at the beginning of this business transformation, which potentially is one of the largest we will ever see. It's part of the EC=MC (every company is a media company) trend in which companies have to engage with their internal and external partners and communities. Those that do it well will prosper.

    Additional info:

    BroadVision Enterprise Social Networking Solution Clearvale Gathers Momentum Users Create over 2,000 Networks in Just 12 Weeks

    CEO's Survival Guide to Socialism 2.0 by Pehong Chen

    Dr. Pehong Chen Discusses Enterprise Social Networks

    - - -

    Please see: Every Company is a Media Company - EC=MC - the transformative equation for business.

    Algebraix: "Too Good To Be True" - Creating An Algebra For Data

    "This is too good to be true," I told Charles Silver, CEO of Algebraix Data, a San Diego based startup that has developed a way of querying huge databases in near real-time without the need for any prior indexing.

    Mr Silver was telling me about the technology behind Algebraix and it's unique approach to the difficult problem of handling very large databases. Companies spend tens of millions of dollars a year just on trying to make sense of the huge amounts of business data they collect.

    Here are some notes from or conversation:

    - The founders are maths professors and they've created an 'algebra' for querying databases.

    - It works on any size database, we haven't yet found a limit.

    - It works on any data in any database, including unstructured data.

    - It goes beyond relational databases, which are based on rows and columns, essentially giant spreadsheets.

    - Usually, querying large databases can be a multi-million dollar project to create the right data sets and then the testing. No prior data modeling is required with our approach.

    - We've just begun to talk to potential enterprise customers in the past six weeks.

    - The CIA and Navy were our first customers and we now have pilots running at some large financial services companies.

    - It can be used to power other applications. It works with standard SQL and runs in near-real time.

    - You could use it to mirror any application.

    - It is based on extended set theory mathematics.

    - We've raised a total of $12m -- all from angels.

    - We have 22 employees.

    - It's expensive. Our list price is based on the size of the data and is $100,000 for the first Terabyte.

    - It runs on any Linux based hardware system. Our development center is in Austin, Texas, and Dell has given us a bunch of machines to use.

    - The size of the application is very small just 7 MBytes.

    - I used to run RealAge, which collected lifestyle data on millions of people and recommended pharmaceuticals. I sold it to Hearst in September 2007.

    - I was an investor then joined as Chairman and took over as CEO in the fall.

    - We have four patents on the technology. Getting software patents is not as easy as it once used to be.

    - People don't believe it. Even our own developers don't believe that it does what it does.

    Foremski's Take: Algebraix potentially has a very disruptive technology. If Charles Silver is right, Algebraix is onto a winner because we are all drowning in data and that data becomes less and less useful because its size make it more difficult to analyze.

    Businesses today collect massive amounts of data and there is tremendous value in that data if it can be converted into actionable information. That's why Business Intelligence is a hot sector these days, and has been the focus of much M&A activity in recent years.

    Any application is essentially a dynamic layer on top of a database. With the Algebraix approach virtually any application could be expressed as an algebraic expression.

    Since the Algebraix approach works across different databases, it could also become a perfect systems integrator technology.

    I'm just a reporter and I don't have any way of testing Algebraix's claims but if what Mr Silver says is true, this startup is going to do very well. It tackles one of the most difficult computational problems at the heart of all modern commercial IT systems.

    - - -
    Please see:

    Our technology | Algebraix Data, formerly Xsprada

    Is The Relational Database Finally Finished? | The Virtual Circle

    SAP Co-CEOs Pledge To Move Company Faster

    SAP's new co-CEOs today promised faster software innovation and better execution on a hybrid enterprise software model that includes cloud computing and traditional enterprise software.

    SAP, which describes itself as the world's largest business software company, recently reshuffled its top management replacing CEO Léo Apotheker with Bill McDermott, who was head of field organization, and Jim Hagemann Snabe, who was head of product development.

    Their appearance at the SAP Silicon Valley center was their first joint press/analyst conference since the announcement of their appointment in early February.

    Here are some notes from the press conference:

    - Business by Design, the cloud computing offering, has been slow getting off the ground but has been successful in terms of software quality. The development team has been using agile software techniques which has reduced development team size by one-third and produced higher quality software than expected.

    - SAP continues to believe a hybrid strategy is best, combining the traditional enterprise software business model with cloud computing/on-demand software as a service.

    - SAP intends to become the number one on-demand software company in the world. It sees huge opportunities in the Chinese market.

    - This summer there will be a major new release of the Business by Design software service and will be followed regular improvements every five weeks.

    - Oracle was criticized for not being innovative. It's acquisition strategy is not providing any benefits to customers, unlike SAP, which has been investing hundreds of thousands of man-years in innovation, such as enabling customers to take advantage of new features without having to upgrade their systems.

    - The new co-CEOs will try to move the company at a faster "clock-rate" than the former CEO. The basic strategy will remain the same but the execution will be faster.

    - SAP wants its employees to be excited about coming to work. It is also impressed by its developer community, which is coming up with lots of interesting ideas.

    - SAP is not going to follow Oracle's strategy of tying applications to specific hardware, as through its acquisition of Sun Microsystems. But it does want to eliminate the conversation about stacks and focus on solutions.

    - Best of breed solutions were criticized, the problem is that "they don't breed well."

    - The acquisition of Business Objects was important in broadening SAP's view of the software world. It sees the future as enabling customers to work with many different companies and allowing their corporate systems to easily interact with their business partners.

    - SAP justified the maintenance fees being paid by customers because the company is innovating across industry sectors.

    - Innovation was a frequently used word during the Q&A but it wasn't clear what this meant or what it would look like.

    Enterprise IT Spending On The Rise To Avert Data Center Failure

    It's been a long time coming but it looks like corporations have boosted their spending on their data centers.

    TechEYE reports that the latest figures from IDC, for X86 server sales, surged in the fourth quarter of 2009.

    X86 server market shows sales surge | Business news | TechEye - All the technology news unfit for print

    Volume server sales rose by 9.9 percent year on year, while midrange servers showed a year on year decline of 5.3 percent.

    IDC said that this was the first increase since Q3 2008 that showed all three sever segments gaining sales.

    IBM holds the number one share worldwide with 35.4 percent share in Q4 2009. Demand for X86 servers increased while the System Z mainframe system declined.

    HP has 30.5 percent share, Dell had 11.5 percent share, Sun Microsystems had eight percent market share and Fujitsu 4.6 percent share.

    Windows server revenues in Q4 amounted to $5.4 billion, the highest figure for two years. Linux also grew with revenues of $1.9 billion. Unix server revenues were $3.9 billion for the quarter, down 18.1 percent year on year.

    Last year, Gary Budzinski, senior VP at Hewlett-Packard's Services Group, told me that if companies didn't start replacing aging IT systems, they would start to break down in large numbers.

    The coming "big crunch" - IT systems will start failing on a large scale

    Things tend to break after a while...There's a big crunch coming," says Mr Budzinski. Companies will start to experience ever greater IT failures unless they start buying new hardware.

    Mr Budzinski's group is paid to make sure client systems continue to run. As those systems age, the maintenance costs rise, until they reach a point where new systems are less expensive than trying to keep the old systems running.

    Large Legacy Costs Squeeze Software Innovation

    Larry Ellison, the founder and CEO of Oracle, has executed well on a brilliant strategy to 'roll-up' the enterprise software market. Through a series of multi-billion dollar acquisitions, such as Peoplesoft, Siebel Systems, and more, he has managed to build a dominant position in enterprise software.

    What he was after was their maintenance revenues. Selling a software license for an enterprise software application is but an entry into a much more lucrative revenue stream that comes from maintenance and support revenues -- these typically account for about 20 per cent of the license cost, and they are paid annually.

    Oracle has operated more like a private equity fund, acquiring software companies, and aggregating a torrent of maintenance revenues. It's a brilliant strategy.

    However, maintenance costs have become a large burden for companies.

    Forrester Research, an IT market research firm, just released its 2010 report on "The State Of Enterprise Software And Emerging Trends." It found that the majority of enterprise software budgets is spent on maintenance and support for legacy enterprise software applications.

    Larry Dignan, on ZDNet, writes:

    Software represents 34 percent of enterprise technology spending, but nearly 55 percent of the applications budget is consumed by maintenance and supporting ongoing operations...

    Add it up and all the talk about enterprise 2.0 and innovative corporate applications just doesn't compute. You're spending too much money on the legacy stuff.

    The more that corporations spend on maintenance, the less money they have to buy innovative software. And the less innovation there is, the fewer challengers to established companies such as Oracle.

    One way forward for software companies is to adopt the strategy used by It offers 'software as a service,' (SaaS). Companies can sign up for just a few seats for very little money and this relationship can later be expanded.

    However, is similar to Oracle, in that it has managed to dominate its sector. It recently raised $500 million in a bid to shore up that position and expand its catalog.

    Software startups are caught between a rock (Oracle), and a hard place (

    It will be interesting to see how this situation affects VC funding in this sector.

    - - -

    Please see: Salesforce $500m war chest - likely target is social media | Tom Foremski: IMHO |

    IBM Software Group Chief Says SAP Problems Aren't A Problem

    Did you know that IBM is the world's second largest software company?

    It's been about 6 years since I spoke with Steve Mills, head of IBM's Software Group - the most profitable business at IBM.

    Mr Mills was in town Monday evening to meet with a handful of media and chat about IBM's green initiatives around municipal infrastructure.

    I had a chance to go off topic and ask him about SAP and the changes at the world's largest business software company.
    [Please see: SAP Replaces CEO With 2 Co-CEOs - SVW]

    Mr Mills said that he welcomed the changes and that it would not impact IBM's SAP related business.

    SAP business is a big business at IBM. The company makes money on consulting services and hardware related to SAP implementations. For every dollar that SAP receives in license revenues, IBM and other systems integrators, make about $9 in services and other revenues.

    SAP has tried to tap into the revenues that systems integrators make on its installations. But the economic slump has slowed new licenses and maintenance revenues. In the most recent financial quarter profits fell 12% and revenues were 9% below year ago results.

    SAP Replaces CEO With 2 Co-CEOs

    SAP, the world's largest business software company, said Léo Apotheker has been replaced as CEO.

    The SAP Executive Board, in agreement with the SAP Supervisory Board, has appointed two Co-CEOs: Bill McDermott, head of field organization and Jim Hagemann Snabe, head of product development, both already members of the SAP Executive Board.

    Dennis Howlett, on ZDNet, writes that Mr Apotheker's departure wasn't unexpected. But it was surprising that the company acted so soon.

    The choice of new leaders should not be surprising but hardly imaginative. In effect, SAP has chosen 'last men standing' rather than taking what some of us thought might be a bold move by appointing an outsider.

    SAP is headquartered in Germany and has a large presence in Silicon Valley. The company beat analyst estimates for Q4 but profits fell 12% and revenues were down 9% from a year ago.


    Vinnie Mirchandani in Deal Architect writes: Enterprise software is entirely bereft of soul

    ...the reality is the customer has been forgotten in enterprise software, not just at SAP. It's about squeezing as much out of old technology as possible. As I wrote earlier in the week. "I wish the other bigger vendors had the cajones to acknowledge they similarly mostly live off profits from software 15- 20 years old, from consultants which implement that old software and provide services from data centers which were designed during the Cold War."
    Leo was expected to do more of the same in his new role as CEO. So, he did - unbelievably pushing maintenance price hikes in the middle of the deep recession. For all his talk about taking on the partners who have piled 5 to 10X costs on top of SAP's own expensive solutions, he really could not - they were part of the "field" he created.

    Intel Makes 100 Futuristic Chips To Help Software Breakthrough

    Intel this morning announced it had made about 100 "futuristic" microprocessors containing 48 processor cores.

    Each chip has about 1.3 billion transistors and offers "a single-chip cloud computer."

    The chips will be distributed to universities and research labs to help test a variety of technologies that can then be used in future IT systems and personal computers such as notebooks.

    Intel and Advanced Micro Devices are building microprocessors with multiple cores but their performance is limited because of software applications that are designed for single-core microprocessors.

    The chip technologies are running several years ahead of software technologies. In order to take advantage of the performance benefits from multi-core microprocessors, software applications have to be re-written, or re-compiled with parallel computing features.

    This requires a large array of software technologies in order to take advantage of multi-core chips. But writing software applications for multi-core chips requires a new generation of developers. Intel hopes that by distributing its experimental microprocessor today, it will help push researchers into developing and testing software technologies for future systems.

    Intel says that future systems with 48 core processors could be capable of: vision in the same way humans see motion.

    Imagine, for example, someday interacting with a computer for a virtual dance lesson or on-line shopping that uses a future laptop's 3-D camera and display to show you a "mirror" of yourself wearing the clothes you are interested in. Twirl and turn and watch how the fabric drapes and how the color complements your skin tone.

    This kind of interaction could eliminate the need of keyboards, remote controls or joysticks for gaming. Some researchers believe computers may even be able to read brain waves, so simply thinking about a command, such as dictating words, would happen without speaking.

    The chip was developed by Intel teams working in India, Oregon, and Germany.

    Here is a video of Intel chip products made by Connected Social Media:

    Gauruv Dhillon's SnapLogic: Creating The Connections For The Business Internet

    I recently had a chance to catch up with one of my favorite Silicon Valley serial entrepreneurs Gauruv Dhillon. I first met Mr Dhillon when I was at the FT and he was CEO of Informatica, one of the top software companies in Silicon Valley.

    These days he is founder, chairman, and CEO of SnapLogic, a startup that has built a technology platform that creates data "connectors" between different systems. For example, you could take Twitter data and run it through your business intelligence system, or connect your security system data with your HR system.

    There are millions of permutations in connecting different systems and today that figure continues to rise as new APIs are published and as new web applications are developed that integrated multiple flows of data.

    If you have the right connector, or "snaps" as the company calls them, you can connect any system and any application.

    "When I started Informatica in 1992 we were on the cusp of the client server revolution. Today I feel the same tingle of excitement because there is another software epoch beginning," says Mr Dhillon.

    "Whenever there is disruption in a market there is the opportunity to succeed provided you are on the right side," says Mr Dhillon.

    He doesn't like to use the term "cloud computing" because it is over used. "It seems cloud computing jumped the shark very quickly and now it is applied very broadly. I prefer to use the term that Marc Andreessen uses "business computing."

    Marc Andreessen, one of SIlicon Valley's top VCs and Internet pioneers, is one of the investors in SnapLogic, which last month raised $2.3m for its Series A.

    Flying upside down . . .

    Mr Dhillon has never been one to follow fashionable trends. "You need to have a true north to guide your business. In Silicon Valley we like to fly upside down sometimes and that's why you need a compass to move your business beyond what's fashionable."

    The timing for SnapLogic seems to be very good. There is an explosion of web based application development, and there are huge numbers of legacy IT systems, and integration continues to be an expensive business -- about $10bn a year.

    SnapLogic believes that it can make integration a lot easier, quicker, and cheaper -- especially if it can convince developers and consultants to create "snaps" and then sell them through its recently launched "SnapStore," which shares the revenues, with 70% going to the developer.

    SnapLogic's revenues also come from licensing its snap building technology for use internally or as a hosted service.

    One key challenge will be to convince developers and consultants to create snaps for sale. They already have much of the technology and it would be a simple port to the SnapLogic platform but they make a good living in custom integration projects. Why should they make available the tools of their trade?

    "Developers and consultants will create snaps because they will earn a good income and it will also likely lead to new clients that discover them through our SnapStore."

    That's the carrot. The stick is that if they don't create snaps for their particular area of expertise, others might do it instead and that will threaten their business.

    It'll be interesting to see if SnapLogic can succeed in helping to disrupt the lucrative systems integration business.

    US IT Market Decline Much Worse Than Expected

    Forrester, the US market research firm, says that the decline in US IT markets will be much worse than it predicted just three months ago.

    In June, Forrester estimated US tech markets to drop by 5.1 per cent in 2009. In the latest forecast released today, the decline is expected to be 9.3 per cent.

    Forrester analyst Andrew Bartels says this is due to two reasons:

    First, cutbacks in capital investment, which had earlier been confined to computer and communications equipment, spread in the first half of 2009 to licensed software, causing big declines in this category of tech purchases. Second, upward revisions to US IT investment data in 2007 and 2008 by the US Department of Commerce raised the base periods for measuring 2009 growth, making the 2009 declines even greater than before.

    The good news is that the worst of the decline is likely over, and fourth quarter demand should be positive. And US tech companies will report decent financial results in the third quarter because of the decline in the value of the US dollar.

    Forrester says that 2010 should be a strong year for US tech markets.

    Low IT spend should be good for cloud computing services this holiday season

    WIll the lack of IT spending provide a boost to cloud computing companies this coming holiday season? It would seem so.

    Retailers and many other companies have to have sufficient computing resources to handle the busiest season of their year. But with many companies cutting back on their IT expenditures over the past year, the strain on their IT infrastructure could turn into a big problem.

    Companies will be looking for ways to deal with massive demands on their computing resources. This should be an excellent opportunity for cloud computing services companies, such as Amazon, Terremark, and others.

    Terremark, for example, offers cloudburst solutions that allow clients to off-load peak computing loads. But this might be a little too risky for some companies. After all, if it doesn't work quite right, lots of customers will be affected at one of the most important times of the year.

    However, off-loading less important applications during the holiday season to cloud services is a less risky proposition. It frees up computing resources for peak loads while at the same time, it provides IT departments with experience with integrating cloud computing into their infrastructure.

    If it all works out, this will create confidence in bringing in more cloud computing into IT strategies and planning.

    That's why the performance of cloud computing services this coming holiday season could open the way to a lot more business in 2010. Low levels of IT spending in 2009 could be very good for cloud computing in 2009 and beyond.

    The Coming "Big Crunch" - The Aging And Failing IT Infrastructure

    GaryBudzinski.jpgA year ago, IT spending fell off a cliff. The key question is will it make a comeback in this quarter?

    There's a lot at stake. Hardware and software companies are hoping that IT spending will make a strong comeback this quarter because of all the pent up demand and because there's a lot of aging IT gear out there.

    In mid-June I met with Gary Budzinski, senior VP at Hewlett-Packard's Services group. Mr Budzinski said that a lot of companies delayed upgrading their software and hardware because of the financial collapse last September.

    "Things tend to break after a while," says Mr Budzinski.

    Many companies extended their maintenance contracts, but, at some point, that won't be enough and IT systems will start failing on a larger scale.

    Story continues...

    VMWorld: Super Swank Parties Point To Lots Of Money In Virtual IT


    The huge VMWorld trade show and conference is in San Francisco this week and judging by the number of swank parties I've been invited to there's a ton of money in virtual IT.

    Tuesday night I popped into the Wyse Technology party at the Old Mint, one of the best party destinations in SF. Last time I was there, about a year ago, MySpace was hosting a Lionel Ritchie concert and it was by far the most fun event of 2008.

    This time Wyse hosted a Flamenco themed evening. But strangely, fire codes greatly limited the number of people allowed inside and it looked semi-empty. For the MySpace party last year it was full to the rafters.

    There are more swank parties later this week. Interestingly, all that Microsoft could muster was beers at the Thirsty Bear, a pleasant little tapas pub. Does this mean that all is not kosher with its virtualization software business? Are parties a barometer for a healthy business? Generally, that's the way they seem to be.

    Social Business Software Can Transform People Into A Platform


    (Photo: By Jemima Gibbons.)

    Ross Mayfield is the co-founder of SocialText, a Silicon Valley startup that has been pioneering the use of social network tools within the world of enterprise IT.

    It might seem that "social" and "business" don't mix well. But that's because those are phrases loaded with social meanings -- an ironic obstacle to what could be a much better way of running a business.

    In a recent post, The C.R.M Iceberg and Social Software Mr Mayfield does a good job in spelling out the lessons of social software and the benefits that can be brought into the enterprise.

    One key lesson learned from the success of Wilikipedia, opensource projects, and even Twitter, is the idea of "shared control." This creates great value but it's a concept that most businesses have little experience with, and considerable reservations.

    ...the tools to share are becoming broadly available and those that use them are at an advantage compared to those that hoard. We see this as a generational shift as the Net Generation comes to work, the biggest global demographic shift in history.

    ...With Social Software, users can freely share knowledge through private tweets (Signals), activity streams, blog posts, file and media sharing and wiki contributions. The tool is simple, without the constraints of predefined structure and socially rewarding. But of greater import, sharing knowledge happens as a byproduct of getting work done. In-the-flow of daily work, where collaboration is a goal.

    Mr Mayfield points out that this was once the goal of knowledge management systems, whose purpose was to extract the knowledge of employees. But knowledge management systems never fulfilled their promise. However, social software can because it works within the flow of a business process.

    He speaks of "people as a platform," which is an excellent way to describe the central value of employees.In effect, he is talking about social software enabling businesses to transform their people into a platform.

    People are the platform, and when you empower them, great things flow between them. While their abilities can be augmented by automating low level tasks, it is they who best provide the intelligence. Either as individuals or even as collective.

    Mr Mayfield says he first saw this happen during the Howard Dean presidential campaign.

    In a private wiki, they invited 300 part time volunteers, divided up who would read what and had them share news clippings. A core editor scanned through these clippings, and the conversations that emphasized what was important, and prepared a briefing book. At first the book went out electronically to staff members daily, later twice a day. More efficient and more effective by all accounts, but what I found transformative was how the sourced more, tapped into a collective wisdom, and enabled the editor to do his core job -- analysis.

    The key problem for any businesses is changing its culture so that it can use social software within its ranks. Changing culture is one of the most difficult things to do. Once a business has its processes in place, it is as if it is on a train track, and it requires considerable effort to change tracks.

    However, competition is a great motivator. If companies start to fall behind because they haven't been able to master the latest social business technologies, then that will provide an excellent tipping point - into the garbage of history or towards a bright future.

    Real-Time: Groovy Zooms Database Performance By 105X

    Real-time performance for business applications is increasingly important but difficult to build. That's what Groovy Corporation, an Australian startup hopes to change.

    Groovy today released the results of tests that show its SQL Switch performed 105 times faster than the fastest available relational database, a highly tuned version of MySQL. The tests were performed on the Dell DVD Store Database Test Suite, which mimics an online retailer.

    Story continues...

    AMD: Building Blocks For Building Clouds

    I met with Margaret Lewis, she is director of commercial solutions and software at Advanced Micro Devices. She spends a lot of time talking with data center managers about their needs and the transition to cloud computing.

    Here are some notes from our conversation:

    - AMD is creating microprocessors with many cores because clock-speed alone cannot increase the performance of IT systems. With several cores on a processor, servers can be virtualized and that means applications can be provisioned dynamically, which results in better utilization of IT resources.

    Story continues...

    Twitter and Facebook In Corporations: IT Professionals Are Often The Most Reactionary To Change

    David Greenfield over at ZDNet, asks: "Why Does IT Hate Facebook and Twitter?"

    With as much as the media might talk about the “new enterprise” and “social media” you’d think that IT would be in lock-step with the rest of the business when it came to social networking. But as my recent work with Michael Osterman shows, there’s a big difference between applications that are allowed by organizations and the ones IT professionals consider to be legitimate.

    Osterman Research surveyed IT organizations of all sizes from across a wide range of industry. While half of the responding organizations allowed Facebook (Figure 1), only 28 percent of respondents thought the application to be legitimate (Figure 2). The same goes for Twitter, which was allowed by 49.2 percent of the organizations and yet viewed as illegitimate by just 28.3 percent of respondents.

    He included these charts:

    Story continues...

    Coming Up: Interview With CEO of SAP - World's Largest Business Software Firm

    I'm looking forward to interviewing Leo Apotheker, the CEO of SAP, the world's largest business software company, live on stage at a Churchill Club event on June 24.

    I'll be trawling for some questions from readers closer to the event. I hope you can join me.

    Here is a Charlie Rose interview with Leo Apotheker from earlier this year:

    Rebooting The Data Center: Intel Reveals Big Jump In Server Performance

    [Intel is a sponsor of SVW]

    Intel today revealed impressive benchmarks for its new Nehalem Xeon 5500 server microprocessor, calling it "transformational" in terms of it's expected effect on customer's applications.

    The new chip represents a large jump in performance when used in data center applications due to integrated support for IT technologies such as virtualization and from Intel's ability to pack more transistors onto the chip using its latest 45nm manufacturing technology. It also reduces power consumption.

    "This is the big one," said Pat Geslinger, senior VP at Intel. He demonstrated one Xeon 5500 based server out performing nine servers. Intel expects that the large cost savings data centers can achieve through consolidating servers and also from lower administration costs, lower power bills, represents a compelling reason for data centers to retire their old gear.

    The performance and total cost of ownership numbers certainly do point towards a massive reboot by data centers installing Xeon 5500 servers, especially since current economic conditions are creating enormous pressure to aggressively reduce business costs. However, IT managers are very conservative and it can take many months for them to qualify a system and make sure it works with all applications. To help speed this process, IT vendors have already seeded Nehalem based systems with large customers months ahead of today's official launch.

    Dell, HP, IBM, Cisco Systems, and many other IT vendors today announced Xeon 5500 based servers.

    The high performance provided by the Nehalem microprocessor architecture makes the chip more competitive with RISC based microprocessors such as Sun Microsystems SPARC and IBM's POWER microprocessors. Nearly half of the server market is RISC based. This represents a massive market opportunity.

    It is this threat to the RISC server market that could be behind reports that Sun has been actively seeking a buyer for the past few months. It is very expensive to maintain a roadmap for SPARC that keeps pace with Intel's performance improvements in its server family.

    - - -

    Please see:

    Nattering nabobs of negativity nixed by Nehalem

    - Upcoming Intel Chip Launch Could Spark Massive Wave Of IT System Disruption

    - Dell Makes Big Bet On Enterprise IT In Bid To Boost Profits

    Intel promises faster, greener, cheaper computing with Xeon 5500 | Between the Lines |

    Intel highlighted some performance benchmarks, looked at specific servers, compared the performance against the previous generation chip, and found performance benchmarks that increased by more than 150 percent in some cases.

    The company also pointed to enhancements in the memory subsystem, as well as the I/O subsystems. And it made note of the improvements that will enhance virtualization benchmarks.

    IBM revamps server lineup based on Intel's Nehalem | Between the Lines |

    Could Troubled Iceland Find A Silver Lining In Cloud Computing?


    Two years ago I suggested Google should build its data centers in Iceland because of all the nearly-free green geothermal energy. Plus, it's a great location, midway between North America and Europe, with access to high speed submarine data cables (illustration above).

    But it's not just Google that is building large data centers. There is growing demand for cloud computing services and that means companies will need to build lots more data centers, and operating costs will play a large role in determining success. Since electric power costs are one of the largest expenses for a data center, Iceland starts to look very attractive as a cloud computing site for many companies.

    The attraction is even greater these days. Iceland's economy isn't doing too well following the collapse of its largest banks last year. And its economy continues to worsen with unemployment expected to reach nearly 10 percent in March from 1 percent a year ago.

    The economic crisis means that land and labor costs are cheaper than ever. And the government is keen to encourage investment by foreign companies, which means tax breaks and other incentives. Plus the government is investing in programs that would aid the business environment such as its plans for "4000 man-years of job creation." This includes:

    . . . supporting an innovation centre in Reykjavík, utilising specialists currently unemployed to assist start-ups, improving the competitive position of start-ups and innovative companies. . .

    Part of the government's stimulus efforts include building more hydro-electric and geothermal power plants because only about one-quarter of the green power potential of Iceland has been tapped.

    However, generating more electric power isn't very useful because you can't export it. You can't run a power line half-way across the Atlantic.

    That means you have to convert the electric power into something that can be exported. Aluminum production requires a lot of electric power and so this has become the main method for Iceland to monetize its abundant green energy.

    The irony is that aluminum smelters are anything but green, they pollute the environment and have been linked to increases in the number of birth defects and cases of cancer in local populations. And they don't provide much local employment. This is leading to growing criticism of the government's plans to expand aluminum production and the role of energy executives in selling cheap power to the smelters.

    The web site Saving Iceland reports that earlier this month:

    ...three black dressed individuals, masked with aluminium foil, threw green Skyr (traditional Icelandic dairy product) on representatives of Icelandic energy companies during a greenwash presentation in the University of Iceland.

    Skyr Thrown on Greenwashing PR Managers

    [Throwing Skyr is a traditional way for Icelanders to communicate disrespect and disapproval.]

    Converting power electrons into data electrons would be a much better use of Iceland's green energy. Cloud computing data centers would provide high quality jobs, and could help transition Iceland's dependence on polluting aluminum smelters.

    The Invest in Iceland Agency has put together a few web pages and a pdf to try and drum up interest in data centers [Please see Iceland: The coolest location for data centers.] Not much luck so far. It probably requires a more direct approach by Iceland's government.

    Maybe Google could step in and buy Iceland, which would about double its GDP. It could then relocate the entire Googleplex and many of its data centers. Google would be able to have its own banks, it could rename the Krona currency the Gollar, Googlers could enjoy an amazing number of outdoor activities, cheap housing, long summer days, and surprisingly mild weather. It could end Icelandic whaling, kick-out the polluting aluminum smelters, . . . and be out of reach of any pesky anti-trust lawsuits.

    - - -

    Please see:

    Saving Iceland » More power plants may cause more economic instability

    Saving Iceland » The Hall of Shame

    Google Invests in Geothermal Energy « Data Center Knowledge

    Invest in Iceland Agency - Information centre for foreign investors investing in Iceland

    Dell Makes Big Bet On Enterprise IT In Bid To Boost Profits


    Dell, Wednesday morning launched an early salvo in what is shaping up to be a massive battle for server markets as data centers look to cut costs by using servers based on an advanced Intel microprocessor due out on Monday.

    Dell announced what it called its broadest ever family of servers, and storage systems, just days ahead of similar announcements expected from rivals Hewlett-Packard, Sun Microsystems, IBM, Cisco, and others, as Intel officially introduces a major upgrade to its Xeon server microprocessor.

    The move is a key strategy of founder Michael Dell's, who returned as CEO more than two years ago to try to reinvigorate the company and move it beyond PCs and expand it's enterprise IT business.

    The server market has almost ground to a standstill in recent months as customers await the first servers based on Intel's latest microprocessor architecture design, Nehalem. Intel has set expectations very high, promising breakthrough performance, while at the same time significantly reducing power consumption. Many data centers are unable to expand because they have drained their power capacity.

    Dell is making a big bet on Nehalem, which is used in it's new Dell PowerEdge server family and includes several features Dell says are unique.

    "We believe our design, based on industry standards and unique features, such as the industry's first built-in management software, will offer customers the lowest total cost of ownership," said Stephen Schuckenbrock, head of Dell's Large Enterprise group.

    Dell said it would release pricing and benchmark results on Monday, the official launch of Nehalem. It claimed excellent performance from its Nehalem based servers, saying that each one could replace 9 servers and as many as 18 servers if customers use virtualization technologies.

    Dell also introduced data storage and IT management software.

    Brad Anderson, senior VP, claimed that Dell can produce better performing server and storage systems than its larger rivals because it doesn't have to support proprietary technologies, especially in the area of management software. And it offers unique capabilities.

    For example, it worked closely with Symantec to create the Dell Management Console (DMC), which replaces as many as nine separate management consoles with a single interface. DMC also works with many types of non-Dell hardware and management software, allowing customers to save on labor costs in administration, which can be as much as 70 per cent of total data center costs.

    [For more details please see: Dell Unveils Efficient Enterprise Computing Portfolio, Freeing Customers from Costly and Proprietary Technology]

    Foremski's Take:

    Dell has a lot riding on this launch because it is seeking higher margin markets. However, it is up against well-entrenched competitors such as HP, IBM, and Sun, that have considerable experience in building data systems. It must show potential customers that it is not just a PC company, assembling standard components, and that it can design high performance IT systems with unique features.

    It must show that it understands the issues facing data center managers as they try to deal with their largest headaches: administration costs, server consolidation, and power consumption.

    The launch is also a test of Dell's Services business because enterprise customers are motivated to buy solutions rather than boxes.

    Dell has invested more than two years on developing this family of IT systems, working closely with Intel, Symantec, VMware, and large IT users to make sure it had the best overall design and performance across 15 different IT applications. Dell also said that its services group was involved from the beginning to make sure services capabilities were closely integrated into its systems.

    Dell's aggressive bid to expand its enterprise IT business comes at an opportune time because of the availability of Intel's Nehalem.

    Intel claims that the extraordinary performance of Nehalem based servers means customers can recoup their costs within as little as 8 months. If this is true, it will create a tsunami of demand from data centers that are already under tremendous pressure from the economic downturn to cut operating costs.

    Although a rising tide will lift all boats, Dell clearly hopes its long preparation will not only lift its boats higher, but establish it as a major vendor of IT systems (. . . especially if IBM acquires Sun.)

    - - -

    Please see Dell Blogs:

    Cisco Crosses The Rubicon With All-In-One Data Center Box - A War Of Attrition Begins?

    Cisco Systems this morning launched an aggressive strategy to gain market share in global IT markets with a data center product family that combines virtualization software, server, data storage, and network capabilities in one system.

    The Cisco Unified Computing System has room for 8 blades consisting of servers, data storage systems, and network systems. It is designed for large IT data centers seeking to reduce their costs and also the amount of energy they consume. Cisco says its saves about 20 per cent on hardware costs, and about 30 per cent on operational costs because of lower administration requirements.

    The move pits Cisco against large server companies such as Hewlett-Packard, Sun Microsystems, IBM and Dell, and also data storage companies such as EMC.

    In a Business Week article, Kevin Johnson, CEO of Juniper Networks, said:"They are clearly crossing the Rubicon, and they are now in direct competition with these other large tech companies."

    The Cisco Unified Computing System is designed to use virtualization software from VMware or Microsoft. This enables it to be more productive in running IT applications because of more efficient use of its server and data storage capabilities. Many servers and data storage systems are running at as low as 15 per cent utilization because of the complexity in switching between applications.

    The Cisco system will also use the next generation Xeon server microprocessors from Intel (Intel is a sponsor of SVW).

    Foremski's Take:

    This is an aggressive move by Cisco to break into new IT markets and to take advantage of two key IT trends: blade servers and virtualization technology. It will also likely trigger a price war in the IT market as IT vendors battle for smaller IT budgets.

    Blade servers allow data centers to consolidate their computing power into smaller numbers of boxes potentially save energy because of more efficient components and cooling systems. Virtualization software allows data centers to become far more efficient and flexible in terms of their computing capabilities.

    Blade servers and virtualization software are becoming commodities. Cisco's move will accelerate this trend and thus pressure pricing on blade servers from HP [HPQ], Sun [JAVA], IBM [IBM] and Dell [DELL], and also on data storage blades, while maintaining premium pricing on its network technology.

    The response from its rivals will be to try to undermine Cisco's network business by offering lower prices on network gear in IT contracts in a bid to protect server margins. This could lead to a war of attrition as the IT vendors try to accelerate the commoditization of their rivals' businesses.

    IBM will likely be the least affected by such competition because most of its revenues come from IT services. IBM has a large hardware business but it also acts as the largest reseller of servers and network systems for the IT vendors.

    Cisco can has two ways it can survive a price war and resist commoditization of its network business. Cisco has about $30 billion in cash. And it's management software provides a data center user interface that acts like a data center operating system enabling customers to save on labor costs through more efficient management of resources.

    - - -

    Please see:

    At Cisco, 'Downturn' Screams Long-Term Opportunity - BusinessWeek

    . . . I do believe very strongly that while this is the most challenging time in our careers, as business leaders, customers, and as countries, it also offers potentially the most opportunity. When you face challenges of this magnitude, with the tremendous disruption it creates for businesses, for jobs, for families, you get a willingness [from people] to change with speed you do not get in normal times. So out of this tremendous pain as a country and as a world, I believe we should focus on tremendous gain.

    . . . We're going to be extremely aggressive during this downturn. As a company, we can come out of this with a stretch goal of being the leader not just in communications, but in IT on a global basis.

    Julius Caesar Crosses the Rubicon, 49 BC

    The crossing of a small stream in northern Italy became one of ancient history's most pivotal events. From it sprang the Roman Empire and the genesis of modern European culture.

    M.R. Rangaswami Launches Annual Cloud Summit Conference

    M.R. Rangaswami has done an excellent job with his Software 2000 series of conferences in helping Software As A Service become a mainstream technology. Now he has turned his attentions to Cloud Computing.

    I caught up with M.R. during lunch at Cloud Summit, a new annual conference looking at the business opportunities in Cloud Computing for users, developers, and investors.

    YouTube, Google and
    Highlights of the conference can be found here:
    Looking for the Silver Lining - Business Opportunities in Cloud Computing

    Social Software Could Bridge Marketing & Sales Divide

    I had an interesting conversation this morning with Liz Miller, VP of the Chief Marketing Officer Council. This organization has been studying the disconnect between sales and marketing within large corporations.

    "Our studies have shown that within companies around the world, the sales and marketing departments are separate and don't work well together. They are often adversarial and hoard customer data," says Ms Miller.

    The CMO Council has surveyed companies around the world and says this problem is found everywhere. "Companies aren't able to create a 360 degree view of the customer which means they can't up-sell or cross-sell, they are losing out on a lot of additional sales," she says.

    The two organizations often operate completely independently of each other and although they use the same language, the words they use can have completely different meanings.

    "We found that even a simple word such as 'lead' is understood differently by sales and marketing departments," says Ms Miller. "And the two departments have different calendars that don't match up with sales cycles or promotional programs."

    The CMO Council has been conducting workshops to try and bridge the divide. And it is also recommending using social software within organizations. "If people can view each others blogs and share customer data then that helps to bring the two functions closer together and aligned to the same goals." Oracle is one of the companies that offers a social CRM component.

    Social media sites, external to companies, provides sales and marketing teams with a lot of customer data but there is a need to identify the right type of data. "Companies get very excited because they can mine a lot of data from the Internet but that's not as good as finding the right data, and targeting the key influencers. Too often marketing just wants to make a big advertising buy in the hope of getting the attention of the right people but this doesn't work anymore. Customers are savvier and they rely more on peer recommendations."

    Foremski's Take:

    Company culture can be a big obstacle to removing the mismatch between sales and marketing departments. And sales tends to focus on individuals while marketing tends to deal with large groups of people, demographics , etc.

    The promise of the Internet is to be able to market to individuals but that means a big change in the way marketing is done today. It also means marketing has to work a lot harder and understand data from many sources and buy multiple types of advertising to target smaller groups of people. That's a lot more work for marketing departments, which won't sit well with marketers.

    More work from marketing to get more sales for the sales department. That's unlikely to bring the two groups closer together. But it'll be interesting to see if the CMO Council can help the two groups work better together. Maybe social software within the enterprise can go a long way in achieving those goals.

    - - -

    CMO COUNCIL :: Scenarios and Solutions: Mapping the Traps and Sales Effectiveness Gaps

    Essential Viewing: Chief Strategist Shane Robison - The Where and Why of HP

    The best part of visiting HP Labs late last week was the presentation by Hewlett-Packard's chief strategist. If you want to know where HP is heading and why, watch or listen to these 9 minutes of Shane Robison explaining the trends and strategy of HP.

    This is one of the most lucid accounts of HP's strategy that I've come across.

    Also please see: HP Labs Reboot

    Additional Information on Shane Robison:

    Story continues...

    Is Salesforce Worth $75/Share To Oracle?

    I'm hearing from a reliable source that has approached Oracle to gauge if there is any interest in a sale at $75 a share. That would be almost a 50 per cent premium over Friday's close of $50.87.

    The deal would make sense:

    -It would provide Oracle with a strong brand in online apps and a strong transition road map to cloud computing and a software as a service business model.

    -Salesforce would benefit from Oracle's dominant position in enterprise IT markets, which would help in convincing corporations that Salesforce is a scalable and viable enterprise solution.

    -Marc Benioff, CEO of Salesforce would make a good successor to replace 63 year old Larry Ellison, CEO of Oracle, when he retires says Matthew Greeley, CEO of Mr Benioff is used to work at Oracle. When he left Oracle in 1999, Mr Ellison provided seed funding for Salesforce and also served on its board of directors.

    -Mr Benioff needs a new challenge, he appears to be losing interest in Salesforce, or at least reducing his financial interest in his company at a rapid daily rate. He has been selling 10,000 Salesforce shares every single day since 21 August 2007. Before then, he sold 20,000 shares every day since 14 November 2006. Prior to that date, Mr Benioff sold thousands of shares every day in variable amounts since 31 July 2006.

    [Please see: Insider Trades - Marc Benioff - Yahoo! Finance.]

    -An Oracle acquisition of Salesforce would strengthen its strategic position against SAP, the top enterprise application software company. SAP has been slow in figuring out its online strategy, even naming its initiative has been challenging to the company.

    UPDATED: Larry Ellison will have to buy Salesforce at some point anyway. Netsuite cannot be scaled to the size of Salesforce in this decade, maybe in the next. The two businesses could be easily integrated, that's the beauty of online software, it's all standards based.

    Buying CRM now at a 50 per cent premium would be a good deal for ORCL. MSFT is going to have to cough up much more than the 62 per cent premium it initially offered for YHOO...

    And Salesforce is to Oracle, as Yahoo is to Microsoft, in terms of future direction and strategic positioning.

    There Seems To Be A Red Shift Acceleration In Time Passing ... Sand Hill Group Celebrates The Holidays (Again)

    Sunday evening I'm at the Four Seasons in San Francisco for the Sand Hill Group's Holiday dinner as a guest of the tireless M.R Rangaswami, "the swami of enterprise software" as I called him because of his excellent Software conferences.

    I used to think enterprise software was dead and boring but M.R convincingly changed my opinion through his conferences and a great online magazine [Check out Peter Sobiloff's article: Ready for a Downturn?]

    Sunday evening felt the same as a year ago at Sand Hill's holiday celebrations, it seemed as if I was here just a month ago. Again, I'm sitting next to Eric Faurot, who is always good company.

    Mr Faurot is a senior executive at CMP, which purchased M.R's Software conference. [CMP buys Sand Hill Group's Software conference for up to $9m] BTW, look out for another acquisition to be announced soon.

    The Software 2008 conference is moving from Silicon Valley to Las Vegas which marks a turning point for what has been a quintessential Silicon Valley conference with great turnout from local VCs, startups and top software executives. The conference will be a lot different in Las Vegas but then again the software as a service market, which had been a prime source of content for the conference, has now gone mainstream, so the conference can potentially attract a larger, more mainstream audience too.

    It is good to see other familiar faces: Terry Garnett of Garnett & Helfrich Capital--the venture buyout firm; Shannon Latta, partner in the Horn Group [Please see the latest post on Horn Group blog: Evolving PR-Ryan Block, Marshall Kirkpatrick and Tom Foremski on Social Media and PR]. Also, Carleen Hawn, editor of FoundRead from GigaOmniMedia.

    It was a very pleasant evening but I wish it hadn't come around so soon. The experience of time in Silicon Valley is definitely accelerating (and it's not just me!)

    - - -

    Please see 2006:

    Sand Hill Group celebrates a good year

    Lunch with the Swami of the enterprise software sector...

    Technorati Tags:

    UK's Enterprise Search Giant Autonomy Moves into eDiscovery of Legal Documents

    Autonomy said Tuesday that it had integrated its recent acquisition of Zantaz into its product line. The move strengthens

    Autonomy's position in the enterprise search market against Google, FAST Search and Transfer, and other companies offering ways to structure large amounts of corporate documents and emails.

    Zantaz, based in California, was acquired in July 2007 for $375m. It's technology helps companies administer document policies and comply with legal and regulatory requests for documents. Legal cases can sometimes require companies to find and turn over millions of documents. Earlier this year Intel ran into a problem complying with a deadline to turn over millions of documents as part of a lawsuit brought by Advanced Micro Devices.

    The Zantaz technology can also identify potential legal risks in a company's operations, offering a proactive benefit. This field is known as Information Risk Management.

    Autonomy has combined its technology with that of Zantaz. "It's now on steroids," said Chief Marketing Officer Nicole Eagan.

    Zantaz gives Autonomy an important beachhead in the US with its large customer base. It can leverage that community through offering a family of search products including the ability to search and index video data.

    The Autonomy technology can search for the meaning within documents based on a Bayesian approach which uses statistical analysis. This allows it to work with any language because "meaning" is defined by the statistical similarity of text within documents. The system has to be trained but once that is done it can quickly process large numbers of documents.

    - - -

    Autonomy Zantaz announcements.

    Please also see: Autonomy Says Tags Don't Work

    Technorati Tags: ,

    Intel Developer Forum: Moore Says Moore's Law Will End

    Gordon Moore, one of the co-founders of Intel, is known widely for his observation that the number of transistors that can be built on a silicon chip doubles about every 2 years.

    This became known as Moore's Law and has been used as a way to explain the productivity gains from technology and the expansion of the modern economy.

    What will happen if Moore's Law stops? Will our economies stagnate? Will technological progress stall?

    On Tuesday, Gordon Moore, in an interview by Moira Gunn, said that the end is in sight . . .

    Also from IDF:


    IDF Casual:

    Hard Meets Soft . . . A New Media Way to Sell IT

    This kinda works . . . which is both weird and interesting at the same time. "Everything has changed" a short music video directed by Spinal Tap's Christopher Guest for Intel. (Hat tip: Ron Deutsch.)

    Sun and Otpier: Five Things to know about IT Virtualization

    Virtualization must be the most buzzed term of 2007 within the IT industry bar none. I recently met with Joost Pronk van Hoogeveen from Sun and Ronit Belson from OpTier, an ISV partner of Sun's that provides IT apps management tools, to talk about virtualization and cut through some of the buzz and into some reality.

    We boiled it down to five things you should know about IT virtualization.

    1 - Understand your business application and what it does. You'd be surprised how many organizations don't even know what applications they have and on which servers they run.

    2 - Assess your virtualization technologies and how they fit into your business process.

    3 - Where should you compress your costs. This is different from cost savings.

    4- Who owns the chargebacks? Some applications can be bigger resource hogs than you might expect.

    5 - What is your backup strategy?

    Linux Report: Mobile Linux gains ground, Mobile Apps from Access, and Kim Polese on OpenSource Apps

    I popped into the recent LinuxWorld:

    Linux Increasingly Mobile

    Motorola is moving towards widespread deployment of its mobile Linux on its cell phones. It is moving the OS further and further up the stack towards enterprise class handsets.

    I spoke with Christy Wyatt, VP of Ecosystem and Market Development at Motorola, about recruiting developers to Motorola's Linux platform.

    Mobile Software Giant

    Access is one of the largest software companies that nobody has heard of, is how Diedier Diaz, senior vp of product strategy at Access describes the company.

    It is a leader in mobile applications, and virtually everyone with a cell phone has used one of the company's apps. This is especially true since the acquisition of PalmSource in late 2005, the developer of the Palm OS.

    Enterprise Open Source Applications

    Combining open source software to create powerful enterprise-class applications suites is what SpikeSource does. But how do you make sure dozens of constantly changing open source software components will work together, and not break each other?

    Kim Polese is the CEO of SpikeSource and the former chief evangelist for Java. She says the secret is in the automated testing of the suites of open source software.

    Sun's Latest Microprocessor Impresses Analysts

    I recently spoke with Nathan Brookwood from Insight64 and Clay Ryder from Sageza Group about Sun's latest server microprocessor, UltraSPARC T2.

    It's an impressive chip and gives Sun an edge for the first time in years. And it shows that investing in your own microprocessor development can potentially pay big dividends.

    Rival Hewlett-Packard switched to Intel's Itanium several years ago, and dropped its PA-RISC microprocessor. Although some of the HP technology has been incorporated into Itanium because of the close collaboration between HP and Intel, future development has been outsourced to Intel.

    Sun, however, continued to develop its SPARC chips despite the costs and pressure to do the same as HP. Now it seems that Sun's strategy could pay off in driving server sales and also in markets such as storage, networking, and consumer applications.

    Sun Intros Fastest Server Microprocessor, Opens up Business Units

    By Tom Foremski
    Jonathan Swartz Sun CEOIn a bold move, Sun Microsystems on Tuesday grabbed the lead from rivals Intel and IBM with the introduction of the fastest server microprocessor, the UltraSPARC T2.

    It also said that it was reorganizing its business units so that they individually have to compete in the open market in a bid to become a provider of chips, software, and systems to partners, which could include rival Hewlett-Packard.

    The speed of the UltraSPARC T2 surprised analysts. It was achieved with an innovative 8 core design with each core capable of 8 threads. This is equivalent to a 64-way server system with a total of 89.6 GHz of computing power (64 times 1.4 GHz).

    This computing power provides the chip with the fastest integer and floating point performance on the market, allowing it to be used in specialist scientific computing and general purpose business IT systems.

    Opening up Sun

    Jonathan Swartz, CEO of Sun, told Silicon Valley Watcher that Sun's business groups are being "decoupled" from each other so that they can compete in the open market against rivals on their own merits. Previously, Sun's business units were considered part of a whole, in which only Sun technologies would be combined into systems.

    The new arrangement would allow partners to use the new chips with technologies from other companies. Mr Swartz said HP and IBM could become a Sun partner, for example.

    Nathan Brookwood, chief analyst at Insight64, said:"Sun has achieved something remarkable. They used to be criticised for focusing on multi-threaded architectures, but now it has paid off for them and they are ahead of the competition."

    Greener IT

    The multicore, multi-threaded architecture also brings other benefits, it dramatically reduces electric power consumption allowing Sun to claim the lead in processing power per watt of electricity consumed.

    Low power consumption saves greenhouse gases but more importantly for data centers, it allows more computing to be concentraed in centers where there are constraints on electric power.

    Mr Brookwood added that the investment Sun makes in microprocesor development helps drive a $5bn server business.

    The new chip also integrates ten security standards for faster processing, and it also has high data throughput allowing it to be used in network and data storage equipment.

    Clay Ryder, chief analyst at the Sageza Group, said that the chip was impressive. "It potentially puts Sun into new markets but it will have to educate potential customers about the chip and why they would need it. In today's web services world there are many factors to consider in equipping data centers."

    Data center and consumer devices

    The chip is made for Sun by Texas Instruments and is priced at $1000, inexpensive for a high performance server microprocessor. Sun said it wants to enter into consumer markets too, and it will produce less expensive chips for those applications.

    Mr Brookwood said that entering consumer markets where the embedded microprocessors have prices of $30 to $40 would be challenging because the qualities that make it excellent for server applications are not the same for embedded applications.


    - High-throughput processing - Eight cores and eight threads per core accelerate throughput as shown by two world-record, single-chip SPEC CPU scores, based on tests that delivered 78.3 est. SPECint_rate2006 and a 62.3 est. SPECfp_rate2006.

    The UltraSPARC T2 processor has twice the thread count of Sun's UltraSPARC T1 processor, which recently set a world record on ten Sun Blade T6300 Server Modules delivering 8253.21 SPECjAppServer2004 [email protected]*

    - Networking - Dual, virtualizable, multithreaded 10 Gigabit-per-second Ethernet ports with built-in packet classification ensure fast access to networks and server-to-server communications

    - Security - Eight cryptographic acceleration units and a total of 10 independent functions address ever-heightening security needs, including NSA-approved algorithms, without a performance penalty

    - Computation - Eight floating point units extend the benefits of CMT to high-performance computing workloads for scientific applications; world record single-chip SPECfp_rate2006 and world-record single-chip SPECompM2001 scores

    Input/Output - Eight lanes of industry-standard PCI Express I/O speed applications like streaming media, database read/write and data back-up

    - Memory access - Quad memory controllers deliver more than 50 Gigabytes-per-second of memory access

    - Software support - The massively threaded Solaris OS takes excellent advantage of the highly threaded processors and enables open and cost-effective virtualization


    Please see:

    Sun Microsystems Enters Commercial Silicon Market With World's Fastest Commodity Microprocessor

    UltraSPARC T2 Processor - Overview

    Nathan Brookwood - Insight 64 -

    The Sageza Group, Inc.

    Content-lite CIO Panel at Churchill Club

    I popped into the Churchill Club's CIO Agenda. You can read about it here:


      Churchill Club: CIOs say budgets are up, hiring is up, outsourcing is up

    Dave Margulius, an IT analyst at Enterprise Insight moderated the panel.

    Dave Margulius

    The Churchill Club, 7-23-07
    Doug Merrill, VP Engineering, Google
    Doug Schwinn, CIO, Hasbro
    David Bergen, CIO, Levi Strauss
    Randy Spratt, CIO, McKesson




    Mr Margulius does a good job putting together this type of CIO panel but disappoints by being very light on the questions. 



    It was my first experience seeing Doug Merrill, VP of Engineering at Google speak. He is flamboyant in dress and mannerisms compared with his fellow panelists, wearing a maroon sports coat, tan slacks, Italian shoes, long hair and an earring. He speaks very passionately with great delivery.


    However, he seems to be saying nothing much at all. It was quite extraordinary. I double checked with some other people at the event, and they had the same experience. I have some video of the event I'll be posting later this week...

    - - -

    Please also see SVW:

    Three funerals and a wedding described mood of Churchill Club CIO panel

    Introducing TechOne . . .

    This is a glimpse into the project I've been working on at I'm executive editor and part of a great team. Lots more to come, way more...

    With the iPhone hitting the stores this past weekend, the post-PC on-demand era entered into warp speed - marked by an appropriately frenzied atmosphere in front of Apple's Palo Alto store. Bill Atkinson, designer of the hypercard (and a member of the Apple Macintosh development team), was amongst the many eager consumers lined up the night before.

    Link to:

    Tags: iPhone, on-demand, Apple, Palo Alto, Bill Atkinson

    Bookmarks: These icons link to social bookmarking sites where readers can share and discover new web pages.

    • NewsVine
    • Reddit
    • TailRank
    • Technorati
    • YahooMyWeb
    • Digg

    Intel's New Anti-Malware Technologies Could Spawn New Consumer Services

    [Intel is a sponsor of SVW}

    On Wednesday I went to Intel's launch of its latest Centrino chipset for notebooks. Everything, of course, is a lot faster, but what caught my eye was a new technology embedded in the chips which, although aimed squarely at business users, would be a god-send for consumers.

    Take a look:

    Intel® vPro™ processor technology. IT departments will be able to reliably manage both desktops and notebooks and deal with what plagues them most – security threats, cost of ownership, resource allocation, and asset management – and do so wirelessly.

    One of the key innovations designed in Intel Centrino Pro – Intel® Active Management Technology – provides business-class notebook PCs with wireless PC management, protection and remote repair work thereby increasing productivity, IT savings and uptime.

    For example, if a virus or other type of malware gets into the notebook, the Intel technology will shut it off from the network, and the IT department is notified, downloads software to get rid of the problem and repair any damaged files. It's all done in a minute or two.

    This technique can be used for other things too, installing software across hundreds of clients etc, etc.

    At first glance it sounds like many other remote management software applications/utilities that provide similar capabilities, what's new here?

    It turns out there is a microcontroller (a separate chip) that creates a wireless back channel to a central location. This back-channel remains unaffected and is used to deliver new software and repairs--even if the notebook is disconnected from its main network and has been completely taken over by hordes of malware!

    This Active Management Technology is inside every one of the new Centrino chipsets, but it is only used in business-class notebooks. It allows the notebook vendors to charge corporations a premium. However, it is there in the consumer notebooks too, it is just not turned on.

    But it could be turned on with the right software and it could become a platform to deliver repair and maintenance services to millions of consumers! It's potentially a massive business for some future companies. Who will be the first to do this?

    Best Buy and its fleet of Geek Squads running out to people's homes to fix their machines might soon become a thing of the past...



    Multitude Of Innovations Boost New Intel–Based Laptops›
    NEW YORK and SAN FRANCISCO, May 9, 2007 – Faster processors and chipsets. Great-looking video and graphics. Stronger and faster wireless signals. Better security and manageability. Designed for energy efficiency to enable great battery life.

    Software 2007 Notes: Enterprise Software Is Certainly Not Dead...

    mr.jpgTwo dueling conferences this week, Software 2007 and Sun Microsystems' JavaOne conference. Software 2007 was the clear choice and that's where most of the local hacks could be found.

    I had once written:

    The enterprise software market is dead, dead, dead....

    I was wrong. Enterprise software markets are not dead boring. They're just plain dead.

    But that was before I started going to MR Rangaswami's Software 2005 conference. And I've become a big fan of MR "the swami of enterprise software" as I've called him, because he has made the this space interesting again. And because he has created one of the best conferences in Silicon Valley.

    Every year it gets better and this year it featured keynotes from top stars of the sector: Steve Ballmer Microsoft; Hasso Plattner, SAP; Shane Robison
    Hewlett-Packard, and of course local royalty, Marc Benioff,

    - Software 2007 Powered by Innovation


    The Old Guard Turn Up

    It was interesting to see the old guard of the enterprise software sector, Microsoft, SAP, EMC, etc, because the show is very focused on software as a service (SAAS). And there is little love lost between these two very different camps.

    Even though the software giants continually announce SAAS ventures, the SAAS business model is disruptively different. With SAAS, customers pay for exactly what they use, rather than pay a big lump fee for an enterprise  license and then 20 percent in annual maintenance fees

    "When your customers are on a monthly service plan, you have to continually deliver value and innovation. It is not about just selling a license and disappearing till the next time. You have to be continually on your toes," says Michael Gregoire, CEO of Taleo, a leading talent management service company.


    Software Startup Investments Magnified By Offshoring 

    MR is a tireless promoter of the enterprise software industry: "There are billions of dollars being invested  BY VCs in enterprise software startups. And if you think about the use of off-shoring some of the development, the use of open source software, and other technologies, you actually are getting a factor of four or five greater than the dollar amount suggests." This is going to produce tremendous amounts of innovation, he says.

    Late last year MR sold the conference to CMP, the trade media and events company. - CMP buys Sand Hill Group's Software conference for up to $9m

    I have met with Eric Faurot, CMP's savvy chief strategist, who led the deal. He said he wanted to take MR's Software 2000 conference and roll it into CMP's Interop show in Las Vegas to recreate a type of Comdex--which used to be the mammoth show. MR told me that he thinks his Software conference could become bigger than Interop. He could be right.


    Media Matters

    On Tuesday morning I was on a fun panel moderated by Sabrina Horn, head of the Horn Group. Here is a write up from Martha Feingold from the Horn Group:

    Media - Who Matters Most?
    Martha Feingold

    The provocative title of this post is the subject we sought to tackle at our breakout session at Software 2007 today.  Our CEO Sabrina Horn put together an interesting mix of media and enterprise software executives- Tom Foremski of Silicon Valley Watcher, Forbes' Victoria Barret , Ben Smith of Merchant Circle, Helen Donnelly of EnterpriseDB and Sam Whitmore from MediaSurvey.


     Horn Group Weblog

    We got some excellent feedback from the audience, which is always very satisfying.

    I'm off to moderate a panel on film financing, more Software 2007 notes are on their way...

    - - -

    Please see SVW:

    Notes from Software 2005: Lunch with the Swami of the enterprise software sector...
    The Swami of enterprise software
    At Software 2005, MR Rangaswami of the Sand Hill Group wonders if the era of the $1 billion software company is over. Tom Foremski reports on this and other nuggets from the swami of software.  


    The enterprise software market is dead, dead, dead....
    I was wrong. Enterprise software markets are not dead boring. They're just plain dead.
    death-of-Enterprise.jpg An update to my online debate with the esteemed journalist John Gallant, Editorial Director of Network World, who disagrees with my assertion that enterprise software markets have become dead boring. I'd like to change my argument. Enterprise software markets are dead. Period. Killed by Larry Ellison.

    Posted by Tom Foremski on September 13, 2005 2:46 AM


    Enterprise software might not be dead after all. . . at least not in early April


    Posted by Tom Foremski on February 7, 2006 11:00 AM

    Catching Up With Tibco...And Why IT Really Does Matter

    I really should spend more time with my sponsors. I spent most of Tuesday at Tibco's user conference, catching up with the the company's business strategy team and having some great conversations, and thinking I really should spend more time with my sponsors.

    Tibco, Infineon Systems, Intel, Edelman and Cohn & Wolfe are part of a small, courageous band of of SVW sponsors. Tibco in particular, has been vital to this venture. 

    Vivek Ranadive, the CEO and founder of Tibco is one of Silicon Valley's key players and one of its quintessential figures. He "got" what I was trying to do with Silicon Valley Watcher earlier than anybody else, when it was just a gleam in my eye.

    Conversely, I feel that I "get" what Tibco is trying to do, as it forges ahead into new territory. And it is a complex new territory that goes beyond information technology as we've known it.

    Tibco's focus is on enabling large corporations to move into the next phase of business automation, into the automation of the deployment of business processes.

    This is not about enterprise applications, ERP, CRM, etc. and the dozens of acronyms and terms that became common in the lexicon of enterprise IT for the past 2 decades.

    Marc Benioff, CEO of talks all the time about "the end of software" and he is dead right. Except that he doesn't really mean it. What Salesforce is trying to say is "the end of software-on-your-server."

    Tibco really is about "the end of software." The leading edge in the enterprise IT space is not about applications--server-based or delivered as a service--it is about the meta level above that layer. It is in the "wrapper" above where application companies such as Salesforce operate.

    Tibco's focus is on automating and managing business processes, and building the service oriented architecture (SOA) that businesses need to quickly respond to a changing world. It's a changing world of competition, and also literally a changing world--rising temperatures, sea levels, and energy costs.

    SOA is about reprogramming an entire business on-the-fly, it is about predictive intelligence, it is how large businesses will differentiate themselves from each other.

    SOA makes IT strategic again because in a world where everyone has the same enterprise applications, the competitive differentiator becomes the automated business process and how quickly it can be deployed and combined.

    The SOA world is a complex one because to get to that level means that a company's IT systems have to be integrated, real-time, and built on an incredibly flexible infrastructure. In the context of SOA, IT really does matter.

    - - -

    Some recent Tibco news:

  • TIBCO Unveils Next Generation Business Process Modeling Powerhouse
  • TIBCO ONE Project to Power Next Generation Infrastructure Applications
  • TIBCO Announces $300 Million Buyback
  • TIBCO to Acquire Spotfire
  • TIBCO Kicks Off Annual User Conference with Record Number of Attendees
  • TIBCO User Conference to Feature Keynote Address by HP CEO Mark Hurd
  • TIBCO Delivers on Predictive Business Roadmap with Release of TIBCO BusinessEvents Version 2.0


  • FAST: European Firm Enters Battle For US Media Markets--Says Its Search Traffic Already Larger Than YHOO, Will Pass GOOG in 2 Years

    FAST Search and Transfer, the leading European search firm, introduced a search based business platform for media companies and said that search traffic from its customers has surpassed Yahoo! and will overtake Google in 2 years.

    The Norwegian based company said its FASTMedia software platform is the first to match content to individual users, in addition to supporting all types of online advertising models. The suite of applications is designed specifically for media companies and enables them to run their own ad networks.

    FAST said that its top 35 media customers already generate search traffic that exceeds that of Yahoo!.

    The market research firm IDC estimates that 70 per cent of search queries do not come from search engines.

    Instead, people are choosing to bypass search engines and are going
    directly to their preferred information sources, retailers, and other
    websites and searching there.

    FAST recently completed a survey of its top 35 media customers:

    Together this "FAST Media Network" is generating as much search traffic as Yahoo!, with search traffic growing more than twice as quickly.  At the current pace, searches within the "FAST Media Network" collectively will surpass Google in two years...

    FAST wants media companies to "turn search from the disrupter of their worlds"  and use the technology to grow their businesses.

    For example, newspaper publishers have stood by and watched Google and Yahoo sell massive amounts of advertising based on their content without any direct benefit--unless a reader clicks through to their news site, and then happens to click on a Google or Yahoo text ad.

    FAST wants to cut out the middle-men by selling search-based business software to media companies to run within their own data centers and operate their own adverting businesses.

    Global Media Warming

    The battle for media markets is heating up.  Google recently acquired DoubleClick for $3.1bn and today Yahoo! acquired Right Media for $680m, to beef up their advertising services.

    The competition is for a very lucrative business--running massive advertising networks for global media companies. The search giants keep about 20 per cent of total advertising revenues.

    But this revenue share is skewed towards a handful of large media companies with the clout to negotiate better deals. Most publishers receive far less, between 60 and 40 per cent of ad revenues.

    The FASTMedia software supports pay-per-click, contextual, classifieds and all other types of online advertising services, plus self-service, and unique features. It's  "Featured Content" technology matches content on-the-fly with online users' searches. Publishers can use this for targeted premium content services.

    The Vikings are in GOOG's rear mirror and coming up FAST

    FAST Search and Transfer has suddenly popped into my sphere of attention and I mean really popped. I got to spend some time at FAST's user conference at the end of last week, and it was an educational experience that got me interested in search again.

    This Norwegian based enterprise software search company has made the subject of search compelling again. For too long GOOG has made it appear as if it had already won the search wars--anything better would be an incremental improvement.

    Yet enterprise search--which is where FAST has staked its expertise--is a much more interesting subject than I imagined, and much more interesting than consumer search. Enterprise search is much more difficult problem, and one of the most challenging problems in IT.

    Consumer search can be vague and still be successful. It can bring up a list of nearly relevant sites or documents, and usually that is all that is needed. But in the enterprise, search is usually needed to find something very specific, a contract, a purchase order, a memo. 

    And there are all sorts of conditions associated with access to data, some security based, others are regulatory. Search quickly becomes quite a complex process and one that can lead to other things.

    Enterprises use a lot of structured data, but there is also a massive amount of unstructured data too. Search in the enterprise could potentially bring the two data world's together.

    You might even be able to create enterprise applications by using modified search algorithms.

    This type of scenario gets very interesting: enterprise applications by algorithm. This is already happening in business intelligence, I wonder how far, in theory, such an approach could be taken. Could you create CRM applications through search algorithms?

    I'll be writing more about this subject, and FAST, over the next few days.

    SVW chat: IBM's CTO of Emerging Technologies talks about Web 2.0 and trust

    David Boloker CTO of Emerging Technologies at IBM came into town to speak at Ajax World. I caught up with him Wednesday morning and we talked about Ajax and Web 2.0, and a new early alpha initiative IBM calls QEDwiki that can provide the framework for integrating information and applications within enterprises:

    David Boloker is very interested in Ajax and very interested in making sure that there aren't dozens of nuances of Ajax. He and Scott Dietzen, CTO at Zimbra, one of the earliest Ajax apps companies, founded the Open Ajax Alliance.

    "Every Ajax toolset was following its own nuance of Ajax and the problem was that each toolset wanted to 'own' the whole page. This created many conflicts and made it difficult to pull together different components," said Mr Boloker. "We did not want to create a standards body but to create agreement on some basic things such as naming JavaScript objects."

    Is an Ajax application the same as a Web 2.0 application? "No, a Web 2.0 application has to include the social dimension, how it implements tagging, for example, and sharing, and all the other community oriented aspects that are important," said Mr Boloker.

    For IBM, Ajax and Web 2.0 represent new generations of  applications that use the web as a platform. And they have characteristics that enable users to create their own "my web" experience by mashing/pulling  together Ajax components from many different sources.

    A key to that approach is to be able to provide the framework that enables that type of integration. And that is the OpenAjax Hub an open source project.

    But with everyone having access to this framework, where is the value-add? Mr Boloker says it will be in two places. One is in the value of the data or content. The databases of content will have value to organizations and users, such as Reuters feeds, or databases of chemical data for example.

    The second place will be in the Services Oriented Architecture (SOA) layer which is all about services. And IBM is a services oriented company.

    "The focus for us is on the business professional, not the IT department. All you need to do is operate a mouse and know how to drag and drop."

    That's the basis for IBM's alpha project called QEDwiki (Quickly and Easily Done wiki), which is being tested by 20 large corporations. This is IBM's version of what Jotspot, SocialText, and others are offering, a way to enable business people to mashup sources, feeds and applications, by what I call drag and drop share or not (DADSON), depending on user access rights.

    But mashing up feeds and data means trust in the source. I pointed out that Google News recently was carrying a news headline that had been hacked, it carried an anti-US anti-Israel message. In that case, Google had not verified the content, it was corrupted, and that corrupted trust in Google.

    In the brave new world of web applications and mashups, verifying that content comes from where it says it does will be absolutely critical. But how will that be done?

    Mr Boloker said that feeds could be signed with security certificates but he also acknowledged that even Microsoft has had problems with security certificates.

    Trust will come from long standing relations, contracts, and also using security technologies, said Mr Boloker. "It will come from your relationships with your vendors and an established history of trust. You will assign different levels of trust to a feed. And trust will be offered as yet another service."

    - - -


    Additional resources and links:

    Story continues...

    RightNow extends CRM into "Customer Retention Management" through focus on customer experience

    On Tuesday, I spoke with Greg Gianforte, founder and chief executive of RightNow Technologies and the fruits of a $25m two-year technology development project, the RightNow 8 enterprise suite.  This is what will carry it into the big leagues.

    The big leagues means breaking into that $1bn annual revenue level, about ten times current revenues. That's also where wants to be, the leading software-as-a-service company.

    Mr Gianforte likes to point out that there is a big difference between RightNow and Salesforce. "We are enterprise class, we compete with SAP, Oracle in the enterprise. Salesforce is aimed at smaller companies. And now with RightNow 8 this will take us to the next level in the enterpsice spoftware market."

    An investment of $25m is huge for this young company, which went public in 2003. It's a bet-the-company investment and so the strategy had better be right.

    Mr Gianforte believes the opportunity is in helping to automate the improvement of the customer experience.

    "Businesses are constantly being challenged by lower cost business models and that means they have to focus on their customers," he says. "In mature markets customer retention becomes the new form of customer acquisition. This means that improving the customer experience is very important."

    RightNow recently commissioned a study that found that nearly one-third of a sample of 1006 people had experienced anger strong enough to make them shake, or to break something--because of a bad customer experience. That's a large number of chances to lose a customer.

    RightNow 8 is an enterprise application platform that builds on the company's core Customer Relationship Management application, with modules for different industry sectors providing ways to improve customer experience. Third parties/partners will fill in the gaps in producing modules for various smaller verticals.

    SVW take: RightNow isn't a web 2.0 company by any stretch of the this short-lived definition. It's a fast growing enterprise software company positioned to profit from the corporate move towards a mix of hosted software services and in-house IT.

    Also, corporations have done a ton of cost cutting in their IT departments, and now are looking at ways to use IT to build revenues.

    RightNow certainly has a shot at grabbing more business because of its lower pricing and fast deployment. It's challenge with RightNow 8 will be in distinguishing its approach from several competing enterprise application platforms.

    Private equity firms buying up software companies or customers?

    Here is AMR Research on private equity firms buying up smaller software companies to create large firms capable of competing with an SAP or IBM. But is it good for customers? It looks like the private equity firms are aggregating customer bases rather than creating a broad base of IT products.

    From: Who Really Owns Your Software Vendor? By Jim Shepherd, Ian Finley, Laura McCaughey at AMR Research.

    At a user conference in 2003, Mike Greenough, then CEO of SSA Global, said that his company had paid an average of $23,500 per customer to acquire 16,000 customers. Three years later, Golden Gate paid approximately $130,000 per customer in order to merge SSA Global with Infor. This might seem expensive, but AMR Research estimates that SSA Global was generating between $40,000 and $50,000 in annual revenue per customer.

    LinuxWorld: IBM using open source to speed up commoditization trends

    IBM announced that it is extending its support for open source business models in eight key initiatives. I spoke with Dan Frye, who heads up IBM's Linux Technology Center in Portland, Oregon.

    "Our experience with Linux and open source has shown how disruptive the business model is, and we want to extend that business model into other open source projects. The disruptive force of open source affects us all, and we want to make sure that we can move rapidly and innovate," said Dan Frye.

    The eight areas are: (From IBM LinuxWorld press kit.)

    o Web Application Servers - Based on Apache open source projects like Geronimo.
    o Development Tools - Built on the open source Eclipse Integrated Development Environment.
    o Client-side middleware - Supporting the Eclipse Rich Client Platform project for hosting cross-platform applications.
    o Data Servers - Building on the open source Apache Derby, with IBM Cloudscape, and free no-license fee IBM DB2 Express-C.
    o Systems Management - Including open source Aperi projects.
    o Open hardware architectures - Community-driven collaborative innovation with and
    o Grid Computing: Expanded support for Open Grid Services Architecture and the Globus Alliance.
    o Business Consulting and Technology Services - Enabling customers to innovate with open source-based solutions and development models.

    SVW take: IBM has a vested interest in speeding up the commoditization of large parts of the IT sector because of its huge IT services group. But it also has a lot of proprietary technologies that are in the path of the open-source steamroller, and the trick will be to figure out which ones to defend and which ones to leave behind.

    IBM is good at moving up the value chain, it will sell large business groups, such as hard drives, PCs, once profit margins drop to low levels. In the case of the open source communities, it has been contributing a lot of IP and patents. This helps accelerate commoditization trends in IT, and it impacts smaller rivals that don't have the scale of IBM's IT services business groups to provide them with revenues from helping customers integrate open source technologies.

    Mr Frye said that large corporations are increasingly using open source in mission critical applications. For such important projects, IBM's IT services can provide customers with an important level of assurance. And IBM can reduce costs by integrating open source solutions instead of commercial applications from rivals, which means more money is available to pay for IBM consulting and services.

    It's all part of the industry-wide transition to a services based business model in which companies pay a monthly/yearly fee. This means that it won't really matter to customers if open source technologies are being used, all that matters is that they receive an IT service at an appropriate price and performance level.

    To that extent, the more open source technologies IBM can cram into its IT services offerings, the better because it reduces its costs. The open source communities carry the burden of testing and maintenance rather than IBM.

    It has to be noted that IBM is considered a good citizen, it contributes more than any other company to open source projects, and it has the most to gain from the success of those projects.

    HP/Mercury merger: A $4.5bn deal to grab lead in IT management software

    Mercury_Int.jpgHewlett-Packard's $4.5bn bid to acquire Mercury Interactive, announced today after close of markets, is a smart move as the top IT vendors jostle for prime position in the area of data center management and automating business processes.

    The ultimate goal is to create a type of operating system for the IT data center of the future in which applications can be provisioned in near real-time, and performance loads can spread across many different resources depending on the business process. This is part of a meta-level approach to combining business processes with IT in what is called Business Optimization Software (BTO). And to do that, IT managers need to know the performance of their applications and the rest of their systems--Mercury Interactive provides part of that solution.

    HP's OpenView software is already one of the leading applications for managing IT resources and the Mercury products will strengthen that product line.
    From HP:

    The transaction brings together the strength of HP OpenView systems, network and IT service management software with Mercury’s strength in application management, application delivery, IT governance and service-oriented architecture governance.

    From HP:

    The Mercury acquisition is expected to increase the size of the HP Software business to more than $2 billion in annual revenue. Immediately following the close of the transaction, Mercury will become part of the HP Software business and both companies’sales forces will begin reference-selling each others’ products.

    However, HP's past performance of its software group has been rocky. Over the past few years, the company failed in its bid to establish a large middleware business through acquisitions and organic growth to rival BEA Systems, and IBM.

    HP also needs to unravel some of the mess that Mercury got itself into in recent years with the SEC and make sure that there aren't any hidden problems.

    Here are some call-in details for further information:

    HP conference call and webcast for financial analysts and shareholders: 5 p.m. ET / 2 p.m. PT, hosted by Mark Hurd. Listen only dial-in: U.S. +1 800 299 0148, International dial-in: +1 617 801 9711, passcode: 82591745. Live audio Replay information, available until Aug. 1, 2006: U.S.: +1 888 286 8010, International dial-in: +1 617 801 6888, passcode: 55367340.

    HP industry analyst call: 6 p.m. ET / 3 p.m. PT, hosted by Thomas Hogan. U.S. dial-in: +1 800 299 8538; International dial-in: +1 617 786 2902, passcode: 83000965.Replay information, available until July 25, 2007: U.S. dial-in: +1 888 286 8010; International dial-in: +1 617 801 6888, passcode: 57320057

    Mercury financial analyst webcast for analysts and shareholders: 8:30 p.m. ET / 5:30 p.m. PT, hosted by Tony Zingale; David Murphy, chief financial officer; and, Shelly Schaffer, vice president, Corporate Finance.

    U.S. dial-in: +1 800 289 0533; International dial-in: +1 913 981 5525, passcode: 4078554. The webcast link will be available on Mercury’s website: The replay will be available via the same link.

    A replay of the Mercury call will be available at +1 719 457 0820 or +1 888 2031112, passcode: 4078554. Replay will be available shortly following the conclusion of the live call for one year and the dial-in replay will be available until July 31, 2006.

    Here is a comment and perspective from a note sent to me by Miko Matsumura VP, Technology Standards, Infravio, The SOA Governance Company:

    Story continues...

    Potential giant-killer Ingres snags NYSE CTO as President

    Ingres, the open source database software company with the ambitions of an Oracle, announced Roger Burkhardt, the former chief technology officer of the New York Stock Exchange, as its president and chief operating officer.

    The appointment is another coup for Terry Garnett, the acting CEO of Ingres, and the leading investor in Ingres. Mr Garnett has built a team of top software industry executives such as:

    Jim Finn, who led Oracle's corporate comms for many years and is credited with managing the tricky acquisition strategy, and was recently head of comms at IBM Americas; Tom Berquist, a former star Wall Street analyst is CFO; Dave Dargo, senior VP and CTO came from Oracle and is a respected authority on Linux; Dev Mukherjee, CMO, came from Microsoft and IBM and is credited with key thought leadership in establishing utility computing and software as a service. Bill Maimone is Chief Architect, he used to lead database development at Oracle.

    Mr Garnett told SVW that because of the high caliber team already in place, recruiting for the position of president and chief operating officer was made more challenging because it required someone of equal stature.

    Mr Burkhardt will bring to Ingres an understanding of the needs of financial services customers--a key market for Ingres.
    Please see: The ambitions of Ingres: A small company with the executive team of a giant

    Exclusive interview: Terry Garnett explains his firm's VC buyout strategy

    Red Hat jumps into M&A: Is the $350m deal defensive or aggresive?

    By Tom Foremski for SiliconValleyWatcher

    Red Hat's acquisition of open source company JBoss on Monday was a big surprise because Oracle was the one that all my sources told me was the purchaser. Maybe the price was a bit steep for Oracle at $350m?

    One interesting thing about this acquisition is that private valuations of open source companies have reached very high levels--much more than comparable companies in the public sector. The other interesting aspect of this deal is the potential emergence of RHAT as a major force in the software business.

    This was clearly a strategic acquisition and it is part of the software vendors racing to build an enterprise stack of operating systems, middleware, and e-commerce applications. Red Hat now has the operating system and a good middleware application server. All open source, but it's not really about open source it is about: The Enterprise Stack. You've either got it or you don't. You, the customer, will be paying a monthly stack fee whether it is open source or not--you are paying for the maintenance and hosting.

    So who will be the first with a one-price-one-bill enterprise stack? Who will be the acquirer, who will roll-up the enterprise stack? Could it be Red Hat? Could it be Ingres? Oracle will certainly continue with acquisitions, and Sun Microsystems is another competitor, not to mention IBM, SAP, Computer Associates, Symantec and Microsoft.

    The way things are going, everyone is heading into this from different market positions. And they are trying to preserve their own business model while trying to commoditize the business model of their competitors.

    That will be interesting to watch.

    - - -

    Dave Dargo, the CTO of Ingres has a lot of insight into the software market, especially the open source movement from his previous job at Oracle, where he built the unbreakable Linux platform. He recently started a blog:

    This is from "White Knight or Strategic Investor?" Dave Dargo's analysis of the Red Hat deal.

    Well, it happened. It wasn’t Oracle, thankfully, in my opinion. It was Red Hat, but was Red Hat being a white knight and saving the open source world or were they making a smart, strategic investment. I think it’s a little bit of both with a heavier emphasis on the strategic investment.

    The ambitions of Ingres: A small company with the executive team of a giant

    By Tom Foremski for SiliconValleyWatcher
    Jim Finn, Tom and Dave Dargo (by Dan Farber)
    I met with the executive team of Ingres Tuesday evening and it's clear that this newly minted company has major ambitions in the open source enterprise software market.

    Ingres was formed in November when Computer Associates spun out its enterprise database group to Garnett & Helfrich Capital--which specializes in venture buyouts. And over the last few months Ingres CEO Terry Garnett has been pulling together one of the top executive teams in the industry.

    It's a team that has spent many years in Oracle--its top target. Dave Dargo, senior VP and CTO came from Oracle and is a respected authority on Linux; Dev Mukherjee, CMO, came from Microsoft and IBM and is credited with key thought leadership in establishing utility computing and software as a service. In recent weeks, Jim Finn, who led Oracle's corporate comms for many years and is credited with managing the tricky acquisition strategy, and was recently head of comms at IBM Americas; Tom Berquist, a former star Wall Street analyst was appointed CFO; and earlier this week Bill Maimone joined as Chief Architect, he had lead database development at Oracle.

    Mr Garnett also used to work at Oracle as senior vp of worldwide marketing, and he says Ingres collectively has about 1,000 man years of experience at Oracle. Check out the rest of the executive team:

    Ingres is offering an open-source enterprise-ready database that can compete against Oracle. MySQL is one of the leading open source databases but it has run into a problem: Oracle has acquired open software companies and controls the transactional database engines that MySQL needs for the enterprise market.

    Dave Dargo, CTO, says that MySQL now has to replace those database technologies and that could take 18 to 24 months. This helps Ingres win business that might have gone to MySQL.

    With such a stellar executive team Ingres clearly has ambitions that go beyond being just one of several open source database companies. The opportunity is in being able to offer the database and the rest of the enterprise software stack , and the question is how will that be done? Will it be done through acquisitions or partnerships?

    Oracle's increasing share of the enterprise applications market, combined with its database and middleware stack--is pressuring large enterprise players such as SAP, BEA Systems, Red Hat, Symantec and others. These now become natural allies to Ingres, and potential partners in the fight against Oracle.

    The business opportunity is in attacking high IT costs. "Oracle customers hate the high license and maintenance fees. There is an opportunity to come in at one-half to one-third of Oracle's fees," says Mr Garnett.

    The enterprise IT market is also switching to a services pricing model, annual fees instead of licenses. Oracle faces a stressful transition to the new model which could take two years to complete; Ingres doesn't have that legacy issue, making it attractive to enterprise customers.

    "I think we can carve-off five to ten per cent of the enterprise database market, which is $16bn. And if we can do that, I don't see why we couldn't get to ten to twenty per cent of the market," says Tom Berquist, CFO.

    A trend in its favor is the acceptance of open-source software within large enterprises where new IT projects increasingly have open-source components. Ingres challenge will be in how it can leverage the open source community in the same way MySQL has benefited. And how quickly it can build the enterprise software stack.

    Other considerable challenges come from IBM and Sun Microsystems, which already have a substantial enterprise software stack and can commoditize the software at a faster rate because they can sell the hardware services.

    Suddenly, the enterprise IT market has become very interesting as these large players try to commoditize each others core markets. [See "Stack war" by Nicholas Carr] And the players that only have one part of the stack are forced to scramble for allies or seek mergers.

    This is why Ingres has become the dark horse of the enterprise market--and one of the hottest and most interesting Silicon Valley companies around. It is a small company with the executive team of a giant--so you can bet that it won't be sitting around quietly. I'll be meeting with Dave Dargo soon--watch this space :-)
    - - -
    Please also see my fellow ZDNet blogger Dan Farber: Ingres prepares for assault on Oracle's turf

    An SAP view on Oracle and open source from Jeff Nolan

    Jeff Nolan was one of the top VCs in the Valley and worked at SAP Ventures for many years before shifting to this role within SAP, as director of the Apollo Strategy Group in SAP Marketing and Customer Operations.

    Informally, he heads the "Kill Oracle team" I'm told. BTW SAP Ventures is an investor in MySQL.

    I think Jeff makes a good point. I have a meeting with Jeff early next week...

    You have been all over the oracle/open source topic, do you think they may be trying to buy their own LAMP stack in order to bolt on Fusion middleware or is it really as simple as they want to frustrate the best open source efforts from moving into Oracle home turf? Ellison is spending a lot of time talking about subscription revenues and all-you-can-eat pricing models… and much of the middleware is in fact moving to commodity levels.

    Just some random thoughts, my team is doing a lot of work in this area if you are interested in comparing notes.

    Jeff Nolan
    Director, Apollo Strategy Group
    SAP Marketing and Customer Operations

    Exclusive: Oracle's hostile moves in open source will fail says Ingres CTO

    I've been writing about Oracle's moves to control the open source movement--or at least the database part of it. Dave Dargo, the CTO of Ingres, sent me his view on things. Ingres, BTW is a company to watch--it is likely to completely remake the traditional boundary between open source and enterprise software. And it is recruiting a top tier management team (Tom Berquist the star Wall Street analyst joins Ingres Wednesday March 1 as CFO and Jim Finn, who headed IBM North Americas communications joined recently).

    - - -


    In many respects, you are spot-on. It must have sent a chill down the spine of the open source community to see the following quote in a Business Week story that preceded the acquisition of Sleepycat: "One source close to the talks [the rumored JBoss talks] says these deals may be just the beginning. 'Larry and [Oracle Co-President and CFO] Safra Catz have a clear plan to control the entire open-source [software] stack,' the person says."

    I'd bet that anonymous quote did not come from the open-source camp.

    Why is Oracle so interested in open-source all of a sudden? I don't think this is about Oracle moving into open-source so much as attempting to consume those open-source users into the larger Oracle machine.

    Story continues...

    Where is the outrage over open source acquisitions?

    By Tom Foremski for ZDNet

    I am glad that some of my fellow ZDnet bloggers have caught up with this issue of Oracle buying up the open source movement. George Ou points to my Feb 16 post and references Dana Blankenhorn's Feb 17 and Feb 21 post.

    George makes a good point that:"it doesn't seem to getting the kind of outrage that I expected."

    There is a great comment left by one of the our wonderfully anonymous but absolutely clued in readers, Sxooter which lays things out quite well, the box of proprietary technology Larry Ellison has drawn around one his most troublesome comeptitors, MySQL.

    [BTW, the reason MySQL did not take Larry's offer is that the company recently received financing from SAP and Intel and those companies have a self interest in maintaing an open source movement.]

    Most of the comments on this issue continue to say that it is not possible to buy the open source movement. Yes, technically, this is true because development communities can fork off and continue on their merry way.

    But this is a psychological battle and Mr Ellison is extremely good at shots across the bow, and "talking down" a competitor. In this case, actions speak louder than words.

    Mr Ellison's strategy pours a bucket of cold water over the best efforts of the venture capital community to create more open source projects and companies that could be troublesome to Oracle. And one of those potential thorns in Oracle's side is the extremely well capitalized Ingres, a relational database company bought by investors from Computer Associates and staffed by a first tier management pack.

    This is a company that in many ways, is typical of the VC investments being made in this sector. The goal is to recruit or acquire a developer community around an open sourced software product. Then sell services to enterprises below Oracle's costs.

    The open source developer community does the development work and the company providing the enterprise services gets revenues and maybe gets sold. (If you are Ingres, you don't attract a hot-shot management team unless you promise a lot of gold...)

    (Please continue reading...)

    Enterprise software might not be dead after all. . . at least not in early April

    By Tom Foremski for SiliconValleyWatcher

    Death-of-Enterprise_Redux.jpgM.R. Rangaswami is a venture capitalist who produces one of the best enterprise software publications. I'm a big fan of his online magazine, and also his conferences, with one coming up in early April. He just sent out his latest edition of the Software Pulse newsletter, with an interesting opinion piece by Geoffrey Moore. (More here. . .)

    M.R.'s interest in the subject of enterprise software comes from a different direction than traditional publishers, he's interested in the trends and issues so that he and other investors can better understand the deal flow and improve on their funding decisions.

    A traditional trade publisher such as an IDG with Computerworld, or a ZDNet, takes a different approach to the subject--writing from the users/customers/decision makers' points of view. Both approaches, it turns out, produce equally high-quality editorial products.

    I tend to favor M.R.'s approach: I like to look at companies and products as existing within a framework of business models; pulled by trends in markets; and all bobbing around within the fluid dynamics of their capital markets.

    Story continues...

    Statisticians are needed to keep massive grid systems running, says Sun Services CTO

    By Tom Foremski, for Silicon Valley Watcher
    The killer skills for this next decade are going to be statistical analysis combined with business studies. I was just recently discussing this with my 18 year old son Matt, who is switching his second year college courses towards those subjects.

    That's because in an online world where you have tens of thousands of business transactions and interactions happening in a day, or even in a minute, you need the tools to manage and interpret the behavior of large numbers of events.

    Then three days later BusinessWeek comes out with its cover story: Why Math Will Rock Your World. I should remember to wear my tin foil lined hat more often--BusinessWeek is known for monitoring my brain waves :-)

    Story continues...

    Network Appliance and its strategy for world domination

    Wednesday evening I was having dinner with Network Appliance CEO Dan Warmenhoven and co-founder Dave Hitz. It's refreshing to see a company that isn't afraid to expose its top executives to the media.

    It was a small gathering, just four business journalists: Wall Street Journal, Barron's, Reuters and SVW. Such small gatherings are excellent, because you get access to top executives, and you get to hear stories that other journalists don't hear. And as a journalist, you need information that few others have; it's the distinction between publications.

    Most recently, I had spoken with Dave Hitz, who called me from Washington D.C. He was out on the East coast meeting customers, and also legislators discussing data protection bills.

    Dave is also a keen blogger, and he just recently jumped to a PageRank of 6, which is pretty good. Here is some link-love to Dave's blog.

    And here is my latest post on ZDNet, about Network Appliance and its crafty positioning in what could be the control point in data centers.

    RightNow Technologies CEO Greg Gianforte slams rival Siebel Systems for selling hype and ignoring customers

    By Greg Gianforte, CEO of RightNow Technologies

    Siebel likes to say, “It’s all about the customer.” But the truth is that it has always been about Siebel. It’s an attitude that pervaded the entire company. That’s why it continues to lose customers and revenue.

    If it really was all about the customer, then Siebel would have somehow made itself accountable for delivering what its customers wanted – increased revenue, greater customer loyalty, improved productivity.

    But you can’t do for others what you can’t do for yourself. Are you really going to trust a company that isn’t growing to help your company grow?

    You can’t totally blame Siebel, though. They just played the same game that so many other enterprise software vendors cashed in on during the go-go 90’s: take the money and run.

    We’re the ones who let these companies hype their enterprise platforms, get oodles of money for them, and then leave it to customers and big-ticket integrators to figure out how to actually get any business value out of them.

    But you can only sell somebody swampland once. Customers eventually realize they aren’t receiving fair value for their money, and they leave. In fact, some Siebel customers ultimately decided to write off their investment and start over with a partner who can actually deliver results.

    The really amusing thing is this line from CEO George Shaheen’s letter to Siebel customers:

    Story continues...