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Those Questionable Charges on Sales Expense Reports

Careful When You Challenge a Software Salesperson's Expense Report

I saw this on YouTube and it certainly reminded me of a few conversations I had with my sales pros and why they thought their outrageous spending was justified: http://www.youtube.com/watch?v=0OTgb3KO7QM.

I clearly remember a sales pro taking an unqualified prospect to a 5-star dinner with wine in New York City. The two of them spent $1800+ on that meal. Of course, the restaurant choice and dinner idea were the prospect's idea. My sales 'pro' fell for this hook, line and sinker. Guess what. We didn't get the business. (Although, I sure gave this sales moron 'the business' for being so naive and so gullible.

Enjoy the video

Where Have the Good Times Gone? Where are the IPOs?

                   Market Silence: The Absence of IPO Hype

VentureSource, a part of Dow Jones, Inc., reported that IPO activity is way off this year. There were only six tech IPOs in the first quarter of this year and none to date in the second. That's off from 37 for the same period last year. 21 firms have withdrawn their planned IPOs including a local Chicago favorite, Initiate Systems.

Merger and acquisition activity is also down from 293 deals the first two quarters of last year to 142 this year.

Needless to say, venture capitalists are not happy. Instead of exiting out of their investments (hopefully, at a huge profit), these VCs will likely have to pour in more capital to keep their investments liquid and growing. Firms like NetSuite should be thankful that they completed their IPO last year as the market has turned decidedly bearish since then.

From an analyst view, it's been a really quiet last six months. The hype leading up to an IPO tends to create an overabundance of press, blog chatter and other noise that drowns out the more interesting developments other firms are announcing during the same time frame. Personally, I like the more peaceful time.

SAP - Recent News

     $1 Billion Damages? Moving into Commercial Banking? What Else?

Reuters reported that Oracle (ORCL) will seek approximately $1 billion USD in damages against SAP AG. This estimate is related to the TomorrowNow litigation that ORCL has brought against SAP. This sound bite from the article is particularly interesting:

"Oracle speculates wildly about the amount of its damages 'claim' in this discovery report, even though more than a year after this case was filed, Oracle still refuses to identify with any precision the nature or amount of its alleged harm or even to provide the theory on which its damage claim is based."

Damage claims must be proved for a court to award them. ORCL will need to show how it was harmed by the transfer of its intellectual property to TomorrowNow. To that end, I'm a little skeptical of claims in the hundreds of millions of dollars or more. Granted, ORCL may ask for punitive damages in addition to actual damages and that could cause the total to really escalate. But, from what I've seen (and that is very limited so far), a large claim could be tough to defend.

In a different matter, Bank Technology News reported that SAP is readying its products for a major push on North American banks. In this story, a major Canadian bank company is dropping a cool $100 million to have SAP replace its core banking applications. This has been a vertical SAP has had success with globally with the very noticeable exception being North America. This will be interesting to watch as US banks have different reporting and regulatory environments/needs than banks in other countries. We should also watch a significant number of competing vertical solutions that may include (and my memory is probably a bit dated here): Fiserv, Hogan, i-Bank, Systematics, Metavante and others. Plus, Indian outsourcers, IBM and EDS have big stakes in this area and I doubt they will just cede it to SAP without a fight.

Misappropriation of Trade Secrets

                 When to Trust Big Firms (Short Answer: Never)

Bloomberg News reported that Google is being sued by LimitNone LLC for alleging misappropriating trade secrets. A damages claim of $950 million is being sought.

In this case, the plaintiffs are apparently claiming that they shared confidential copies of the product with Google and were assured that Google would not develop a competing product. Approximately eight months later, Google apparently did just that.

Small technology firms are often flattered whenever a larger firm takes an interest in their products. The prospect of the large firm acting as a distribution channel for the product could be an enormous windfall for the small firm.

Unfortunately, I've seen large firms invite one or more smaller firms to form alliances/partnerships/distribution agreements with them only to study each firm's products and eventually create their own comparable or superior product. The smaller firms get cut loose only to face a larger, better funded competitor. In other situations, I've seen larger firms intentionally wait and see if smaller firms can develop a market for a new technology. Once they do, the larger firms acquire or create their own solution. Again, the smaller firms perish or languish.

Large firms, often correctly, surmise that small firms lack the capital to fund a protracted legal challenge. Large firms can survey the space and cherry-pick what they like while feeling fairly confident that small firms will not sue them. Patents could be effective here if they didn't take so long to be granted and weren't so expensive to enforce. Litigation, again, is often needed to enforce patent infringement and litigation is expensive.

I have seen this activity many times and quite up close. In one case, I saw a firm mimic another's functionality within a week. Worse, they even appropriated the smaller firm's product names and descriptions, too.

Venture Capitalists will often tell you that no one ever has a truly new product or idea. They'll tell you that they've heard of several other firms pitching the same idea. That may be true but the rapid imitation of another firm's product is still misappropriation.

This case will be an interesting one to watch. I suspect Google will attempt to drag it out for years and force a premature, lop-sided settlement if not an outright abandonment of the claim. Still, it could be a good one to watch.

T-Mobile Cuts Loose Subscriber For Using Their Service

                                 Is Free-Roaming Truly Free?

            Can You Terminate a Customer Just For Using Your Product?

The Chicago Tribune has a consumer problem solving column called "What's Your Problem?". Today, they published the story of a six-year T-Mobile customer who was informed that one of her family's three T-Mobile phone numbers was being terminated.

The issue apparently is that one of the phones is being used by a 19-year old college daughter who uses 250 or less minutes per month in an out-of-town college. The daughter's phone number was highlighted by T-Mobile's "Excessive Roaming Reduction Team" and the company determined that her number was no longer profitable. This is interesting as the family's plan includes free roaming.

As a road warrior, I have many, many months where I exceed 250 roaming minutes per month and T-Mobile has not cancelled my account (yet). Should I be concerned?

While T-Mobile offered to waive early termination fees against the family, the family and the Tribune had no real success with T-Mobile who pretty much stuck with their decision. As for the family, they had to pay new activation fees to move their business to AT&T. The family severed their ties with T-Mobile.

Who wins in this deal? Maybe AT&T did but no one else did. T-Mobile lost three customers and caught a pile of bad PR out the mess. The fact that T-Mobile was dealing with one college student in a family didn't seem to enter their decision-making consciousness.

Cell phones carriers are mystified why "Churn" is so high in their sector. Stories like this are why consumers have so little love for them. Some of these firms have "Customer Retention" workers but obviously they're overworked, underutilized or ineffective as too many people are none to happy with the customer service they receive. Incidentally, this story was page 1 of the Metro section and was continued with a big color photo on page 4. Sure, some companies believe that any PR is good PR but this story just encourages people to switch carriers.

If I ran a competing cell carrier, I'd contact the Tribune today and offer this family a trio of phones and a year's free service just to show that they are the carrier who tries to understand its customers and is a carrier that honors free-roaming contract clauses. The cost of that freebie would maybe carry a retail cost of $1-2000 but the print space it would generate would be worth 10X that. Moreover, reprints of that article could be plastered all over their retail outlets to help prospective customers know why they should do business with someone other than T-Mobile. If I were T-Mobile, I'd buy a page of advertising and try to explain to Tribune readers why they make the decisions they do (if that's even possible).

Bad business decisions happen but good companies do something to prevent their frequency and PR damage. T-Mobile has some work to do here.

I wonder if the Illinois Public Utility Commission and States Attorney office read this article?

iPhone Only Costs $173?

              What About Vinnie's iPhone ROI Calculations?

Some time back, my colleague, Vinnie of the Deal Architect blog, wrote a piece on the economics of owning an iPhone. The numbers were staggering and he wasn't bashful when it came to suggesting that Apple use its market power and sourcing expertise to get both the cost of the product and the carrier choice to be more economical to buyers.

Well, according to an Infoworld article, (see "Why is the New 3g iPhone So Cheap?"), the firm iSuppli has calculated the cost of the new iPhone to only be $173. Maybe Apple read Vinnie's earlier post, because they dramatically cut the cost of this unit.

The real question remains though: When will consumers see a concerted reduction in the total cost of ownership (TCO) for this device? Not soon. ATT is still the exclusive US provider of the phone service according to a press release they issued on 6/9/2008. They still require a 2-year plan. The only concession that has been made of late to consumers is the abandonment of a revenue sharing arrangement between ATT and Apple.

Until the phone is availabe on other carriers, does not require a long-term plan and shows a reduction in all of the add-on costs levied by the carriers (e.g., text messaging fees, web access fees, etc. on top of the regular plan fees), it's still not much of a bargain. Let's hope the situation improves before the 4g phone arrives....

Is Technology Killing Productivity?

     Put the Twitter, IM, Phone and E-Mail On Hold and Read This Post

Maggie Johnson's new book, Distracted, might be something more VCs, software developers, geeks extraordinaire and self-important folks might want to read. In a nation full of Crackberries (those who take and check their Blackberries everywhere), this book may be too late for some but it could save others.

Book_distracted

Maggie wrote a short piece for last week's BusinessWeek (see: "May We Have Your Attention, Please?", 6/23/2008) and this excerpt speaks volumes about the issue:

"Roughly once every three minutes, typical cubicle dwellers set aside whatever they're doing and start something else - anything else. It could be answering the phone, checking e-mail, responding to an instant message, clicking over to YouTube, or posting something amusing on Facebook. ...These distractions consume as much as 28% of the average U.S. worker's day, including recovery time, and sap productivity to the tune of $650 billion a year according to Basex, a business research company in New York City."

I was pleased to see this piece as I've often wondered about the business ROI of technologies like IM, Twitter, Facebook and countless other products. In their rush to tout the coolness of new technologies, few research firms ever really calculate the negative impact some of these technologies can have on corporate productivity.

Moreover, I've found it disturbing to have a meeting or meaningful business conversation with someone who is trying to win the multi-tasking Olympics. On a personal level, I resent it greatly when I'm paying a lawyer, accountant or other service person who isn't giving me or my business 100% of their time and attention. I also question the quality of the service provided from someone who never takes the time to give my problems the full, undivided and focused attention they deserve. Many problems cannot be solved in 3 second or 3 minute bursts. Maybe you think you can text a reply, read some emails, Twitter your latest GPS co-ordinates, order tonight's take out online, etc. and slip in my business in between it all but I don't want you working on my account.

Look at the problem this way. If you were buying a new car, would you want the factory workers doing all these activities while they're supposedly assembling your car's engine. No, you wouldn't. I recently had an impatient doctor try to pull this bad behavior in front of me and several family members. Since I don't suffer fools gladly, I called him on this unprofessional behavior and made him cut it out long enough for us to get straight answers to all of our questions.

Just yesterday, a client of mine admitted how good he felt when he took a week's vacation with his family and left most of his intrusive technologies at home. If you want a quality relationship with the people you love or do business with, you have to give them the attention they need/demand. Anything less is insulting or demeaning.

Let's get old school for a moment. When I need to solve big, complex problems, I turn off the phone, the television and even the iPod to focus my attention completely on the matter. I realize some problems just take more time to solve. Sometimes I even put a sign on my office door to remind potential interrupters that I'm preoccupied and unavailable short of a bonafide emergency. And, you know what? People understand that. It turns out that most of the interruptions people fire at me are neither important or urgent. They can wait.

I seriously doubt the rude, egocentric, self-important folks out there will read Maggie's book because it can't be parsed into a quick one line Twitter entry. That's a shame. But, here's hoping that some of you will fire off either this blog post or a copy of her book to those hopelessfully trapped in an attention-distracted (not attention-deficit or attention-overload) mode.

For those of you in a services profession, you and your peers really need to take heed. Inattention to clients and each other will not bode well for your firm. Just because hot technologies exist doesn't mean they don't need boundaries.

this blog cross-posted on ServicesSafari

Predictive Analytics

               BOBJ, SPSS, SAP - Predicting Customer Behaviors?

There was a small piece written up in the 6/16/2008 issue of InformationWeek. It stated that SAP's Business Objects (BOBJ) group is now offering a BI solution called Predictive Workbench. Interestingly, the technology originates from Chicago-based SPSS and allows users to predict customer behaviors and business performance.

SPSS, for those who didn't know, is a company name abbreviation for Statistical Package for the Social Sciences. The company makes software steeped in understanding how people act, think and behave and providing measurements of same. The focus of the firm has always been to provide users with data to better predict how people will act. The fact that BOBJ is using SPSS technology is not all that surprising except that BI and reporting firms like BOBJ have generally tried to develop their own capabilities in these areas instead of partnering with firms like SAS or SPSS.

This new capability of SAP's is a welcome addition to their product line. Firms have captured loads of transaction data and can report it. However, most reporting tool users lack the statistical or analytical knowledge to determine what future acts or predictions can be reasonably drawn from these data points. The best example of this occurs when customers call order entry personnel. Most systems do not calculate or suggest replenishment orders or appropriate add-on or up-sell items to callers because the software cannot make sense of prior order history. Even fewer systems are smart enough to group like minded customers into specific categories so that add-on sales suggestions can be made more relevant.

Businesses need this technology to identify product lifecycles, sales seasonality and other trends to more accurately predict sales, competitor price changes, etc.

Bottom line: This move by SAP is a good one albeit late to the market. Let's hope a number of their vast customers take advantage of this new technology.

Unintended Consequences of Online Transactions

Think Before You Buy (Buyers) -

Think Before You Sell Customer Data (Vendors)

I read two disturbing articles this week about how companies are (mis)using customer data.

In one piece (see "Siemens Seeks Protection For Corporate Travel Data", 6/16/2008, Business Travel News), a Siemens executive was surprised to learn during a RFP process for hotel rooms that 'nonpreferred hoteliers contacted Siemens commodity specialists to ask about gaining more of their business armed with the number of room nights Siemens booked in the hotels' zip code."

In particular, this executive was concerned that a third party had and was selling this information and this information could be used by competitors and others to gain special inside information. For example, with the right programs and analysis, a competitor could detect changes in travel patterns that could tip off competitors to: potential acquisitions, potential new client acquisitions, potential sales, etc. Worse, competitors should not know the movements of their employees.

While the legality of these data sales is unknown, the fact remains that information about what your employees buy, sell, the prescriptions they take, the insurance claims they file and the even the web sites they surf can be bought and sold by third parties and your firm might not be able to do anything about it if it even knew it was occurring.

Siemens, understandably, wants the firms selling this information to aggregate it with other firms but it may not succeed in getting this done.

In another article in BusinessWeek (see "Your Lifestyle May Hurt Your Credit", June 30, 2008), Jessica Silver-Greenberg wrote about an FTC case against credit card issuer CompuCredit. The gist of the article discusses how credit scoring activities are using factors other than payment history to raise/lower your credit scores. Specifically, credit card issuers may be looking at what you buy (i.e., buying behavior patterns).

The FTC is investigating whether firms are cutting credit lines to people who frequent marriage counselors, massage parlors and other establishments.  Boy, cash is looking better and better these days.

At the heart of both situations is the unintended consequence or misuse of transaction data. When businesses sell their customer lists (a la mailing lists), they may do so to monetize an asset they own but they also destroy the relationship and confidence customers have with them. Once this list is sold, it can be re-sold, modified, etc. through numerous other information brokers and the original customer is bombarded with junk mail, solicitations, etc. If you really don't give a damn about your customers, then go ahead and sell their contact data.

If you really don't care about your customers, then sell their transaction data. Tell the world who rented that risque video, who eats out every night of the week, who consistently overpaid for their automobiles, who clips coupons, who bought a pregnancy test, who browsed for adoption sites online, etc.

We do not have even the appearance of privacy rights in the digital world and we won't until someone or some firm is heinously violated by some neer-do-well who uses this information that should have remained private all along.

Ethically, businesses must ask themselves if they'd want their data sold to others the way the do. If ethics always trumped the pursuit of cash, we wouldn't have this problem. We've got a privacy trainwreck underway and, as a consumer, I can't wait to see someone sue the living daylights out of a firm that betrayed their confidence.

Until then...

The Wide, Wild World of ERP

The (Re-) Ascendancy of ERP

Or

My Wasn’t Last Week Interesting

Last week, ERP solutions really made the news. If Apple’s 3g iPhone wasn’t announced, there would be no news but ERP news.

Let’s recap:

NetSuite has come out strongly as a full-fledged ERP Suite provider with their Manufacturing announcement. I particularly liked this quote from a NetSuite press release:

“NetSuite for Manufacturers, which includes new functionality for Assembly, Work Order and Bill of Materials, takes aim at SAP’s core market and seeks to exploit the prolonged delay of SAP’s Business ByDesign product roll-out, providing mid-sized manufacturers with an integrated on-demand solution they can put to work today.”

What’s key to this announcement is that here is a SaaS (software as a service) offering that offers back office, front office, warehouse, distribution and now manufacturing functionality in areas such as: Bill of Materials, Demand-based Inventory Replenishment, Assembly Management and Work Order functionality. NetSuite partners will provide specific capabilities delivered via NetSuite’s NS-BOS architecture. Specifically, Omnify Software will provide Product Lifecycle Management. Configure One supports highly configurable or customized product manufacturers. SuiteCommerce will provide product configuration technology. Lastly, SPS Commerce provides EDI and B2B integration services.

What was so eerie about these announcements was that they came one day after I did a press interview with Mergermarket USA. During that interview I stressed how firms like salesforce.com or NetSuite could benefit from organic or inorganic product line growth. Good to know the old crystal ball is still working.

Speaking of Salesforce, one of the stars of their Force.com road shows has been the re-born CODA software. CODA, recently acquired by Unit 4/Agresso, has developed a new product line, Coda 2go. Coda 2go is built off the Force.com architecture. We recently prepared a research report on this product line and just got it through fact-checks this weekend. You can check it out at www.vitalanalysis.com .

Last week, our friend Judith Rothrock hosted another JRocket Marketing, Grape Escape event. Three major application software vendors presented at the event along with a key user executive from each firm. Detailed write-ups on each will be prepared this week and posted on the Vital Analysis site soon.

Agresso of North America made a couple of announcements at the event. First, the company continues to close ever larger deals and take them away from larger competitors. A $1.5 million deal was announced at the event.

Agresso also announced the availability of its new Talent Management solution. The core of this system originated via an acquisition Unit 4/Agresso made last year (i.e., Nextlearn). This product extension is highly compatible with Agresso’s strategy of serving people based verticals (e.g., professional services).

SYSPRO reported a big competitive victory. In their situation, they told of how a prior customer, Novatek, switched from SYSPRO to SAP Business One/Fourth Shift solution only to switch back to SYSPRO.

SYSPRO also demonstrated the financial impact of their solutions when a customer of theirs attributed a 15% improvement to their bottom line after the SYSPRO solution was installed.

Meridian Systems, a project-based solutions provider and the only non-ERP vendor at the Grape Escape, had some interesting news as well. First, the company landed a major new partnership with DMJN H&N, an AECOM company. DMJN H&N is one the world’s largest design and construction project management firms.

Meridian

also announced new product enhancements for Proliance product that provide greater integration to Microsoft Outlook. Lastly,

Meridian

closed several new deals with groups like the Illinois Tollway, an organization that gets my money almost every day.

As stated before new reports are coming out for all three of these firms. Stay tuned.