Software Safari - Premium Blog on Application Software

Better News - Business Objects / SAP

                      External Knowledge in BI

I recently caught a Business Intelligence (BI) promotion here in Chicago. At first, the event had a long sales pitch for SAP/Business Objects. We were reminded, many times, that SAP had recently acquired Business Objects.

The best part of the event followed. During this stage, Business Objects showed how it now includes access to a number of third party databases to assist business decision makers in crafting more reasoned, intelligent business decisions. Some of the highlighted data sources included:

• US Bureau of Economic Analysis
• Dun & Bradstreet
• eBay transaction data
• Thomson Financial
• US Census Bureau
• and more

These external data sources can be chosen by provider, vertical industry need, geography or other selection criteria.

Why is this important?

Businesses have known for years that you cannot understand your customers, suppliers, competitors and other entities by studying internally generated accounting transaction data. Only when you add outside perspectives to internal data can a business executive make intelligent business decisions. In fact, the whole concept of business intelligence has been a misnomer as most every system to date does not use outside data. How can this be intelligent?

This is a big step forward for Business Objects and culturally a huge improvement for SAP. Just a few years ago, a senior SAP executive dismissed my suggestions that they could improve their product line by adding external data/perspectives to it. These changes should help their efforts to expand and extend their BI offerings.

Next, Business Objects should deliver the data as a fully integrated, context sensitive part of the SAP suite. For now, it's great one can access this information. But, in the future, it would be nice to see this data appearing side-by-side with transaction data throughout the system and not just on reports.

This is a great step forward but it's only the first step.

Workday's Intervention Tour

                             Progress Report on Workday

I caught the Workday Intervention tour today in Chicago. Turns out, it was worth the time this morning. Here are the highlights I observed:

The star of the event was a one-hour, three person demo where the audience saw an exceptionally robust business scenario completed on the Workday solutions. Specifically, the audience watched as different users quickly:

• launched a project
• staffed it with internal employees and consultants
• established a budget for the project
• paid employees
• bought personal computers for the project team members
• tracked expenses into the project
• reported on the project
• paid the project manager a bonus at the end of the successful project
• and more

I'm not doing this full justice. Users were moving through the software and doing HR, financial and reporting tasks without using code blocks, subledgers and other trappings of old ERP solutions. Workday demonstrated the use of WorkTags, global currency and language, the new Workday Payroll product, BI and more. Most ERP vendors would have struggled to get half of the wow-factor items we saw in the same time frame.

The big take aways are that Workday's Financials and HR products are atypical (thank goodness!) from the usual ERP products being hawked today. The underlying design principles are rooted in a new way of doing business - not another version of the Industrial Age systems modern businesses have outgrown. The products work well together and benefit from the innovations from each system.

Workday has a total of 40+ customers and 200 employees. The firm is targeting mid-to-large firms and intimated that they may close a huge customer deal soon from a San Jose based firm. 

What's a Warranty Worth?

                        Matching the Marketing to the Warranty

Software vendors are really good at hyperbole. Their products are always: world-class, industry-leading, bleeding edge, re-defining the market, state of the art, pioneering, advanced, standards-setting, etc. And, of course, they're always great (to quote pitchman extraordinaire Tony the Tiger).

LifeLock, a provider of identity-theft solutions, has been pitching their wares on television to the American public a lot lately. They offer to stop miscreants from stealing your identity and ruining your credit history. Now, they've been hit with two lawsuits: one from a major credit bureau, Experian, and the other from a customer who is pursuing a class-action case. Neither case is particularly flattering for LifeLock and the allegations from both cases make for some interesting reading (see: http://www.azcentral.com/community/tempe/articles/2008/03/27/20080327biz-lifelock0328.html for one write-up). You can peruse Google and find lots of interesting tidbits on LifeLock, this litigation and LifeLock's founders.

What really grabbed me in this were the language differences between what is promised/promoted/touted in advertisements versus what LifeLock will actually do. This language of the warranty provided by LifeLock reminded me of the expectation vs. reality gap so prevalent in software sales. To quote from the above referenced article:

Lane, a Maricopa County resident, and his attorneys argue that LifeLock advertisements trick consumers into thinking the company will pay up to $1 million to recoup any losses resulting from misuse of their personal information when its service guarantee presents much narrower scope.

The company's terms and conditions state it "will pay professionals to assist in restoring any such loss or recover such expenses . . . provided however that the maximum limit of our Service Guarantee is $1 million per lifetime for all incidents."

The actual service guarantee states the company will only pay for expenses resulting from a defect in its service.

"It's just a bald warranty that offers nothing," said Robert Carey, one of Lane's attorneys.

(Readers might also want to see: http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/03-31-2008/0004783351&EDATE= )

When software users find problems in the code they just licensed, they start calling the vendor for help. The vendor, instinctively, reaches for the contract and recites to the affected user the reality of what the contract and its warranties will or will not do. That first call can be so distressing.

Software vendors don't ever really have to fix minor problems. They know you'll never sue them for petty stuff and they don't get worked up over it.

Software vendors have only to make a good faith effort to get the product working sometime. Your timetable and needs are not relevant. Only the vendor's timetable and priorities are.

A warranty and a guarantee are two distinct animals and if you don't believe me, call a lawyer. Vendors provide warranties as they allow the maker an opportunity to fix the defect. A guarantee asserts that something will do what was promised - period. If it doesn't, the customer is getting his/her money back or a new product. A guarantee is a much higher standard for a product to meet and will rarely ever be encountered in the world of software.

Clever software firms write in language in their contracts that:

• specifically negate any promises, assurances, claims, etc. made by sales staff, consultants and others about the product. Just because you and 30 other people were in  the room when the software sales person said this product would be updated perpetually for free, contain specific functionality for your cemetery plot management business and would soon be made of free-range code, doesn't mean you have a case against the company when you find out that all of these statements were bogus.
• promises when they'll call you back to discuss your software problems but not when the problem itself will be fixed
• never mentions any option of getting your money back for this lame purchase
• prohibits refunding the cost of integrators you hire to fix the problem that never should have been there in the first place

Deceit occurs when someone knowingly intends to defraud you. That is not the same as being mistaken. It's amazing how many software sales people can be so mistaken about the products they rep. But, rest assured, that's the first line of defense when companies are threatened with litigation from an upset software user ("Honestly, I didn't know that the software was really written in PowerPoint only"). It's hard to prove deceit unless you can show a well-planned pattern or processs intended to separate folks from their money.

Buyers of software should spend more time reading the fine print in both the contract and the warranty. Too many buyers expend all of their energy beating up the vendor on price only to accept the vendor's paper/contract as-is. That's a mistake and a costly one, too.

While my wife gets frustrated with me as I read all the fine print in any deal, I can tell you that I've found major mistakes and unconscionable wording in these. I want a contract that offers no surprises and is a solid foundation for a long-term business relationship. I recommend software buyers:

• use your own contracts not those provided by the vendor (Vendors hate this. So what. I only do deals with my own paper and never that of the other side. At least with my documents, I know what's in them.)
• read everything
• get counsel to approve all language especially in the warranties
• contact other software customers to determine what aspects of the warranty need beefing up
• Be sure to build in liquidated damages and timelines. Vendors hate for anyone to hold them accountable for anything. When your contract says that they must fix a bug by a specific date, then make sure you add penalties (e.g., $1,000/day) for their failure to deliver a satisfactory solution.

Good luck making those warranties meaningful

Ethics in Competitive Intelligence

                    Black or White Hat Competitive Intelligence?

Every year, I'm approached by a few software vendors who want my firm to undertake some competitive intelligence project for them. In almost all of these situations, I decline the work. The critical determinant is whether the work they want completed is legal and ethical.

CI work is either legal and ethical (white hat) or illegal/unethical (black hat). An example of black hat work is the following:

"Would you call the customers of our competitors and do write-ups of just the negative references. We want lots of dirt and be selective about which companies you interview. We really want to smear them."

This work is wrong on several fronts. First, the work is selective, not representative. Second, the process is not intended to be fair. Third, the requesting firm does not want to be directly associated with this smear campaign and would rather have my company's reputation tarnished as hate monger.

Please read the following article  in the Worchester Business Journal: http://wbjournal.com/j/index.php?option=com_content&task=view&id=3643&Itemid=139  It uses the recent Softscape SuccessFactors dispute as a backdrop on this matter.

More to follow....

More on the Softscape - SuccessFactors Litigation

                      Softscape Lines Up Top Flight Counsel

SoftScape has lined up Taylor & Co. to defend them in the case recently filed by SuccessFactors. The two attorneys from Taylor & Co. on this case will be Steve Taylor and Jessica Grant. Mr. Taylor achieved some measure of fame in HR circles with his successful defense of PeopleSoft in a theft of trade secrets trial in the early 90s.

In that trial, two competing HR software firms alleged that newcomer, PeopleSoft, had infringed on proprietary intellectual property. In the spirit of full disclosure, I was personally subpoenaed for that case although I did not get deposed or offer testimony. That case was quickly dismissed as the Federal judge on that case did not find that the infringements were at all material or unique. In that case, plaintiffs alleged that a screen requesting 14 data elements like name, address, zip code and social security number were a unique, defensible HR intellectual property creation. I agreed with the judge that those 'unique' features were obvious and common to just about any payroll or HR system. PeopleSoft prevailed and their sales exploded immediately after the case was ended.

Softscape needs a solid litigator and it appears that they've made a good choice (see: http://www.tcolaw.com/aboutus.html) . If they get the case heard in Federal court with a sharp judge, that could help them, too.

No one can handicap the case right now as the discovery process is far from complete. Like in sports and war, a good defense is as important as a good offense. Lining up solid defense attorneys is a good move on Softscape's part. If this case is all about the bad acts of a rogue employee, both parties could save a lot of money and reach a quick settlement fast. The attorney fees will be steep. If it's a bigger matter, it will become the HR software story of the year.   

Temporary Restraining Order - Softscape / SuccessFactors

Latest News -

U.S. Judge Claudia Wilken granted SuccessFactors its motion for a temporary restraining order (TRO)against Softscape. Specifically, the court ordered Softscape to:

• not distribute the PowerPoint deck in question
• not access SuccessFactors' websites or other intellectual property
• not make statements that purportedly come from another

The court further ordered Softscape to post a $10,000 bond. The court also granted permission to issue subpeonas to Verizon and Comcast. Those subpeonas will help identify who either sent the PowerPoint deck to SuccessFactor prospects or who logged into SuccessFactor webinars.

My assessment:

The judge issued an appropriate TRO. The impact on Softscape, so far, is minimal but when the participants are identified, it could get problematic for those involved. SuccessFactors gets what it most needs: the end of the distribution of this document and a pile of sympathetic publicity.

At this juncture, the case will now go through a protracted discovery process followed by additional court room time for the civil case. When the discovery process is completed, it will be interesting to see if criminal charges are possible. Those could arise if SuccessFactors' web site or other intellectual property was illegally viewed with stolen passwords or other acts.

For now, the talent management/human resources software space will go back to being a relatively calm space. It will get more interesting again once the discovery facts come to light. Who wins in this deal? No one really except the lawyers. Who'll pay is clear: Softscape and certain Softscape employees. Softscape will need to distance itself from rogue employee behavior, if that's indeed what happened. It will need to double down on its PR activities and become a more humble, chastened and repentant firm. That's okay and software buyers are actually a forgiving lot. They've forgiven a lot worse:

• CEOs who blew most of their investors' capital on elaborate Vegas parties instead of product development;
• CEOs convicted of crimes;
• Products with over 10,000 bugs
• Products that were late, by years, to market
• Loss of key company founders

Both companies need to move past this quickly and get prospects focused on the real matters at hand: talent management and HR problems in today's business economy. This dust-up should not become more important than solving their customers real business problems.

To read the judge's opinion see: http://www.softscape.com/pdf/doc/TRO_Decision080313.pdf     

Softscape - SuccessFactors Dustup - Continued

                                  When Software Sales Go Awry

                        What Software Buyers Should Guard Against

When you read the court filing by SuccessFactors (see:  http://www.successfactors.com/docs/complaint.pdf ), you see some activities that software sales and marketing professionals should avoid at all costs. Likewise, there are instructional points for software buyers, too.

Reading the complaint and those launched from other plaintiffs in unrelated spats, I decided to craft a generalized point sheet for both buyers and sellers of technology.

For Software Sellers:

• Never produce competitive analysis materials with the intellectual property of competitors included. This means that unauthorized use of logos, trademarks and screen shots are off limits. Remember, you don't need internal documents to be pretty to be effective. But, if you include other firm's intellectual property, can you make sure it never, ever, leaves your firm? Many people naively think they can but all it takes is one misguided employee, disgruntled employee or upset prospect to tank your business.
• Never use artifice to discover the capabilities of a competitor's offerings. Don't register for competitors' webinars and other marketing events posing as someone else. Don't make unauthorized screen shots of competitors' products. Always remember that its their intellectual property not yours.
• Never use pilfered passwords or hack a competitors' system. I know these things are candy to the wrong employee but this type of behavior must be harshly dealt with and never permitted.
• Never try to pass off your competitive assessment as the work of another or especially that of a direct competitor
• Never hire a third party to do competitive assessment work you know to be illegal or unethical.
• Never ask a third party to use subterfuge (e.g., pretend to be developing a market research report) to gain access to third party data.
• Never tell bald-face lies. If you know it is untrue, don't publish it.
• Never share any internal competitive assessments with any prospect. One of them will betray you. That is an absolute truth. Worse, once a document leaves your firm's domain, it takes on a life of its own.
• Train your sales and marketing team to never develop rogue sales enablement documents.

For Software Buyers:

• Realize that most technology vendors maintain 'negative' references for all of their major competitors. Any vendor of any size has some percentage of customers who have migrated away from their product. Many of these defections could be for very legitimate business reasons (e.g., vendor rationalization, merger, downsizing, etc.). Negative references, generally, are not at all valuable unless they make up a material (i.e., more than 20%) percentage of the competitor's install base.
• Never trust anonymous sources of competitive information. This analysis is rarely worth the paper it's written on.
• Particularly negative data must be viewed as skeptically as you would view overly complementary puffery. This information is so skewed/slanted to a particular point of view that you will need to put it into a more appropriate context to determine if it's even relevant for your firm. If it's not objective, it's problematic.
• Do your own reference checking. Nothing beats hearing straight from the horses mouth.
• Seek out unique references. Don't rely on anyone's pre-vetted list of contacts. Find Wall Street analysts, integrators, industry competitors/colleagues, etc.

10 Mgmt Rules for SaaS Firms

Metrics That Analysts and Stock Buyers Should Use in Evaluating SaaS Firms

I found Byron Deeter's "Top 10 Laws for Being SaaS-Y" to be one of the best blog posts of the month. http://www.sandhill.com/opinion/editorial.php?id=176&page=1 Byron is with Bessemer Venture Partners and his posting reflects the knowledge Bessemer acquired in reviewing scores of SaaS companies.

An Excellent post!

Help for Internet PR Hacks

Can I Get This Kind of PR?

 

Jack Ma, founder of Alibaba.com, is living large these days. And, judging by the favorable press mentions he and his firm have gotten lately, so should his PR firm. 

   

The Evidence: 

The January 2008 issue of Inc. Magazine printed a 2 page interview with him (see “How I Did It Jack Ma Alibaba.com”) and gave him a full page color photo to boot. It’s your typical “I’m a struggling internet entrepreneur who struggled against big corporations and other setbacks to win” story. 

The December 10, 2007 issue of Fortune did a lengthy piece on Jack and his firm (see: “China’s Web King”). This story uses the backdrop of the Alibaba public offering to glean additional insights into Jack and the company.     

The Analysis: 

Sure, this story has been told before with only minor modifications. We could replace Jack’s name with Bill Gates, Larry Ellison, Steve Jobs, the Google team, Jerry Yang and others and still get the same general bit. 

 

So, for you aspiring PR trailblazers, I’m going to do you all a favor and prepare the next Horatio Alger Internet story. Feel free to substitute Tina’s name for your client’s and pitch it to Fortune whenever you need a real rags-to-riches internet story to pitch.   

   

The Boilerplate Story: 

When Tina Humble arrives at her offices at Web 98.6 (www.ImAZillionaire.com ) in her custom 872 hp 2011 Porsche CantCatchMe, she exudes confidence. But, that wasn’t always the case. Before Web 98.6 went public, Tina led a very different life.   

The Humble Beginnings

 

Tina was born in the foothills of San Francisco in a small log cabin she built herself. “We couldn’t even afford Internet access!” she recalls. “It wasn’t until I was getting another piercing while working in a coffee shop in Oakland that I began to understand how all those laptop using coffee drinkers were really communicating across this thing called the Internet. Back then, my parents were still making me use a cell phone! Take about Paleolithic!!”

 

Tina went on to major in animal husbandry at Buffalo Tech Junior Community College and Truck Driving Institute but dropped out after just 3 grueling weeks. “They expected me do homework, study for tests and attend classes. That was just so wrong. As a child of the millennia, I should be texting, collaborating and gaming not learning!!” Tina added ruefully.

 

So, Tina gathered several of her disaffected and disenfranchised friends and began squating in some vacant retail space at the nearby TeenTown mall. “We wanted a location that’s good for productivity and shopping”. Good indeed as that is where Tina had her first major inspiration for Web 98.6 – shoppers will want to read about reviews of pedicure services online!

 

“I remember our first review. Someone wrote in to say that this one shop gave them a planter’s wart. That was fabulous!” From that one quote, Tina has gone to create an internet media conglomerate worth 600X more than Google, Microsoft and Cisco combined. “Yeah, Google’s so old school. I mean we’re much more representative of the newest wave of innovation on the web today. We’re even introducing new virtual pedicure services that people can buy and consume on sites like Third and Fourth Life.”

 

The Public Offering 

Web 98.6 almost didn’t go public. First, investment bankers wore suits and ties to their first meeting with Tina. “That, like totally, set the wrong tone.” Then, to exacerbate matters “Their whole public offering document was fully of capital letters! Chuh! I mean they capitalized every name and first word of each sentence. I haven’t used a capital letter in my whole life – why would I start with this public offering?” Tina’s distress was understandable and it took months of special effort between her underwriters and the SEC to keep capital letters out of her IPO.

“When we got that mega-issue cleared up, then another problem surfaced. It seems that these people didn’t want me to discuss anything. I couldn’t let my blog stagnate while we did this whole quiet period thing.” In fact, Tina’s blog did go silent with one 2 hour window that almost panicked the entire blogger world. “When I quit talking about Web 98.6, it’s like Hollywood not talking about Britney or Lindsay. That’s like insane!”

 

The Future

Web 98.6 is eyeing acquisitions and product expansions. “We’re thinking we’d like to buy the US Federal Reserve Bank. I mean our credit rating is better than those Treasury Notes they’re hawking”. Tina also adds “Plus, the government of Stantiople is willing to back us on this deal in case some courts try to block it.”

 

“We’re also looking into some other web companies if we can get them before their valuations exceed the GDP of Canada.” That could hard for Web 98.6 as Internet stocks are already experiencing what Wall Street analyst Chip Herder calls ‘the Fourth Internet Bubble’.

 

Will the future always be so bright for Tina and Web 98.6? Tina sums it up with “If it crashes, I’ll go back to that log cabin and imagine the Next Big Thing.”

Declining Influence of Analyst Firms

                                        Yes, Vinnie is Right

                             (Better Call the Record Books!)

Recently, I read Vinnie's blog ( http://dealarchitect.typepad.com/deal_architect/2007/05/revisiting_anal.html#comments) re-visiting a subject he and I have discussed many times over the years: the declining influence and relevancy of analyst firms.

He's right. They just aren't that important anymore and they may never recover their past grandeur. Let's look at a few reasons why:

• Analyst firms have never quite come clean about where their revenues come from. If you knew your analyst firm got over 10% of its annual revenue from a large ERP vendor (e.g., SAP) would you re-think their recommendations? Don't you think they have a responsibility to inform you of this material fact? Many analyst firms get the majority of their revenues from vendors not corporate IT buyers. Do you really think they'll write an adverse report on a firm that could devastate their financials? No - they won't.
• The Internet makes smaller firms as accessible as large firms. Businesses no longer need to rely on an analyst's recommendation as to who they should review. Self-service via the internet has obviated the need for many analyst interactions with software buyers.
• Vendors used to fear analysts as analysts controlled access to buyers. Not anymore. Improvements in Marketing techniques, internet knowledge dissemination, etc. have de-fanged the all powerful analyst.
• Many analyst firms lack stars today. In their quest to reduce costs, many firms ran off their most senior analysts and hired unknown kids to replace them. The result was a double whammy - the research lacked bite and perspective and clients felt no connection to these newbies.
• The tech crash of 2000 taught many CIOs that they really didn't need all of those analyst services and reports that were pushed on them over the 1990s. As a result, analyst firms have had to downscale dramatically and stay lean.
• Too many analysts are covering very mature technology segments and these have little new and exciting points to write about. Reading a lot of analyst reports today is about as exciting as reading about the number of cupholders present in the 2004 models of cars.

But more than anything else, analyst firms are woefully lacking in producing anything truly innovative or interesting of late. I'm sorry but if a firm's only big idea for the last several years is a 2X2 quadrant or wave chart, then that's pretty light.

To get back their groove, analyst firms have to:

• re-discover who their customer is. Will they serve vendors or buyers of technology? Pick one and serve them well but quit trying to play on both sides of the fence and pretend you're neutral.
• re-discover innovation. Vendors have to do it and so should you!
• think like a Hollywood movie mogul. Create some star analysts who are getting recognized and making a difference in the industry. Find some people who are more exciting than a bowl of old, cold oatmeal.
• get serious about the declining value (and rising cost) of old technologies (like ERP). Quit coming up with cute phrases like TCO when you should be be-moaning the lack of value being delivered by ERP solutions. When you quit writing about ROI and talk about TCO, we all recognize that you've gone soft on vendors. You have no spine analyst firms and we can tell it!

Vinnie's right - The golden age of analyst firms are past. Let me know where the funeral is taking place and maybe I'll fly to Boston to attend it.