Microsoft MDM? Don’t hold your breath

At a conference this week at which Microsoft explained how it intends to unify its rambling applications offerings, Mike Ehrenberg (architect for Microsoft’s MBS products) mentioned that Microsoft was “investigating”an MDM product offering. It should be said that Microsoft should be in an excellent position to understand the problem of inconsistent master data, at least within their own portfolio of business software products. Through a series of acquisitions they have assembled no less than five distinctly overlapping products for SMEs, and have manifestly failed to explain how any of this resembles a strategy. This mess has enabled innovative newcomers like Ataio make steady progress in what should really be Microsoft’s natural turf, as customers have been bemused by Microsoft’s seeming inability to articulate which technologies they were really intending to invest in. The answer, it seems, is all of them – MSFT will “converge” their five products “no sooner than 2009” (unofficially, 2011 is a target date I have heard from an insider). The most amusing line in the article was: “The MBS products, Gates said, “have more head room for growth than just about any business we’re in.” This is about as backhanded a compliment as one can think of: I have heard that Microsoft management is very unhappy about the lack of progress in this division, so this comment is like saying to a sports team that just came bottom of the league “we now have more room to improve than anyone”.

Microsoft seems perennially to struggle in the enterprise software market, despite its vast resources, huge brand and marketing clout. It essentially stumbled into the DBMS marketplace; I have it on good authority that Gates originally approached Larry Ellison with a view to bundling Oracle as the DBMS on Windows NT, and it was only after being spurned that Microsoft decided to launch SQL Server out of the ashes of the Sybase code-base it had purchased (this is a piece of hubris that Oracle may live to regret). In Excel and Analysis Services Microsoft has the most ubiquitous business intelligence software out there, yet has hardly any mind-share in this market. Perhaps it is just not in Microsoft’s DNA to really relish the enterprise software market, when its business model is above all about high volume, and large enterprises demand endless tinkering and specialization of software to their specific needs.
Based on the train-wreck that is Microsoft’s enterprise applications strategy, I wouldn’t count on a strong MDM product entry any time soon.

Putting lipstick on a caterpillar does not make a butterfly

Oracles recent repackaging of its BI offerings appears to be just that: a repackaging of existing technologies, of which of course they now have a lot. Peoplesoft had EPM, which had a mediocre reputation, but they did better with Siebel, who had astutely acquired nQuire, a good product that was relabeled Siebel Analytics. Oracle also has Discoverer, a fairly blatant rip-off of Business Objects, a series of pre-built data marts for Oracle apps as well as assorted older reporting tools developed along the way, like Oracle ReportBuilder, which seems to me strictly for those who secretly dislike graphical user interfaces and yearn for a return to a command prompt and “proper” programming. This assortment of technologies has been placed into three “editions”, but you can scour the Oracle website in vain for anything which talks about the actual integration of these technologies at anything below the marketing/pricing level. Hence it would seem that customers will still essentially be presented with a mish-mash of tools of varying quality. Perhaps more R&D is in the works to integrate the various BI offerings properly, but it seems that for now Oracle still has some work to do in presenting a coherent BI picture. Business Objects and Cognos will not be quaking in their boots.

ETL moves into the database

With SQL Server 2005 Microsoft has replaced its somewhat limited DTS ETL offering with SQL Server Information Services (SSIS), which is compared with IBM’s offerings (based on the Ascential acquisition). I have written previously about the shrinking of the ETL vendor space, and the enhanced Microsoft offering will merely accelerate this. Oracle has its Warehouse Builder technology (despite its name this is really an ETL tool) as well as Microsoft and IBM, and as these tools improve it will be tough for the remaining ETL vendors. Informatica has broadened into the general data integration space, and seems to be doing quite well, but there are not many others.

Sunopsis is innovative with its “ELT” approach which sensibly relies on, rather than competes
with, the native DBMS capabilities, but it remains to be seen how long it can flourish, given that the DBMS ETL capabilities will just keep getting better and eat away at its value. The surreal Ab Initio is reportedly doing well at the high volume end, but given its secretive nature it is hard to say anything with certainty about this company other than its business practices and CEO are truly eccentric (a fascinating account of its predecessor Thinking Machines can be found at the following link). Data Junction has a strong reputation and is OEMed by many companies (it is now part of Pervasive Software). There are a few other survivors, like ETI, who have just recapitalised their company after struggling for some years , but it is hard to see how ETL can remain a sustainable separate market in the long term. Indeed Gartner has recently stated that they will are to drop their “magic quadrant” for ETL entirely.

The future of ETL would appear to be in broader offerings, either as part of wider integration software or as just a feature of the DBMS.

Blue sky thinking?

IBM continues to invest in “information management”, creating a major practice in this area. It has been active for some time in its software division in acquiring technologies related to data integration and various aspects of master data management. Now this latest reorganization puts in place the services side that accompany the software products. Clearly information management goes well beyond just technology, involving ownership of data (business or IT?) governance issues, project management, change management, perhaps setting up competence centers, etc. Hence there is clearly a large services component. Estimates of the BI/data warehouse market vary, but the total market is perhaps ten times larger than that purely for the software technologies. This reorganization makes clear that IBM sees this is a growing opportunity.

Someone once described IBM as the “beige” of the computer world i.e. they go with anything, meaning that IBM raises less hackles in customer organizations than some other high profile organizations e.g. Accenture is loved by some, but loathed by others. Hence in some ways IBM ought to be quite well placed to provide advice on projects that tend by definition to span wide areas of the business, and touch many other technologies. At some point systems integrators need to stop sucking on the comforting teat of ERP implementations, ERP re-implementations and ERP consolidation projects (surely at some point customers are going to stop paying for re-implementing these huge projects for the nth time?), so it would seem timely for enterprise software consulting teams to have a major alternative to draw on.

It must be generally good for the industry that IBM is addressing information management in a serious way, as if nothing else it will raise its profile. Delivering better information to decision makers is something that has always seemed to me obviously higher value than just automating operational processes, yet the bulk of the IT spend has always been on such projects. Perhaps this latest IBM move is another straw in the wind indicating that information management is finally moving up the agenda?

Easier than quantum mechanics

I laughed out loud when I saw an article today with the headline “Oracle Solution- Easier to Implement than SAP”, but that isn’t setting the bar real high, is it? SAP may be lots of things: successful, profitable, large, but no one ever accused their software of being simple and easy to implement. What next? “Accountants less creative than Arthur Anderson at Enron” or “now, a car more stylish than a Lada”?

This particular piece of marketing spin is supposedly around an “independent” study done on SAP BW and Oracle Warehouse Builder implementations at various sampled customers. I have to say I suspect that the study might just be paid for by Oracle, though that is not stated, given that this same market research firm also brought you articles such as “Oracle is 46% more productive than DB2”. We all await with bated breath further independent research pieces showing that “Oracle solves world hunger” and “Why the world loves Larry”.

However, in this case I don’t doubt the veracity of the material (much). SAP has become a byword for complexity, with up to 45,000 tables per implementation. Business warehouse is not quite on this scale, but still involves lots of juicy consulting hours and most likely some programming in ASP’s own proprietary coding language ABAP, which I am proud to see that I once took a course in (think: a cross between IBM assembler and COBOL). I haven’t got direct coding experience with Oracle’s tools, but I have to assume that they can’t get murkier than this.

High tech marketing has come up with some entertaining headlines and slogans over the years, but “easier than SAP” is definitely my favorite in 2006 so far.

Application vendors and SOA

In an article looking forward to trends in 2006, an Oracle executive raises an interesting point. The applications market for large enterprises has now essentially reduced to a field of two giants, SAP and Oracle, with a long gap now in size between them and vendors in particular niches such as supply chain or customer relationship management. Yet CIOs are demanding, as he puts it, “hot pluggable” applications, which is another way of saying easy inter-operability between applications. For example a company might like to be able to call up a specialist pricing application from a small vendor within their SAP or Oracle ERP application.

This creates a tricky dynamic for Oracle and SAP, who ideally would like to expand their own footprint within customers at the expense of each other (and other vendors). If SOA actually works, then they will be enabling customers to easily switch out the bits of their applications that customers dislike in favor of others, which is not in their interest. Of course Oracle also sells a middleware stack, and now SAP has entered the fray with Netweaver. By doing so they hope to switch the ground: if someone is going to call up a non-SAP application from within SAP, then SAP would rather that they did it using Netweaver protocols than a rival stack, such as IBM Websphere. Indeed they would really prefer that people didn’t do this at all, but instead just use more and more SAP modules. The same goes for Oracle. Hence these two application vendors need to be seen to be playing the game with regards to inter-operability, yet it is actually more in their own interest if this capability does not work properly. IBM, who does not sell applications, is in a much cleaner position here, since they can only benefit by having genuine application inter-operability via Websphere, whoever the application vendors are. IBM does not sell applications, so only has a vested interest in selling more middleware in this context (and of course the consulting to implement it).

Customers need to be very aware of the desire by the application vendors to lock them into their offerings through their middleware, and should question how genuine the commitment of application vendors to true inter-operability really is. Just as turkeys don’t vote for Christmas, why would a dominant application vendor really want their application to be split into bite-sized pieces that could be each attacked by niche application vendors that would not have the reach to challenge their monolithic applications without this capability?

Of course Oracle and SAP cannot actually say this out loud. IBM (and other independent vendors like Tibco), however, should, and potentially this ought to give them an edge in the coming middleware wars.

MDM gets the blues, or at least the blue

In case anyone has any doubt about the reality of the master data management (MDM) market, it is worth noting that IBM has now set up a significant business unit dedicated to MDM, with 1,000 staff, in its vast software group division. This follows a series of acquisitions (Ascential for data movement technology, Trigo for product management, DWL for customer information synchronisation, SRD for identity management).

So far this set of tools still has gaps, though. As I noted elsewhere, BP has 350 different types of master data being managed by KALIDO MDM, and customer and product are just two of these 350 categories. It would seem excessive to expect a customer to buy 348 further technologies once they have bought their CDI and PIM products, so it seems clear to me that a more generic approach to MDM is required than tackling each specific type of data with a different technology. Moreover IBM still lacks a technology to deal with the “analytic” part of MDM, something which can help manage the semantic integration of the various business models which large corporations have, and which contribute heavily to the diversity of master data. Buying piecemeal technologies that tackles specific data-types, however clever they may be (and DWL and Trigo both had excellent reputations) is not going to solve the enterprise-wide problems that large companies face in managing their master data. It seems to me that, while incomplete, IBM has a better grasp of the issues than Oracle or SAP, which has already ditched its first MDM offering, while the SAP MDME solution, based on technology acquired from A2i, has had poor initial feedback from early prospects. “Even worse than the original SAP MDM” is one customer assessment which cannot be encouraging to the German giant. Moreover IBM, with its deliberate abstinence from application software, has the advantage of not being perceived as quite as aggressive as SAP or Oracle. One CIO memorably described IBM as the “beige of the IT industry” meaning that it was neutral and inoffensive compared to many others.

I see there being an evolution in most master data initiatives, the first stage being the analysis of the problem, classifying the various different business definitions that exist for master data in the enterprise; this goes well beyond customer and product e.g. “Asset”, “brand”, “person”, “location” are all important types of master data. The next stage is to document the existing processes for managing change within these categories (mostly manual, involving email) and the governance and authority levels involved e.g. not everyone can authorize the creation of a new brand. This will then require either automation of this workflow, or some process redesign (probably both). Finally the new workflow will need to be linked up to some form of messaging infrastructure e.g. EAI technology, so that changes to the master data can be physically propagated throughout the various operational systems in the corporation. At present there are various technologies around to tackle elements of the problem, but they are far from joined up.

The MDM market is in a nascent state, with people still coming to terms with the issues and trying to piece together where the technology offerings fit. The business problems which it addresses are very real in terms of operational efficiency, so there should be plenty of value there for companies that have compelling offerings. IBM has realized this earlier than most.

Oracle’ struggles to buy growth

It is interesting that Oracle’s buying binge in the last couple of years has not enlivened its share price. As pointed out in a recent Forbes article, Oracle’s price/earnings ratio (a simple measure of how strongly the market views a stock) is now the lowest since 1990. This is despite Oracle’s superb operating margin of 31% (up there with Microsoft and better than SAP’s also excellent 27%). The problem is clearly not profitability but perceived room for growth. Even its core database software license sales were flat in the last quarter. The database business is still very much the jewel in Oracle’s crown, contributing a disproportionate proportion of Oracle’s profits.

The strategic issues are that the database market is somewhat saturated, with Microsoft chipping away at Oracle’s market share with ever its more functional SQL Server, and IBM continuing to revamp DB2. Although insignificant now, the open source mySQL at the least creates pricing pressure, as does SQL Server. Oracle’s applications business has been thoroughly outclassed by SAP. And the Peoplesoft acquisition was very important in order to inject both extra market share and superior technology. Oracle’s grab of retail software vendor Retek from the clutches of SAP was an astute, albeit defensive, move. Over the years Oracle has meandered into a range of other technologies, either by development or acquisition, but rarely with much success e.g. its MPP offerings, its lackluster business intelligence products, etc. This is less surprising, as large software companies usually struggle to diversify, especially the further they move from the area that originally made them successful.

Certainly the wielding of the cheque book has bought Oracle some market share, but it also brings with it a major technology challenge in trying to integrate the various technology platforms of the companies it has acquired in with its already sprawling suite of software. Oracle has long been known for its superb marketing and aggressive sales force, but its pushy tactics have alienated a lot of customers, which in the end must damage it. When household name companies start to contemplate the massive task of moving away from Oracle to SQL Server, not on technical grounds basically because they feel themselves commercially abused, then this indicates a depth of animosity amongst customers which eventually will come home to roost.

Oracle did a fine job of winning the premier slot on the DBMS business, outpacing often superior technology (such as Ingres) through relentlessly effective marketing and sales execution. It remains to be seen whether the trail of upset customers they left along the way will continue to haunt them as they try and bring back growth. Perhaps Larry Ellison should ask the Pythia, the priestesses of Apollo at the original Oracle of Delphi, for some guidance. Their predictions were usually cryptic, but further predictions could always be bought with more gold if the initial ones didn’t meet expectations. Sounds a bit like Oracle’s application strategy: if you can’t build a set of applications that someone wants, then just buy vendors who have. Some things never change.

Weaving knots rather than nets

SAP’s Netweaver initiative is an astute move to try and define and so to control a standard for applications in large enterprises. It will certainly present advantages to existing committed SAP customers, who will be able to interact more easily with some non SAP applications. However there are several drawbacks. Firstly, NetWeaver’s integration is skin-deep. If you are on an SAP screen you can potentially branch out to a non-SAP routine e.g. a specialist payroll calculation routine. However anything that requires the integration of data between SAP and a non-SAP system is no better off than they are today i.e. customers are still into coding. Since the higher value levels of integration will usually involve not just portal-like “put in on the same screen” integration but actually dealing with business meaning of data, this will limit the use in reality. For example Netweaver would allow you to drop out of an SAP process into a supplier system, but does not help you deal with the issue that your set of product codes, or your general ledger structure, are different from that of your suppliers. For meaningful integration you need to resolve the business meaning or semantics.

What Netweaver certainly does is to declare war on several industry players who were previously either neutral to SAP or indeed active partners. IBM is the most obvious example. IBM has a massive services arm that does huge business implementing SAP, and IBM has decided to stay out of the applications business, so relations between the firms were good. Netweaver directly attacks IBM’s core websphere middleware, and so now IBM’s software group is in direct competition with SAP. The same would go for the EAI and ETL vendors (e.g. Tibco) and Microsoft, who have their own middleware stack. Oracle competes here too, but of course Oracle was already the most direct competitor to SAP. SAP may not care about the EAI world, but IBM especially is a big target to take on. The reason that SAP is prepared to take this risk is that the reward is so great: Microsoft showed the power that can be exerted by controlling the critical standard, in their case Windows.

Most large corporations have multiple middleware stacks within their organization (SAP, but also IBM Websphere, Microsoft and probably Oracle as well), so the key issue for them is how to deal in a neutral way across these, rather than how to rip all but one of these out. This is where the Netweaver strategy may ultimately fail, since the sheer cost of ripping out an existing well-established software infrastructure is gigantic, and that assumes that corporations donÂ’t care about the lock-in that would give SAP. Some won’t care about this, but many will. However the practical problem is the sheer scale of core infrastructure that would have to ripped out, and yet without data and business semantic integration, the benefits of doing such a thing would be very limited. Oracle and SAP are both giants locked in a battle to gain a larger and larger footprint in the enterprise, yet both are too well-entrenched to ultimately destroy the other. SAP has no database, for example, an Achilles heel for it, and SAP grieves every time they win an application account from Oracle and then see the customer deploy SAP on the Oracle platform. Oracle and SAP are always likely to optimize their applications for their own proprietary middleware, since their agenda is to expand their footprint inside large corporations, yet by doing so they rule themselves out of being an idealapplicationsn-neutral layer that can genuinely help their customers.

For most enterprises, Netweaver looks superficially attractive but does not solve the core integration problem, that of resolving the differences in business meaning embedded in their many, many core transaction systems. Netweaver’s widespread deployment is certain, but its skin-deep level of integration will deliver only limited benefits to customers, yet at considerable cost. Perhaps customers should check back on the investment cases they made a few years ago before they went down the ERP route – did the benefits promised then actually materialize? The costs certainly did (billions of dollars each for global corporations), but I haven’t seen too many of their IT departments shrinking away to nothing because all their integration problems were solved.

Wiping the slate CleAn?

When a company or organization changes its name, you know that its troubles are big. A few days ago Computer Associates made the radical name change to “CA” (I congratulate the brand naming people for their imagination; I imagine their fee was suitable modest). This follows a series of accounting scandals that has accounted for most of the executive team and has its previous CFO pleading guilty to criminal charges and previous CEO Sanjay Kumar now leaving the company. The name change is in a fine tradition of hoping to cover up the past: in the UK we had a nuclear power station called Windscale which had an unfortunately tendency to leak a bit, and a safety reputation that would have troubled Homer Simpson. A swift bit of PR damage control and voila – Sellafield was born. We all felt much safer that day, I can tell you. Of course some name changes are just good sense e..g Nintendo was previously called Marafuku (I kid you not).

However the big question for CA is whether its rebirth will be superficial or deep-rooted. CA was the body-snatcher of the IT industry, picking up ailing companies that had decent technology and maintenance revenues for a song, stripping out most of the costs and milking the maintenance revenue stream. It does have some strong systems management technologies like Unicenter, and is a very large company, with USD 942 million in revenues last quarter. However its famously antagonistic relationships with its customers have not helped as it has had to weather a series of scandals and management changes. Jim Swainson of IBM is the latest person to have the role of turning the company around in his new role as CEO. I wish him luck, as a company with troubles that deep-seated will not be fixed by a PR blitz and a name change.
I hope he has better fortune than PWC did with “Monday”.