HP Joins the Enterprise Software Market: Léo Apotheker Becomes CEO

It looks like HP really wants to be a player in the enterprise software market after all,  and avoid the fate of Sun and others before it. The appointment of Léo Apotheker to the top spot fills a desperate void in HP’s strategy that may really signal the turn-around of a once great company into a new center of power in the industry.

I’ve seen Léo in action, and he may be just want HP needs: someone from outside Silicon Valley culture who understands how to navigate in a global economy, a consummate sales professional, a strategist and thinker, and, above all, someone who gets enterprise software, and the value of looking high up the food chain for opportunity.  Of course, I’m biased, but, that’s why I didn’t chose to become a storage technology analyst 20 years ago.

For those who disparage Léo’s rocky tenure at SAP, remember that, had 2008 finished the way it started for SAP, Léo would have been seen as one of the most successful CEOs in the company’s history. The company’s first-half numbers were incredible — revenues were up almost 20% over the previous year — and while they have been lost in the swamp of the last two years, those numbers reflect a lot of what is possible for HP with Léo at the helm.

And for those who worry that Leo doesn’t get hardware, I wouldn’t worry about that. HP has plenty of people who do. The problem has never been that HP doesn’t know the hardware business, it’s that HP doesn’t know what to do with all that knowledge. Insofar as I was already thinking that a focus on the enterprise software market is one of the things HP should be doing, I have to concur with the HP board’s choice on this.

By the way, don’t lose sight of the fact that Ray Lane is now on the board of HP as well.  This is another firm sign that HP is moving into the enterprise software market, and doing so in a big way. It’s really a new dawn for HP, coming from the nadir that was the Mark Hurd fiasco and Oracle Open World. The HP Way lives again.

Looking for the Oxygen at Oracle Open World: High Tide and Low Tide for Fusion Apps

It’s tough being an apps guy at Oracle Open World, actually it’s tough being anyone at OOW. The biggest tech event in North America (not the world, however, despite Oracle’s claims: that distinction goes to CEBIT, which numbers its attendees in the hundreds of thousands) is just too gargantuan to make sense any more. There are too many people, too many messages, too many products, too many sessions for any individual to really make sense of.

Regardless, I am happy to report that I found the signs of life for the apps side of the business that I was looking for, though on keynote night Larry Ellison spent so much time on selling hardware that by the time he got to talking about Fusion (and don’t forget, he followed the disastrous HP keynotes) many in the audience were no longer paying attention.

The glassy-eyed stare became a metaphor for the sessions I attended at what Oracle bills as a customer event. (Not an influencer event, just to be clear, which is why OOW cannot really be compared to SAP’s Sapphire or Microsoft’s Convergence. It also lends some color to the contretemps that took place when a group of press and bloggers were barred from attending a customer event. Oracle’s job at OOW is NOT to cater to the needs of the influencers, just the customers. Not a policy I like or agree with, but now that we know we should all adjust our expectations accordingly.)

But back to the glassy-eyed stare. While the Fusion apps team did yeoman’s duty explaining in session after session the strategy, feature-functionality, and positioning of the new and ever forthcoming product set, it was clear from sitting in the audience that something else was going on.

Andy Mulholland’s talk on Tues. showed the gist of the problem. While the room was pretty much full – not bad for a systems integrator clearly interested in drumming up business – the audience was unusually passive. Not apathetic, more like deer in the headlights. Andy’s talk focused on the architectural issues underlying Fusion, and presented his company’s approach (CORA), among other concepts. All good, important stuff, all well-delivered.

But did it actually sink in? Not sure: It was like watching a crowd of people starving to death and too weak to grab the ample food just out of arm’s reach.

This was the case even in Steven Miranda’s overview of Fusion Apps earlier that day. So much info, so many details, so much pressure in the firehose that it was clear the customers were overwhelmed by what they were seeing and hearing.

Watching the ebb and flow of the audience’s attention in the many Fusion sessions I attended alternated between glassy-eyed and attentive, with the following tidal chart being a typical one. (And a composite of the sessions I attended):

  • Welcome remarks, high tide: all eyes up front
  • Minute 20, following ten minutes of deep feature/functionality description, the tide is running out, eyes are glassing over.
  • Minute 30, deep descriptions of specific features in a specific module, and why they are in there: low tide.
  • Minute 40, the topic is now about adoption scenarios for Fusion: the tide comes roaring in and all eyes are up front. Lightbulbs go on all over the room as a discussion of how Fusion modules can be plugged into existing Apps Unlimited implementations just like all the other apps that Oracle has acquired.
  • Minute 50, a slide is on the screen showing the full complement of Fusion capabilities – people are taking pictures with their cell phones. High tide.
  • Minute 60: The session is running late and half the people are running for the door. Ebb tide.

Why is this happening? The basic problem is that Oracle Fusion Apps are still  considered as high-level theory, not in terms of feature/functionality, mostly because that’s how Oracle has presented the new portfolio – as an exercise in rewriting, re-architecting, and redoing, using the best of the best of their portfolio – in order to bring a new world order to the IT department.

This theory is interesting to Oracle and many in the office of the CIO and the punditocracy, but it blurs the message that’s most relevant: Oracle is building some great new apps that extend old concepts like CRM, HCM, SCM, and the like, in new and exciting ways. And these apps are going to make your company run better, your users more happy, and their jobs more efficient.

What instead happened at OOW was that the tone of the show was set by Larry Ellison’s tech-talk, hardware-heavy keynote, and followed by more of the same. Which meant that too much of the messaging around Fusion Apps was technical in nature, and while playing to acknowledged strengths, failed to emphasize the strengths that matter most: great new user experience, great new functionality, and solid integration with the existing apps portfolios.

Here is my analysis of what Oracle needs to do to make Fusion Apps messaging more consumable for its audience:

1)      Oracle desperately needs an apps conference for its apps audience, particularly those who are seeking specific answers to specific problems about their application roadmaps. This conference should include separate tracks on architecture and applications functionality, and leave the hardware and Iron Man 2 videos to a different audience.

2)      Oracle needs to STOP talking about Fusion Apps and start talking about new functionality that it is offering on a new platform. When customers looked at Fusion modules the way they looked at G-log and Demantra as add-ons to their existing portfolios, they were both comforted and excited.

3)      Oracle needs to talk about Fusion Architecture in a way that separates it from the Apps. Andy Mulholland’s talk was important for the IT decision-maker, but the apps users/buyers need to not be concerned with these details. Right now the lack of differentiation between Fusion the Applications and Fusion the Middleware and Fusion the Architectural Strategy is really muddying up the apps messages.

This really means that the Oracle Apps portfolio needs its own show, just like Microsoft Dynamics gets it own show, and just like Sapphire is an apps show. OOW this year was like lumping a Detroit auto show with a civil engineering conference: learning how to build the road when all you need is a hot car makes for a tedious experience.

And in the end, after three days of OOW, that’s the bottom line. It was tedious. Too bad for everyone. But I did see some hot cars……

The End of the HP Way: Can the HP Will Keep the Dream Alive?

The HP Way died a miserable death on the altars of Oracle Open World last night, in an auto-da-fe of medieval proportions. It’s as if Larry Ellison’s Sun Tzu alter-ego had scripted it personally – no need to say anything, just let HP be HP and make the company’s growing irrelevance so stark and obvious that nothing else needed to be said, or done.

The HP Way speeches at Oracle were all the more ironic to those of us viewing them from the analyst workroom, where technical difficulties forced us to watch the sinking of HP in glorious black and white. This lent an almost newsreel, you-were-there, feel to the event, making it look truly like it was an historical documentary about the moment when the beginning of the end began.

What the speeches by HP’s Ann Livermore and Dave Donnatelli  solidified is the stifling stodginess of HP relative to everything else happening in the Silicon Valley of 2010. Passion, vision, excitement, drama, charisma, leadership – all were AWOL on the stage Sunday night. It’s not even worth rehashing what was said, because what wasn’t said was so much more important: HP is the also-ran in a technology horserace that looks more and more like it’s being run on an entirely different track.

Line up HP against its historical competitors  IBM, and now Oracle/Sun – as well as any other competitor you could name (Apple in mobile, Teradata in data warehouse), and only HP could turn in the performance it did last night.

It doesn’t have to be this way, HP is stuffed with great people, lots of great products, and the HP Will, that striving for success that still exists in the people who make up one of the most storied brands in the industry. The HP Will has at its core a collective need to make good on its birthright and brand, and keep the legacy of its founders alive. I think that core can still be harnessed, if the company can only see the light.

That light is enterprise software, the same bugaboo that made Sun the great, enduring company it isn’t today. Sun’s big mistake was in not understanding the importance of enterprise software as a core part of its business, a mistake that IBM hasn’t been making for years, despite its protestations that Big Blue doesn’t sell packaged enterprise software (and what is Open Pages? Tortellini?). Oracle eschews that mistake as well: in case you hadn’t noticed, the company has a lot of enterprise software to back up its new hardware business too.

HP sits poised at the most critical junction in that 71-year history HP keeps harking back to. The company can still make a play in enterprise software, it even hired a well-respected software guy, Bill Veghte, to head up its software strategy. Now if only the board can get behind a new CEO candidate who actually understands the value of enterprise software and unleash Veghte, this may become a company that can once again play on the same field as IBM and Oracle. Whoever that lucky CEO (said somewhat tongue-in-cheek) ends up being, enterprise software experience and vision has to be at the top of the list of attributes he or she brings to the table.

It wouldn’t hurt to be able to give a great speech and wind up a crowd too.

Is Enterprise Relationship Planning the New ERP?

I’ve been toying with this idea for a while, and I think it’s starting to stick. More and more I’m seeing that the most critical business problems to be tackled today in the enterprise center around enabling and improving the myriad relationships — inside the firewall, outside the firewall, and all points in between — that make key business processes come to life. This can be as simple as organizing the sales cycle, a classic CRM function, or something more complex like linking a complex external ecosystem to itself (your external marketplace) and then tying that ecosystem closely to the different stakeholders in the company who are in charge of optimizing that eco-system (channel and partner managers, sales and service managers, procurement and supply chain managers, etc. etc.).

This complex web of external relationships tied closely to internal stakeholders is made all the more valuable by the growing presence of external communities of interest and the unstructured data and processes that they use in their day-to-day lives. These communities can be made up of customers, or external contractors, or suppliers, all of which need to be carefully managed by the individual stakeholders whose job it is to keep the ecosystem alive and providing competitive advantage. It’s a many-to-many matrix of interactions and relationships that craves new software and business processes in order to get it right.

This explains the enormous growth in CRM sales, far out-pacing the sales of classic ERP. It also explains the value of tools like Microsoft Dynamics xRM, which extends the CRM model to handle the non-customer relationships in the new ERP. It also defines the opportunity of companies like RelayWare, which is carving out the partnership relationship management space with this goal in mind. And it defines a clear path to integrate social media — like Facebook — and new on-line sales and marketing sites with classic enterprise processes.

This new ERP opportunity represents an excellent way to organize enterprise business planning, and as such requires something other than classic ERP software, which focuses on resources, not relationships. There are a lot of ways to solve the problem, but the main order of business is to look beyond traditional resource planning towards the greater challenge of relationship planning. Considering the fact that collaborative software has so far mostly shown us how poorly our collective skills at collaboration are, I believe the challenge of enterprise relationship planning will be with us for a long time to come.

Is Oracle An Apps Company that Sells Hardware, or a Hardware Company that Dabbles in Apps?

It’s open season in the punditocracy on Oracle, as the move to put Mark Hurd in Oracle’s corner and jettison Charles Phillips makes a helluva welcome-back-to-work present for anyone who actually took Labor Day off from their daily labors.

What’s obvious from where I sit is that Oracle is now more firmly a hardware company than it was last week, when all it had in the hardware category was a company called Sun. Indeed, with Mark’s ascendancy and Charles’ (can we now go back to calling him Chuck?) “retirement,” the real question, lawsuits and succession planning aside, is whether Oracle’s applications product line will ever become a major part of the company’s product focus again.

I say that with full knowledge that the company is plugging away at keeping its Applications Unlimited apps up to date and innovative, as much as can be done with such a broad set of products and code bases. I also say that with full knowledge that a year has gone by since the last Oracle Open World, and Oracle’s marketing of its Fusion Applications Suite, not to mention the rest of the apps line,  has been conspicuous in its absence. And I say that with full knowledge that, judging from Mark Hurd’s track record at HP, he may not have the mandate to formulate  an innovative enterprise applications strategy for Oracle going forward.

Not that Thomas Kurian, who runs the whole apps show at Oracle, can’t come up with a strategy – he has, or did, though the part of that strategy that includes Fusion Apps seems to have been shuffled off to wait-and-see land. But can Kurian now drive an apps strategy in a company that has just been taken over by the hardware jockeys? I’m personally worried, for Oracle and its customers.

The problem is that Kurian’s ability to keep apps in the forefront at Oracle was already in trouble from the Sun acquisition, and those of us who have watched Oracle lo these many years have seen this movie before. It may be hard to imagine, but until Oracle went on its M&A spree in 2003, the company’s commitment to the enterprise applications market was in question. eBusiness Suite had had a couple of rough releases, and key enterprise applications advocates like Ray Lane, Gary Bloom, and Mark Jarvis had left the company. As the post-dotcom era unfolded, the company was more and more focusing on its database and middleware roots, and those of us who followed the apps side of the business were wondering whether Oracle was going to be another also-ran in the apps business.

That clearly changed in 2003, and one of the principal architects of that plan was Charles Phillips, who, when we was still called Chuck, was among the acknowledged experts in enterprise software among the financial analyst community. He showed up at Oracle just as the battle for PeopleSoft was winding up, and he clearly put his imprint on the incredible string of software acquisitions that Oracle undertook as the decade unfolded.

I have to imagine that part of the reason that Phillips has left Oracle is that the Sun deal represented the beginning of the end of the primacy of enterprise software at Oracle. Not that the company is going to jettison its current apps, not a chance. But it’s clear that the Sun acquisition has pulled Larry Ellison’s attention away from apps, and that it’s looking like 2000 (the year Ray Lane resigned) all over again.

In this light, I have to wonder if Charles’ gaffe over the supposed $70 billion M&A fund earlier this year wasn’t a ploy to float his last and final position on the company’s strategy in the public domain in order to see which way the wind was really blowing. It’s been done before – though that’s more of a Washington DC inside-the-beltway ploy than a Silicon Valley ploy. Regardless, his reprimand came swiftly, and the rest is history.

So, with Mark Hurd “replacing” Phillips, and a host of Sun people now swarming through the executive offices of Oracle, it’s hard to imagine that the apps group will be more than an adjunct to the hardware side of the business for some time to come.

Let’s be honest – Sun’s enterprise apps strategy was almost as robust as HP’s, and that’s not saying a whole lot. Each company has squandered numerous opportunities to more synergistically blend enterprise apps with their hardware and software technology lines, and, while I will give Hurd the benefit of the doubt now that he is actually running a major enterprise software company, the proof will be in a strategy that does more than make Oracle’s apps something they sell to make the hardware business run.

My final concern is that Oracle is more and more emulating IBM, a company that eschews enterprise applications in favor of a tools and technology approach to the market that puts Global Services in charge of creating one-off, highly profitable, enterprise apps that compete more and more with packaged solutions. If Larry continues his quest to be the next IBM, it would mean more marginalization of enterprise apps in years to come.

All of this can change in a couple of weeks, when Oracle Open World descends on San Francisco (with some questions about how the current game of musical chairs will sort out) . I will be there watching for signs that I’m wrong, and not so secretly hoping I am. For if Oracle is truly downgrading enterprise apps, then its customers and the market will be all the more poor for that downgrade. And that would be the biggest shame of all.