Michael Fauscette

SAP SapphireNow 2010

Last week SAP employees, partners and customers gathered in both Orlando and Frankfurt (as well in virtual locations around the globe) for the annual Sapphire conference, this year recast as SapphireNow. For the first time the conference was run simultaneously in both locations through the miracle of Internet collaborative technologies. If nothing else it was a showcase for global collaboration run by a host of new anchors and visited by celebrities including Sir Richard Branson, Al Gore and General Colin Powell. It was also a chance for a somewhat beleaguered SAP, given its less than stellar financial performance over the last year or so, to showcase its new co-CEO's and their strategy for reinvigorating SAP. There was in general a lot of energy and activity around the conference among employees and partners, and spilling over to customer attendees. In particular the design / layout of the conference focused around a single exhibition hall that incorporated meeting areas, exhibits, and studios for small, medium and main stage gatherings. I'd say that considering the number of conferences I attend every year I'm fairly experienced in this area and for me, this is a best practice that other vendors could incorporate in their conference planning. The design kept everyone focused in the same space and helped to raise the overall energy level quite a bit.

The strategy, which was initially laid out in the Co-CEO roadshow earlier this year (see this post) and summed up in three pillars:

1. On demand

2. Mobile

3. Orchestration

delivered in three models:

1. On premise

2. On demand

3. On device

On demand and cloud were front and center in every keynote and many of the sessions throughout the event. As reported in my previous post there are two distinct focus areas for on demand apps, Business by Design (ByD), the fully functional end-to-end ERP for the mod market and Enterprise, stand alone apps that are intended as a way for enterprise SAP customers to get new functionality along side their existing ERP systems. The 2.5 release of ByD, the first multi-tenant version and according to SAP the scaleable release that will finally be offered beyond the few initial beta customers, was on display in the exhibition hall and is slated for release this summer (end of July is the rumor). ByD is targeted against the current mid market SaaS ERP players, Netsuite and Workday, as well as the on premise vendors, MS Dynamics, Epicor, Lawson, Sage, etc. ByD also is taking advantage of SAP's in-memory technology to increase the amount of real-time information available to the user (more on in-memory later in the post). The mid market segment that SAP is targeting is buying full ERP systems in the cloud, you only have to look at Netsuite's financial performance last year to see that, so ByD does have the potential to offer a growth opportunity to SAP if it is stable and as feature rich as they claim.

In the enterprise SaaS offerings SAP seems to be focusing on markets that have already proven to be fertile like sales force automation (SFA), talent management, travel & expense, etc (see this post for more information). I suppose these markets have proven that they are interested in SaaS delivery as there are already some strong players in each like salesforce.com in SFA, Taleo and Successfactors in talent management and Concur in travel & expense, but one does wonder why SAP would go after markets that already have strong leaders when there are a lot of markets in which SAP is strong on premise that they could attack with a SaaS offering. From a platform perspective SAP has three SaaS platforms, ByD, Frictionless and Coghead. It is not clear which platform will the their SaaS platform of choice going forward and in several meetings it was verified that the decision has not yet been made. It appears that the enterprise offerings are currently being build on either Coghead or Frictionless. None of the platforms are currently available as a PaaS offering although in discussion around partner strategy it would appear that they plan to move in that direction in the future. For the next release of ByD (r2.5) SAP wants to encourage partners to extend the functionality, especially to meet needs of different verticals. In general the partner ecosystem is featured prominently in SAP's cloud story.

Mobile and the on device pillar were present in almost every session. There were Blackberry apps, iPhone apps and the iPad was particularly popular. I saw quite a few iPad demos and SAP founder and Chairman Hasso Plattner even used one as a part of his ByD / in-memory demo during his keynote.

We did get more information on the SAP in-memory database technology although the use is still limited. During Hasso's keynote he discussed the move to in-memory technology and how customers could apply it in the near future in limited ways, stepping through 6 stages to the ultimate goal of fully operating on an in-memory database. In step one customers would use an appliance as their data warehouse / analysis solution added to their current installation of SAP. The appliance could be built on an HP blade with the in-memory database, which has a columnar compression algorithm and a solid state drive as the back up data store. I'm no expert in database technologies but it seems functionally to resemble the Oracle Exadata database machine (and other data warehouse appliances) which has smart flash cache and hybrid columnar compression. The difference seems to be that the Exadata cache predicts what data the user needs and caches that data, not the whole database while the SAP machine would cache the entire database.

Hasso demo'ed some ByD features that use in-memory technology to provide fast data access and analysis. From his end the demo was done completely on the iPad. I was very impressed with the iPad as an enterprise tool, I believe that its use in this capacity is starting to explode as more people get exposure to the UI and see its potential for business use.

Sustainability was also a prominent topic of discussion during the conference. This topic was very visible last year at Sapphire and has continued to gain momentum. Last year sustainability was focused on data center and energy use but this year it was more of a business focus across areas of opportunity from carbon management to environmental compliance.

Social also continues to be a hot topic for SAP. During the conference their new ideasourcing site was announced, powered by Jive software. The recently released social collaboration tool StreamWork was also a frequent topic of discussion. The tool is designed to facilitate decision making by bringing together people, information and process / business methods. Unlike salesforce.com Chatter, Novell Pulse and SocialCast, StreamWork is more focused on process driven collaboration than on ad hoc collaboration.

In general SAP is clearly a company in transition. There is renewed energy and excitement among employees and a great deal of activity. A lot of what was discussed at SapphireNow this year is future but if the level of activity continues there's no reason to believe that there won't be a lot of new and interesting developments this year. The next big milestone, the release of ByD 2.5 is rapidly approaching and is particularly important to reach to sustain the current momentum. The icing on the cake was the customer event on Wed night where Carlos Santana was the featured performer. The concert was excellent (but I'm a fan so I guess I'm biased).

Some Predictions for 2010

2009 is thankfully behind us and its time to turn our attention to 2010 in ernest. Every year at this time teams of analysts all over IDC get together and produce top ten predictions documents in their coverage areas. My group, Software Business Solutions is no exception, we're putting the finishing touches on our document this weekend. I have a joint breakfast briefing with Henry Morris and Steve Hendrick this Tuesday, 1/26 to highlight predictions from the 3 major WW IDC software groups. Contributing to the predictions from my group: Mary Wardley, Albert Pang, Amy Konary, Robert Mahowald, Sanjeev Pal, Darren Bibby, Steve White, Virginia Agee, Mira Perry and Caroline Dangson.

I'm not going to share the whole document in this post, if you want that you'll have to check it out on the IDC site (should be up in a week or so), but I do want to share the predictions that we came up with this year. From a trends perspective the predictions theme is the "new normal" and they fell into a few buckets; social business, mobile, next gen apps / cloud and lasting change. Here are our predictions:

1. The social business movement gains momentum through the cultural shift that is enabled by social enabled applications that are formed from the intersection of collaboration, content, search, communities, CRM and the current web 2.0 tools like blogs, wiki’s, microblogs, etc. with 50%+ of the Fortune 500 initiating social business projects this year.

2. Software vendors, recognizing that "one size does not fit all" with partner programs, will move to an a-la-carte benefit structure versus a long list of perks with diluted value.

3. The great divide will come to an end between horizontal and vertical applications for the enterprise.

4. As a fundamental part of the Social Business transformation businesses shift their focus from technology and process to people, who in effect become the new enterprise platform.

5. Cloud infrastructure computing moves squarely into the mainstream as a significant number of the Fortune 1000 companies adopt the utility computing model demonstrated by moving a portion of their “sandbox” apps into production on public clouds.

6. In response to a productivity spike, VARs, SIs and ISVs will turn in force to contracting (virtual staffing) and partnering. Vendor programs will adapt to support these new models.

7. "There's an app for that": Mobile becomes the new enterprise desktop with more than 50% of US workers accessing applications via a mobile device.

8. The 'new normal' will give rise to increased end-user buying power causing extreme pressure on existing vendors to mold offerings and giving opportunity to aggressive suppliers.

9. A software industry shift toward subscription models will result in a nearly $7B decline in WW new license revenues in 2010.

10. Cloudsourcing becomes a major alternative for companies looking to outsource non-core business processes (software-in-a-service).

So there you have it, what other predictions did we miss for enterprise applications and their vendors and partners?

Cloudy days

Oracle OpenWorld's done for this year and I'm now spending the weekend trying to catch up from a week at the conference and get the post-conference write up and analysis started. As I think back on the week one of the most entertaining events was listening to Larry Ellison at the Financial Analysts briefing rant about cloud computing (for the 2nd year in a row). Its a well known fact that Larry is not fond of the term (frankly it took me over a year to get comfortable using it myself so I can empathize here). Last year's rant (again at the Financial Analysts briefing at OOW) yielded one of my favorite Ellison cloud quotes: "the technology industry is the only industry that's more fashion conscious than women's fashion, I'm telling my marketing people to put cloud on everything"...a classic. This year the much quoted sound bite is "cloud computing is the future, it's also the present and the past". As I was thinking back on these quotes and giggling (which I suppose could cause a scene as I'm sitting in my local coffee shop, Phil'z, really awesome BTW, you should check it out if your in San Francisco...and no I didn't get sponsored to say that) it occurred to me that there's an important point lodged somewhere inside these funny lines, have we clouded (sorry couldn't resist) the SaaS message to much with all of the hype and jargon and are we obscuring the goodness in to much marketing? Do customers understand what we mean by cloud (actually do we all understand too)? And what about the other "technical" marketing things we keep seeing like multi-tenant / single tenant (sorry to bring this up again, but it's key to my point, here's my take on that subject), do they help prospects understand and adopt SaaS or are they in the way?

SaaS applications are growing ahead of the rest of the software industry, that much we can clearly see. But why? Personally I see lot's of benefit to consuming software in the accepted SaaS model and I think that the customers that are buying it do as well. I'm starting to think though that this may be in spite of our marketing instead of because of it. OK, maybe that's not completely fair, the important messages are also there, things like pay for what you consume, easier to implement (my post on that), faster time to value, lower TCO (although that one's up for debate), don't need to maintain your own infrastructure, simpler upgrades, easier to access from mobile / multiple devices, etc. But I do think our fascination with clouds and technical jargon is doing some damage to our overall messaging. What are SaaS or cloud applications anyway? In my definition cloud apps are SW applications that are sold on a subscription basis (so the software is leased rather than purchased), maintained by the vendor (patches and upgrades are installed by the vendor or the vendor's partner) and the app is available over the internet. The SW can be located at the SW vendor's data center, a partner's data center or even the clients datacenter by the way, but the customer pays 1 fee (not 1 to the vendor and 1 to the hosting partner). As far as I'm concerned that's it, nothing else is required.

Do customers want multi-tenant over single tenant? I don't think so, although some recent IDC survey data came up contrary to that point. On drilling into that more though, I think that survey helps prove my point, we've marketed multi-tenancy so much customers have started to think it's important to them, but can they tell us why...I doubt it. Multi-tenancy is only good for the vendor unless the vendor passes the cost savings on to the end customer...do you think that's happening? Oracle's Anthony Lye has very openly stated that Oracle prices multi-tenant and single tenant deployment the same for on demand apps (and the new Oracle Fusion Apps are architected so that they can be deployed in either model, customer choice is a good thing). Given the same pricing structure which do you think a customer would choose, a shared database with other customers (and yes, I know that it's very secure) or their own database? With their own database they get more flexibility. Alright, enough on that line of thought, you can read what I've already said about that if you want. My real point is that we need to look at the messaging again and focus on the value, on the benefit to the customer, not on technical jargon that doesn't really matter to the customer. I suppose that's a good marketing lesson no matter what your product for that matter. It's very important right now to SaaS or cloud vendors though, because I believe we've over marketed things that are not important to the customer and the real message is getting lost. Let's start spending more time telling customers that consuming apps in the cloud model has all sorts of goodness that comes along with it and no more time on cloudy messages about architecture (OK, you can save those slides for the IT organization briefing part of the sales process).

Oracle OpenWorld 2009 update #1

Officially day 2 of Oracle OpenWorld but for me day 3 since I started on Sunday with the Oracle PartnerNetwork day. I'll write up more detail later of course but I wanted to take a few minutes and share some of the highlights so far.

Starting with the OPN day on Sunday the most exciting news was the announcement of a new platform called Enablement 2.0 which is the new OPN platform to deliver services to all partners and the new program around partner specialization called Oracle Partner Specialized. With all of the products in the Oracle portfolio (and soon to grow even bigger with the addition of Sun) it has become very difficult for a partner to be knowledgeable on the entire portfolio. To encourage partners to focus on a few products and to assist customers in locating the best and correct assistance the partners will have specializations. Specialization is technical competency and business acumen - offered around all Oracle products. The Remarketer program, which was started last year is officially a partner tier (the lowest) and Silver level partners are not eligible for Specialization. Gold and Platinum partners are eligible for Specializations and eligible to sell Apps. According to Oracle President Safra Catz, "Specialization in Oracle product lines is what makes you better, customer don't want a rookie."

A highlight of Sunday was having the opportunity to listen to Andrew McAfee talk about enterprise 2.0 and the transformation to a social business. See my Twitter stream below for a few highlights of that presentation.

The messaging for the overall conference is focusing on the same 3 prong strategy that Oracle has used for the last 3 years, open, complete and integrated. This year though the focus is on integrated. Part of this message is AIA of course but it also stretches to the idea that Oracle, as a multi-brand company offers a wide variety of App choices. Customer can choose the best fit apps and stitch them together into a virtual, integrated suite. Oracle Presidents Safra Catz and Charles Phillips opened OOW yesterday with a keynote that started to tell this story but things really came together today in Thomas Kurian's Keynote. Thomas told a great story that stretched from UI mashups to the database and really demonstrated the power of complete, open and integrated.

Below is copied my live-tweeting of the OOW event so far:

12seconds - Marc Benioff at #oow09 http://tiny12.tv/S48CP41 minutes ago from 12seconds

Karen Tillman -execs using Twitter helps focus the messge #oow09about 1 hour ago from Tweetie

Listening to Karen Tillman's interview on Oracle's use of social media #oow09about 1 hour ago from Tweetie

Waiting to do an interview with the Oracle social medial team #oow09about 1 hour ago from Tweetie

Norm frm Qualcomm "Financial integrity is in our DNA." #oow09about 4 hours ago from TweetDeck

Steve Miranda takes the stage with Qualcomm to demo GRC apps #oow09about 4 hours ago from TweetDeck

Thomas Kurian - well done keynote with mix of demos, presentation, customers, & videos - "tell the story" #oow09about 4 hours ago from TweetDeck

Thomas Kurian - integrated process & BI - going from insight to action #oow09about 4 hours ago from TweetDeck

Thomas Kurian - Ingersoll Rand strategy - implement new features about every 100 days #oow09about 4 hours ago from TweetDeck

@megbear I wish I could get to the blogger meetup but I have 3 prior commitments tonightabout 4 hours ago from TweetDeck in reply to megbear

Thomas Kurian - now looking at package BI across multiple apps with customer Ingersoll Rand joining on stage #oow09about 4 hours ago from TweetDeck

Thomas Kurian - demo Siebel + EBS + Fusion middleware, integrated order capture thru fullfillment #oow09about 4 hours ago from TweetDeck

Thomas Kurian - commerce to all the channels that a customer uses rather than just "eCommerce" #oow09about 4 hours ago from TweetDeck

Thomas Kurian demo custom Fusion UI storefront on Siebel CRM, EBS & Fusion Middleware with embedded social SW tools "integration" #oow09about 4 hours ago from TweetDeck

Thomas Kurian looking at how Oracle's unique combo of tech platform and best of breed apps solves biz problems #oow09about 5 hours ago from TweetDeck

Thomas Kurian this yr dev shipped over 3000 products including 190 new products #oow09about 5 hours ago from TweetDeck

OOW day #2 Thomas Kurian EVP, Product Development, keynote, reviewing all of the product releases this yr #oow09about 5 hours ago from TweetDeck

@megbear I have to leave for a dinner but there might be some others still thereabout 20 hours ago from Tweetie in reply to megbear

Heading to the Tweetup at #oow09 Marriott Lobby at 5:45 near starbucks. - @fscavo @rwang0 @mkrigsman @ekolsky @dealarchitectabout 20 hours ago from Tweetie

Talking social CRM & retail with Oracle VP Mark Woollen #oow09about 21 hours ago from Tweetie

Discussing apps strategy with Oracle GVP Chris Leone #oow09about 22 hours ago from Tweetie

meeting with Oracle EMEA EVP Loic le Guisquet #oow09about 23 hours ago from TweetDeck

great discussion with Claes Lindholtz, Dir of Cust programs at Swedish Rail on their Siebel CRM loyalty programs #oow09about 24 hours ago from TweetDeck

had an excellent meeting with the Oracle Primavera team discussing enterprise PPM & all of the integrations #oow0912:22 PM Oct 12th from web

RT @merv: #oow09 Yr after yr, vendor execs give keynotes that are giant commercials & audiences leave. They never learn. HP is no exception9:53 AM Oct 12th from TweetDeck

RT @mkrigsman: Ann Livermore: 70% of IT budgets spent on operations; 30% spent on innovation #oow099:46 AM Oct 12th from TweetDeck

Application modernization programs 1 of the top CIO issues #oow099:43 AM Oct 12th from TweetDeck

HP presentation: how HP & Oracle can help companies create biz value in uncertain economic times #oow099:37 AM Oct 12th from TweetDeck

Anthony Lye: integrated solution of Demantra & CRM allow companies to create & optimize plans based on fact #oow099:26 AM Oct 12th from TweetDeck

Anthony Lye: customers wanted Oracle to integrate Siebel CRM to Demantra demand planning for trade promotions #oow099:25 AM Oct 12th from TweetDeck

Anthony Lye on stage to demo Oracle's trade promotions solution #oow099:24 AM Oct 12th from TweetDeck

Safra Catz: the pieces matter but the integration is the key #oow099:23 AM Oct 12th from TweetDeck

Oracle integrated fashion planning solutions designed to run a fast fashion biz #oow099:16 AM Oct 12th from TweetDeck

Fashion: old way 2 seasons = 2 turns a yr - now fast fashion 8-10 turns a yr = higher margins but greater complexity #oow099:13 AM Oct 12th from TweetDeck

Safra Catz introducing Oracle Retail integrated solution #oow099:12 AM Oct 12th from TweetDeck

interesting that the 1st mainstage solution this year is project & portfolio mgt. project based solutions are hot #oow09 #pbs9:05 AM Oct 12th from TweetDeck

Joel Koppleman: since the acquisition of Primavera they have focused on integrating PPM with ERP #oow09 #pbs9:01 AM Oct 12th from TweetDeck

Joel Koppleman: 25% of the world's GDP is project based #oow09 #pbs9:00 AM Oct 12th from TweetDeck

Joel Koppleman: companies want enterprise portfolio management connected to the rest of their ERP systems. integration is the key #oow098:59 AM Oct 12th from TweetDeck

Joel Koppelman (who joined Oracle from the Primavera acquisition) on stage discussing Oracle's project based solutions #oow09 #pbs8:58 AM Oct 12th from TweetDeck

Charles Phillips: have more SAP / Oracle joint customers integrating SAP to SAP with Oracle technology than use Netweaver #oow098:54 AM Oct 12th from TweetDeck

Charles Phillips: Oracle spends around $3B a year in R&D and have >20K developers #oow098:49 AM Oct 12th from TweetDeck

Safra Catz: buying enterprise SW today is like buying a car that is delivered in random parts that you have to assemble yourself #oow098:47 AM Oct 12th from TweetDeck

Safra Catz: the vendor now has to take the responsibility for providing an integrated, fully functional solution #oow098:46 AM Oct 12th from TweetDeck

Oracle co-presidents Safra Catz and Charles Phillips on stage for the opening keynotes #oow098:45 AM Oct 12th from TweetDeck

RT @rwang0: Tweetup at #oow09 meet at the Marriott Lobby at 5:45 near starbucks. @fscavo @mfauscette @mkrigsman @ekolsky @dealarchitect6:39 AM Oct 12th from TweetDeck

12seconds - Opening reception #oow09 http://tiny12.tv/N5V8W8:48 PM Oct 11th from 12seconds

Watching the Oracle Titan Partner awards. IDC (me included) did a lot of the judging for these #oow097:40 PM Oct 11th from Tweetie

Scott McNealy "I think Larry's going to enjoy his new toy" #oow096:52 PM Oct 11th from TweetDeck

Larry Ellison - drops a $10M challenge to IBM #oow096:51 PM Oct 11th from TweetDeck

Larry Ellison - build a smarter planet - IBM? build a smarter computer - Sun / Oracle #oow096:50 PM Oct 11th from TweetDeck

Larry Ellison - TPC benchmark - IBM 6x more power consumed, 8X more floor space used, Oracle / Sun fault tolerant, IBM not. #oow096:48 PM Oct 11th from TweetDeck

Larry Ellison - answering the IBM challenge - Oracle / Sun gear TPC benchmark-25% more throughput, 16X faster response #oow096:45 PM Oct 11th from TweetDeck

Larry Ellison - Sun / Oracle can compete successfully against the "giant" #oow096:39 PM Oct 11th from TweetDeck

Larry Ellison - engineer the hwd components as you engineer the SW is a better way. look at Apple #oow096:38 PM Oct 11th from TweetDeck

Larry Ellison - MySQL does not compete with Oracle, ORacle will increase investment in MySQL. fantastic product. #oow096:36 PM Oct 11th from TweetDeck

Larry Ellison - Solaris is the number 1 operating system period #oow096:35 PM Oct 11th from TweetDeck

Larry Ellison - IBM tells Sun customers that Oracle is a SW company & won't do Hwd - Oracle "intends to invest in SPARC" #oow096:34 PM Oct 11th from TweetDeck

Scott McNealy - introducing the "Oracle of Redwood City" Larry Ellison #oow096:31 PM Oct 11th from TweetDeck

Scott McNealy - John Fowler, head of Sun systems business - Sun is fastest platform for Java and for Oracle #oow096:22 PM Oct 11th from TweetDeck

Scott McNealy - "they won't be a software company after we get done with them" #oow096:16 PM Oct 11th from TweetDeck

Scott McNealy - most people use Java everyday and don't even know it #oow096:15 PM Oct 11th from TweetDeck

RT @shawnrog: Wow the Oracle World hash tag is like a fire hose. I need a better filter. #oow096:12 PM Oct 11th from TweetDeck

Scott McNealy - will Oracle be good for Java - fastest growing Oracle products are big bags of Java code - Oracle a big contributor #oow096:11 PM Oct 11th from TweetDeck

Scott McNealy - what's going to happen with Sun innovations - Java - Larry says "Java stands for itself" #oow096:08 PM Oct 11th from TweetDeck

Scott McNealy - what's going to happen with Sun innovations - Open Source - no issue here, Oracle will continue to support #oow096:07 PM Oct 11th from TweetDeck

Scott McNealy - what's going to happen with Sun innovations - Solaris - Oracle will spend more $ on Solaris than Sun does today #oow096:05 PM Oct 11th from TweetDeck

Scott McNealy - what's going to happen with Sun innovations - SPARC - Oracle will spend more $ on SPARC than Sun does today #oow096:05 PM Oct 11th from TweetDeck

Scott McNealy Sun: #1 contributor to the open source community on the planet #oow096:00 PM Oct 11th from TweetDeck

watching a great funny video of Scott McNealyisms #oow095:51 PM Oct 11th from TweetDeck

Judson Call to action for partners: learn about OPN Specialized - invest in enablement 2.0 to become specialized - keep selling #oow095:32 PM Oct 11th from TweetDeck

Andrew McAfee: sitting this one out is a bad idea #oow095:27 PM Oct 11th from TweetDeck

Andrew McAfee: Tools - email, hated, here to stay for now - stop trying to replace inbox - concentrate on things that email can't do #oow095:20 PM Oct 11th from TweetDeck

RT @rwang0: Influencers in the house for @amcafee @ekolsky @mfauscette @mkrigsman albert Pang, Rick Whiting #oow09 #oracle5:18 PM Oct 11th from TweetDeck

Andrew McAfee: Intelligence - crowds can be very wise - enable peer review - experiment with collective intelligence #oow095:18 PM Oct 11th from TweetDeck

Andrew McAfee: Innovation - Expertise is emergent - question credentialism - build communities that people want to join #oow095:10 PM Oct 11th from TweetDeck

Andrew McAfee: Innovation - if you come at a problem from enough different angles you will solve the problem #oow095:07 PM Oct 11th from TweetDeck

Andrew McAfee: Q - is it easier to search your co intranet over the open Internet? A - no, Google found Internet is deeply structured #oow095:06 PM Oct 11th from TweetDeck

Andrew McAfee: beware of 1 best way, ask how much workflow is necessary. use tools that let structure appear #oow095:03 PM Oct 11th from TweetDeck

Andrew McAfee: standardizing on a process has stuck with us for a long time, one best way to do something is now in question #oow095:02 PM Oct 11th from TweetDeck

Andrew McAfee: People Want to help: stop obsessing about the risks, lower the barriers to altruism #oow094:58 PM Oct 11th from TweetDeck

Andrew McAfee: telling story of BBC using wisdom of crowds internally to solve problems, people want to help, #altruism #oow094:57 PM Oct 11th from TweetDeck

Andrew McAfee: used Twitter to get emergency help to solve a car problem #powerofocialmedia #oow094:55 PM Oct 11th from TweetDeck

RT @FltAdvisor: SFO Ground Delays for flights due to WEATHER / LOW CEILINGS, delays of 44 minutes. #sfo #travel #flight4:52 PM Oct 11th from TweetDeck

Andrew McAfee: e2.0 is the use of emergent social software platforms by organizations in pursuit of their goals #oow094:52 PM Oct 11th from TweetDeck

taking the stage MIT principal research scientists Andrew McAfee, Enterprise 2.0, what we've learned so far #oow094:51 PM Oct 11th from TweetDeck

RT @rwang0: Charles Phillips - we're still working on what we'll need to do to incorporate our Sun partners and to learn from them #oow094:49 PM Oct 11th from TweetDeck

Charles Phillips: Oracle sales has already done this, generalists can't win, you need specialists to compete #oow094:47 PM Oct 11th from TweetDeck

Charles Phillips: we have so many products and with Sun will add more, as a partner specialization is the key. #oow094:46 PM Oct 11th from TweetDeck

Charles Phillips: we want to do the iPod for the enterprise, highly integrated and you know it just works, from apps to disk #oow094:45 PM Oct 11th from TweetDeck

Charles Phillips: story's still the same for Oracle, "complete, open and integrated", Sun acquisition doesn't change that strategy #oow094:44 PM Oct 11th from TweetDeck

Charles Phillips: Ecosystems will more and more be the source of differentiation for large tech vendors #oow094:43 PM Oct 11th from TweetDeck

More partners at OOW this year than last year, unusual in this environment #oow094:41 PM Oct 11th from TweetDeck

Back at the 2nd general OPN session, Judson Althoff welcoming Oracle Prez Charles Phillips to the stage #oow094:41 PM Oct 11th from TweetDeck

RT @pgreenbe: This is a good solid piece on social CRM. Social CRM. Ready for action? - http://shar.es/1JDaG #scrm2:31 PM Oct 11th from TweetDeck

I love this: Why Apple & Google Win - and Your Company Doesn't frm @ScottMonty http://tinyurl.com/ylk8ea62:18 PM Oct 11th from TweetDeck

signs of the times: sitting in the Oracle analyst workroom watching techs hook up live video feed & live Twitter stream monitors #oow092:16 PM Oct 11th from TweetDeck

If you can't make it to Oracle OpenWorld in person you can watch the keynotes live here: http://tinyurl.com/yzxjgd5 #oow091:56 PM Oct 11th from TweetDeck

Join Judson Althoff for the 1st ever Oracle Partner 5K run Monday morning, 7am, 5th and Howard #oow091:31 PM Oct 11th from TweetDeck

Safra Catz: Specialization in Oracle product lines is what makes you better, customer don't want a rookie. #oow091:27 PM Oct 11th from TweetDeck

Oracle Pres Safra Catz on stage with Judson Althoff discussing the financial impact of the OPN #oow091:24 PM Oct 11th from TweetDeck

Oracle Partners can now embed YouTube videos as a part of their solutions catalog offering, that's partner 2.0 #oow091:18 PM Oct 11th from TweetDeck

Nick Kritikos walking the OPN attendees through the process of becoming a "Specialized" partner in the new program #oow091:11 PM Oct 11th from TweetDeck

Oracle Platinum Partners are the Elite level for Specialized Partners in the new program #oow091:06 PM Oct 11th from TweetDeck

Gold partners 1st level of Oracle partner eligible for specialization & eligible to sell apps (Remarketer & Sliver not eligible) #oow091:06 PM Oct 11th from TweetDeck

Specialization is technical competency and business acumen - offered around all Oracle products #oow091:02 PM Oct 11th from TweetDeck

new program announcement - Oracle Partner Specialized - encouraging partners to deeper specialization #oow091:00 PM Oct 11th from TweetDeck

Enablement 2.0 is the platform to deliver new services for all OPN partners #oow0912:59 PM Oct 11th from TweetDeck

listening to Judson Althoff's opening for the OPN Forum, talking about the Sun deal #oow0912:50 PM Oct 11th from TweetDeck

at Oracle OpenWorld waiting for the PartnerNetwork Alliances and Channels General session to start #oow09

The emergence of the mega-tech vendor economy

In the IDC Top Ten Predictions publications over a year ago I started talking about the economies that were growing up around the major software vendors and their platforms. I could see that the consolidations in the market had changed the dynamics of the industry, that the consolidation cycle was continuing and that partners were growing into more of an ecosystem around those larger mega-vendors. What I didn't envision though was to what extent that consolidation would extend and that in technology as a whole there would be a change to this model of mega-vendor and ecosystems. OK, the Oracle Sun acquisition brought on this concept of the new hybrid mega-vendor, but the signs were already there before, I just didn't think big enough. I've already posted on the Oracle Sun deal so I won't go back through that for now, even though I will most probably do more when more details come out. The one point I want to make is that Oracle, post close, will not look anything like it did before, from database / middleware / application software company add hardware, storage, infrastructure software + the #1 slot in open source software. Also the competitive landscape shifts even more, Oracle would then be a hybrid conglomerate like IBM, Microsoft, HP, Google and Cisco. SAP would only be seen as a competitor in the apps business, a medium piece of the whole. And as for other software companies, they would only compete with Oracle in distinct markets. The focus of Oracle as a whole changes.

The event that brought this line of thinking out is the announcement today from IBM and Hubspan have formed a partnership and are jointly selling a new cloud based integration platform called WebSpan. WebSpan is a SaaS integration platform that combines IBM's Websphere integration software with WebSpan's on demand integration platform into a single integration platform providing process automation and information integration in one package. The new product offering will be sold by both sales organizations. This is a clear example of the evolving ecosystem and a new way of bringing products to market together. Not that the details of the deal are particularly different from any number of joint go-to-market announcements but what is interesting is the number of and the density of these types of announcements as well as the much stronger joint go-to-market approach. Don't be surprised to see more of these closely tied partnerships converge around those few mega-vendors this year.

With all the consolidation and the emergence of the mega-vendors there's a lot of talk about innovation in the tech space and specifically how the new mega-vendor environment stifles innovation in tech. There are two types of innovation, continuous and discontinuous and in understanding where our industry is moving it's important to note the difference. Continuous innovation happens in a steady path of improvements to existing product lines over time. This is the most common form of innovation and is evidenced by the "roadmaps" of all the tech companies. It is also the easiest for customers to adopt and implement as it does not radically change their infrastructure, environment and processes (there is of course incremental process change and improvement but it is in small doses). The game changing innovation is discontinuous. Discontinuous innovation is the radical leap-frogging of a current industry norms, things like client/server over mainframe and SOA are good examples in the enterprise space. The mega-vendor model feeds off of continuous innovation while start-ups often feeds off of discontinuous innovation. I think both of these types of innovation are important in a maturing industry like tech and in fact they seem to continue in a healthy way today. What I think is different is that we have 3 (and only 3) classes of vendors today...the mega-vendor (who will compete and partner amongst themselves as it suites their business), the midsize (and often slow growth) vendor that competes with the mega-vendor in 1 or a few segments (and over time may be pulled into the mega-economy by being acquired by one of the mega-vendors, or if niche enough, continues on in a healthy way) and start ups. The start ups will drive discontinuous innovation and, if successful (most are not), be acquired by the mega-vendor when the innovation is proven (will there be another Google, maybe but personally I don't think so, they would be acquired before that could happen). Outside of this core there is a large partner ecosystem that grows up around each of the mega-vendors.

What this means for partners? I think it means that more than ever it's critical to tie yourself to one of these mega-vendors, use their platforms and go-to-market together. I also see quite a bit of partner consolidation and certainly there will emerge a set of thriving and potentially larger and more complete partners in each ecosystem. Pick the right mega-vendor for your business and leverage what they bring to market, that's the key.

Oracle and Sun

   As I came off a weeks vacation Monday I was greeted by a 5AM call from Oracle informing me that they were announcing Oracle's intent to acquire Sun Microsystems for $9.50 per share. The deal comes at a time when IBM, who had been in negotiations with Sun for several months, had withdrawn its offer citing the belief that the price tag was too rich. In typical Silicon Valley style it seems clear now that the long standing relationship between Oracle CEO and Co-founder Larry Ellison and Sun founder and Chairman Scott McNealy played a big part in the ability of the two companies to pull off this deal in a very short time, a bold move that strengthens Oracle's position against both IBM and Microsoft. The deal is interesting from several different angles and provides some unique opportunities for the Oracle / Sun customer base.

In a conversation with Oracle Co-President Charles Phillips Monday morning I was able to get some insight to the motivation behind the acquisition and the early take on a go forward strategy. When asked about the key drivers from Oracle's perspective Charles listed three elements as core: 1. Java, 2. Solaris and 3. storage. Clearly Oracle views Java as a critical part of its open strategy, with its fast growth Fusion Middleware business reliant on Java as its foundation. In the announcement call Larry Ellison called the acquisition of Java the single most important software purchase they have made (quite a statement from a company that has acquired 60 companies in 5 years). Solaris is important to Oracle as it is the most often deployed operating system with Oracle software. The last driver, storage, was not one I would have initially listed but as I reflect on what Charles said I realize that in fact an Oracle play in storage could be a very strong growth business opportunity.

Sun of course is a mixed bag from open source software to hardware. Oracle stated that with the operational efficiencies of a merged company it can take a recently unprofitable Sun and drive healthy profits (Oracle Co-President Safra Katz stated $1.5B in profits, a very healthy number). Can they do it? Again this is #60 on their acquisition list so this is not new. What is new of course is the hardware piece of the business, a departure from previous statements from Oracle that they had no interest in getting into the hardware business (I suppose that ended last year at Oracle OpenWorld with the announcement of the Exadata Database Machine, co produced with HP). Sun's expertise in hardware is in design with all their manufacturing outsourced. This model could fit nicely into Oracle and lead to a series of "appliance" products that bundle database, OS, apps and hardware into a vertical or market segment focused solution that is pre-integrated and operationally compatible. Oracle was already testing this "appliance" idea in a few test verticals so this is a natural next step.

The one area that seems to be getting the most buzz in the Twittersphere and blogsphere is the open source question. There is, IMHO, a misconception that Oracle will kill off part of Sun's open source software portfolio, specifically MySQL. I asked Charles and a few other executives the direct question about MySQL and in every case have received the same answer, MySQL will be continued post-acquisition. While some analyst have posited that Oracle is threatened by MySQL, it seems more likely that the plan will be to continue to target areas in the market where MySQL is a good fit over Oracle's database products (small and medium business for example) and also use MySQL as a component in some of the appliance offerings. Oracle is not new to open source software with projects like InnoDB, Unbreakable Linux, Berkley DB, etc. and with the addition of Sun's portfolio of OSS Oracle is arguably the world's largest OSS vendor. In the past Sun had been criticized for it's management of some of its OSS portfolio by not encouraging openness and true OSS communities, it will be interesting to see if Oracle can improve the transparency and openness and foster stronger communities for the Sun portfolio going forward.

There are still a lot of unanswered questions, which is normal in the early days of acquisition announcements. The Oracle team will continue its due diligence over the next few months as the deal moves forward and over time make known their full plans for integrating the Sun business. If nothing else you have to applaud Oracle's boldness as they, in true Sun Tzu Art of War fashion, once again snatch the prize out of the grasp of their competition.

The Great Recession: Four Vendor Responses for Partners

Welcome Darren Bibby with this guest post. Darren is IDC's Program Director for Software Partner, Channels and Alliances in my Software Business Solutions Group. Catch up with him on Twitter @darrenbibby.

Since late September, the miserable economy and all its implications have been the only things on the minds of, well, everyone. The talented people who run the top software partner programs across the industry are no different. The partners that these people cater to are no different.

Our large software vendor clients have been asking IDC for months what we're seeing in response to the economic downturn. And my answer so far? Nothing earth-shattering really. Some recent vendor conversations confirmed my thoughts on this.

I think every vendor expected that every other vendor would be planning some major partner-facing initiatives to battle the economy. But in reality, if there was some magical program to boost sales for partners, why wouldn't it have launched years ago?

So vendors have turned to a few key areas to help partners in these uncertain times.

Incentives

Perhaps the most obvious thing that software vendors have done has been to offer even better incentives to partners, with the hope that the extra motivation will result in more sales. This is always a difficult tactic as everyone is pretty much in the same boat. Customers are often postponing decisions for several months at a time, or have budget reductions of 50% or more. The extra 5 points that a vendor is willing to give a partner is welcomed, but often not enough to make the deal.

Financing

A few of the largest companies have been offering financing for hardware, software, and even partner services for a while now. This type of total solution financing (especially the partner services element) isn't something that a distributor or regular financing company is willing to get involved with. Now is the time that many partners might start taking them up on financing more and more. Both Microsoft Dynamics and SAP announced 0% financing late last year to sweeten the pot in response to the downturn.

Cloud and OpEx

Similar to the way financing can turn one big lump sum payment into a stream of more manageable payments, vendors and partners are looking to other consumable delivery and pricing models that allow customers to use Operating Expense (OpEx) budgets versus Capital Expense (CapEx) budgets to pay for solutions. SaaS and outsourced / managed services are the best examples of this. Cloud based services that can be paid for on a monthly basis represent a more attractive purchasing option for many companies who can't foot the bill for a large on-premise solution up front. Service provider licensing agreements where the partner pays the vendor only for what software was used each month, could prove to be more and more popular as an option in this economy.

Re-packaging of Offerings

I have also seen a lot of re-packaging of communications of late. In a few cases, vendors have said, "Here's how we're going to help you out in response to the economy..." And their answer has not exactly been anything new, but rather a re-packaging of offerings that partners had access to anyway. Vendors may package up financing with sales assistance with business planning with suggested cost-saving solutions and call it an "Economic Response Package for Partners," or something like that. I don't blame vendors for taking this seemingly easy way out. It's very difficult to create something net new in response to the economy that really works. And the fact is, most partners don't use, or don't even know about, the majority of useful benefits that vendor partner teams have to offer.

I'm sure we'll hear more from vendors in response to the economy. Let me know if you do hear of something interesting. But maybe the downturn is the opportunity for some partners to re-tool, and finally look under the covers of the partners programs they have been members of for years, and discover what free and discounted resources are available to them. We have been investigating partner programs in-depth for almost a year now and there is a lot of value out there for partners.

Cash Flow Trumps Margin for the Little Guy!

Welcome Daniel O'Boyle Kelly with this guest post. Daniel is an IDC Consulting Director who supports my SBS group.

  Its with a fair amount of regularity these days that I come across some vendor slideware extolling the virtues of their "partner profitability" initiatives. This, in many ways, is a good thing. Yet with few exceptions, when peeling back the layers, improving profitability relates in large part to giving 'a few extra points' to push a vendor's technology or platform. While improving margins may indeed lead to better profitability, vendors need to better meet today's business challenges for the channel and without question, challenge number one is maintaining positive cash flow.   

In a recent custom survey IDC conducted for a large software vendor, we asked no fewer than 400 of their partners about a number of business performance metrics. The positive takeaway is that at least 75% of them were experiencing positive cash-flow coming into their businesses. Of course, the flipside is that a quarter were on the bubble or in fact in negative cash-flow - an ominous position to be in during these times. What is even more stark is that when breaking down the numbers by partner size, almost a third of those channel partners with less than 10 employees were break even or negative cash-flow. In the past, when the focus was on revenue growth, rapid sales cycles could possibly carry some partners through any 'profit valleys'. But with both the number of deals and length of sales cycles being extended, partners need to shift focus to cash-flow as KPI number one to manage the business. And a few concerted actions now could keep a partner's head above water:

• Seek out vendor financing and special incentives to power specific technology buying and thus shorten sales cycles. If incentives are not obvious, partners might want to hound their vendors for options claiming that other providers are stepping up. SAP and Microsoft are currently offering 0% financing on certain business applications. Cisco recently announced the "Now's The Time" offering that lets partners offer their customers no payments and no interest for three months on all Cisco hardware, software and bundled services for deals of $30 million or less.
• Identify general channel financing options beyond traditional vendors as a way to convert bookings to cash. For instance, Tech Data has an arrangement with NexCap to provide much valued capital through Reseller financing. By structuring a deal through this arrangement, resellers can improve cash flow as accounts receivables are converted to cash in 5-7 days. There are other arrangements out there too. Now is the time for partners to at least understand their options.  
• Most importantly, partners should get disciplined on all their billing and collection practices. In a recent IDC survey, we found top channel performers had average days sales outstanding of 45 days versus typical average 64 days collecting valuable cash faster and able to fund growth or debt repayment. Even if partners need to work with customers and be creative to match their budgetary constraints, it will pay to hammer out predictable schedules. Proper terms and milestone scheduling is key and forecasting accuracy should be incented similarly to other MBOs.

Clearly, vendors need to support their partners with more options and possibly 'new ways to fund deals' type training. We will be tracking their efforts ….stay tuned.

The Unofficial Oracle Partnering Week

Welcome Darren Bibby with this guest post. Darren is IDC's Program Director for Software Partner, Channels and Alliances in my Software Business Solutions Group. Catch up with him on Twitter @darrenbibby.

  I don't know if you're like me but I tend to find themes to each of my work weeks. A few weeks ago it was IBM week, then Microsoft week, then Citrix week and next it looks to be SAP week. This week was all about Oracle for me.

Oracle updated IDC's Software Partnering team on its plans around a new type partner designation for some of its best partners and also on the VAD Remarketer program that allows non Oracle Partner Network (OPN) partners to resell several of its baseline products. I also attended Oracle's first attempt at a virtual online partner conference.

Sales Readiness Verification initiative - Role Play for partners!

The first announcement was on Oracle's brand new Sales Readiness Verification initiative, which expands on Oracle's theme launched last Fall of Partner Enablement 2.0. It will help Oracle to enable and certify about 75 North American partners in the coming months on its Fusion Middleware products.

What's neat about this particular initiative is that it's not just a large scale, self-service, "take some training / take an exam" initiative that we're used to. Yes, those elements will be a part of this. But participating partners will also be subjected to a partner certification board where a role play and knowledge review will be conducted. Since this is sales training, a role play makes perfect sense in validating whether or not an individual "gets" it.

Oracle is doing this to move its North American partners up the technology stack. While Oracle has acquired over 50 companies to date, many of its current partners are still stuck on the database. There is a lot of opportunity for these partners if they can make the move "upward" to areas such as business intelligence, application software, content management, and much more.

In one respect, what this really comes down to for me is that Oracle's partner levels (Partner, Certified Partner, Certified Advantage Partner), and many similar partner structures in the industry, aren't enough to distinguish who the truly best partners are. In aiming for 75 partners, and asking partner reps to participate in role plays, Oracle clearly isn't trying to scale this to all partners. This is another way of picking out the best partners. It brings up the question of whether or not partner programs and their architectures should try to handle this type of "who's the best in what area" type of question, or whether it should be side initiatives like this one from Oracle.

By comparison, several partner programs have attempted to solve this. Cisco's partners can achieve Specializations and even Masters Specializations to show depth of skill in any one area. They can also then achieve partner levels (Select, Premier, Silver, Gold) to define their breadth of capability and ability to integrate different areas of specialization into a solution.

Autodesk also follows this plan in that a partner qualifies at a partner level (Standard, Select, Premier) in one or more industry-oriented product lines (Manufacturing, Geospatial, etc.). Microsoft also announced at its last partner conference that it's considering changing its program so that partners aren't just Certified or Gold anymore. A partner earns its level within each of the competencies they pursue, such as being Gold in Security, Certified in Advanced Infrastructure, but only Registered in the rest .

Most partner programs have implemented some kind of specialization or competency concept and I wouldn't be surprised to see Oracle's version at some point soon. Even then, I still think there's much merit to innovative initiatives such as Oracle's Sales Readiness Verification initiative. How else do you programmatically work with the best partners in a certain discipline? I think the key is to having consistency across similar programs at a vendor versus having a different program for every possible focus area.

Oracle VAD Remarketer Program - Oracle's take on open distribution

IDC also received an update on the Oracle VAD Remarketer Program, which allows partners who aren't qualified for the full OPN program to resell a baseline set of software products. The program is a couple of years old at this point and is growing nicely. There are 47 Remarketer VADs worldwide and hundreds of Remarketer partners who can sell any of the ten (and growing) software products including versions of database and application server products.

One new element of the update was that Oracle is trying to get these partners involved in more of a community. Oracle has set up a site on mix.oracle.com for Remarketer partners to congregate, and also developed a blog site on the program. Gathering a community like this is hard work. But if there's a reason for these partners to come together and work with each other, the effort will be worth it. But patience is key.

I think the big story with the VAD Remarketer program however, is that, before this program was in place, only full OPN partners were allowed to resell any product. For some partners who might only sell one or two Oracle software deals a year, it just wasn't worth the $1995 fee and the time and effort to earn the technical certifications necessary. This open and controlled distribution debate has been going on with Citrix and IBM very recently. The VAD Remarketer program has been done well and Oracle has opened up the right types of baseline products that don't necessarily need all the same skills that are required from an OPN partner.

Oracle Online PartnerExpo - Good first event

Lastly, I wanted to touch on a topic which I'm sure will get bigger as the year goes on. Oracle held an online partner conference of sorts on Wednesday where partners could sign on and see and hear live presentations, participate in scheduled chats by topic area, visit Oracle and partners in the Exhibition Hall or generally try to network in the Partner Lounge. This wasn't done in Second Life but rather a fairly attractive solution from On24. The presentations worked fine and it was a good way for Oracle to gather partners together for key updates at a mid-way point between the main Oracle OpenWorld conference. I think that the aim of networking at this type of online event still has a way to go, considering some of the chats I saw going on. But I'm happy to see Oracle putting this kind of event on, experimental as it still seems for many. This type of virtual conference will be a more common occurrence as partners try to save money and the technology and experience improve.

I was just disappointed that it wasn't in Second Life and I wasn't able to fly over tall buildings.

CAD/CAM/PLM Vendors, are you hiding or preparing for the next boom?

Welcome Sanjeev Pal with this guest post. Sanjeev is a Sr Analyst at IDC covering PLM, engineering software, EAM and project & portfolio management in my Software Business solutions group.

Its hard to disagree that the survival through the recession for most firms equates to lowering the spending, overall cost reduction and trimming the fat around the company. In other words, make cuts in every aspect of the business until the market turns around. In this blog, I will try to answer the question - What are the PLM/CAD/CAM providers doing to cope up with this recession. Is it a sound business strategy for the PLM companies including the digital manufacturing firms to invest in enhancing the existing technology & software in these hard economic times?

What measures have the digital/PLM software providers taken to survive the recession? Let us look briefly at each of the big provider.

Dassault - No formal announcement on reducing workforce, but unofficial consolidation that may have been a direct effect of recession.

Siemens PLM - No formal or informal announcement of consolidation.

Autodesk - 10% reduction in workforce (750 employees approx), other cost saving measures like hiring freeze etc, resulting in savings 130 million a year starting from 2010.

PTC - Started its first quarter with 5,264 employees, planned to work with 5,000 employees.

It has been proven time and again that manufacturing is the backbone of any healthy economy and the software supporting manufacturing processes- an essential element for achieving higher productivity. We should not forget that the present recession has been brought about by failure of the financial industry and not by decreased demand for manufacturing or failure of the manufacturing industry. On the contrary, manufacturing firms across the globe remain profitable and are still in stable to good financial health. Government’s increased focus on encouraging manufacturing will act as a catalyst to fire up the activity in manufacturing, with any slight up turn in economy.

I believe this is the right time for CAD/CAM/PLM vendors to invest in the future because: -

1. The importance of manufacturing to the well being of the economy is understood around the world.

2. Easy availability of over qualified labor.

3. Opportunity of acquiring small niche vendors.

4. Increased flexibility of vendors to form partnerships to increase their revenue stream.

5. Competition around the world has changed; Emerging markets of India and China are still growing.

6. The most important point - Waiting to invest in innovation and new channels until the market turns around means increased time to market , greater marketing costs (increased labor as well as operating costs in a boom) and probability of lower profits, there will always be someone ready to market their innovation.

In short, What are CAD/CAM/CAE/PLM vendors doing to position themselves? The answer seems to be not much!!!

Dassault , Siemens and Autodesk remain in overall good health and do indicate that they want to invest in small niche software providers. Cloud computing or the SaaS bug has bitten them , but has not been a revenue driver . I believe Cloud computing will definitely gain some traction in the small and medium business markets.

These vendors are expanding and developing the VAR, ARE, ISV channels with great interest. I am not sure if this channel expansion is being done to reduce their financial liability or increase their respective product penetration in the market. I see it more as a consequence of the recession than as a measure to increase the product penetration in the market or even product innovation that VARs can offer.