Innovation and the Time dimension


On labor day, I was vacationing in CO, and picked up this blog post by Vinnie Mirchandani ( @dealarchitect on twitter) to read while my family was getting ready for the day’s activities. http://dealarchitect.typepad.com/deal_architect/2011/09/ibm-we-need-more-innovators-less-integrators.html . Vinnie had earlier penned http://www.enterpriseirregulars.com/40863/we-need-more-applegoogleamazon-moments-less-ibm-moments/. I picked up a lively and healthy debate with Vinnie on twitter, and then Martijn Linssen joined in.  He is @martinlinssen on twitter, and I am @vijayasankarv.

 

Vinnie is a well respected analyst in the industry, as is totally entitled to his opinion. However, I do think the thought process in this case has some flaws.  I have an equal amount of respect for Martijn, and respect his opinions as well. We had to stop the twitter debate abruptly since I had promised to take my daughter to the zoo.

 

So here is me picking up that thread. I do work for IBM since 2006, and am very proud to be an IBMer. However, these are just my opinions, and not that of IBM’s .

 

How does one define innovation? Vinnie gives his metric to define innovation here.

How much of IBM’s revenues comes from new products innovated in the last 5 years? Because that is the benchmark that Apple and Google and Amazon blow IBM away on as what I consider a legitimate claim to innovation

 

I think it is a really bad metric to judge innovation of an enterprise company.  Here are a few reasons why.

 

First off – I truly admire Apple, Google and Amazon for what they have done and what they are doing. They truly deserve the accolades Vinnie and others bestow.  I use them all as a consumer, and am happy with all of them.

 

However, Apple comes up with a new product version say every year or less – like the iPad. Since it is a brilliant product, a lot of consumers pay about $1000 give or take each year to buy the next version . That is pretty much a 100% recurring annual cost. Enterprise customers cannot even tolerate 22% maintenance fees. How many vendors can manage to get a savvy enterprise customer to fork 100% every year for the next big thing?  And unlike the consumer world, the enterprise world generally needs backward compatibility.

 

Martijn made a point that IBM thrives because of great sales skills. I questioned that asking him how many customers will stick with a vendor for long term just because the sales people were rockstars. Martijn came back with some good points – mentioning shelfware and government contracts. Even if both are true, what percentage of the $100B revenue will come from shelfware and government? I think the reason IBM survived a 100 years – most of them as a leader – is that great sales was paired with greater delivery.

 

IBM developed Sabre for American airlines many decades ago – before I was born. And it is still being used widely – and not just for airline reservations. That is innovation that has withstood the test of time. It did not need annual revisions that cost 100% more money from customer every year.  If I am an enterprise customer – which one would I like? something that changes every year, and costs me practically 100% of my initial investment every year? or something that I buy once and pay a much smaller maintenance fee annually to keep up to date for decades?

 

Apple revolutionized how we consume music with iPods. iPhone and iPad were phenomenal successes as well. And they came out in a span of few years or less of each other. Very impressive. But guess who started an entire industry around personal computers? IBM did.  And how many years did it take for the next big thing to come up? a few decades.  An investment in a PC is not something people did in a recurring fashion every year. And even with mobile devices catching up – PC is not exactly dying.  Doesn’t that count as innovative? Or is it not innovative because it was not done in last 5 years?

 

By the same token, IBM sold off its PC division to Lenovo in 2005 when they figured that the margins of that business were not going to help take IBM to the next level. Wasn’t that brilliant for the shareholders that IBM invested in high margin services and software instead of low margin PC business? And Lenovo is a very successful company too and shows good numbers to its investors.  Why is that not innovative?

 

Vinnie goes on to say

IBM prides itself as supporting and leveraging Open source but cordons it off from its own proprietary and profitable products.

 

So is it Apple that is the shining example of all things open? Apple decides what works and does not work with their products. It is not open, and it can get away with it in consumer space. IBM is way more open in its products – and supports multiple systems to integrate with its products. Sure it can be argued that it could integrate more – but the point is, it is fairly open, and has been an active proponent of open standards.

 

Vinnie makes a point of IBM as more of an integrator than an innovator.  He says

If IBM was truly innovative it would be automating and commoditizing much of that labor – its own and that of the rest of the market.

 

Here – there are 2 issues. Is it bad to be an integrator? I would categorically say NO, especially if you are the best (or one of the best) in your business. Second – IBM has very innovative service solutions. IBM does not solve services problems by just throwing warm bodies at it. They are one of the few companies that bring high-end consulting, software, assets, hardware  and research capabilities all together to solve the complex problems of its customers.  It is a large company, and hence many people have different perspectives on IBM. Some exceptional, some good and some bad and some really really bad. Bad press gets more publicity – but that does not take away anything from a company that has been an icon for a 100 years.

 

Vinnie’s blog closes of with this

What I find disconcerting is that even at the top IBM confuses its nice margins from milking old software and old data centers and old partners like SAP as “innovation”. This WSJ article I should  have written about a while ago summarizes that state of delusion.

 

Sure SAP is  a few decades old. Sure it could also be more innovative like everyone else. But one should also not forget that a good portion of Global business runs on SAP. And IBM is one of the biggest partners of SAP globally. ERP projects get a lot of bad rap for being costly to implement and maintain. But the number of successful projects definitely outnumber the unsuccessful ones, although it hardly ever gets reported on.  And OLD does not mean BAD if it still works effectively. Sockets API for Unix was unchanged for a long time since it was written. Was it BAD? Full disclosure : For most of my life, I did SAP consulting. So I probably am biased on this topic 🙂

 

If Lotus is 20 years old, what about Microsoft office?  Why do customers use something that originated more than a decade ago? Shouldn’t that be anti-innovation too?

 

Martijn said HP invests more in R&D than IBM, and so does many other companies. Not sure if that is a fact – but I do know that IBM invests quite a bit on R&D, and in terms of number of patents and number of PhDs employed, I wonder how many other companies will come close. And how many other companies have 5 Nobel prize winners?  Does that sound like sustained investing in innovation?

 

Of course IBM has had its fair share of challenges. When I did my MBA, we used to discuss endlessly how IBM nearly died, and how it strongly came back. So I am not saying it doesn’t have its problems. But irrespective of all that – I firmly believe that IBM is one of the most innovative companies in the world. In fact, it is one of the core values of IBMers

Innovation that matters- for our company and for the world.

 

 

SAP HANA – we did it in 4 days, and lived to tell the tale


SAP Teched is fast approaching, and I have an ASUG session on HANA where I am presenting.  Due to a variety of reasons – I could not get my presentation and demo completed earlier. And then the idea dawned on me – why not crowd source this within the larger organization ? Having worked on a number of global projects in IBM – there was not a doubt in my mind that I could  find a team of super smart people from across the globe who will work with me to accomplish the goal.  We also enlisted the help of SAP, which they gladly provided.

Goal was simple – Stand up a whole infrastructure from scratch – hardware and software, and do a meaningful scenario of loading data using data services, putting it in HANA, and getting it to show up in multiple BI 4.0 reporting tools. We explicitly did not want to take any short cuts – no programming workarounds – enhancements or mods, no use of existing stable systems in the landscape, etc. And if we could not complete it in less than a week – we decided to stop. And for the information of my friends in enterprise collaboration – we made utmost use of lotus suite. Lotus connections, sametime, lotus notes and good ol’ telephone.

We did not want any “managers” in the team – we only wanted hands-on techies, irrespective of the official titles.  As it turned out – we had a core team comprised of folks from India, Europe and USA.  Plus we had an extended team in IBM and SAP who we could call on if we needed help. Some of the core team guys were on vacation, some had to do fasting through the day and only eat at night – and those who were working, all had one or more active projects that needed their attention.  Essentially – this had to be done on the side. This team had skills in basis, Linux, BI, ETL, SQL and some java.  I think on an average – we all had more than 10 years experience in SAP and/or BO  technologies.

The first big challenge was getting the Linux OS loaded on the box. It took almost a day to figure it out, but then finished quickly.  We could not have done this without the active help of  the IBM HANA/BWA  expert  Henning Sackewitz – thanks guys. HANA installation was next – and it was relatively smooth. We did the Rev 13 of HANA, and we could finish this in a few hours.  Although my basis colleagues are routinely used to seeing .SAR files and SAPCAR utility – I was a bit annoyed using them. Eventually I got the right version installed on my laptop – and studio/client got installed very quickly. However, not every one had the same luck. Few others had to fight the studio install before they were up and running.  Bottom line – my question for SAP – Why do I need to do command line options to install a windows application in 2011?  Is it that hard to package a visual installer that I can unzip and install?

Onwards to data services. Seriously a huge pain in the neck to get this one up and running. The post installation steps needed to get it working are not explained in a straight forward manner. We spent a lot of time hunting for the right .jar files and .dll files for the front end. Even as I type this, designer does not work on my PC. Thankfully – it did work for few others, so we could move ahead.

Data services integration to HANA was also quite painful. If the source is ECC- it is quite smooth. But once we  used some flat file sources – it gave us a tonne of false starts. Just setting up the connections with HANA took us a while. So my next question to SAP – why can’t I connect two of your systems in a more straightforward way?  For example : why would I need to read through your documentation to understand that the only port that works  is 30015? if you have a consistent logic to derive this anyway according to the documentation, why can’t the software figure this out without me wasting time?  SAP should consider spending some serious design thinking time on making sure the integration between data services, hana and BI 4.0 is seamless as advertised.

BI 4.0 was a known beast since we had experience playing with it before – and hence the additional grief was kind of minimal.  The connections to HANA are not exactly straightforward – but not too difficult either. We could expose universes and Explorer to HANA relatively quickly.

HANA studio is eclipse based, and hence had a familiar feel to it. However, when SAP talks about design thinking – this would not be what they are referring to as a top example. Context menu is not always very useful – and getting help on some features are just not possible. Quick launch is a nice touch – except there are some links which do not give useful responses. For example : Configure import server – you put in the data, hit an ok and then you wait. Guess what – data is saved, and you can see it if you go in a second time. But system won’t tell u what happened after you hit the OK button.  Another example: If you right click a table – would you not expect to see an option to see the data flow on how it is getting populated? or even an option to create data provisioning for it? well – no dice.  If you find me at Teched, I can give a few more of these misses.

And what is with the error messages? If you try to display data – and if you don’t have the right previleges, all you get is a java exception that shows up in top right of the screen. It is useless – and we have to trace to find the issue.  Took us a bit to figure out all the right access requirements. I did not get a good feeling that I can implement HANA security for a productive instance. Need to work on this some more .

Other than to test some inserts – we did not use SQL script at all. We stuck to the visual tools, and all its limitations. Calc views would work a lot better with SQL, but our intent was to do it in the most straightforward manner possible. Visual modelling is ok – but has room for plenty of improvement on consistency.  For example – I could get automatic mapping for unions, but not for joins.

In any case – by yesterday evening, we over came all the hurdles – and could get data to flow from source to hana, and get it to show up in BI 4.0 reports.  That is quite an achievement – and I am incredibly proud to be part of the team.

Special thanks to my fellow gang members – Gagan, Tomas, Manish, Ayub, Sudhir ,Suresh and Abhishek.  You guys rocked it. It is amazing that a small group of passionate techies could accomplish so much, with limited time and resources.  We speak different languages, work in different time zones, belong to different organizations and hold various formal titles – but we made it work.
Without Tag Robertson doing the needful in getting us the shiny new hana box, none of this would have worked in the first place – thanks Tag !.  And many thanks to Bill, Elaine, Birdie and entire hosting team for the fast turnaround in getting the box wired and ready for us.  The ever helpful Xavier was always came through for us and we owe him one.  And I specifically want to thank our BI Partner Craig Rich and IBM’s SAP CTO Chuck Kichler for their unwavering support.

And from SAP – Patrice, Balaji, Mani and other colleagues – many thanks for the continued support.   There are many more from SAP and IBM who have contributed to our success – you know who you are, and I am very grateful to all of you.

Although I criticized it a fair bit – I also admire how well HANA has turned out to be by Rev 13.  SAP’s HANA team should be genuinely proud in getting a 1.0 product this far ahead. There is some work to be done – but that does not take away any of the credit that is due to the team that develops hana at SAP.

Now – lets try to put HANA into the cloud over the next weekend 🙂

SAP HANA, Mobility and On Demand – where is the money ?


SAP had a great quarter – and deserves kudos for that.  Not a surprise either that maintenance revenue is the big contributor. Despite what analysts say about disruption and other such stuff – when you have a stable and committed install base, they are not going anywhere in a hurry. So SAP can take reasonable time to get new revenue streams. However it is not a permanent hall pass, and investors will become annoyed quickly if EPS drops.

 

So they have these three opportunities to make new money – HANA, Mobility and On-demand.

 

HANA is the biggest name from a pure marketing POV – SAP is shouting from the roof tops that HANA is awesome.  But what is the reality? Dennis Howlett’s post http://www.zdnet.com/blog/howlett/jim-snabe-co-ceo-sap-explains-current-business-drivers/3313?tag=mantle_skin;content says Snabe could not name a live customer for HANA.  We know there are several POC customers from the SAPPHIRE videos. We also heard the 10 Million a week pipeline .  We also heard it is fast and easy to stand up a high value HANA scenario. So why is not Snabe listing out several customer names using HANA and deriving value in production ?  Assuming 20% of the pipeline will close sales – it should bring in 72M in 2011.  May be for a 1.0 product that is pretty good.

 

So then what happens when HANA moves under BW as its database? There are about 15000 installations or so of BW as I heard somewhere. How many of these will move from ORCL, DB2 etc to HANA?  I am not convinced there will be a mass exodus from existing DB to HANA DB. For one – SAP needs to prove HANA can be fail safe in HA environments. And of course legacy DB vendors are not dumb – they will use licensing terms, instability of a new product and other FUD to delay a transition.  It is an even bigger problem when HANA goes under business suites. So how much money will SAP make out of HANA eventually?Remains to be seen.

 

Moving on to On Demand – they have two things at play. ByD  and LOB on demand. In my opinion, it is hard for SAP to make it big on ByD any time soon.  They started late, had delays, and still are aiming for low numbers. There is also the worry of cannibalizing ERP on premises.  Maybe some day this will change – but not soon enough.

 

However, LOB on demand solutions I think is a money shot.  Compared to HANA – the upfront development cost is low. A small team of product managers need to figure out a good solution. Technology is already there from ByD, and since both report into same SAP executive in Peter L, I am pretty sure ByD can be extended as needed for a good reason, if an on-demand application needs it. Development skills are existing – not new, like HANA.  And even if SAP takes time to sell this – one big customer is all they would need to break even. And since it is on internet, it can reach more people quickly. And they can/should be used on mobile. And once you institutionalize the development process – each successive application can be made faster and cheaper.

 

However, on flip side there are two big issues. One – it is never easy for a small developer to be an SAP partner to build applications on top.  And two – SAP needs scalable data centers to host this. Neither is particularly easy to pull off soon.

 

And then there is mobility – which should be the easiest place for SAP to make money., given the growing market. Every client I know of has a mobility initiative. And very few know what SAP has to offer. Which is a pity to say the least.

 

Bottom line – SAP seems to portray the next big things as HANA, On Demand and Mobility. And I think it should be exactly the other way around. What say you?