SAP buys Concur and Oracle gets new CEOs – My 2 cents


Just as soon as I came back from lunch , I heard about both news items from SAP and Oracle . Here are my views – strictly personal opinions as always , and has nothing to do with present or past employers .

SAP buying Concur is a pretty good move in my opinion. As a frequent business traveler , the standard SAP solutions are not exactly the ones I think of as my “painkillers” . Concur fits the bill and I know there are millions like me who need their services . What is more – it is a growing business with plenty of scope for innovation given the options to travel are increasing .

For SAP – with Ariba already providing a pretty big network , this is a neat deal to add to their breadth and depth . Success factors fits in too pretty well from HR synergy . And of course there is the core FI and budgeting apps which their instal base already has in plenty . So from a portfolio synergy – it makes perfect sense to me .

I really hope that this does not start another “let’s replatform to Hana” initiative . I am sure hana fits some parts of concur really well – like maybe getting amazing insights across expenses and other corporate data like HR , risk and so on . But a blanket replatforming – especially from a transaction processing point of view , doesn’t look like high value for me .

After reading Den Howlett’s blog on the recent influencer meeting – there was only one question I asked . Was there any mention of M&A ? He said there wasn’t . And I was wondering how SAP plans to get all that top line money organically . Well today answers that question for the most part 🙂 Buying for top line improvement is something IBM, Oracle etc have done before too – so nothing new in that respect . Oracle market cap probably increased about $50B via acquisitions in last 5 years or so I think .

So now my big question is what companies will SAP acquire to bolster the platform side. ? Business Objects is good – but tired . Lumira did not exactly give tableau a run for its money . So maybe SAP can buy a modern company to boost the BI business – like Tableau or Alteryx . It probably won’t be cheap – but probably a good idea to retain BI market leadership .

Or maybe TIBCO – and have a shot at both EAI and BI in one go .

Another option might be to buy into the lower end of the stack like redhat . That could open all kinds of doors for SAP on platform side . In fact – I would rate such a purchase as way more strategic than even tableau.

No idea if any of these vendors – maybe except TIBCO – wants to be sold . And if they did – SAP will probably need $10B+ to buy a couple of them .

In any case – big congrats to Bill McDermott and SAP !

Moving on to Oracle . I am not sure what exactly changed there . Everyone seems to have moved one level up the ladder and Larry retains control of all technology aspects . And while he remains active – it is hard to imagine Oracle having two other CEOs .

There was a rumor throughout that Larry might become Chairman and buy Salesforce.com and make Benioff the Oracle CEO . Clearly that did not happen . But it is not to say that can’t happen in future . The two new CEOs (best of luck and congrats to both) both deserved the job for sure . So the possibility that they move to the board in a couple of years and Benioff getting the CEO job long term is a possibility . We will see I guess 🙂

I think it makes sense for Oracle to make a big noise to divert attention from a rather lackluster financial quarter . Beyond that , I don’t see anything material about the CEO transition .

Scale and Culture , the ultimate conflict in startups


Ever since I left the big company career , I have been talking to and learning from folks who have a lot of experience in the scrappy startup way of life. I have had such conversation with engineers, founders, sales people, VCs , Angels , receptionists and pretty much anyone else who would talk to me about this . I am rather firmly convinced by now that what worries start ups is the idea of scale – or more precisely, how to scale the business without sacrificing their culture. 

Culture is a loosely defined term for me. It is contextual – some people consider the freedom to work on a pet project as culture, another looks at free beer and food as culture, yet another thinks a primarily engineering skilled work force is the hall mark of culture , some one else looks at a flat hierarchy as the best indication of culture and so on. And this is primarily the reason for the conflict between the need to scale and the urge to defend culture. 

Looking at some iconic new generation companies from the outside – like Google and Facebook, it looks like a lot of the startup culture can be saved. At least the easy ones like informal dress code, free food etc. But a few friends who work there have told me that when it comes to decision making and hierarchy, they tend to shift more to the large company way of doing things. 

I have never founded a company – but from observing people who have done so, it looks to me that the ideal way to do this is for an engineer with a great idea to go find a friend who has business savvy and get a company started. May be it works with the business guy being the starting point too – but to me it does not seem likely that a business person without tech chops can identify a good techie quite as easy as a techie can look for business skills in a partner. I may be wrong – but at least that is how it appears to me. Without a business oriented founder ( pretty cool if business person also is a techie) – I think there will always be a feeling in the company that the sellers who get recruited are a bunch of over paid losers. 

Same is the case for hierarchy . I hate hierarchies with a passion. But it is nearly impossible to manage more than 10 people effectively. So as a company grows, fighting hierarchy is futile – you will just invite chaos. It is a fine balance. When you are small – you can hire enough top notch talent who might not need much management. But there are only so many smart people available on the planet and not all of them are available to your company. So embrace the concept of structure to minimize growing pains. 

There is a certain paradox in engineers fighting hierarchy and structure in organizations. I am a perfect example. I am obsessive compulsive in organizing my code well, ensuring separation of concern , clear hierarchy of a stacks and so on. Yet when it comes to people management – I have fought my bosses tooth and nail on every bit of organizational discipline they had instituted. I can’t say I have fully embraced the idea – but I am a lot more understanding of the need for structure than I was in my younger days. My closest to ideal situation is a flat team that organizes itself to solve a problem, and use hierarchies needed to get things done. And then they go back to the flat team and re organize for next problem to be solved. 

Same deal with performance reviews and comp plans. I like giving and getting feedback at task level and periodically at big picture level. This works well when the organization is relatively small. But when a company grows to hundreds and thousands of people – all those things I don’t like – bell curve type things, come into play. A lot of this misery is caused by lack of flexibility in corporate budgeting. Budgeting is done for predictability – not for performance optimization. And it has extreme side effects that everyone knows but very few CFOs act on. To some extent, tools are to be blamed too. Even if a business wants to be flexible – the common enterprise tools for budgeting and planning have restrictions that minimize flexibility. 

When I left SAP and joined MongoDB – a lot of friends and my mentors told me that once you taste the startup world, there is no turning back to old world. To a large extent, I believe that is indeed true. The flexibility and freedom offered in a smaller and faster growing company is a big plus factor. But what happens when a start up gets too big ? I have seen some of my friends go back to the big company world, and some others just jump to an early stage company and help them grow. A handful who made a lot of money have moved on to be investors. 

I think some cross pollination is necessary in our industry. Even in the 5 months that I have been in this role – I realize how some stuff in my old world can benefit by making changes to how they operate. Similarly the younger companies can get a lot of benefit from people who bring in the perspectives from the big company world – especially about scaling. The latter happens a lot already. But the former – where big companies hire leaders from startup world – don’t happen to the same degree. 

I am very much a newbie to all of this – and am very curious what you think . 

 

 

Apple and IBM, a view from the peanut gallery


Apple and IBM are both companies I hold in great esteem – in the top 5 of all companies I care about. I worked at IBM for a long time, and I own a lot of Apple devices. I have small investments in the stocks of both companies . My day job is to make partners successful for my employer MongoDB – so any enterprise alliance news is something I look at as a learning opportunity  Naturally it picked my interest significantly when I heard the announcement . My instinct was to say “Wow Ginnie scored big”. So, here are my thoughts on the alliance – strictly my personal views and not that of current or past employers.

There is very little in common between IBM and Apple to begin with.

1. Apple is a much more prosperous company than IBM – be it Market cap, revenue or margins. And its no secret that Apple is the senior partner in the relationship. IBM’s CEO flew to CA to do the announcement with Apple’s CEO, and not the other way around. If this happened in IBM’s prime years, Tim Cook would have landed in JFK and taken a limo to Armonk 🙂

2. Apple is more prosperous than IBM with MUCH less employees than IBM has. On top of that the IBM internal organization is heavily matrix oriented to take care of its complex business. It would take some Eisenhower-esque leadership to get all the right teams focused on this initiative. (But honestly, I am not all that worried since I know first hand that when it comes to leadership, IBM has some of the best in the corporate world in their ranks.)

3. Apple is extremely focused – it has a much smaller portfolio around which this massive empire has been built. IBM portfolio is like encyclopedia Brittanica in comparison 🙂 . When I looked at the joint announcement first – I smiled thinking “wow you could not have expressed in a more cover-all-bases generic way”. 

4. Apple makes money from hardware and IBM has been steadily divesting hardware business

5. Apple provides a workplace that is cutting edge and has an awesome cafeteria – IBM to my knowledge does not even provide free coffee to its employees . Apple prefers jeans and IBM prefers suits. The impedance mismatch in culture is palpable.

6. Although several employees at IBM use Apple devices in a BYOD mode, the company standard issue has always been a thinkpad laptop, and not a Mac.

Why does this alliance make sense ?

Just like with the law of magnetism in physics – opposite poles attract !

1. Apple is a company that thrives on innovation. But they need something to keep the market happy during the time taken between innovations. IBM opens the doors to the top enterprises – voila, a whole new addressable market delivered on a platter.

2. IBM services is pretty good at production support and maintenance. Many large companies have outsourced support to IBM – and combine Apple care with what they do today, there is a clean new upsell package for IBM GBS and GTS. 

3. People don’t give enough credit for IBM’s design investments. IBM has a solid design team that does an amazing job – the most famous being the public facing sporting events like US Open. So when it comes to creating the 100 apps – design is something that IBM can rely on being a differentiator. Same goes for advertising – IBM makes some pretty impressive ads. I am thoroughly enjoying the ones I am seeing during US Open, although I don’t see any mention of the Apple collaboration in any of them. 

4. IBM has an asset that they don’t seem to be able to use effectively so far – that is IBM Watson. It frustrates me to no end seeing IBM take incremental steps in pushing Watson. I think this partnership is the most fantastic way for Watson team to push its case before the biggest corporations on the planet. A Watson on every iPad ! . In fact I think rather than do the generic announcement they did – I would have preferred to see 100% of the focus on just Watson and Applecare for the enterprise. The rest seem like noise to me

5. IBM has strong alliances with many ISV partners like SAP, Oracle, MongoDB etc. And most enterprises already use solutions from these ISVs. IBM has a great opportunity to further the value of Apple alliance by building apps around what enterprises already have. 

6. IBM has sheer size in its favor . A massive overhaul of enterprise tech landscapes need armies of consultants. Apple does not have that army, and can’t recruit fast enough even if god forbid they want to do it. That is a huge advantage for this alliance. 

And finally, what is the big risk factor ?

This is largely a Global Business Services (GBS) led effort if I understood it correctly from the announcements. GBS is a well managed machine with extremely low bench at any given point. So if a massive investment is needed in headcount , time and budget – it will need to be taken away from billable engagements. That is a really hard thing to do unless another part of IBM can pick up the slack to bring in the money to keep investors happy. The only viable division that can pick up slack is the software group. Since Ginnie did not reset Sam’s 2015 EPS roadmap – IBM cannot take a lot of risk on losing focus on existing revenue and bottom line. That in my mind is what the risk is – there is a significant upside in the long term if everything works out well , but it needs making big bets in rejiggering the existing business for IBM. 

If IBM won’t take that risk ( and I REALLY hope that they will take the risk, and convince investors to cut them some slack) – then it will be business as usual for both companies, and this will be yet another partnership announcement that did not pan out. 

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