THINK IT Services

Years ago, I considered the week leading into Labor Day as the final hurrah of the Summer and tried to preserve it for an end of season vacation to cap off the warm weather months in New England. Then my kids became school age and schools started kicking off before the holiday weekend. (Don’t get me started on this silly practice.)

Now, the tech industry is also making a habit of getting back into stride for the new Fall season before the dog days of August are behind us. One of the important annual venues for kicking off the new season of activity is VMworld.

This year’s event is generating plenty of news, especially regarding cloud-oriented acquisitions and alliances. Here’s a quick sampling:

• VMware Acquires Integrien and TriCipher 
• Verizon and VMware to Launch Enterprise-Class Hybrid Cloud Solution 
• BlueLock Introduces VMware vCloud Datacenter Service with CloudConnector 
• EMC Transforms Management of the Private Cloud, Ionix Unified Infrastructure Manager 2.0 Now in Customer Beta
• Citrix Acquires Virtualisation Firm VMLogix 

Why all the buzz surrounding this event?

Virtualization is one of the critical building blocks for creating cloud computing environments and VMware has become a key player in the cloud computing marketplace. As a result, a widening array of tech companies, service providers and channel organizations are aligning themselves with VMware. At the same time, other virtualization vendors are trying to keep pace with VMware’s capabilities and strategies.

This week’s acquisitions, alliances and other announcements are just the latest illustrations about how this marketplace is evolving and the competitive landscape is shifting.

For instance, performance and access management are pivotal pieces in a public or private cloud computing environment. This is the reasoning behind VMware’s acquisition of Integrien and TriCipher, and part of the thinking that drove Citrix’s acquisiton of VMLogix.

So, while the Dell/HP bidding war over 3Par has captured plenty of attention, other industry players are staking their own claims on a share of the rapidly expanding cloud computing market opportunity.

There have been a series of acquisitions over the past few weeks which clearly illustrate how the competitive landscape in the tech industry and beyond is being fundamentally changed by the rapidly evolving cloud computing phenomenon.

The two most recent examples came this week. The first was CA Technologies’ acquisition of 4Base Technology, a virtualization and cloud infrastructure consulting firm, which CA plans to use as a cornerstone of its expanded cloud computing professional services capabilities. This is the latest in a series of acquisitions which CA has made to transform the company from a software-only to a multi-dimensional corporate portfolio which personifies its new CA Technologies company name. CA’s transformation echos the moves of other players seeking to become one-stop shops for hardware, software and services. The most significant of these was Oracle’s acquisition of Sun Microsystems.

Intel made an even more dramatic acquisition this week with its announced plans to purchase McAfee. This acquisition moves Intel into the Softwae-as-a-Service (SaaS) based security solutions market by embedding security software functionality into a chip. Paul Otellini, Intel’s President and CEO, put the acquisition into perspective by stating in the company’s announcement, 

“In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences.”

These moves come on the heels of a series of other acquisitions over the past few months aimed at repositioning various technology and business services vendors seeking to capitalize on the burgeoning cloud computing market.

Less newsworthy, but equally intriguing have been the following acquisitions:

• ADP’s acquisition of Cobalt, a digital marketing services vendor, in July. This acquisition was the latest example of ADP’s efforts to offer a widening array of business and information services to make itself a more strategic, single-source of a full lifecycle of business services, such as marketing solutions.
• IBM followed ADP’s example by acquiring Unica,a marketing software solutions vendor, early this month augmenting its middleware and infrastructure enablement capabilities. IBM clearly stated its goals regarding the Unica acquisition in its announcement,

“Assembling transformational capabilities to help clients create…relevant cross-channel brand experience to promote customer loyalty and satisfaction…This acquisition along with IBM’s recent acquisitions of Sterling Commerce and Coremetrics will enhance IBM’s ability to support customers increasing demands in this growing market.”

• Salesforce.com’s acquisition of Jigsaw earlier this year was also aimed at redefining the company’s capabilities and helping to reposition it in the market.  Jigsaw’s online lead generation database will feed essential data into Salesforce.com’s SaaS-based customer relationship management (CRM) solution, making it easier for the company’s users to satisfy their needs. Jigsaw also provides analytics regarding the productivity of users’ sales efforts. As a result, Salesforce.com is able to now transform itself from a SaaS company to a business or information service provider offering Data-as-a-Service (DaaS).

The commonality of all of these acquisitions is not only that they extend the scope of the companies’ corporate portfolios, but that they do it by adding SaaS capabilities to their delivery methodologies.

These are just some of the ways various technology and software companies are transforming their businesses through acquisitions to capitalize on and  better target today’s quickly growing cloud computing opportunities. They also open a Pandora’s Box of ancillary organizational and go-to-market challenges for the acquiring companies.

Mark Hurd’s sudden resignation as HP’s CEO has opened a floodgate of speculation regarding who the company will select to succeed him.

Because his departure wasn’t anticipated, there are no clear-cut internal candidates. And, because Hurd himself was a surprise selection for the post in 2006, it is possible that another little-known industry executive may be tapped again for the position this time around.

So, this creates a wonderful opportunity for anyone with a passing interest in HP’s future, and the future of the technology industry as a whole, to throw a few names in the hat.

The HP CEO position is particularly intriguing in part because it has grown to become the largest IT vendor in the industry through a series of acquisitions of Compaq, EDS and others. More importantly, HP like the rest of the IT industry is at a pivotal crossroads brought on by the disruptive forces surrounding cloud computing, globalization, the consumerization of IT, mobility and the economy.

As a consequence, HP and every other established technology (and software) company has to re-think their corporate strategies, redesign their products and services, and restructure their go-to-market tactics.

For HP, this means realigning its hardware, software and service capabilities to more effectively leverage the ‘cloud’ so it can more effectively responding to customers’ rapidly changing requirements and expectations, and compete in an increasingly competitive marketplace.

I was first prompted to think about potential HP CEO candidates immediately after Hurd’s resignation when I was asked by a top-flight headhunter for my quick suggestions and came up with the following names off the top of my head:

• Joe Tucci, EMC’s CEO who has transformed the company from a hardware-centric to a software-driven business model and pulled off a similar feat at Wang Computer where he moved the company from hardware to services. EMC and HP’s corporate capabilities and challenges have many similarities.
• John Chambers, Cisco Systems’ CEO who has successfully transformed the company from a corporate network infrastructure vendor into a multidimensional technology supplier to everyone from major service providers to small office/home office (SOHO) workers. Under Chambers’ leadership, Cisco has withstood every economic and competitive challenge, and is now moving into the data center where HP has made much of its living.
• Marc Benioff, Salesforce.com’s CEO who has transformed the software industry by leading the Software-as-a-Service (SaaS) charge and evangelizing about the added business benefits of moving to a broader array of cloud computing alternatives. If Salesforce.com isn’t going to be acquired by Oracle and Benioff made CEO under Larry Ellison, he would be a great candidate to push HP’s legacy software business into the new world of SaaS and its hardware business into the cloud.
• Steve Mills, IBM’s Software Czar, who has used an aggressive acquisition strategy to recast the company into a powerful middleware vendor within a similar set of hardware, software and service businesses which HP possesses. As a result of his success with the software division, Mills was recently given responsibility for managing IBM’s IBM hardware, storage, and operating systems businesses. But, Mills is also facing a mandatory retirement barrier to further advancement and could put his experience to good use at HP.

My friends, Chris Hoffmann and Scott Donahue at TripleTree, where I am a senior advisor, suggested that we put our heads together to broaden the candidate list. Here’s what we came up with:

• Michael Capellas- He has successfully stepped into even tougher situations at Compaq (now part of HP) and MCI/Worldcom, and is well respected in the tech industry and beyond.
• Bill Campbell - Current Intuit Chairman and former CEO, but more importantly he has been a key advisor at Google and Apple, and is also very well respected in the tech industry.
• Kevin Johnson- Former rising star at Microsoft now running Juniper Networks who understands HP’s products and channels.
• Anne Livermore- Runs HP’s Enterprise unit which brings together its hardware, software and services businesses. He’s been passed over many times but might be the safest best as an inside pick.
• John Thompson- Former CEO, and current Chairman of Symantec, recognized the importance of moving to SaaS but couldn’t overcome channel resistance.
• Meg Whitman - If the Governor thing fizzles…she’s a proven, capable leader who will be looking to prove herself again.
• Ray Lane- Ran Oracle as President, then became an early proponent of the virtues of SaaS as a top-tier VC.
• Charles Philips- Has been driving Oracle’s acquisition strategy and runnng a major portion of its operations. He’s just beginning to learn about the hardware business as a result of the Sun acquisition, but he’s a quick study and forward-minded.
• Jon Rubinstein - Ex-Palm, Ex-Apple…might be too much of an engineer but interesting match for HP. Understand mobility which is where the world is heading, and can help HP fully exploit its Palm acquisition.
• Ed Whitacre- Just announced his resignation from GM where he quicklygot the behemoth back on track with no prior industry experience. Before that, he also pulled together SBC and AT&T, and could bring HP’s far-reaching assets together. He’s in his early 60’s, so it might be a stretch to see him as a long-term CEO at HP. However, he could bring stability until HP cultivates a new leader for the longhaul.   
• Diane Greene- Former CEO of VMware revolutionized IT with virtualization, a key component in HP’s future. Might be too techie, but certainly understands the opportunities and challenges.
• Shantanu Narayen - Well respected, but not well known CEO of Adobe which is a key player in the web development world which is driving cloud services.
• Vivek Paul- CEO of Wipro, known as a visionary in outsourcing, now in private equity, with the global experience which will be essential going forward.

If these industry stalwarts seem too mundane, here are a few frivolous ideas to think about for fun:

• Brett Favre – nominated by my Minneapolis-based friends at TripleTree who worship the indecisive quarterback as a brilliant turnaround artist.
• Joe Montana – my football oriented alternative because of better winning record and Bay Area roots.
• Simon Cowell – he is a tough-minded task-master with time on his hands since he left American Idol.
• Oprah Winfrey – knows how to build businesses and a worldwide following, and might be willing to put aside her upcoming year of long goodbyes as she departs her syndicated talk show.
• Tony Blair- the consummate negotiator who would be a perfect candidate to address the myriad of channel issues which will arise if HP adopts an aggressive SaaS/cloud computing strategy.

As you can see, Mark Hurd’s resignation has given us a great way to while away the dog-days of August with various ideas. I hope this gives you plenty of food for thought for the weekend and welcome your suggestions as well.

Nothing sells the value of a product or service better than demonstrating its utility in the context of a popular social cause. This marketing tactic not only illustrates the functional capabilities of the product or service, but also helps the vendor build goodwill in the marketplace.

This isn’t a new idea. Companies have been giving away their products and services in support of popular causes for years.

Now, the ‘on-demand’ and ‘cloud computing’ industries are using this marketing technique to illustrate how their solutions can be utilized in real-world situations. One of the most prominent examples is Salesforce.com’s 1/1/1 model which dedicates 1% of the company’s employee time, software licenses and corporate equity to social causes, including nonprofit agencies.

The most recent example to cross my radar-screen was Axeda’s “Where’s Leslie?” promotional campaign in association with this past weekend’s Pan Mass Challenge (PMC) bikeathon.

Many of the followers of THINKstrategies know that I’ve been participating in the PMC for the past four years. For those of you that aren’t aware of the PMC, it is the largest and most cost-effective athletic fundraising event in the U.S., raising over $31 million over a two day event which attracts over 5200 riders and another 3000 volunteers covering multiple courses which span 192 miles from the middle of the state of Massachusetts to the tip of Cape Cod.

Axeda is a Foxboro, MA-based provider of a cloud application development platform which enables manufacturers, solution providers, and system integrators to rapidly build powerful machine to machine (M2M) applications to connect products and systems to create new business models and revenue opportunities.

Leslie Baker, a technical support engineer at Axeda, decided to ride in the PMC in honor of her late father, and Axeda capitalized on the opportunity to show how its cloud-based application development platform’s advanced rules engine, geofence capabilities, and Axeda Custom Objects can be configured to track her progress along the route.

Specifically, Axeda used an Enfora Mini MT edge device with a Wyless SIM card to create an application which sent latitude-longitude data via location-based services to track Leslie’s exact location during the ride.

Axeda also created a microsite which integrated with Twitter to send tweets as Leslie reached pre-defined milestones, and displayed local weather updates along the course based on zip code information leveraging Yahoo Web Services.

In sum, it was a timely and practical use case for Axeda’s cloud-based, M2M application development platform capabilities.

(Click here to learn about my PMC ride and to contribute to this extraordinary cause.)

Although announcements regarding new rounds of funding are relatively commonplace in the tech industry, whenever a Software-as-a-Service (SaaS) company is able to boast about their latest vote of confidence among investors it is worth noting in these tough economic times.

But, Xactly’s announcement this morning that it had garnered a new round of $12 million in funding was especially newsworthy because it also included a “strategic new investment” by Salesforce.com.

Speculating about who Salesforce.com is going to acquire next has become a popular parlor game in the SaaS industry over the past few years. The company has done an admirable job acquiring a variety of companies which have helped to extend its service delivery capabilities, as well as expand its application functionalities.

Some of its acquisitions, like Jigsaw, have been announced publicly. Others, like GroupSwim, have been done quietly.

While there has been speculation that Salesforce.com will move into a variety of new areas, there have been few instances when it has made strategic investments to stake a claim in a new market segment. The most notable example was its investment in FinancialForce.com last year.

Today’s announcement may be an indication that Salesforce.com is inching into the sales performance management (SPM) business. If this is the case, Xactly is a good candidate because it has seen significant growth over the past year, recently picking up Haliburton and Xerox, among others.  Steve Cakebread, a former senior executive at Salesforce.com, is also a senior business advisor at Xactly.

Whenever Salesforce.com makes an acquisition or strategic investment it runs the risk of stepping on the toes of other AppExchange partners. This investment in Xactly is no exception as it is sure to raise concerns among other Salesforce.com partners in the SPM business, most notably Callidus Software.

(Disclosure: Xactly, Salesforce.com and Callidus Software have been but are not currently THINKstrategies clients.)

One of the more interesting sagas in the Software-as-a-Service (SaaS) market has been SAP’s effort to develop and deliver a competitive offering.

After a series of fits and starts over the past three years, SAP is hoping the latest version of its SaaS-based Business ByDesign (ByD) system which was made generally available today will finally hit the mark.

As I reported in this space in May, I was briefed by SAP (a THINKstrategies client) at its Sapphire user conference about the significant investment it has made retooling the ByD service delivery infrastructure and user interface to make it more appealing, economical and competitive. On the infrastructure side, the 2.5 version of ByD boasts a truer multi-tenant architecture to make it more scalable. The user interface is more intuitive and easier to configure.

Today SAP unveiled three new ’starter kits’ in Feature Pack 2.5:

1. Customer Relationship Management (CRM) starter package which the company says can be implemented in approximately three weeks at a fixed implementation price of $13,500 (EUR 9,900) and subscription fee of $89 (EUR 79) per user.
2. Enterprise Resource Planning (ERP) starter package which can be implemented in approximately six weeks for a fixed implementation price of $37,500 (EUR 24,900) and subscription fee of $149 (EUR 133) per user.
3. Professional Service Provider (PSP) starter package which can be deployed in approximately eight weeks for a fixed implementation price of $45,000 (EUR 34,900) and subscription fee of $149 (EUR 133) per user.

While the latest offerings clearly illustrate the company’s determination to deliver a solid SaaS solution, the real measure of its success will be its market uptake from a customer and partner perspective.

Now that SAP has addressed some of the key technological and application design deficencies of ByD, it must overcome the go-to-market challenges in order to win over new customers and partners to prove it has regained a competitive edge.