Category Archives: Lens360

Large-Enterprise Financials – A Less Scary Path to the Future

Most people are risk-averse. Growing up, my parents certainly were. And it has long been clear that most large-enterprise CFOs are. So it has not been that surprising that the Office of the CFO has been cautious in adopting Cloud-based solutions, regardless as to whether any of their fears are substantially justified or not.

No doubt, pockets of next-gen solution adoption have been occurring for some time throughout Finance, although mostly around the periphery. Cloud players such as Adaptive Insights, Host Analytics and Tidemark are having strong success in the business planning and budgeting space. Niche players such as Avalara and Kyriba are likewise enjoying strong demand in the Sales / Use Tax and Corporate Treasury segments respectfully. And providers of Cloud-based core Accounting / Financials targeting SMBs and mid-market firms have likewise seen some solid success, including firms such as Intacct, Kenandy, FinancialForce and especially NetSuite – as well as newer next-gen versions from Sage, Epicor and Infor, all of whom have been heavily investing in / reinventing their solution sets.

For the largest of enterprises, though, we still haven’t yet seen the explosive growth in core financials anticipated only a couple of years ago. To some degree we have viewed this as a “chicken or the egg” issue – as until the last year or two, large enterprises lacked robust / fully fleshed out / credible financials / accounting offerings to evaluate and choose from.

However, that has been changing – as four options are now available to serve the unique needs of this high-end market segment. NetSuite has been having some success going upmarket with its two-tier financial consolidation play for a couple of years now. Oracle has come to market with its Fusion Financials Cloud Service, and both Workday (see recent Lens360 blog post) and SAP now have much richer and more powerful solutions that can support the needs of the largest of enterprises.

As part of our focused 2014-2015 research program on Cloud Financials, last Continue reading

The Curious Incident of the HP Announcement

The immediate fallout from this week’s big #HPbreakup announcement reminds me of one of the great bits of dialogue in the Sherlock Homes story “Silver Blaze.” The scene goes like this:

  • Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?”
  • Holmes: “To the curious incident of the dog in the night-time.”
  • Gregory: “The dog did nothing in the night-time.”
  • Holmes: “That was the curious incident.”

In short, while something important and influential happened, the dog gave no alarm. It provided an extremely important clue in the case.

As I write this, we are more than one business day after founding titan of the IT industry HP announced that it would split itself into two separate, but related, provider firms. Each will deliver $50B-plus in annual revenues; each will be publically traded; each will address a large segment of a rapidly-shifting IT marketplace.

Tens of thousands of employees are being directly affected. Thousands if not tens of thousands of channel partners, developers, and other ecosystem members will be affected; as will millions of users within thousands of customer firms.

Yet, after a flurry of blog posts and business news articles immediately before and after the announcement, there is significant quiet in the industry. One telling factor: HP is not listed among the top ten topics in either Google Business or Technology Continue reading

HP’s New Mantra: Divide and Conquer

After intermittent speculation going back almost a decade, Hewlett-Packard Co. (HPQ) has announced that it will split into two separate companies: Hewlett-Packard Enterprise, and HP Inc. The split is projected to be completed by the end of HP’s fiscal 2015, which is 31 October 2015.

Hewlett-Packard Enterprise is expected to “build upon HP’s leading position in servers, storage, networking, converged systems, services and software as well as the company’s OpenStack Helion cloud platform,” while HP Inc. will be built around the more commodity-oriented PC and printer groups. In short, HP Inc. will retain the company’s current logo and continue the company’s legacy cash-cow business (albeit with planned expansion into 3D printing and various “creative” efforts focused on portable computing devices), while Hewlett-Packard Enterprise will be the large customer-oriented, Cloud-catalyzed, integrated services provider enterprise Master Brand.

Current HPQ CoB and CEO Meg Whitman will be President and Chief Executive Officer of Hewlett-Packard Enterprise; Pat Russo has been named as Chairman of the Hewlett-Packard Enterprise board. Interestingly, Whitman will also be the chair of the HP Inc. board, with Dion Weislerto to be President and Chief Executive Officer of HP Inc. The two companies will each be publicly traded, and are being positioned as being “independent” from one another despite the strategic, C-level-plus-board-level overlap with Whitman.

Saugatuck sees this split as significant in two ways: One, obviously, because it is a significant strategic move by one of the oldest and most influential Master Brands in IT. The other, because it shines a brilliant spotlight on how the IT business has changed in very sweeping and fundamental ways over the past several years, and how much Continue reading

IBM Needs to Learn the “Other” Software Business

A recent IBM briefing for Saugatuck helped to clarify the breadth and depth of IBM’s Cloud / SaaS portfolio, business strategy, approach, and results. We came away with two key net takeaways:

I.         IBM certainly has a broad, deep, useful, and valuable SaaS portfolio. Almost quietly, it’s long-standing positioning as a provider of software, but not applications, has shifted. Mostly through SaaS acquisitions, IBM today is a very significant and competitive business applications provider. One big example: the $1.3 billion acquisition of HCM / Talent Management SaaS provider Kenexa in 2012 (see Forbes article).

According to our recent briefing, IBM’s SaaS portfolio now includes over 120 busienss applications – across a range of functional roles (e.g., customer service, finance, human resources, marketing, procurement, sales) and solution categories (e.g., advanced analytics, BPaaS, Smarter Cities, Watson). By our estimates, IBM is already realizing more than $1B in annual revenues from this portfolio, and we expect Big Blue to at least double their current SaaS revenues within the next 18 months as this portfolio continues to grow (by acquisition and internal development) reach 150-200 by YE2015.

II.         But given the acquired nature of much of that portfolio, IBM still faces substantial needs for, and challenges in, organization, coordination, integration, and go-to-market approaches for the assembled Continue reading

SAP Concur Acquisition Illustrates the New Digital Business Enterprise Model 

SAP has agreed to acquire Cloud-based travel and expense management provider Concur Technologies.  When completed, the deal will be the most expensive acquisition ever for SAP, ranking above SAP’s 2010 $7.1 billion acquisition of Sybase Inc. It will also be a Top 10 all-time software or Cloud / SaaS acquisition in terms of total price paid. Concur shareholders will receive $129 per share, a 20 percent premium over Wednesday’s closing price of $107.80. The 21-year-old, Bellevue, WA-based Concur had been known to be shopping for a buyer, with most rumors indicating SAP or Oracle as the most likely acquirers. The publicly-traded firm posted fiscal-year 2013 losses of $24.4 million on revenue of $546 million.

Saugatuck’s first take is that, while buying Concur may not improve bottom-line profits immediately, SAP does get another significant stream of Cloud-driven revenue; Cloud-based providers’ revenues are growing increasingly faster than traditional software providers. SAP also adds more Cloud expertise and presence overall, especially expertise in marketing and supporting Cloud-based financial software. With 23,000 clients and 25 million users through 150 countries, SAP also gains a business transaction network similar to its 2012 acquisition of Ariba. According to SAP CEO Bill McDermott, the addition of Concur would mean Continue reading

Who’s Innovating? Tell Us Today!

On November 12 2014, Saugatuck Technology Inc. will recognize leading-edge firms that have developed, and profited from, innovative adaptations and applications of Cloud, mobile, social, and advanced analytics.

The 3rd annual Beacon Awards for business innovation are an integral aspect of Saugatuck’s annual Cloud Business Summit. Each year, we identify and recognize select firms that have developed creative and innovative means of adapting and applying digital business technologies to improve existing operations, enable new ways of doing business, or create entirely new businesses. The typical gains include current and future monetary savings, improvements in company organization and management, and creation or enablement of opportunities that would otherwise have been impossible – or even unimagined.

We know that there are hundreds, if not thousands, of firms trying and applying these technologies to enable and create competitive advantage. If your firm is one, or if you know of any firm making such efforts, let us know so that we can recognize them with the 2014 Beacon Awards.

Now through September 30, 2014, you can nominate your firm, your customers, or your partners. Click HERE for more information and for details on how to submit a nomination.

Nominations must be submitted via email to Saugatuck at Chris.MacGregor@SaugatuckTechnology.com, and should include the following information:

  • Nominated Company: Please provide the name of the company and executive being nominated, along with their full contact information (including phone and email).
  • Submitted By: Please provide the name of the person and company who is submitting the nomination, along with their full contact information (including phone and email).
  • Nomination Submission: In 500 words or less, please provide a summary description of the nominated company’s digital business efforts and results for the Beacon Award committee to consider. If you have supporting evidence that you would like the committee to review, such as a case study, or a video, please attach or provide links.

Continue reading

Microsoft Surface: Don’t Unplug the Patient While Vitals are Improving

Saugatuck’s ongoing research model is built on a foundation that we call the Boundary-free Enterprise™, a model of “free-range” business enabled by varying, and often innovative, applications of Cloud, Mobility, Social IT, and advanced Analytics.

It’s in that context of Cloud-first, mixed-generation work computing that I spent time this weekend reviewing Microsoft’s Surface tablet development and progress. The Surface line has been widely reported to have cost Microsoft as much as $2B over the past two fiscal years – an amount that has some IT industry analysts and business reporters calling for its cancellation. I think that the vital signs tell us that it’s much too early to pull the plug on this patient.

Source: Computerworld, from Microsoft and SEC documents

Source: Computerworld, from Microsoft and SEC documents

To my mind, the way to look at it is this: Over two years, Microsoft has spent less than 1% of total company revenue on tablet PC R&D, while establishing and building market share, and building a trend that could result in profitability within the next fiscal year.

Computerworld published the graphic below as part of an examination of Microsoft’s Surface investment. Assuming that these numbers are correct, and we have no reason to doubt their veracity, in one fiscal year, Surface revenue has almost tripled, while the gap between Surface revenue and cost of that revenue has been cut by 1/2, with the resulting red ink has also Continue reading

Apple Watch and iPhone 6 Lead The Way for IOT Adoption

Today Apple announced a new line of iPhones, the long rumored Apple Watch, and their long-rumored payments system Apple Pay, which is built off of NFC capabilities, coupled with their Touch ID system. Amid the announcements, one thing was absolutely clear across all the devices, and services, that Apple announced: The Internet of Things is here, and Apple is leading the way.

Across the new devices, the presence of more sensors, chips, and processors points to how device and application makers like Apple and its App Ecosystem are focused on gathering, processing and reacting to more real-world inputs. Already iPhones are an impressive array of sensors for such a small package, and the new iPhones add an NFC chip, a gyroscope, a barometer, as well as the new M8 Motion processor, designed to help App Developers take advantage of all these new motion tracking chips without overloading the processor and draining the battery life. Additionally, the Apple Watch adds additional sensors to the ecosystem, an additional accelerometer, a heart rate Monitor, a gyroscope, an NFC chip, and a haptic feedback chip. With multiple overlapping capabilities between iPhone and Apple Watch, app developers will have an even more complete picture of how you are interacting with your environment, and how to appropriately interact with you.  Continue reading

Call for More Nominations: Saugatuck’s Beacon Awards for Business Innovation

What firms do you know that have innovated, improved themselves, and profited from Digital Business initiatives? Tell us about them, so we can tell the world about them through the 2014 Beacon Awards for business innovation.

Every year, the Beacon Awards recognize user enterprises that have re-thought, re-invented, or built new businesses, created new opportunities, or reshaped the future of their company, their markets, and their customer/partner ecosystems through the innovative use of Cloud and other digital technologies.

Past winners have implemented creative mobility strategies that improve customer engagement, cultivated new software development approaches that improve business operations, and developed software+services that productize internal operations into industry-beneficial solutions.

Now through September 30, 2014, you can nominate your firm, your customers, or your partners. Click HERE for more information and for details on how to submit a nomination.

Nominations must be submitted via email to Continue reading

Workday Update – HCM in Full Stride, Financials Gaining Traction

Last week we had the opportunity to get briefed by Workday on its Workday 23 release, with a focus on its Financials suite. On Friday, I also took the time to fully absorb the transcript from Workday’s second quarter fiscal 2015 earnings call, as published by Seeking Alpha (good read – highly recommend).

It is clear that the company remains on a tear, as it reported second quarter revenues of $186.8 million, up 74 percent from a year ago – with “anticipated total revenue of approximately $760 million to $770 million” for the year (up 62-64 percent year-over-year), and subscription revenues ranging from “$592 million to $602 million, reflecting year-over-year growth of 67 to 70 percent.” Total derived billings for the year are anticipated “to be approximately $940 million to $960 million.” That is right – nearly $1 billion!

There is little doubt that the HCM product line continues to drive the boat, with an expanding arsenal of add-on products (e.g., recruiting) that is significantly increasing the average contract value per customer. Workday now reports that it has over 700 HCM customers, which is a good jump up from the 500 + reported at the analyst event associated with Workday Rising last September. On the HCM side they clearly can now scale to the largest of enterprises, having announced Bank of America as a new customer with 300,000 seats.

On the financials side, Workday is likewise gaining traction – reporting that it now has 100 customers for its Financial Management application. This is up from the roughly Continue reading