Storm vs Cloud

Once again, Mother Nature dashes the best laid plans of men. The Friday storm took down Amazon’s cloud data center in Virginia (once again). The storm disrupted power supplies for much of the greater DC area, including Amazon’s US-East-1 region. Apparently the backup power came online too late, and a data center’s worth of virtual servers needed to be restarted. It took Amazon about 24 hours to fully restore cloud services.

This time the cloud crash took down some big names including Netflix, Instagram, and Pinterest. I assume these tech leaders did not choose Amazon’s remote failover capabilities when they set up their cloud based businesses. Simply using the cloud does not insulate anyone from operational problems at data centers. The cloud can be effective provided the service providers and their customers apply normal risk analyses in setting up cloud implementations – remote failover is one response to weather related risks that needs to be considered.

In fairness, it is likely that many on premises data centers were affected by the power outage. These needed to configure their applications for likely risks as well. It’s just that with all the cloud hype, the failures on premises are ignored as are the successes.

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Hype, Mixed Messages, Snark, and Cover-up

The convergence of cloud, mobility, and consumerization of business technology make a competitive environment for ERP applications even tougher. No vendor can deploy all the answers today. This leads to exaggerated claims and snarky counter claims by the big ERP vendors. Larry Ellison shows why he is the king of controversy with his recent claim of 100 cloud apps.

Larry Ellison claimed in his Oracle Cloud presentation last week. I’ve just checked, and his exact words were “Over 100 enterprise-grade applications running in the cloud.”

Analysts wonder just what Ellison is talking about.

Indeed, Ellison at one point boasted that Oracle was eating its own dog food by running four of its own cloud apps, and a familiar list appeared on the screen: Fusion Sales and Marketing, Fusion Financials, Fusion Talent Management, and Fusion CRM. (When these four apps appeared on the screen, I couldn’t help asking in a Tweet where the other 96 apps were.)

The analyst consensus is that Oracle is creating hype through an ever changing definition of what is and isn’t an app. This hype is kicked into high gear when Ellison claims SAP doesn’t get cloud.

For example, Ellison claims that SAP has done nothing in the cloud except for its acquisition of SuccessFactors, and that it will have nothing otherwise in the cloud until 2020. He conveniently overlooks SAP’s five or seven year effort to develop Business ByDesign, a full-suite multi-tenant cloud ERP system, which SAP has has sold to over 1,000 customers.

Yeah, Ellison is doing his normal thing again. The real question is what value is there for Oracle customers in what has been announced. Frank Scavo finds the cover-up that Ellison’s hyperbole is designed to push behind the curtain.

Back-channel discussions indicate that nearly all Oracle Fusion application sales are for cloud deployment, not on-premises. It appears that this is the case not because Fusion can only run in the cloud (like Salesforce.com or Workday) but because Fusion technical requirements are so complex that virtually no organization wants to deploy Fusion Apps on-premises. It is easier to simply turn over the infrastructure and application management activities to Oracle.

The Oracle Fusion Apps are too complicated to run on-premises? This is a major technology fail event hidden behind bluster and snark. The whole argument behind the cloud is that cost are controlled by having the vendor deal with the application. However if it is too complex to run on premises, the vendor may be able to manage the apps from behind the curtain in the cloud – but not at a competitive cost.

HarrisData revealed our approach to consumerized technology at our recent user conference. Yes all the typical checkmarks are included (cloud, mobility, analytics) . However the metric underlying our approach is whether the new consumerized technology is easier to deploy than our prior releases. This ease of deployment is a key software engineering goal of the project. The economic justification for time invested in ease of deployment: lower cost deployment for our customers on premises equals higher ROI for customer projects with an added benefit of lower cost deployment and higher ROI for us behind the curtain in the cloud. Better outcomes for customers always create better outcomes for vendors, it is a virtuous circle. It is simply stunning that other vendors miss this key principle of application development.

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To Boldly Go Where No One Has Gone Before

[CEO presentation at this year’s user conference, ed.]

Charting a new course
Where to go?
How to get there?

As CEO, my focus is on leading HarrisData and our customers to a successful future. That requires answering a couple basic questions.

Where to go?
Key trends pointing the way:
Smart phones and tablets are changing the way people interact with computers

    Mobility and multiple devices
    “Touch and speak” interfaces
    More iPads shipped than PCs by any single manufacturer
    Fastest adopted technology in human history

“Consumerization” of technology

    There’s no instruction manual for the internet
    There’s no menu for the internet

The most important change facing business application vendors today is the Consumerization of IT. After years of hype about Cloud / Mobile / Apps, the extraordinary adoption of tablet computers and smart phones represents a major change in the way people interact with software. In the past we could count on new hires being familiar with Excel and Word style point and click interfaces and menus. The new hires today know Google, Facebook, and Twitter – applications that do not have menus, that are optimized for touch screen and voice interfaces, and are so intuitive that little training is required to operate them. Further these new hires often operate more than one device at the same time, Twittering on the smart phone, searching on the tablet, and checking Facebook status on their laptop. The actual devices are not selected by corporate IT, but by the user themselves who bring their own device(s) and expect to be able to use them at work. Our challenge is to let our employees be consumers of devices while handling the back end applications and security necessary to a business environment.

How will application users react?
Study enterprise application users to find out how they respond

    Engaged leading user interface design firm projekt202 to help find out
    Watched real people do real tasks using new devices and interfaces

“Surprised and delighted”

With such a fundamental change in the way enterprise applications are organized in front of us, HarrisData engaged the experts at projekt202 to learn what users wanted, how to organize work flows, and how users reacted to the new approach. Several normal people (users of HRIS applications) were asked to participate in the study. We watched from afar (real-time over the internet) as these people attempted to perform normal tasks using the new approach. One by one they were presented a tablet featuring the new software and let at it without any training or explanation. I particularly enjoyed watching one skeptical person rant about how strange and inappropriate the application was, then plunge in, and about 5 minutes later start singing its praises! The results from this study: users were “surprised and delighted” with the new format.

User-centric interface
Most enterprise applications can be improved dramatically using new techniques

    Organize
    Collaborate
    Adapt

New HarrisData Workspace

What is this new format? It is a way of presenting an enterprise application which eschews menus and allows users to organize their work, collaborate with each other, and adapt the workspace to their own needs. Organize, collaborate, and adapt are the three core capabilities that consumer technology does well. Adding these techniques to enterprise software is what Consumerization of IT is all about. The new HarrisData workspace achieves the consumerization of HarrisData’s software.

The RTI Software Division has a workspace for CRM that got us thinking quite a while ago. Note that while it adheres to conventional “Windows” standards, it does provide user centric features. Tabs for task lists, collaborative work flows, and adaptability (via the IT department) are all present. It is a very effective way to manage a variety of tasks that come about when helping people through a support issue or sales cycle. This is a good starting point, but more industrial than consumer oriented.

Applying what we learned the new HarrisData workspace adds capability while achieving consumer orientation. Search, Favorites, History, routine tasks (what you want to do), assigned tasks (what your boss wants you to do), and alerts allow the user to have everything at their fingertips and organize it all as they see fit. Note, not a menu in sight!

How do we get there?
Server-centric architecture

    access from any device (mobile or desktop)
    Better security
    Integration via web services
    Cloud deployment options

Device-independent interface

    Windows, iOS, Android, what’s next
    Rich “touch and speak” clients
    Integration with common client features

How do we get the new HarrisData workspace to you? First we leverage a strong server-centric architecture for enterprise applications. The core processing, security, and data are kept on the server where it is easier to deploy, manage, and control. The server can be on premises or in the cloud. Web services allows extension of enterprise functionality and integration to peripheral systems (such as your e-Commerce site). The client is device independent, it runs in a browser and works with any device you user / consumers choose. At the same time the workspace can access common client device features (e-mail, contact lists, calendars, cameras) as needed. Since consumer devices like smart phones and tablets are the most stolen / lost / replaced items in our world, it is extremely important to keep the data and security on the server side so nothing is lost / and new device setup is a snap.

How do we get there?
Use Industry Standards

Use proven Frameworks

On a technical level, the key is to avoid Apps. Apps are device specific, must be independently developed and maintained, and require user effort to update on the device. Remember, users will bring their own devices anyway, it is our task to see that they are productively utilized. In response, the industry has developed core standards for consumerization which accomplish all that Apps do, but without the hassle. Use of these standards ensures operability across all devices. Proven frameworks including Sencha Touch and PhoneGap provide consistent feel and access to device capabilities. IBM’s Cognos provides delivery of BI and Analytics via consumer devices (it still requires report creation the old fashioned way).

How do we get there?
Build a common interface
Add web services layer to current applications

    Re-architect server processes as needed

Connect interface to current applications

    First project: HRIS
    Next project: CRM
    More to follow

To summarize, HarrisData is developing a consumerized, browser based workspace interface for all our applications. We are adding web services to all our applications, redefining processes where needed. Today we are introducing our new HRIS – a complete payroll and human resources application utilizing everything we have learned and featuring the new HarrisData workspace. Our next project will be the RTI Division’s CRM applications CustomerFirst , SalesFirst, and WebFirst. The rest of our applications will follow.

HarrisData is boldly taking all our applications to the new consumerized IT environment. No other enterprise vendor has done this, although several have dabbled with point apps alongside their applications. Expect “surprised and delighted” users / consumers at your organization in the near future.

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Cloud, Mobility, and Big Partners

IBM recently announced new PureSystems and PureFlex hardware for inhouse cloud deployment. The good news is, as Frank Scavo notes

For some reason, Oracle, Microsoft, and IBM are able to make life easier for small developers.

Thus HarrisData achieved certification on the PureFlex platform for its entire suite of products with little fuss.

For a comparison, Scavo looks at SAP as it rolls out Mobility technology and encourages its partners to develop apps for customers.

But for a hint of what it’s like for a small developer to work with SAP, take a look at this blog post (on SAP’s own SCN community site!): Why Does SAP Make This So Complicated?

I am pleased HarrisData competes with SAP and partners with IBM.

The other interesting commonality between the IBM and SAP announcements is that Cloud and Mobility are now re-energizing hype by merging into one giant hype machine. Big partners provide lots of development tools and the hype, while small developers provide the apps that actually do anything related to the cloud or mobility. While mobility makes sense in certain applications (mobile payroll or accounting seem odd), and cloud makes sense for some companies and not others (buy vs rent), the combination is presented as more global than either alone. This misses a key point: mobile (now in the form of tablets rather than smart phones) is preferred because the touch based user interface is easier to learn and navigate than mouse based point and click interfaces. Very few modern ERP functions involve lots of keying (thank the growth of e-commerce like EDI, web based sales, and ACH plus scanned employee time and inventory transactions). Many of these functions are a natural fit for the tablet. This is especially true if the mobility is within the walls of the company office, and much expensive PC infrastructure is no longer needed. That the tablet still works outside the walls is a bonus. HarrisData is developing our software to take advantage of this increased ease of use.

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Cloud Security, Full of Holes and Bugs?

Maybe not full of holes, but certainly the Cloud requires us to think carefully about what we are doing. Mel Beckman addresses the top 5 vulnerabilities of the cloud:

Each of the three cloud service models has at minimum one unique security vulnerability, and cloud services in general share a couple of serious security risks. I’ve found five vulnerabilities that are significant because they’re so often overlooked, even when they’re easily addressed.

Mel cites inadequate passwords and the need for multifactor authentication, a problem which hackers are all too ready to exploit. Add the need for encryption of the cloud conversation (including authentication) using something like SSL 3.0. Then there are factors only your cloud vendor can control, but you need to confirm: the virtual server “snapshot problem” where others have access to virtual memory pages including all encryption keys; backup redundancy (does your backup provider back up its own datacenters and how well); and treatment of API keys as data rather than keys to be secured. For the full explanation of each vulnerability and how to address it, please read the full article.

Charles Babcock finds a security bug caused a major cloud service outage at Microsoft.

A process meant to detect failed hardware in Microsoft’s Azure cloud was inadvertently triggered by a Leap Day software bug that set invalid expiration dates for security certificates. The bad certificates caused virtual machine startups to stall, which in turn generated more and more readings of hardware failure until Microsoft had a full-blown service outage on its hands.

The bug was part of a customer workload, reminding us that in the cloud your neighbors’ bad habits affect you. Given the nature of the bug, any regression test from the Y2K days should have captured it. One customer neglected this old standby quality requirement impacting Microsoft and many of its customers.

Art Wittmann puts it all into perspective regarding what to consider before using the cloud, before wrapping your head around the above risks of using the cloud properly and safely.

If you’re a weekend warrior and you need a tile saw, jack hammer, or concrete chainsaw for a small project, you go rent one, even though you know that a single weekend’s rental price is probably a quarter of the price to buy the tool. But if you lay tile for a living, you buy your own tile saw. The point is that for very infrequent use, the price of the rented tool almost doesn’t matter. You need it when you need it, and you don’t want to own it under almost any circumstance. If you have computing needs like that, the cloud is for you.

He identifies very creative use of the cloud for development and proof of concept activities prior to moving production in house, as well as using the cloud for “burst mode” capacity needs for a limited timeframe. The idea is to be flexible and creative about using the cloud, but do not forget about the advantages of on premises for your day to day workloads.

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Welcome to a New Partner

Thank you to Tom Kempster and ABC services for their fine introduction to our new partnership.

“Our partnership with HarrisData will free our ERP customers from the chains of their existing ERP software, allowing ABC Services to deliver new high performance IBM Power solutions to these customers,” said Hal Schwartz, Vice President of ABC Services.

ABC Services shares our focus on the cutomer’s end results, and will help package hardware and technical services together with HarrisData software to deliver modern technology to our customers for a lower cost of ownership, faster implementation, and more predictable benefits and ROI.

Be sure to visit ABC Services blog for up to date explanations of IBM Power Systems technology. A good place to start is Tom’s explanation of cloud computing.

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Multitenancy: Panacea and Problem

Multitenancy is a buzzword getting a lot of attention these days. Over at ZDNet, Eric Lai started quite a conversation looking at what he felt were Four Big Problems with Multitenancy from an enterprise application space. Frank Scavo replied that the post was a Mischaracterization of Multitenancy in his blog.

Multitenancy is an interesting word. You won’t find it in a dictionary (unless you use Wikipedia’s definition as your dictionary – and even that definition is still considered suspect by the Wikipedia editors almost two years after first appearing). It’s a word that conveys an obvious meaning on a vendor’s or expert’s slide, and probably shouldn’t need a strict definition. But we’re in the technology business, and folks like to debate what words mean. Even the National Institute of Standards and Technology (NIST) definition of cloud computing contains only one reference to ‘multi-tenant’, and it’s only used in the definition of the term ‘resource pooling’. Multi-tenancy and cloud computing looks at the definition of multi-tenant by starting with the definition of a tenant – in which there is some ambiguity. Let’s ignore the strict definition of the word multi-tenant and use a more pragmatic definition. A multitenant solution allows two tenants to share resources with the express desire to lower cost.

With that background, here’s three things to ponder when considering the next claim that a product is or isn’t great because it is multitenant:

  • Business requirements matter
    I’ve commented on this before, noting that Multitenant ERP Solutions are a fundamentally bad idea. Multitenant is a great cost saver for the technology end of the solution, but cannot afford to ignore the impact of SOX and other regulatory bodies on the pace and timing of change in ERP systems at real businesses. A vendor simply can’t force a SOX-compliant company to change their business processes just because one of the other tenants is now ready to change theirs. On the other hand, HR/Payroll solutions are ideally suited for multitenancy. Regulatory changes imposed by Federal, State, and Local authorities are not optional and must be deployed to all users of the HR/Payroll applications (i.e. all tenants) as quickly as possible – ready or not, here comes the regulatory change! Processes that are not subject to the rigors of auditing paralysis like ERP or to non-stop mandatory updates like HR/Payroll can be viewed through the narrow technical lens of technical costs. Sales Force Automation and CRM solutions can be ideal candidates for multitenancy because there is nothing preventing them from sharing the same applications, and most users will want access to the new features as quickly as possible.

    Bottom line: Multitenancy is not a panacea – business requirements will drive whether multitenancy is appropriate for a given application (and to what degree).

  • End user prices are market-driven
    There are many pundits who will claim loudly that multitenant solutions inherently cost less to end-users than single tenant applications. These pundits who truly believe that cost and price are related in every market skipped some days in their economics class. Commodity markets like platform-as-a-service are largely driven by price. To the extent that two software applications are virtually indistinguishable from a feature/function standpoint, the price will be the deciding factor, margins will be squeezed, and the low cost provider (who can, by implication, offer the lowest cost solution) will win. This logic breaks down quickly in application software markets. First, enterprise applications are still highly differentiated – even if only by brand. Customers are willing to pay more for one solution than another – price is rarely the deciding factor in a solution purchase (despite the claims of software sales professionals). Second, the assumption that price and cost are connected is proven invalid when end-users no longer pay to use the software. Consider mint.com, acquired by Intuit, who provides a cloud-based solution with substantially the same functionality as Quicken, but at no cost to the end user. Business models emerge to help companies turn their assets into profits. New business models may leverage multitenancy to save money and increase profits, but are not dependent on adhering to any strict definition of multitenancy to make money.

    Bottom line: Multitenancy, where it can be leveraged, lowers costs for vendors. The impact on the end customer depends more on the market and the business model.

  • Economics requires choices
    A multitenant implementation of a software application may be just as easy to secure as a single tenant application using the same tools, but the risks associated with deploying an application as multitenant are undeniably higher. In the most extreme case, Payroll data combines names, addresses, salary and financial information, and Social Security Numbers in the database. A large, multitenant HR/Payroll application may be just as secure as a smaller, single tenant HR/Payroll application. But from the risk standpoint, I’m reminded of Willie Sutton. When asked why he robbed banks, he replied ‘that’s where the money is‘. By putting all of this data into one giant database with one encryption key and one super-user password, we make it all that much more attractive to hackers. The best way to keep hackers out of your HR/Payroll database is to run HR/Payroll applications on computers that are not connected to the Internet in any way. I’m not recommending that this is an appropriate solution (see my comments about the advantages of HR/Payroll as a multitenant application above), I’m only noting that buyers with different risk profiles will see the alternatives differently. We know from Econ 101 that there are buyers with different preferences. Ideally, the application is fundamentally the same (from the end user standpoint) whether it is delivered in the low-cost cloud-based multitenant mode, or in the hyper-secure unconnected on-premise single tenant mode.

    Bottom line: Customers have varying preferences, with varying tolerances for risk competing with varying appetites for growth. Some people drive cars, some drive trucks. Mutitenancy does have different risks, and is not appropriate for all applications at all customers.

Our take: We believe multitenancy creates cost advantages for ISVs like HarrisData, and intend to leverage multitenancy in whatever forms provide the most value to our customers. However, a religious commitment to multitenancy ahead of real customer requirements is just pandering to investors.

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The End User Training Arms Race

What conclusion should we reach from SAP answering Oracle’s investment in training technology? That the big ERP players care about the successful use of their products? While that spin may work for technology and financial analysts, the role of end user training in successful ERP implementation and ongoing production use deserves a deeper look.

that significance is tempered by the sorry state of training content and the unfortunately legitimate attitude of many a CIO that spending big on training is wasted.

Given the state of end user training offered to ERP users just about anything can be viewed as an improvement. The specific problems as training is delivered today include:

most training content doesn’t match implementation reality, training only happens at the initial time of implementation, and training is usually dumped into user’s heads during mind-numbing day-long classes, which means that it is forgotten the moment the class is over. Not to mention the fact that few companies refresh their end-user training during the enterprise software lifecycle, nor do they bother to train new hires.

Thus ERP customers appear justified in concluding that end user training as delivered is not worth the cost.

So are the Oracle and SAP investments in training technology about increasing the value of end user training?

with the similar goal of driving advances in training into its customer base, and thereby building a solid training revenue base. Those goals have largely been dashed in the ensuing three years, not because UPK isn’t a good product — it most fundamentally is, and enjoys a significant penetration in the SAP customer base as well as the Oracle customer base. The problem is that the value of training has never been elevated to meet the technological advances

Not that anyone can tell. More likely these investments are a continuation of the technology acquisition arms race aimed at increasing revenues streams and mollifying technology and financial analysts. They are a continuation of the big footprint / me-too strategy followed by too many technology firms. Acquire more functions than your competitor, acquire more services teams than your competitor, acquire more BI than your competitor, and now acquire more training technology than your competitor. This is a strategy that focuses on analyst and stock market perceptions exclusive of value delivered to customers.

This leaves open the key question: is anybody actually improving the value delivered in training? HarrisData is doing just that.

For example one major component of implementation costs is end user training. End user training is provided as a last step before going live. For customers with multiple locations to be trained, end user training may be repeated at each location. Post implementation, end user training is repeated as employee turnover impacts the user base. Additional end user training is required for specific topics tied to infrequent activities (e.g. year end payroll processing). Over the life of an information system end user training is a big need. How then can the cost be brought under control? HarrisData is developing a library of end user training chapters to be provided on demand to our customers. The library will include suggested (or custom) syllabus complete with course tracking by individual user. Subscriptions to the library will allow customers to ensure that their users are trained as needed for predictable (and affordable) cost.

A strategy focused on partnership with the customers to the exclusion of analysts increases value to customers.

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US Labor Costs Lower Than Elsewhere

More good news for US manufacturers as per unit of output labor costs decreased by 13% while increasing everywhere else. James Hagerty and Kate Linebaugh (Wall Street Journal, “In U.S., a Cheaper Labor Pool”, 1/6/12) report on manufacturing cost trends since 2000, and they are positive for US manufacturers.

Though the U.S. is hardly a low-wage country, it has become much more efficient, making it more attractive for global manufacturers. U.S. wage growth has been minimal, and manufacturers have found ways to use more-flexible work practices and increased automation to make the same amount of goods with far fewer people.

Other positives for manufacturers include a weaker dollar, and lower energy costs from the shale gas boom. High US taxes remain a problem. The authors predict a growing manufacturing sector with stable manufacturing employment.

This article confirms trends we have seen elsewhere – manufacturers are looking at the total cost of getting products to their customers. That means balancing low cost per unit / low wage imports with low inventory costs of lean production in local high productivity factories. Investment in automation is the key to high productivity – and that includes modern machinery as well as modern ERP software.

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2012 Could be a Good Year

Boosted by productivity gains and higher costs in competitors, including China, U.S. manufacturing exports have grown at their fastest rate since the late 1980s.

As we close out 2011 and start thinking about 2012, US manufacturing is getting positive reviews in many places. Joel Kotkin ranks the cities best prepared for a manufacturing recovery. Joel credits improved competitiveness for a return of manufacturers.

Randy Myers looks into the reasons for the ongoing resurgence of manufacturing, providing some details behind the improved US competitiveness. First he cites annual wage inflation in China of 15-20% for closing the gap on labor costs.

While wages account for only a fraction of the total cost of many goods, that still means the ultimate savings from outsourcing to China will, for many products, fall to the single digits.

Next up are IP theft concerns – with manufacturers finding Chinese partners adding their own plants to produce competing products with purloined designs. Subsidizing the competition is a tough cost to calculate, but one now considered more frequently in deciding where to produce.

The final factor is the largest. Transport and inventory carrying costs now exceed labor savings from offshoring.

found itself having to carry more inventory once it started manufacturing in China, just to account for the six weeks it took for new product to reach its warehouses… [vs] as little as two to three days of inventory for many of its products. It also has dramatically pared transportation costs.

TM Lutas expands on the benefits of local production versus offshoring by identifying a new path for US Manufacturing growth.

Methods used by “catch up” countries to do technology and expertise transfer from the US are not one way processes. We can do it in the other direction.

In his example, find something not manufactured in the US, start in China to learn their process, then duplicate here. In all US manufacturing can expect to grow from increased competitiveness, return of offshore production, and onshoring production of new goods. Further, this growth could generate 2-3 million jobs and a much brighter 2012.

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