Thursday, October 29, 2009
"Driven to Perform" Podcast with Jon Reed - EPM, GRC, and the Future of SAP in a SaaS World
Jon Reed is a guru on the subject of SAP implementation skills and runs a great site called Jon Reed on SAP Consulting. He has been deservedly recognized for his contributions by SAP by being nominated as an SAP mentor. We got together to do podcast on a wide variety of subjects, including the motivation and methodology behind Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution, how SAP's EPM and GRC offerings fulfill the vision behind the book, and the skills necessary to implement the products. The conversation then turned to a topic that is hot on everyone's minds: the hype versus reality of SaaS and how SAP is responding to this important trend. You can download the podcast here or go to this page to read a fairly thorough transcript of the discussion that Jon was kind enough to create, which I would encourage anyone interested in these subjects to do. I hope you enjoy it! Let me know your feedback in the comments.
Tuesday, October 27, 2009
PivotLink Blog - Is Reporting Overrated? YES! Drilling down even further
I had the chance to meet with Ajay Dawar a couple of weeks ago, who is an old friend and someone I looked up to when we were both at Siebel Systems, and i am glad to still be in touch with him now. Ajay was an expert on Siebel's Marketing Analytics among numerous other areas, and was one of the early employees of LucidEra, one of the earliest pioneers in SaaS BI. There are few people in the industry who know about SaaS BI than him. Ajay now works for PivotLink, a leading vendor in the On Demand or SaaS Business Intelligence world with a recently revamped and now very strong management team.
After our conversation, Ajay posted an intriguing blog post on PivotLink's blog entitled "Is Reporting Overrated?" that has already got a great comments thread running including James Taylor (his excellent blog here) and Jerome Pineau (his excellent blog here):
But as to reporting specifically, for as long as I've been in this industry, and from what I can tell, as long as this industry has been around, we have not been able to get more than 20% of the users in an organization to use query, reporting, analysis, etc. tools despite continuous attempts. We've made the reporting tools significantly easier to use, with attractive options available from SAP BusinessObjects, Oracle, and IBM Cognos having been available for years. We now have a new generation of SaaS BI players like PivotLink as well as Birst, and Good Data that also do a credible job of providing the functionality that the on-premise vendors do, but with the significant TCO advantages that SaaS can provide, with a much lower time to implement, compelling UIs, and nowhere near the manageability headaches of their on-premise counterparts. Will these newer BI tools be able to break the barrier of increasing the adoption of BI technologies in the enterprise?
While I have good friends at every single vendor above and wish all of them nothing but the utmost success, unfortunately, I don't believe so. I think even vendors with very low costs and very compelling options like the aforementioned SaaS BI vendors will still hit the 20% adoption wall because although their reporting capabilities are excellent, the metaphor of the report is not what end user's want. Reports, the kind that have a grid with a lot of numbers, a number of dimensions, a few metrics, etc. require too much work to create and too much work to interpret. If I'm a sales manager in the middle of a task and I have to look at the sales pipeline report, I have to expend a lot of cognitive effort to figure out if the right filters have been applied, what this number means versus another, etc. It's a very specific metaphor whose rightful place is on the analysts' desk, not on the desktop of every user in the enterprise. Those end users definitely need the information that is contained within those reports, but delivering it in the report format is unlikely to work, no matter how easy it is to create. But, I readily acknowledge that it is too early to tell. I am an empiricist and always welcome contrarian opinions and more importantly data that refutes my hypotheses.
For those users in the enterprise who DO need reports, such as analysts, I think the SaaS BI offerings like PivotLink's and Good Data's are very compelling from a value perspective compared to their on-premise brethren, and all have their sweet spots in terms of differentiation. But that post is for another day!
After our conversation, Ajay posted an intriguing blog post on PivotLink's blog entitled "Is Reporting Overrated?" that has already got a great comments thread running including James Taylor (his excellent blog here) and Jerome Pineau (his excellent blog here):
Late last week I had lunch with Nenshad Bardoliwalla, an ex-VP from SAP’s Business Intelligence group. He has written a great book on Corporate Performance Management . He said (and I paraphrase)” that users don’t really know what to look for in a report and that information is useless without context. So even if you gave all the required reports to a customer they wouldn’t know all the right things to look for.” His point was that the BI industry needs much more than reports. Customers need guidance on what to look for.If you've read this blog or Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution, you'll know that reporting is one small part of a very rich set of capabilities needed to manage a business effectively: goal setting, risk management, compliance management, initiative management, planning, budgeting, and forecasting, predictive analytics, data mining, simulation and other types of modeling, and optimization.
But as to reporting specifically, for as long as I've been in this industry, and from what I can tell, as long as this industry has been around, we have not been able to get more than 20% of the users in an organization to use query, reporting, analysis, etc. tools despite continuous attempts. We've made the reporting tools significantly easier to use, with attractive options available from SAP BusinessObjects, Oracle, and IBM Cognos having been available for years. We now have a new generation of SaaS BI players like PivotLink as well as Birst, and Good Data that also do a credible job of providing the functionality that the on-premise vendors do, but with the significant TCO advantages that SaaS can provide, with a much lower time to implement, compelling UIs, and nowhere near the manageability headaches of their on-premise counterparts. Will these newer BI tools be able to break the barrier of increasing the adoption of BI technologies in the enterprise?
While I have good friends at every single vendor above and wish all of them nothing but the utmost success, unfortunately, I don't believe so. I think even vendors with very low costs and very compelling options like the aforementioned SaaS BI vendors will still hit the 20% adoption wall because although their reporting capabilities are excellent, the metaphor of the report is not what end user's want. Reports, the kind that have a grid with a lot of numbers, a number of dimensions, a few metrics, etc. require too much work to create and too much work to interpret. If I'm a sales manager in the middle of a task and I have to look at the sales pipeline report, I have to expend a lot of cognitive effort to figure out if the right filters have been applied, what this number means versus another, etc. It's a very specific metaphor whose rightful place is on the analysts' desk, not on the desktop of every user in the enterprise. Those end users definitely need the information that is contained within those reports, but delivering it in the report format is unlikely to work, no matter how easy it is to create. But, I readily acknowledge that it is too early to tell. I am an empiricist and always welcome contrarian opinions and more importantly data that refutes my hypotheses.
For those users in the enterprise who DO need reports, such as analysts, I think the SaaS BI offerings like PivotLink's and Good Data's are very compelling from a value perspective compared to their on-premise brethren, and all have their sweet spots in terms of differentiation. But that post is for another day!
Honored to contribute to the Customer Bill of Rights - Software-as-a-Service
On October 12, 2009, R "Ray" Wang, partner at Altimeter Group, LLC, published the first
Customer Bill of Rights - Software-as-a Service. In contrast to the closed-wall, not-invented-here traditional style of industry analyst firms, R actually solicited feedback from dozens of thought leaders outside of his firm as well as numerous firms themselves. I was honored to be asked to participate with many individuals far smarter than me and think it turned out well. My specific feedback is reproduced below so you can see the issues that I thought were particularly relevant.
1. "Issues related to software license rights. Software vendor owns the code. Licensee’s own the data. In true multi-tenancy, code cannot be client modified because a change for one client perpetuates to all clients in a multi-tenant environment. Clients must assess exit strategies. What happens if the vendor goes out of business? Is acquired by a competitor? What do you do with the data? How do you prevent lock-in?"
There are two things missing here that need to be fleshed out. The first is not the data ownership per se, but the semantics of the data. Getting flat file dumps out of the SaaS system is not valuable without the business rules that govern the data structures within which the data is stored. At Siebel, customers could purchase (under NDA) the data models and logical models of the system. I believe SaaS customers should have the same right.
The second issue that needs to be teased out that I've seen nobody address is process ownership. As you know all too well, there are core and context enterprise processes that are digitized in the customer's software through their specific configuration. In the case of highly differentiated processes, the customer should own the intellectual property of their differentiating process as embodied in the SaaS vendors software configuration. This can include the process models (notated in BPMN or some other standards-based representation) but also the specific instances of the process itself. If I were a customer, I would be extremely nervous if my vendor could take the embodiment of my enterprise's uniquely differentiated processes and offer it to someone else on the same multi-tenant infrastructure (especially a competitor), and that possibility is greatly increased in the SaaS environment.
2. "Include an entire agreement clause. Prospects and clients should ask for this right to ensure that demos, proposals, and promises made during the selection process are included in the final contract. Vendors should expect clients to include documentation as exhibits in contracts."
This has always been a gray area in software negotiations. On-premise vendors make all kinds of promises that they will never document because it would cause revenue deferral if caught. I'm concerned about the serious revenue recognition risk that vendors place themselves under when they make promises they can not keep. I think a broader point (not for this document necessarily) is that the entire revenue recognition process for SaaS companies needs to be revisited for these and many other issues related to the customer lifecycle.
3. "Perform due diligence on a vendor. Prospects should be able to examine a SaaS vendor’s financial viability, security risks, and legal liability. Key areas should include financial performance, legal risks, management team background, customer lists, and SAS 70 compliance."
The SAS 70 issue needs to be teased apart further. I believe customers deserve the right to have regular audits conducted of the vendor data center for their own purposes as well as hiring third-party auditors to do so. Some vendors refuse to share the results of their SAS 70 certification process other than validating that they have the certification, and this not acceptable to many customers for certain business processes (Hire to Retire) in certain industries (Pharma) and certain geographies (EMEA).
Finally, a general comment: I appreciate the individual tenets described under the SaaS Ownership Experience Spans a Five-Phased Lifecycle. But for each individual tenet "professional customer relations, timely and meaningful interactions" etc., I kept asking agreeing with the principle but then immediately asking myself "how should this be measured and what's the appropriate benchmark?" This should be no surprised given my background and expertise, but I think it's a critical point. Examples: Is a roadmap update every 6 months "timely"? What "format of remuneration" is acceptable without putting undue burden on both parties? I expect that much of this information is not available given the infancy of the industry, but this would be a very valuable area of research for Altimeter or others in the ecosystem to pursue.
You can see the full document here:
AG Customer Bill of Rights - SaaS - Live
Other excellent coverage of this topic follows:
A 'Bill Of Rights' For SaaS Customers
Customer Bill of Rights - Software-as-a Service. In contrast to the closed-wall, not-invented-here traditional style of industry analyst firms, R actually solicited feedback from dozens of thought leaders outside of his firm as well as numerous firms themselves. I was honored to be asked to participate with many individuals far smarter than me and think it turned out well. My specific feedback is reproduced below so you can see the issues that I thought were particularly relevant.
1. "Issues related to software license rights. Software vendor owns the code. Licensee’s own the data. In true multi-tenancy, code cannot be client modified because a change for one client perpetuates to all clients in a multi-tenant environment. Clients must assess exit strategies. What happens if the vendor goes out of business? Is acquired by a competitor? What do you do with the data? How do you prevent lock-in?"
There are two things missing here that need to be fleshed out. The first is not the data ownership per se, but the semantics of the data. Getting flat file dumps out of the SaaS system is not valuable without the business rules that govern the data structures within which the data is stored. At Siebel, customers could purchase (under NDA) the data models and logical models of the system. I believe SaaS customers should have the same right.
The second issue that needs to be teased out that I've seen nobody address is process ownership. As you know all too well, there are core and context enterprise processes that are digitized in the customer's software through their specific configuration. In the case of highly differentiated processes, the customer should own the intellectual property of their differentiating process as embodied in the SaaS vendors software configuration. This can include the process models (notated in BPMN or some other standards-based representation) but also the specific instances of the process itself. If I were a customer, I would be extremely nervous if my vendor could take the embodiment of my enterprise's uniquely differentiated processes and offer it to someone else on the same multi-tenant infrastructure (especially a competitor), and that possibility is greatly increased in the SaaS environment.
2. "Include an entire agreement clause. Prospects and clients should ask for this right to ensure that demos, proposals, and promises made during the selection process are included in the final contract. Vendors should expect clients to include documentation as exhibits in contracts."
This has always been a gray area in software negotiations. On-premise vendors make all kinds of promises that they will never document because it would cause revenue deferral if caught. I'm concerned about the serious revenue recognition risk that vendors place themselves under when they make promises they can not keep. I think a broader point (not for this document necessarily) is that the entire revenue recognition process for SaaS companies needs to be revisited for these and many other issues related to the customer lifecycle.
3. "Perform due diligence on a vendor. Prospects should be able to examine a SaaS vendor’s financial viability, security risks, and legal liability. Key areas should include financial performance, legal risks, management team background, customer lists, and SAS 70 compliance."
The SAS 70 issue needs to be teased apart further. I believe customers deserve the right to have regular audits conducted of the vendor data center for their own purposes as well as hiring third-party auditors to do so. Some vendors refuse to share the results of their SAS 70 certification process other than validating that they have the certification, and this not acceptable to many customers for certain business processes (Hire to Retire) in certain industries (Pharma) and certain geographies (EMEA).
Finally, a general comment: I appreciate the individual tenets described under the SaaS Ownership Experience Spans a Five-Phased Lifecycle. But for each individual tenet "professional customer relations, timely and meaningful interactions" etc., I kept asking agreeing with the principle but then immediately asking myself "how should this be measured and what's the appropriate benchmark?" This should be no surprised given my background and expertise, but I think it's a critical point. Examples: Is a roadmap update every 6 months "timely"? What "format of remuneration" is acceptable without putting undue burden on both parties? I expect that much of this information is not available given the infancy of the industry, but this would be a very valuable area of research for Altimeter or others in the ecosystem to pursue.
You can see the full document here:
AG Customer Bill of Rights - SaaS - Live
Other excellent coverage of this topic follows:
A 'Bill Of Rights' For SaaS Customers
SaaS Customer Bill of Rights: right thing, right time
Altimeter Report: Customer Bill of Rights – Software-as-a Service
"Driven to Perform" Featured in Quick’n'Dirty Podcast
Jennifer Leggio was my colleague at Hyperion Solutions in 2005 when we launched System 9 to the market and distinguished herself as a very talented PR professional whom I'm privileged to say is still my friend. She writes a very popular blog on ZDNet called Social Business and is also a perennial presence on Twitter. She's forgotten more about social media than I know! She also runs a podcast series called Quick-n-Dirty on on blogtalkradio and was kind enough to feature me in their August 27, 2009 podcast 12 which you can download here or play directly here.
And this week we highlighted my former co-worker and current performance management thought leader Nenshad Bardoliwalla (@nenshad). He knows how enterprise technology and enterprise 2.0 operates better than most people I know. Definitely worth a follow.Thanks a lot for the shout-out Jennifer! Please take a moment to check out all of the Quick-n-Dirty podcasts including this one. Jennifer and her co-host Aaron Strout's styles are very witty and they have a great rapport with their many excellent guests. And after listening to this podcast, if you still haven't picked up a copy of Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution, what are you waiting for?
Performance Management: Getting Everybody On the Same Page in the Supply Chain
The three co-authors of Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution wrote an article for Material Handling Management called Performance Management: Getting Everybody On the Same Page that specifically discusses how Driven to Perform can help you improve your performance in Supply Chain Management.
Some highlights are below, but be sure to read the whole article!
On the challenges of modern supply chain management and how performance management can help:
On metrics that matter to break open corporate siloes:
On embracing a holistic view of supply chain performance:
Some highlights are below, but be sure to read the whole article!
On the challenges of modern supply chain management and how performance management can help:
Actively managing the performance of your supply chain has never been more important. Increased globalization, volatility in demand and commodity costs, regulatory requirements and greater dependency on suppliers and other partners have significantly increased the risk of doing business. Knowing inventory positions, delivery dates and fill rates is not enough. You must also understand the impact of supply chain changes on total cost or cash flow and optimize supply chain effectiveness for better corporate results. This requires end-to-end visibility into factors that drive performance — such as cash-to-cash cycle times, overall supply chain cost and the quality of order fulfillment.
On metrics that matter to break open corporate siloes:
In today's IT-heavy supply chain networks, plenty of data points exist. In any given situation, however, only a few numbers are truly important. Unable to identify the right key performance indicators (KPIs), managers may focus only on improving the measures under their immediate control — an approach that fosters silo thinking and frequently sacrifices overall supply chain network effectiveness. For example, isolated focus on capacity utilization may result in excess inventories.
On embracing a holistic view of supply chain performance:
Quarterly snapshots of supply chain activities alone won't cut it anymore. With each passing day, the need for modern modeling and optimization processes becomes greater. If you don't have a detailed, real-time view of your supply chain, you will be unable to compete in today's marketplace. A limited view will also prevent you from aligning your supply chain strategy with your corporate goals. With the right supply chain performance management architecture, you will be able to manage an extended, globally dispersed, responsive supply network; use models to view the performance of your network; execute based on visibility gained by closing the loop; link strategy to execution; and systematically measure, monitor and optimize strategy and performance.You can find much more detail about supply chain performance, risk, and compliance management in Driven to Perform. Enjoy!
The Road to Strategy-Driven Execution - Part I - The Business User’s Fantasy - Enterprise Applications That Enable Strategy-Driven Execution
I have long believed in the unification of transactional and analytical systems and have been working towards building systems that deliver on this promise for close to a decade. My co-authors and I used the term “Strategy-Driven Execution” in Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution to describe this desired state. We have come to a point from a business perspective where companies will not survive if they do not unify their insights and action systems to speed-of-thought latencies and where the technology to do so has made this a real possibility.
In the last five pages of “Driven to Perform”, we discussed the end-game for enterprise applications that would enable strategy-driven execution.
Imagine a board meeting five years from now. It is easy to imagine a meeting, for example, to discuss a downward trend in profits. Instead of having to discuss what questions should be studied and brought back for later review, it should be possible to ask and answer questions right then, using a performance management system that allows drilldown into all the relevant areas. For example, the CFO should be able to look at the trends in all of the components of net income. Perhaps the CFO discovers the most obvious cause of the declining income is increased costs in a particular product line. The VP of Supply Chain looks up the product line and identifies increased costs in a category (such as feedstock or oil). Then the VP of Procurement looks up that category and identifies spend breakdown and determines to identify alternate sources of supply. It is not hard to imagine that alternate sources are presented on the dashboard. One could be chosen and submitted for a risk review. The Chief Risk Officer can pull up a dashboard and start to determine if there are unacceptable risks. The head of customer service can report on any quality problems that may have had an effect on the market. The VP of Sales can look for other contributing factors reported from the field that may have dampened sales. The VP of marketing can analyze how to reshuffle resources to prop up demand in the desired area. During all this, the CIO and CTO can both beam happily now that everyone is speaking the same language. At the next board meeting, it would be just as simple to see if the adjustment worked. The VP of Procurement could show the costs from the new supplier. The VP of Supply Chain’s dashboard shows that costs have gone down and so the product line margin is looking good again. The CFO agrees and indicates to the CEO that the revenue on the dashboard is trending back up.
It is possible to imagine an even more advanced integration of performance management, risk and compliance management, and business process management. In a world in which a company is run according to explicitly defined end-to-end processes, it will be possible to look at a goal that the company is trying to achieve in an integrated fashion. One side of the goal will be the business process used to achieve that goal, another side will be the performance management metrics that are used to track the progress of the execution of the process, and the third side would be the risk indicators and compliance processes that must be performed as part of that processes.
Strategy-Driven Execution - The Complete Fusion of Goals, Initiatives, Plans, Forecasts, Risks, Controls, Performance Monitoring, and Optimization with Transactional Processes
Any goal in business involves all three of these dimensions, but now they are treated more separately than they should be. Any attempt at optimization involves all three as well. The end result of this kind of strategy-driven execution is the ability to rapidly reconfigure your business with confidence that no important issues are being ignored.
Excerpted from Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution (Nenshad Bardoliwalla, Stephanie Buscemi, and Denise Broady, New York, NY, Evolved Technologist Press, 2009). Copyright © 2009 by Evolved Media, LLC
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