The debacle that has consumed the implementation and rollout of the U.S. government’s Affordable Care Act and its website, healthcare.gov is not directly associated with supply chain business processes but then again, we can certainly extract the learning when one considers large-scale ERP or online fulfillment systems implementations.
Perhaps our readers, especially our IT audience have been keeping-up with the saga of the information-technology development and service providers pointing the finger at one another as to the initial dismal response of the healthcare.gov web site. This author can certainly relate to this saga and our IT focused readers can relate all too well. Upon following the events, this author questions the original plan for cross-vendor program management as well as the overall system’s scalability and operational testing. However, what really caught our eye yesterday was a report from Bloomberg that indicates that the U.S. government has now drafted the external assistance of some tech heavyweights.
According to Bloomberg, the U.S. government has enlisted computer engineers and programmers from Google, Red Hat, Oracle and other information technology companies to assist in remediation efforts. It’s a literal, all hands on deck effort, and is being directed by a newly appointed overall project director. Reports indicate that overall project management has been realigned with UnitedHealthcare Group’s Quality Software Services unit now overseeing the entire operation.
Bloomberg cites names such as Michael Dickerson, a site reliability engineer on leave from Google who is working on improving the stability of the web site, Greg Gershman, innovation director at Moborno is assisting on improving agility of the development process. Even Larry Ellison of Oracle has offered his company’s technical and database engineering resources to aide in remediation efforts.
Here’s the learning, at least thus far.
When a major systems implementation is in trouble, stop hiding the reality. This is the era of social and the Internet, and news travels rather quickly, in spite of any efforts to spin-up a different story.
Next, bring in the real experts, those that have demonstrated proven skills in large-scale systems development and implementation, and bring them in when the obvious is concluded- the system has a major problem. If you’re the President of the United States, and your signature program is in trouble, you have the opportunity to call on the best tech minds, engineers and developers to assist, and that seems to now be happening.
By our view, healthcare.gov will get fixed, the question is when, at what cost, and at what political fallout. This is somewhat akin to a large-scale ERP implementation or online commerce systems implementation, only far more visible.
Recently, ERP technology providers have rushed to take advantage of today’s buyer preferences for adoption of more cloud-based applications that can surgically be inserted to support specific business processes. They effect of that strategy has come home to roost for the major players.
This week, SAP AG reported a 23 percent increase in third-quarter profits but the winds of currency and buyer preferences impacted the growth of software license revenues. Total revenues climbed a mere 2 percent to slightly over €4 billion, compared with a 14 percent growth rate a year earlier. According to business media reports, revenues for the company’s core software licensing businesses actually decreased by 5 percent overall, including 13 percent in the Americas and 9 percent in the Asia regions. License sales in the EMEA region increased by 8 percent. Cloud subscription revenues more than doubled in the quarter to €191 million and claims to have 33 million cloud subscribers. Looking toward its final quarter, SAP executives forecasted an overall 10 percent excluding currency fluctuations. That would imply an aggressive sales effort in the very important upcoming final fiscal quarter.
In mid-September, rival Oracle also reported a mere 2 percent increase its fiscal first quarter revenues, continuing its trend of two challenging quarters of revenue growth. Oracle does not breakout its revenues for cloud based application and indicated that revenue from the combination of new application software licenses and cloud subscriptions grew 5 percent in the quarter. First quarter profits rose to approximately $2.2 billion, compared with just over $2 billion a year earlier. Looking forward to the remainder of the fiscal year, Oracle indicated that combined software application and cloud subscription revenues growth would range from a negative 4 percent to a gain of 6 percent in constant currency, a rather wide range.
ERP vendors have a special challenge, they have to convince customers that their current cloud computing offerings have a more compelling value proposition that those of existing best-of-breed cloud-based vendors. Recent cloud-focused acquisitions have had a slower record of integration with existing applications with elongated timetables, and that probably accounts for why buyers are shopping the field.
The other more subtle challenges is that ERP vendors have built a legacy of staffing and overhead directed at supporting traditional direct sales of applications while cloud-based sales are more developed by longer-term relationship selling.
Supply Chain Matters is wrapping up our attendance at this year’s Oracle OpenWorld , not necessarily our overall impressions. We will provide our summary impressions posting early next week after assimilating all of the information we have gathered.
Readers can view our previous event postings by clicking below:
As we prepare for a flight back to the office, we will share a few additional impressions garnered over these past days.
- In his keynote, President Mark Hurd boasted that Oracle continues to invest $5 billion in product development and research. That is a significant sum for an enterprise software and technology company, especially in the current era of financial engineering of corporate balance sheets. In the case of Oracle, the company affirms that this development removes the burden of customers to engineer their solution needs. Many of the blizzard of products announcements made at this year’s conference were most likely a result of that investment. The question is do customers really care? After listening in on a large panel of select Oracle customers, it appears clear that customers do care and now demand that technology vendors do the heavy lifting for integration and seamlessness of implementation. That should be a message to other technology vendors as well.
- Continuing on that theme, we continue to be impressed at how mature technology and software customers have become. While vendors can continue with glossy PowerPoints announcing the next big solution for business processes, customers are now inclined toward show me the evidence and let me talk with those who have implemented the solution. That is good news for all, tech and industry alike.
- Make no mistake that Oracle’s strategy is focused on being the big tech disruptor. What was announced this week will motivate further tech industry developments, although Oracle refuses to publically declare pricing of these new products. There were some potentially profound database and underlying infrastructure product announcements made at this year’s OpenWorld, which should manifest themselves in supply chain, B2B, procurement, online fulfillment and predictive analytics capabilities in the weeks and months to come. That will be goodness.
- The trash talking between Oracle and SAP on who has the best database and information analysis platform once again broke out after just a day of OpenWorld. What we are clearly hearing from customers, particular business and functional in role is they do not give a damn who’s platform is better. They have business challenges to solve most very day and where technology can overcome that challenge in speed, cost , agility and cost of ownership, than that is where they will invest.
- We continue to applaud Oracle’s efforts to offer influencers full access to customers, either in panels or customer sessions. Not all software vendors are that open.
- Our most favorite session this year concerned Oracle allowing 11 of the brightest computer user interface professionals this author has ever witnessed to demonstrate some of the most mind-blowing yet elegant concepts in presenting large volumes of information on mobile devices. It was awesome and exciting to view what is coming in technology.
Finally, we extend our sincere thanks to the Oracle internal and external corporate communications teams, especially Karen Hartquist for going the extra mile to make our visit to OracleWorld productive and meaningful. They were all dedicated and helpful.
For this particular commentary we focus on Oracle’s family of supply chain management applications.
Somewhat similar to SAP, Oracle umbrellas the leadership of its supply chain development umbrella to include a wide swath of related support applications. That includes supply chain planning, warehouse and transportation execution, supplier collaboration, procurement, product lifecycle management (PLM) and business intelligence. The addition of the procurement side is rather new, transferring from the financial applications and PeopleSoft side, and perhaps a strong indication of deeper support for direct materials and broad-based supplier network procurement business process needs. Having such a wide swath reinforces the need for technology support to span the complete value-chain requirements from product introduction to product retirement, and from order to cash.
As noted in our previous commentary, for this author, this will be my eight OpenWorld conference and thus I provide a historic context. As the industry analyst for AMR Research in 2000-2001, I introduced the market and clients to the initial capabilities of Oracle’s then supply chain planning suite. A lot has transpired since then.
Value Chain Planning (VCP) within the Oracle E-Business Suite is now much more mainstream in customer adoption. One of the most strategically important acquisitions for the VCP team was that of Demantra, which has now garnered lots of customer acclaim in demand sensing, S&OP process and other product demand facing business process support needs. Adding more reinforcement, I had the opportunity to sit-in on a customer panel of four VCP customers at this event and walked away with the impression that this suite of applications is now being deployed in far broader vertical industry settings, such as oil and gas equipment and complex discrete, and delivering discernible value. The same can be stated for the warehouse management and transportation side, and the previous strategic acquisition of G-Log. The addition of the new Release 12.2 of Oracle E-Business Suite with its Online Patching features to support high availability application needs will certainly add more capability for VCP and broader supply chain focused customers.
Moving forward, Oracle’s supply chain umbrella will likely take two dimensions, the above noted suite of behind-the-firewall application support capabilities and the new generation of Fusion Supply Chain Management cloud-based applications. Our commentary from last year’s OpenWorld noted a rather thin and fuzzy timetable related to Fusion Supply Chain Management. A year later, some progress has been made in Distributed Order Orchestration and Order Promising, along with some compelling features within Fusion Master Data Management. The future timetable now includes new features manufacturing execution, lifecycle PLM and other areas. The missing link to the previous fuzzy timetable we believe was the need for further Oracle-wide developments in engineering the cloud-based infrastructure and middleware components including in-memory row and columnar database processing and a switchable cloud database as well as other developments. Now that the infrastructure side of Oracle is reaching the pinnacle of its efforts, the applications side must now crank-up its efforts and demonstrate to customers how cloud-based applications can be more appealing.
By our view, Oracle has all of the elements to enable both a supply chain control tower form of capabilities along with deep predictive analytics applied to supply chain resource planning needs. However, cranking the applications development side of Oracle has its own set of challenges. We’ll see what the future holds.
We are blogging from the Oracle Open World Conference being held in San Francisco this week. Yesterday, we posted our initial commentary and we pen this posting on Tuesday evening of the conference.
The principle themes of the Tuesday keynotes were once again focused on Oracle’s product announcements in the area of database, cloud and engineered systems. What is becoming much clearer is the ongoing product strategy related to both underlying IT infrastructure and deployment of future applications releases.
For this author, this will be my eight OpenWorld conference and thus I can provide some historic context. Peel away the multitudes of Oracle PowerPoint over this period and one gets a sense that Oracle has figured out how to compete and deploy what could be breakthrough engineered systems. What remains is expanding the outreach to business and functional audiences in the context of delivering significant business value. More on that later.
The blizzard of new product releases announced in just two days needs context for business as well as IT enablement. Executive Vice President of Development Thomas Kurian indicated that within the last 4 quarters, Oracle has produced 60 major releases of software and has updated 3600 software products. Yet, he clearly stated that the single most important project for Oracle’s engineering teams was developing cloud based infrastructure and applications. That includes cloud-based availability of IT infrastructure (aka Amazon like data center services), cloud-based database, Java related services, document collaboration, marketplace services and finally applications.
For functional supply chain, product and other business teams, that implies a vision once articulated by ex-Sun Microsystems CEO Scott McNealey fifteen or so years ago, “the network is the system”. Instead of the company’s IT budget being primarily consumed by data center, infrastructure maintenance, upgrade and rollout costs, Oracle is positioning itself to be the one-stop shop for IT services. A massive undertaking but yet, the components are starting to fall into place, at least in PowerPoint and prototype demos.
The goal post is now becoming quite visible, and as we have opined months ago, the clash of the enterprise software vendors has reached a new milestone. Oracle has thrown down the gauntlet. A series of unlikely enterprise partners is also evolving. Who would have envisioned Microsoft and Salesforce partnering with Oracle, joining previous partners EMC and Intel.
Thus far, Oracle has had time as an ally. The Fusion powered applicationsvision articulated several years ago is now becoming more concrete. The new test comes when mission-critical business applications are completely powered in private or public clouds.
Stay tuned for our next update as we share our insights on the broad supply chain umbrella of applications and what may be in-store for future development paths.
We are blogging from the Oracle Open World Conference being held in San Francisco this week. Oracle President Mark Hurd announced total attendance of this event as being close to 60,000, and judging from the logistics and attached photo of trying to traverse among the various venues, visit a restroom or secure transportation, we believe it.
The principle theme of the Monday keynotes were all focused on Oracle’s product announcements in the area of database, including a newly announced in-memory switch with accelerated row and column processing that can dramatically increase analytics applications. Enterprise blogger and friend Vinnie Mirchandani characterized the announcement as a potential “game changer”. The longer-term implication of this announcement for supply chain procurement and manufacturing professionals will be more opportunities to deploy faster and more efficient predictive analytics or remote sensor capabilities addressing supply chain related challenges. Oracle is obviously responding to SAP’s efforts in HANA powered applications, and together, functional and IT teams will benefit from broader and faster options in analyzing large amounts of data and generating either simulation based and what-if planning and execution capabilities.
In-between keynotes and interviews, this author was able to sit in on product strategy and roadmap sessions addressing Oracle Advanced Procurement and Oracle Fusion Supply Chain Management, the cloud-based deployment of oracle’s supply chain suite. We will feature more detailed commentaries regarding Oracle’s ongoing efforts in supporting supply chain, online fulfillment and B2B process needs in subsequent postings. One humorous aspect of Oracle’s roadmap focused presentations is how little time a presenter utilizes to speak to the longer-term development strategy. That in our view is a lost opportunity to engage customers and prospects in feedback.
Our summary of Monday’s sessions was that Oracle elected a focus on two strategic areas in its major keynotes, namely database and engineered systems. Applications related sessions are focused on the latest 12.2 Release of Oracle E-Business Suite. More on that aspect later.