SAP Q1 2013: a mixed bag

Image courtesy of BusinessWeek

Image courtesy of BusinessWeek

I am writing this on request. It’s hectic at Howlett Towers and this will likely be the last #evilplans post here before we launch the real #evilplans on 1st May. Keep your eyes peeled.

SAP announced its Q1 FY2013 results earlier today. Despite missing the consensus revenue forecast by some five percent, I was more concerned with the detail. This is important for a number of reasons that I will discuss over time.

First, it is important to remember that all vendors, regardless of size, should be subject to financial sanity checks. Buyers need to know that the companies they buy from have a long term future. That is especially true for companies that run their back office with a single supplier. Here, I define ‘back office’ as accounting, HR admin and CRM admin functionality. These are the core ‘things’ that all large businesses need in order to develop an efficient organization. They represent the backbone functions upon which all businesses depend and which provide the way in which they pay and get paid for the goods and services provided.  SAP is no exception.

Next, and as promised, SAP adopted a method of reporting that gives better visibility into its sources of revenue. This makes it much easier to understand the trends and business drivers, leaving less room for speculative forecasting or interpretation. On to the numbers.

My initial analysis suggests that SAP’s core ERP, BusinessObjects and Sybase businesses are declining. There was a fall of around six percent in revenue for these core items on a year over year basis. This amounted to some €38 million. In an analyst call, the company attributed this entirely to activities in Asia Pacific.  I have to take SAP at its word but I have been predicting that without a significant refresh, SAP runs out of steam on core ERP by 2017.

Elsewhere, while attention continues to be focused on SuccessFactors and HANA, I wonder what’s happening with Business ByDesign.

Jim Hageman-Snabe took a call from me on these points. His take (paraphrased):


Provides a way of radically simplifying the landscape. Quoting SAP’s own implementation of HANA, Snabe claimed the company has reduced hardware cost from €3.8 million to €0.5 million. That’s fine but then I don’t know how much HANA was needed to achieve these savings. Neither do I know the amount of retrofitting and testing necessary to achieve those savings. If SAP is to convince and benefit, then it MUST share benefit with its customers. That means ensuring that simplification also translates into reduced implementation cost. Times five software license cost will NOT cut it. As a side note, I hear that Cisco is offering ‘free’ HANA boxes to kick start its entry into the market. IBM is in the process of divesting its server business to Lenovo. That should remove another cost pressure point.

Extending the traditional business. SAP is selling BusinessWarehouse on HANA very hard. Accelerating the warehouse provides incremental value although that can amount to millions of dollars/euros in value. If SAP gets Business Suite on HANA into full production for the summer then the picture changes as SAP is then able to offer real time operational systems. This will put them firmly into competition with the cloud players which already have real time capability while providing a safe haven for those who may feel under pressure to move to the cloud but are nervous about the implications.

Open innovation – new solutions. This is the part that SAP has yet to flesh out and about which Snabe is not fully prepared to discuss. The last year, I, along with my video partner Jon Reed, have been following SAP’s startup support efforts in this business unit. We have found a number of good examples. Only the other day I met Warwick Analytics who have a fledgling solution for discovering root cause quality problems in manufacturing industries. More to come on this but the solution we discussed is genuinely exciting. The other week, I caught up with Basis Technologies. They are working on predicting customer propensity to complain or leave in energy utilities. In both cases, the business value runs many millions of dollars/Euros. And that is just two examples. My personal view is that regardless of the value HANA may bring to Business Suite and BW customers, the biggest potential is in this area of new solutions. It is SAP’s to win…or lose.


SAP is selling SuccessFactors hard and accelerating the onboarding of users for Ariba. The results speak for themselves. Cloud revenue is at an annual run rate of €900 million. Having said that, there is plenty of controversy surrounding SuccessFactors. I routinely hear of tensions between SAP and the implementation channel where the smaller SIs are ignored in favor of the big hitters. Then there is the question about how well SuccessFactors integrates back to core HR and/or whether the newer SuccessFactors products will be sold in as replacements. For now and tensions aside, SAP is leveraging its customer base well. ByDesign is a different story.

On our call, Snabe talked about wins against NetSuite and on products that are subsets of the main BYD suite, including Sales OnDemand. I can point to wins the other way. Snabe said that the mid range is continuing to buy functions with finance leading the way. I find this depressing. The cloud provides ways to transform business. If SAP is a proxy for what’s happening in the market then that isn’t the case in the mid market. More research is needed here.

Whether BYD shrivels away is an unknown. If that happens then it will be an opportunity wasted that will hurt customers and SAP’s reputation. If SAP is able to get BusinessOne into the cloud in workable form then this discussion becomes moot. BusinessOne is a very good solution and more advanced than BYD. That should not be a surprise given its maturity.

Concluding thoughts

This quarter’s results are the clearest indication of a company in transition. The fact SAP can point to a relatively small market as the reason for a forecast revenue number miss tells me that core ERP sales are fragile. The HANA and cloud replacements are coming along at a brisk pace but then buyers should not be wowed by the double and triple digit growth numbers. SAP is coming from a small base and would be rightly panned if they achieved anything less. HANA is the future at many levels but, as we will discover, SAP has numerous issues to overcome before it can declare that HANA is mainstream. Right now, Snabe is talking up proof of concept conversions. That’s all good. But I can equally point to customers who are holding back, waiting to hear SAP clarify its messaging, simplify pricing and accurately articulate benefits before they make what, for many, will be a multi-million dollar investment. They’ve been bitten before, they won’t fall for it again.

What financial analysts think about SAP does (and doesn’t) matter

Some weeks ago, Frank Scavo wrote a piece where he chided Motley Fool analyst Richard Saintvilus for a failure to fully understand Oracle’s cloud play. At the time. I said to Frank that financial analyst opinion is important from the ‘due diligence’ perspective because the tech industry is littered with great ideas that fizzled. When companies bet on technology they are assuming there is a longevity to the solutions into which they are buying and so when financial analysts piss on any company we should take notice.

However….financial analysts have a specific set of agendas: either to pump or short a stock valuation. They usually have little clue about buyer behaviour and, if my observations are correct, blank out observations that challenge their position based models. At their worst, financial analysts presume to know what is happening inside a company based upon thin data which is then extrapolated to represent ‘fact.’ Such is the case with Peter Goldmacher’s ‘analysis’ of SAP’s revenue.

He successfully goaded Arik Hesseldahl on AllThingsD to write the provocative headline: SAP Accused of Inflating HANA Growth Numbers. This was followed by Larry Dignan basically reprinting Hesseldalhl’s story. Goldmacher claims:

“If we take management at its word and believe that HANA’s two-year license growth [rate] through FY13 is about 120 percent, then this means that the other 90 percent of SAP’s license business, Apps and BI, is growing at … roughly 2 percent, materially below category growth rates,” Goldmacher wrote. “Our research and experience lead us to believe that SAP is allocating product revenue subjectively and that this is resulting in an inflated HANA growth rate. This could give the appearance of market momentum that doesn’t yet exist.”

On its face this is a damning assessment but is it as bad as Goldmacher would like us to believe? SAP’s latest results have been in the public domain for some weeks. At the time, I noted:

Then we come to the core. Here, growth is in single digits overall with analytics accounting for “high” single-digit growth. Here Snabe says that going forward, the company expects the recently announced Business Suite on HANA to boost sales.

In an earnings conversation with Jim Snabe, co-CEO SAP, he acknowledged to me that growth in the core business was in ‘low single digits.’ So what’s new here? Nothing.

SAP has known for some time that core apps growth would at best be flat to marginally accretive. That is because the latest iteration of the big money spinners are really upgrades to old products. SAP is instead pinning its future on HANA as much more than a database and anyone who is bucketing in the database camp is utterly missing the point.

HANA is much more than that. While it might have started out as a poorly thought out (Oracle competitive) database play, it is a development environment that is providing ISVs with extraordinary opportunities to rethink business processes as well as providing the real time platform for both analytics and the transactional systems. This is a big topic and given the attention span of most financial analysts, it is hardly surprising that they come to screwy conclusions.

The fact that Goldmacher finds it difficult to find solid examples of HANA momentum doesn’t mean they do not exist. The fact Goldmacher fails to back his conclusions with anything other than speculation should tell you all you need to know.

From my own experience I see plenty of HANA based innovation (Disclosure: SAP is a video client for partner innovations. We have filmed around 50 examples so far. Small potatoes in the SAP context but indicative of future momentum, some of which represent multi million dollar opportunities.)

The real problem is that SAP has yet to find a model where partner innovation can be scaled so that everyone in the ecosystem benefits. SAP is keenly aware of this and is working to fix the problem. When (not if) it does, then I suspect the doubting Thomas’s will be made to eat their words.

In the meantime, the ever positive Morgan Stanley jumps to SAP’s defence, albeit acknowledging the possibility of discounting in other areas to sweeten the HANA pot.

There’s a few things I know about SAP that are worth reiterating:

  • SAP is paranoid about getting revenue recognition wrong – there’s a team of some 70 people working on this topic.
  • SAP marketing is often haphazard. One minute HANA is an Oracle killer, next it is the future of the Business Suite. I have little sympathy for these mis-steps yet understand why they occur.
  • SAP’s obsession with ‘beating out’ Oracle is self defeating, drawing attention away from what it does best.
  • Getting HANA POCs converted to enterprise licences as Snabe has promised is the real metric to which people should be paying attention.
  • Seeing Business Suite on HANA momentum is SAP’s next main target. Watch for SAPPHIRE Now announcements. If they are thin on the ground then SAP is stumbling. If not, and customers are talking value, then Goldmacher’s worries disappear.

Accounting innovation in Australia with Xero

Last year I visited Sydney, this year it was Melbourne and as part of the gig I dropped in on Xero. It was a tremendous couple of hours that provided some jaw dropping moments.

In the above video, I spliced together some highlights from the recording session that provides some context to what is happening in the profession ‘down under.’ Key points to note:

  • Professional businesses that are willing to make transformational change experience some pain in order to develop a new culture of customer service that is cloud centric.
  • Benchmarking against industry norms is happening.
  • Recent growth for one practice was 40 percent in eight months. That mirrors what I saw from talking to The WOW Company where they are talking 50 percent growth. OK – these are only two data points but at opposite ends of the world. A trend in the making?
  • Gen Y/Millenials coming into the profession do not want to be number crunchers. They want to be business analysts and advisors that have direct client contact. Accounting has become social!
  • Professional accounting can be fun. Seriously!
  • Social tools can and do help growth. Although it is not part of this cut, one practitioner who started from zero two plus years ago reckons he gets 80 percent of referrals via Twitter.
  • Being global is a reality. One practitioner talks about servicing the needs of customers based outside Australia but with local needs.

Finally…I was treated to a flat white coffee made by Chris Ridd, managing director Xero Australia. When I asked – ‘So you know how to drive a coffee machine eh?’ The unsurprising answer was: ‘All our staff are given a day’s training as baristas.’ How cool is that?

Bonus points: here is a video I recorded with Chris, talking about the explosive growth Xero Australia has seen in the last year. They’ve gone from 16,000 to 40,000 customers in a year.

How events should be: Mastering SAP Technologies

via @mgillet

via @mgillet

Last year I attended Mastering SAP Technologies in Sydney Australia. It was my first time at one of these events and I thoroughly enjoyed myself, capturing a lot of high quality video along the way. This year, the event is in Melbourne just a stones throw from the business district. Once again, it is shaping up to be a great show. Why? What differentiates this from other events?

The first thing is that the organizers go out of their way to actively engage participant involvement. That’s not to say commercial sponsors and supporters are discouraged but it is the users who set the agenda. So yesterday for instance, there was a whole afternoon devoted to SIT (SAP Inside Track), a community organized session where the topics are chosen on the day by those who turn up.

This year, rather than have a series of round robin discussion sessions, it was organized on the basis of a series of chats with whomever wanted to get on the stage. It was done fireside chat style. That alone sets a relaxed tone.

But what really struck me was the quality and depth of question and while all those who took the stage have deep expertise in one or more aspects of SAP, they were not afraid to render opinions that would normally be considered ‘off message.’ It is this honesty that makes such a difference and serves to strip away the often marketing led ‘stuff’ that is spoon fed to attendees at other conferences.

This year I reckon there were almost double the number from 2012. That’s a great testament to the vibe this type of event encourages.

via @gapingvoid

via @gapingvoid

This year I was invited to give a presentation which I entitled: I Don’t Give a F%^k About Your Code (video) where I talked about the changing buyer landscape, the rise of LOB buyers and what they care about. I’ve not had time to time stamp the video but I got some great questions which start at around the 20 minute mark.

The slides from that presentation will go up later this week as they include images from an embargoed presentation I was given at the end of last week.

After SIT work, we were entertained by a DemoJam session with five contestants presenting whacky ideas. I like the way they do the voting – via SMS so there is no real room for gaming the voting unless you pack the room with buddies. I’ll produce one or two videos from that part of the day a little later. One includes a cannon. Go figure.

Thanks to the Eventful Group for living up to their moniker: ‘making communities thrive’ and for making the show happen. A special thanks goes to Graham Robinson for asking me to deliver a presentation to developers. It’s a rare privilege.

Endnote – during the presso, I say there was almost no representation from developers at MWC 2013. Apparently, 18 percent self of attendees identified themselves as developers. All I can say is they were thin on the ground.

The Russian EuroCloud

What’s the state of the cloud market in Russia? On a fleeting visit to San Francisco, EuroCloud VP and cloud blogger Phil Wainewright caught up with Max Chebotarev, chair of the Russian cloud interest group RCCPA, which will shortly become EuroCloud Russia.

There’s a lot of interest in cloud in Russia but a lot of it is still private cloud, Max explained. It turns out that credit card or Paypal payment is not a good way to get Russian businesses signed up for services such as or Microsoft Office 365. Corporate payment cards are not often seen in Russia and it’s a big problem for Russian companies to transfer funds across borders to make payments in Ireland or Luxembourg. If these providers were to team up with Russian payment processors, Max believes they’d make a lot more progress.

Max also talked about the upcoming EuroCloud Russia Congress, which takes place on April 24th at the Digital October venue in Moscow. Formerly known as CloudConf, this is Russia’s biggest cloud computing event.

Show notes

0:43 All about EuroCloud Russia Congress on April 24th
1:25 State of the cloud market in Russia
1:48 Advice for global players coming to Russia
2:28 Why international payment issues are holding back SaaS
3:18 Local partners are needed to explain concepts like CRM
4:08 There’s distrust of cloud but hosted email is now gaining ground
4:48 Some companies count on the cloud to hide data from the authorities

Glossary: CIS = Commonwealth of Independent States, the former countries of the Soviet Union.

Co-innovation: myths and reality

innovationSoftware vendors are cozying up to customers big time. The market for greenfield sales is done, there will be an occasional shuffling of the deck chairs but that’s pretty much it. Any future growth and especially in ERP has to come from revisiting the customer base to sell them more. But what do you do if they have the full ERP suite? This is where co-innovation comes in.

Earlier in the week, I was musing on the topic with Vijay Vijayasankar, formerly associate partner at IBM and now part of Vishal Sikka, executive board member SAP’s team who are tasked with helping customers build new classes of application. The idea is that customers take advantage of HANA, SAP’s much discussed in-memory database and development environment. To date, much of the action has been around working with customers on the one hand and encouraging the developer community on the other hand.

In a piece entitled, Co-innovation – It Takes Two To Tango, Vijay makes a number of important points, starting with:

I am of the firm opinion that a vendor should not claim innovation on any product or service – only a customer should. I am in two minds these days on whether analysts and bloggers are good judges of innovation. But till I get some clarity of thought, I am going to stick with customers as the sole judge.

I am with Vijay on this. Customers are always the final arbiters of what is and is not innovation. But then he makes the crucially important observation:

One reason for this balance being hard to strike is because vendor solutions are not always outcome based. Almost every customer has budget to make more money – be it revenue increases or cost reductions. But not all vendors and customers can articulate IT solutions in the context of a business solution. It is an in-exact science to begin with.

This is where we diverge. My sense is that technology companies are overly fond of talking technology without necessarily engaging the business in ways that matter. Customers on the other hand also do a less than stellar job in articulating what needs to happen. End result? Often chaotic, rarely optimal and a continuation of the ‘geek v suits’ arguments that plague the industry and deliver little value back to customers.

I have met customers who do ‘get it’ and will be publishing a video I shot with one CIO who talks about two issues: speed to outcome and change management.  What needs to change?

Four steps to successful co-innovation

  1. Customers and vendors need to meet each other half way. It’s not enough to finger point when things don’t work out the way they were initially thought.
  2. Consultants need to spend far more time in the pre-blueprinting phase getting to know about customer needs. Starting off with ‘we need a bank systems refresh’ is hardly a good basis for project and technical assessment.
  3. Vendors – or rather the consulting organizations – need to get away from the constant change order mentality that says something like: ‘anything that deviates from plan is a change order and you need to pay us more money because we didn’t budget for that.’
  4. Much is made of top level buy in but in reality you need top level engagement all the way through to the people who will end up using the new system. Engage users early and often, iterating along the way.

This is not an exhaustive list but it is a good place to start and one for which there is evidence of success. And in fairness to Vijay, he makes many of the points in his own way. There is one more step though that the industry sorely needs. Vijay kind of references it where he says:

Vendors will need a solution that they can lift and shift to other customers . That will typically mean – some features specific to the given customer they are working with might not fit a “framework” model. Customers on the other hand will want an out of the box solution that they don’t need to customize any more.

The days of having a solution custom built that will deliver single business value are done. Sooner or later, everything gets commoditized. Going one step further, value achieved is not about the functionality a company thinks will give it an edge but about the way it implements, the degree to which it handles change and the way it uses the softwares in the context of the business process problems it is solving. The truly innovative companies quickly discover this and once they have siphoned off value, move onto the next thing.

Vendors on the other hand should always be looking for ways in which they can take what they’ve learned from projects and push it to a wider audience. Claiming ‘custom’ for everything doesn’t wash. If, after the first iteration, the vendor cannot offer 80 percent to other customers then there is something wrong.

Times are changing and customers demand more for less. There now needs to be a fresh kind of partnership between vendors and customers. One that allows innovation to thrive but doesn’t do so at the expense of the market as a whole. One that leaves lawyers at the door because the work is being done between trusted partners.

Consulting Sapphire: creating the obvious

Dealing with the obvious is a cracking good way to break myths, tackle gnarly problems and generally make a dent in the universe. Sometimes the obvious catches people by surprise, other times it delights. It always puts a smile on people’s face. None more so than the other week when I met with Dan Barton who is creating a new consultancy practice for the SAP world. His schtick (among other things) is about making SAP projects accountable. What does he mean? (Check the video above for a more detailed explanation.)

Too often we see projects that are/have/will fail because the moment the contract was signed and the implementatino kick off meeting got under way, two things happened:

  1. The initial business case and ROI calculations were quickly forgotten.
  2. Something changed that blows the project off its intended course.

The first is inexcusable, the second is rarely impossible to contain or prevent. Why?

When management decides to make a software selection it usually does so on the basis of a known pain point. It doesn’t necessarily understand  or know the nuances involved in arriving at their selected solution. This provides the consulting firms with the kind of ‘change order’ bouquet they love to receive. It gets then out of thin margin fixed price deals, allows the reselling of past solutions at ground up development pricing and provides fertile ground for ‘added value.’

Barton doesn’t say his approach can fix all of those issues but he does insist that project management is accountable. It’s obvious yet so rarely done as project leaders become embroiled in the minutiae of delivery.  So if Barton’s model can’t necessarily fix stuff then what’s the point? Simple – learning. SAP is one of those solutions that involves multiple projects, often with similar characteristics. The more that’s learned, explained and documented, the better the chances of avoid future pitfalls.

It is early days but Dan has a strong value proposition and has got contracts in waiting. I wish him well in a world that too often hits the headlines because of failures.

Dear British Airways

I have standardized all my travel on BA. It’s a conscious decision based upon the following experience:

  1. When you reach Gold status then you get an extra baggage allowance and extra weight. That matters when I travel with heavy studio equipment.
  2. The BA lounges in London are among the best in the world. The shared lounge in Sydney is truly world class. Others are less so. The one at Malaga, shared with Iberia is pathetic. Earlier this week I was in the Concorde Room at Heathrow and was able to bring a colleague into the same space on my card. He was able to benefit from the same facilities as myself. Another bonus.
  3. BA staff are among the most courteous in the world. They know who their frequent flyers are and address them personally. There is for instance nothing nicer than to be greeted on board with something like: ‘Good to see you again Mr Howlett, we hope you enjoy your flight.’ It isn’t fake – they mean it because their livelihoods depend upon people like me coming back for more.
  4. You can have a proper conversation with BA staff, whether on the ground or in the air about issues that matter. They’re chatty, candid and have no qualms about telling you where management are messing up.
  5. While the ‘golden days’ of BA travel are gone for staff, those who remain and are in long service provide a thoroughly professional service.

All of which contrasts wildly with the low cost airlines who seem to treat passengers as little more than a vehicle from which to extract as much cash as possible. I am sure that’s at the behest of management.

But…like so many other businesses, there are key parts of BA service that don’t work so well.


  1. Right now there is a labor dispute in Spain with Iberia staff. BA and Iberia are part of a mega corp that is imposing much needed change on Iberia methods and systems. Staff don’t like it and are striking at certain intervals. Iberia staff are effectively grounding many flights in and out of Spain. BA staff for their part don’t seem to know what’s going on or only have glimpses of the right information. There is no coordination between management and staff such that passengers get a clear message. BA doesn’t communicate directly with passengers about possible disruption. It is chaotic.
  2. I get that labor disputes are fluid situations but having a clear communications strategy in these and similar circumstances would do much to reduce passenger tension.
  3. BAs training policies are slapdash. At least part of the Iberia problem is that staff are having to learn a new system after 20 some years of using their own. This is never an easy task but there seems little on the ground support. BA staff tell me they have similar problems. This goes to the core of managing your people effectively. To their credit, BA staff solider on as best they can but it isn’t optimal. BA could use its own staff to help their Spanish colleagues, but I see no evidence of that.
  4. BA has a nice Twitter presence. However it doesn’t seem well equipped to answer questions and especially not deal with gripes. This is customer care 101 and again, BA could do itself a lot of good by learning from the candor that front line staff share with customers.
  5. BA occasionally asks passengers to complete surveys. Passengers are rewarded for doing so with generous Avios additions to their account. However, the surveys I have seen are methodologically unsound. They point towards providing BA management with ‘feel good’ feedback rather than honest appraisals. How does that help BA improve its service? I don’t get it.


This month, BA has a very good entertainment package with films like Argo, Skyfall and Lincoln all on the menu. However, everyone gets those choices. Would they be better differentiating classes of travel through different entertainment options? I think so. Would that represent a genuine value add for business and first class passengers? I think so.

Arriving in the US is always a tortuous business. Could BA improve its service by negotiating fast track clearance for business and first class travelers? How much of a value add would that be when the alternative is queuing for an hour in circumstances which are only going to get worse as the year progresses?

Concluding thoughts

Digital business and media puts the passenger in a position to render opinions and thoughts that no business can control. As you can see…I am sure BA ‘gets’ that but its responses are patchy. It tries to ‘game’ some of its passengers like me, by giving us upgrades and the like. That is all to the goos and, in truth, is their only real way of encouraging positive feedback. The First Class experience is definitely up there with the world’s best but there are more ways to improve service.

12 things to know about #evilplans

ssshJust checking in and noticed that I’ve not posted a thing here for 10 days. Has it been that long? Wow.

Anyhoo – the ‘real’ #evilplans have been consuming 90 percent of my time and so it has been really difficult to get content out other than a clutch of videos I shot recently. Add in the fact I’ve bounced back and forth between countries in Europe and you can see how cranking out content might be a tad challenging.

To make matters worse, I am now on the first leg of a monster piece of travel that will see me in multiple locations in the US, Australia and South East Asia between now and the end of the month.

The hope is I have shoehorned enough time into the schedule to publish stories here but right now I can’t guarantee that will be the case or that it will be a regular diet. In the meantime, please bear with me. There’s a shedload of things going on in the background that I think will surprise a few people, flummox others, delight a good few and irritate the heck out of those that won’t understand what’s going on. All of that is OK.

Rather than keep teasing though I’ll give a few hints.

  1. It ain’t just me. There’s a ‘gang of five’ (noooo…not the C5 of a past era)
  2. The team has a combined ‘age’ of 125 in terms of experience.
  3. Some of us write or have written code.
  4. We are so not corporate types. Each of us has a wee rebellious streak.
  5. We each have a distinctive ‘style’ that should make reading our ‘stuff’ interesting at the very least.
  6. We are building a wholly new media model which has not been done before but which is so obvious when you think about it that some folk will say ‘ah-ha.’ Experience tells me those obvious things are often the best things.
  7. The model can be replicated but not easily given the way media operates. We’re finding out just how hard it is but it’s fun along the way.
  8. Here’s one thing for those of you who hate advertising – we won’t have any. Period.
  9. Here’s another. It will be content driven. Nothing else.
  10. We’re chewing off some big hairy problems but if our model works then everyone wins.
  11. We have a declared launch date of 1st May. I really hope it doesn’t slip. If it does then all are encouraged to beat me up for failing.
  12. I wanted to call the new thing #evilplans for real. Wiser heads explained that it might attract the wrong kind of attention. Oh well, can’t win ’em all. So what’s it called. That’s for later but think two things: digital and economy. Go figure from there.

More later…

UNIT4’s central UK government deal implies a shift in thinking around shared services

unit4 screenHot on the heels of winning an important deal with other government departments and pivoting its own business model, UNIT4 announced its first central government shared services deal, this time as the solution provider to the Department of Transport. The deal, which is rumored to run low eight figures over the life of the services agreement, sees UNIT4 make its first major strike against the SAP/Oracle hegemony.

Arvato, a German business process outsourcing provider is the main contractor in the seven year arrangement. It is the first time that the UK government has chosen to outsource a shared service center to the private sector.

According to Information Age:

The “planning assumption” of the project is that other government departments, including Culture, Media and Sport and the Department for Communities and Local Government, will in future also use the outsourced function as a shared service.


This is an important deal at multiple levels. Here’s why:

  1. The accepted SAP/Oracle hegemony is now under question. Calls to Oracle partners suggest they believe the UK government will never be able to get away from using their software because they are so deeply entrenched within government. Only recently, it is said that Safra Catz, Oracle president cut a substantial deal with government over payroll upgrades. The Arvato deal puts a question mark over those assumptions.
  2. While UK government might well continue to award large contracts to the ‘usual suspects,’ the planning assumptions outlined above suggest a different strategy that gives a seat at the table to smaller, more nimble and cost effective alternatives. In essence, those large contracts will now come under increased scrutiny.
  3. None of the parties to this deal are disclosing costs or anticipated savings. This should not surprise given the UK government’s long history of failed or expensive projects. However, UNIT4 does have a track record of success in this area. In Norway for example, it has 115 departments running off a single shared instance. In Australia, it counts Queensland as a success, contrasting with IBM and SAP’s recent troubles at Queensland.
  4. UK government has set itself a stretch goal of £600 million in IT savings over the coming years. Sources say the low end of expectations is in the £128 million range. Much depends on the ability of departments to learn from project success and collaborate with one another. That is always difficult where politics are involved. However, the changed mood suggests that in the UK at least, government is determined to wring significant change out of its IT investments. Whether this translates into strong growth for firms like Arvato and UNIT4 remains to be seen.