Category Archives: Enterprise Software

Comparing M&A at Oracle v HP

Image representing Hewlett-Packard as depicted...

There is an interesting article in today’s WSJ, Hurdling HP: Oracle Shows Way in M&A, which describes Oracle and HP’s different fortunes in M&A.  Oracle has seen its free cash flow and market cap increase dramatically since going on a greater than $40 billion acquisition spree over the last 5 years.  The Wall Street Journal credits ORCL’s price discipline and its expertise at doing company integrations for its success.   HPQ, on the other hand, has had woeful results in acquisitions: Compaq, Palm, EDS, and now Autonomy.

When HP first announced its $8.8 billion dollar write down of Autonomy and asserted it had been defrauded and duped, my read of the news suggested that HP had some legitimate gripes.   Categorizing hardware as marketing spend?  Sounded as though there may have been some hinky business going on.

But the more I reflect on it, the more skeptical I become.  Autonomy had a real audit firm behind it, posting real numbers. I’d expect that it submitted to a detailed and lengthy diligence process, as $10.3 billion is still a huge check to write.

And the next problem of course is that the Autonomy writedown comes after a horror show of past acquisitions–Palm, Compaq, EDS–all decretive to long-term shareholder value.

At a certain level, irrespective of whether Autonomy defrauded HP, the damage is basically done.  To an extent, the new management team needs to establish that there is a new boss in town at HP.  They’ve been in a hole and they are going to stop digging.  But what the HP-Autonomy episode shows, and the side-by-side comparison with Oracle is very telling, is that HP has been a circus for a while.  It would be good, for all of our sakes, if the madness stopped.  Here’s to hope.

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Can You Beat the Box? Getting Hired by Machine

This morning’s Wall Street Journal covers a growing trend in which companies are using software and algorithms to make hiring decisions, cutting out the traditional job application and in person interview processes.



It is a fascinating read.  It also reinforces the notion that there really are no limits to what software can disrupt, where software can make an impact.  It was also interesting to me, because, little known fact about me, based on a multiple choice test, I was once declared not qualified to become a junior stock broker trainee.  More on that below… :)

I will be interested in watching this trend evolve.  In particular, I’m interested to watch and learn how  prospective applicants react to this.  Potentially in a bad job market, people are more willing to take a test and try to ‘beat the box,’ relative to what they might have done in the past.  I’d love to see whether sites pop up where applicants try to share information on how they answered questions during the test, and what worked.  Gaming of a system always happens, and in this realm, I’d assume that’ll happen too.  I’m going to figure as well that job placement firms and job coaches / counselors etc. will in time evolve to help job seekers how to “Look Your Best, When Taking the Test.”  This all sounds a little silly when I think about it, but in a very real and serious sense, as you shift this behavior to software, you start to realize that all sorts of second order behavior will change along with it.

For my own part, though I was always really good at test taking, I’m really glad that (hopefully) I won’t have to do this to get a job.  Very early in my 20s, some good friends of mine got me a job interview at one of the big stock brokerage firms in Boston.  The opportunity was to join the training program for stock brokers, basically to start cold calling.  I knew next to nothing about the stock market, but that didn’t really seem to matter.  What mattered to those I interviewed with was that I could connect with them, was a good communicator, clearly worked hard, etc.

On the basis of the first day of human interviews, the feedback was that I’d done great, and they were hoping to make me an offer.  I was waiting tables at the time, so I felt like I was getting a lead on working on Wall Street.  I envisioned Michael J. Foxx in the movie The Secret of My Success, Charlie Sheen in Wall Street.  That was me, baby.  I’d arrived!

The one step between that first day of in person interviews and getting an offer was a basic test that they wanted me to take.  Reflecting back on it, I think this test was something like a Myers-Briggs profile.  It asked questions like, “if you have a free evening would you rather read a book or spend it with friends?”  Things like that: no wrong answers.  As someone who’d made a lifetime of crushing standardized, fill in the bubble type tests, this was a breeze.  I was in and out in about 30 minutes.  Didn’t think a thing of it, shook hands with everyone on my way out as I envisioned weekends on Nantucket and lying in a solid gold bathtub filled with dollar bills.   We were all fired up–they were excited for me to start, and I thrilled to have a real job and not have to wait the breakfast shift at the Hyatt Regency in Cambridge (where I was working at the time).

A few days later, I got a phone call.  That phone call said, Jay, we’er really sorry but based on the results of this test, we don’t think you’re really someone who’s a great long-term fit as a stock broker.  Bummer, nho gold-plated bathtub for me!

I’d forgotten all about this until my brother in law reminded me of it a few months ago.  We had a huge laugh about it–and I can barely contain laughter as I think about it now.  Though I’d been deemed unfit to be a stock broker, in all honesty, not beating the box that day was probably the best thing that ever happened to me.

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The SalesForce.Com Mafia is driving the new biz sw wave

Image representing Salesforce as depicted in C...
Image via CrunchBase

Silicon Valley, like Hollywood, enjoys good storylines.  One of the storylines that’s been popular for years is the PayPal Mafia–the founders and employees of the early payments company have gone on to found huge successes, including LinkedIn, Yelp, YouTube, Slide, and others.  These enterpreneurs are great innovators, and its hard to imagine a day goes by when I’m not visiting at least 3 web sites built by a PayPal employee.  That’s big impact stuff.

I think there is a new storyline coming–it will be the Salesforce.com mafia, and it will center around the new generation of business software being created by alums of this revolutionary software company.

What led me to this was today’s WSJ report that there is a “tide shift on web startups, in the article, Online-Services Firms Catering to Businesses Look Good Again to Venture Investors – WSJ.com.  It points to companies like Box.net, Marketo, Zuora, Jive, and others as evidence that a new wave of momentum exists for enterprise software companies.

I agree with this view and I see it as a great development, and from my perspective its long over due.  Its great to see new innovation and activity in enterprise software.

The story that is yet to be written about this new wave of innovation is the importance and impact of Salesforce.com and Marc Benioff in setting the table for this wave.

Several of these ‘next gen enterprise’ companies are either indirectly taking plays from Salesforce.com (all on demand SaaS business) or are directly being created by Salesforce.com alums, e.g., Zuora, Marketo, Okta, etc.  In the same way that PayPal has an established Mafia, Salesforce and its alums are fueling a new wave of business-focused startups.

I am a huge admirer of Salesforce.com and its CEO, Marc Beinoff.  They’ve got a big vision, they execute strongly, and they are relentlessly customer focused–all things that are admirable for any company.  And that should stand them in great stead.  What is even better, though, is that they’ve fostered the entrpreneurial talents of so many great startups over time–it will be great to watch this new wave of founders and startups stand on the shoulders of Salesforce and drive to the next wave of business software innovation.

 

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The Consumerization of IT Part I: Device Proliferation

Last week I started the first in a set of posts I’m writing on the tech mega-trend, the Consumerization of IT.  The basic set up of that introduction was that we are living in a Steve Jobs-oriented world.  By that I mean that a big leverage point that is and will continue to impact IT  is a function of the products, innovations and services  that consumers have experienced in improving their digital lifestyle.

To summarize: while our digital lifestyle is completely different than where we were 10 years ago (Facebook, YouTube, NetFlix, iPhone, etc., etc.), how we work as information users is basically the same.  The opportunity is high for our digital workstyle to change dramatically.   And that’s what the Consumerization of IT is all about at the highest level.

This series of posts will dig in more deeply on the Consumerization of IT, what are the implications of this, what will we see specifically.  I think there will be several implications.  The first that I want to discuss is the coming proliferation of devices.

I have a running bet with a good friend of mine around how many computing devices will we own  in 10 years.  We generally think about this in the context of how many devices we’ll carry on when we get onto a flight, but anyway, we’ll argue about that in 2021 when the time comes to pay out.

His idea is that he’ll own only 1 device, and the rest will basically be screens.  I tend to think that we’ll have literally dozens of devices, all that are smart.  Also, when I am carrying my bag luggage to a plane, I expect I’ll not have 1, but several devices, as I do today when I get on plane with an iPad, an iPhone, and a MacBook Pro.  (When I’m going on vacation btw, I add to this a Kindle.)

Bets aside, in either scenario, its apparent that device proliferation will continue to happen.  Furthermore, consumers will drive this proliferation–they will have different tastes and price points, and this will fuel a cornucopia of hardware devices that users can choose from.  Alfred P Sloan’s mantra for General Motors: ‘a car for every pocket and every purse’ will be the order of the day.

This device proliferation is an important factor in the Consumerization of IT trend.  Specifically, IT will continue to require control and security management capabilities over users, applications, data, and devices.   This is not a new problem, of course: security management and user provisioninig has been a headache for IT for over a decade, with the rise of users having Windows-based PCs and laptops.   To provide a sense of where we’ve come from, roughly 10 years ago, when IT analysts such as Gartner or IDC talked about an enterprise’s “Mobile Strategy,” it tended to focus on how to secure and manage laptops, not feature phones.  And to be sure, laptops being left behind did cause significant security and IT breaches: e.g., within the past few years, there’s been a highly publicized breech where a Fidelity employee left her laptop containing customer account data on hundreds of users in a taxi cab.

The consumer-led device explosion that we are now experiencing will make IT’s security management responsibilities even more challenging than they have historically been.  There will be more devices (phones, tablets, laptops, smartscreens, etc.), more platforms (iOS, Android, Windows Phone) than were part of the past hegemony of Microsoft Windows on the desktop and RIM Blackberry on mobile.  In addition to device and platform proliferation, there will be a rising calls and demands from users to have their devices and platforms supported.  Unlike the past where IT could dictate reference PC devices and provide a standard “software image,” the future is one where users will expect and demand that their devices, applications and platforms are supported.  It will be IT’s very challenging job to figure out how to deliver that user flexibility while at the same time ensuring that the corporate data assets are protected and all regulatory and legal compliance responsibilities are met.  Truly, the demands on IT are increasing.

What this means for early stage companies and investing is that there are new opportunities around Mobile in the Enterprise.  Companies like MobileIron, Zenprise, and AppCentral (disclosure: I am on the board of AppCentral) arenew entrants into this field, aiming at helping IT deliver the kind of device and application management protection required while enabling users to maintain the flexibility they demand.

In  my next post, I will talk about a second element of the Consumerizaiton of IT trend, namely how consumierization could change the way we think about distributing and managing software applications in the future.

 

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The Consumerization of IT: an Introduction

Image representing Apple as depicted in CrunchBase

Image via CrunchBase

A recent big theme in tech has been the Consumerization of IT.  It is a big topic, and its one that people often say without giving much more than lip service to what its meaning really is and what impacts will fall out as ar esult of it.  I think it’s a big topic, and I want to use this blog to collect and organize my thoughts, describe as best I can what this terrifically inelegant buzzphrase means, what’s happening in the marketplace, and where things are going.  This will be a series of posts, and this introduction frames the current situation as I see it. 

Its a Steve Jobs World

 

To unpack this Consumerization of IT trend, start with the rise and impact of the consumer in the technology world.  Over the last decade, the consumer has become king.  Facebook, Twitter, Zynga, to name just three, are all less than a decade old, all having have built massive franchises that have impacted fundamentally how people connect and interact. And its not just updating status and farming corn, consumers are gadget crazy.  Consumers adoption of new gadget technology has reached rates never before seen—last holiday season, Microsoft’s Kinect sold 8m units in its first 60 days of launch, setting a new world record, which will very likely be trounced by the Apple iPhone 4S, which sold 4m units in its first 3 days . And when arguing that the consumer is king, one must acknoledge the impact of Apple.  In short, we live in a Steve Jobs world.    When we think about how different our digital lifestyle is today versus in November 2001, its hard to overemphasize how much impact and innovation has occurred in the consumer space. 

While the digital lifestyle has changed dramatically, the impacts in the digital workstyle are less apparent.  I suspect that like me, you spend much of your time in email.  We schedule meetings, email attachments, fill out spreadsheets or powerpoints. For heaven’s sakes, Lotus Notes is still available!  Unlike my digital lifestyle which is massively changed, my digital workstyle is pretty similar to how I worked 10 years ago in November 2001.  To modify my heading: It’s a Steve Jobs World (not a Steve Ballmer world). 

Changes are certainly afoot in the digital workplace, and they should be.  Products like Salesforce’s Chatter, Yammer, and Box.net are growing quickly and show great promise.  Still, none has gotten anywhere near the ubiquity in usage and uptake that a Twitter or Facebook have.  This makes sense: the intertia of getting an entire organization to shift from an existing tool to a new one is hard and takes time. 

So in this Steve Jobs world, in which our digital lifestyle has been surging forward, where our digital workstyle has evolved much more incrementally, what does the Consumerization of IT mean and where are we going?  This is a big topic, that will cover shifts in the types of companies, business models, and sectors that will be interesting to watch (in my view), and I’ll look forward to working on collecting my thoughts in a series of posts. 

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