New Age Enterprise Cloud Software- competitors to SAP,Oracle Apps,Peoplesoft

New Age Enterprise Software in cloud.

Interesting to see how is growing from CRM into other verticals. Already cornering many CRM vendors like Siebel, SAL CRM, and Oracle Peoplesoft CRM.Same way Workday is growing fast in HR solutions.Are there ERP based on cloud threat to traditional vendors.Now industry is segmented into two types of ERP : Tradition ERP Vs Cloud based ERP.

Let’s look why Traditional ERP are facing the brunt:

Let see evolution : ERP evolved from desktop based systems to client server system in 90’s to web based systems then So SAP R3 like three tier product (database server-application server- webserver –client).We had lots of security challenges then also. Next went to n-tier where we had choice of n number of application server layers. Then today we are faced with 2 question Cloud enablement and mobility.(of course these are not the only challenge there are others too).

1. Biggest impact ERP made to life of Executives is Time to market. Now see today if Any cloud ERP provider has to do mobile enablement it just few steps while for traditional ERP giving form to future cloud based browser is big problem.SAP had to acquire company like Sybase still integration is not complete.

2. The big vendors are vulnerable because they require big expensive upgrades. Workday doesn’t go into startups — it’s selling to big companies that have HR and financial software in place. But companies have to update this software periodically, and the traditional vendors like Oracle and SAP make it hard and expensive to upgrade. That’s when startups like Workday jump in.

  • Oracle will survive the cloud transition, but will have to acquire some companies. He thinks NetSuite, which is already majority-owned by Larry Ellison, is a logical candidate.
  • SAP is toast. “I think SAP doesn’t really have a play.”.ABAP language on which ERP is based is old based on COBOL syntaxes.Has evolved into Object Orientation with lot of effort.So netweaver came in to enable java to work for ABAP.But Oracle the biggest competitor acquired Sun hence Java. So, now SAP wanted to remove  all dependency from Java.See simple thing like JSP /ASP like technology which is very old came into java just 2 yrs back with BSP in ABAP.Otherwise in SAP Netweaver used to the work through JSP(Netweaver is J2EE server only).Now how many years it will take to remove dependency.SAP acquired Sybase to provide mobility solution but still SAP mobility has long way to tread.Then where is cloud. I agree Enterprise software lifecycle being longer company does not suddenly decide to replace in Peoplesoft HRMS with another package.Atleast 1 year in implementation and second year in stablisation
  • Don’t underestimate Microsoft but competition is hotting up like iWork from apple. He thinks the company really gets the cloud, and that Windows 8 will easily become the second-biggest category of tablets — simply because they will run Office, while the iPad never will. “If I could get Office on a tablet, I’d throw my laptop away.” He also thinks that Microsoft’s army of .NET developers will move to Azure, the company’s cloud platform.iPad is also warming up with iWork office suite on mobile. Micorsoft is moving fast on Axcepta coming up with CRM, Financial, SCM modules. collaboration with sharepoint,oulook,messenger integration,integrated SQL server based MSBI and reporting.Available everything on cloud Azure.WCF, WWF fighting with workflow software.
  • Google will make a bigger enterprise play eventually. Google more focused on consumer and advertising play facing facebook. Enterprise is Google’s “secret weapon” and noted that he sees a lot of companies considering a switch to Gmail at the same time as they switch to Workday.
  • Workday: Aneel Bhusri,Dave

SalesForce CEO Marc Benioff last year Oracle Open world blasted on Oracle/SAP Strategy  new version new revenue of not going to cloud. visit Benioff was not invited in 2011 openworld. (Read :

We were hearing a lot about the cloud early this decade, and now it seems like in the last year or two a lot of enterprise cloud companies are getting momentum.07 or 08 years, it was hard to sell cloud. We started out by focusing on large enterprises on day one. Everybody thought cloud was for SMBs (small and mid-size businesses) but we change is happening for large enterprises, that they were going to replace their core systems.

So for the last 18 months WorkDay grew , it’s really exploded. 2009 grew (bookings) 50%. 2010 grew 75%. 2011 workday going to grow 100%. Our growth’s actually accelerating.That’s booking. Revenue growth would be faster.

Books of public cloud companies like Salesforce and NetSuite is that the revenue growth looks good, but the bottom line growth doesn’t match. It seems like there’s a really long ramp-up before you get to profitability. It’s purely the accounting model. With a license-based model, you get to account for all the revenue up front because you get all the cash up front. You sell a perpetual license which means the customer has it for ever. With a subscription model you get maybe a three-year subscription, and you don’t get to recognize it all up front, you have to recognize it ratably. You don’t get all the cash up front, you get some portion of the three-year deal up front and then the customer generally pays over time.

If you converted us to a license model or you converted Salesforce to a license model we’d be wildly profitable. It really is just idiosyncrasies of accounting.

 Small companies tend to go out of business, large ones don’t so churn is less for large clients. Selling HR and accounting systems that customers might change out every 7 to 10 years when technology is out of date. So to date, although these cloud providers are young, and had almost no churn.Suppose  they get three year contracts, Workday average contract is four years.

Workday Cloud HRMS provider says There average customer has about 8,000 employees. If you look at the last 9 months, it’s 15,000 to 50,000. Just with the letter “T” in the last few months, Thomson Reuters,Time Warner, and Toys R Us. Those are full scale human capital management replacements for Thomson Reuters and Time Warner.

Big account displacement”

Oracle-PeopleSoft and SAP.  Right now, Workday have about 250 large enterprise customers on human capital management. And ramping up on financials, and are just beginning to do those replacements too.

What’s driving this accelerated move to the cloud over the last 18 months? Is it economic? A big technological shift?

1. By the model itself, the cloud is cheaper. In 2009 workday grew 50%, and you’d be hard pressed to find salesforce that grew 50%. Sony Pictures chose Workday because they couldn’t afford to implement SAP.

2. Innovation: Since then, one things people haven’t paid attention to with the cloud is the pace of innovation. Cloud Enterprise Companies don’t have four or five versions we’re worrying about. You look at PeopleSoft or SAP customer base, they might be on one of four or five versions going all the way back to the year 2000. With the cloud model, everybody’s on the same instance. When a new version comes out, they all go on the same version. Cloud Enterprise Companies just keep moving customers forward instead of keeping them on old releases. So the development model looks much more like Google or Facebook than it does like SAP or Oracle.

3. Functionality: And in the last 18 months, systems like Workday or Salesforce, which looked like exciting new technologies that were less functional than those systems, now have more functionality. We’re innovating so rapidly we’re blowing by the legacy systems.

So the combination of lower costs, higher rate of innovation, and now the functionality where you can actually turn off those old systems, the combination of those three things is really driving it.

How customers throw out these old systems they’ve invested so much in? Catch them at the point of an upgrade. They can’t stay on an old version forever, especially with HR and accounting which are driven by statutory rules. So you can’t have a system that’s outdated or HR rules that are outdated, you’ll get in trouble. So they might get a proposal for an upgrade that’s very expensive [seven figures plus]. At that point they look outside. We come in and say we’re half the cost — typically over five years we’re half the cost — we’re a modern look and feel, modern functionality, and we take care of upgrades for you, they’re no longer your problem.Almost all of the large accounts are facing a big upgrade process.

With a browser-based solution, and Cloud Enterprise Companies made a big leap forward around the ease of use —a bunch of consumer Internet developers to really build our UI technologies. The newest big leap is around the iPad. We see a lot of executives carrying around iPads. Generally they don’t get on these enterprise systems, but if you can give them a system that is really built for them — analytics, search, directory, simple transactions — they will use it.

Next couple years, executives, managers, employees, all of whom use HR systems, they will predominantly use the iPad and systems like that to get to Workday. The power users, accounting and HR people will still use a laptop or desktop, but 90% of the people who are not in the HR or accounting department, they will use tablets.

Early days of the cloud, so there’s still plenty of runway for all of us. A  few weeks ago at Dreamforice we announced a big partnership with Salesforce, Workday embraced Chatter, Workday embraced as an extensibility platform.

ERP replacement, so HR and accounting. Financials is not a new idea, it’s just a new application. that’s a $30 or $40 billion market.

 The people that are trying to replace the core systems that were on premise before. Trying to replaceSiebel, PeopleSoft, SAP, rather than trying to coexist. The people are successful in displacing those systems rather than coexisting are going to be very big companies. That’s what Salesforce is doing, that’s what we’re doing. NetSuite’s trying to do that in the SMB market — we never see them — if we compete with NetSuite, one of us is in the wrong place.

NetSuite: Financial Package Oracle tries to buy NetSuite. Because Fusion is not a true cloud application, Larry already owns 2/3ds of NetSuite, he’ll just buy it. I think Box is a great company in the collaboration area,

Okta: There’s an identity management company called Okta — full disclosure. This whole area of identity is really important. If you’ve got five or six cloud apps do you want a different user ID and password for each one? No.

Zoura, they’re a very interesting billing company.

For Oracle Fusion is not the answer. They want Fusion to be on premise, in the cloud, and hybrid but there’s no such thing. You’re either all in the cloud or not. If you’re all in the cloud, you build your systems to be grid-aware, you build them to be based on that scalable cloud model, multitenant, all these things. You can’t have it both ways. If you want to have multiple choices, it’s just the old-school hosting model.

Oracle’s going to continue to do very well supplying the cloud providers. There’s a long-tail on these applications. Workday now has 250 large enterprises. There are probably 40,000 enterprises around the globe that are running Oracle, SAP, and PeopleSoft.

HP : should be doing is buying the software infrastructure layers around automation, monitoring, and configuration management that drive server sales. So if people want to replicate the Amazon Web Services, then HP provides all the servers and all the software around replicating it. Autonomy doesn’t fit that strategy, but I’m not setting strategy for HP.

Microsoft:  They seem to be doing both the application layer with Office 365 and Dynamics CRM and ERP, and then Azure is their attempt to do the infrastructure more of an SMB mid-market competitor.

Windows Mobile 8 and Windows 8, Microsoft going to become the number-two player in tablets because of Office integration. I love my iPad. I think Apple rocks. But I still need Office, and that’s the one thing I can’t get on the iPad. If I could get Office on a tablet I’d throw my laptop away.

Some of the Office 365 is pretty slick, and they don’t get the credit for it. I think people will start paying attention to them sooner or later. It’s funny call them a dark horse, but I think Microsoft gets the cloud way better than people give them credit for.

The development platforms are really interesting. There are a whole bunch of .NET developers out there.Where are they going to go? They’re going to go to Azure. The Java developers are going to go to Force or Heroku (Agile deployment for Ruby, Node.js, Clojure, Java, Python, and Scala.) or Google App Engine. But the .NET guys are not going to jump on to Java platforms.

Google —they’re a consumer company. They’re very focused, as you see with Google+, more focused on being relevant in social and consumer. I think enterprise is their hidden weapon, though,
it’s growing very rapidly, we’re getting to know the Google Enterprise folks, the products are excellent. Google Docs has to come further to truly be an Office replacement, but Gmail is terrific.

What I’m seeing in sales cycles, as people are going from PeopleSoft or SAP to Workday, they are asking us about Gmail.I think for them, it’s much more about a sales and marketing push than it is about the technology. Google and Microsoft can build anything they want, they both have amazing engineering organizations. But enterprise people are not good at doing consumer technologies, consumer technologies need to learn how to sell to enterprises. Google’s learning that — they actually hired a couple of the guys out of SAP.

In the early days of the cloud, people paid a lot of attention to architecture — multitenancy versus hosted — and yeah it’s got a consumer look and feel versus old enterprise systems. But as the technology evolves with social, with mobile, with open Web services, these new generation of systems look so different from the old generation that the cloud is just the starting point, and the gap is just widening between these legacy systems.

It’s not just about the cloud versus on premise, it’s that the cloud vendors are taking all the consumer internet technologies and bringing them to the enterprise world, and the old guys are not. So I can do an iPad demo for you now that looks just like a native iPad app. It doesn’t look like an enterprise app. It’s an iPad app.

The same technologies you use to build a cloud service — HTML5, open Web services — they happen to be the same technologies you use to build mobile. So for a cloud vendor, getting to mobile is pretty easy. For a legacy vendor like SAP, they spent $5 billion on Sybase, and a year later they still have nothing to show for it. Workday had 5 22-year-old developers building our iPad client.