Ericsson launches a cloud-based machine-to-machine communications platform to help telecoms operators connect more than just laptops and smartphones.

The company believes that more than 50 billion devices will be connected by 2020 and that its Ericsson Device Connection Platform can help operators to quickly deliver M2M solutions to their enterprise customers. Ericsson’s platform will be offered using a Software as a Service (SaaS) model that it believes will minimize barriers to entry in the M2M market.

“We envision a world with 50 billion connected devices in 2020, where everything that benefits from a connection will be connected,” said Magnus Furustam, Vice President, head of Core & IMS at Ericsson. “To get there, Ericsson is working with telecom operators, selected industry verticals and other players across the M2M value chain to create world-leading, innovative technology and sustainable business solutions.”

Ericsson’s Device Connection Platform primarily makes it possible to create tailored connectivity and price plans for M2M services. Ericsson will help telecoms operators to offer enterprise customers a self-service interface, flexible billing, charging and connectivity plans for all devices connected to the network.

“The platform will help operators deliver solutions for devices and applications that have diverse connectivity needs, ranging from sending a single business critical SMS to high-quality video surveillance via the mobile network. Ericsson’s Device Connection Platform addresses these needs and is there to support operators in developing their business in new areas,” said Furustam.

The service will allow telco customers to manage their subscriptions and devices in real time.

Matthew_Whalley

Edel_Telecom

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Cloud Computing will put customers in charge in the enterprise IT sector

How to apply the learnings of the ‘Cluetrain Manifesto’

We’re hosting a roundtable lunch time discussion with Doc Searls, internet visionary and leading academic from the Berkman Center for Internet and Society at Harvard University, on Friday 22nd October.

Whether you call it Cloud Computing, Software/Platform/Infrastructure as a Service or just see it as a variant of the ‘dot com’ ASP model there is no doubt that the technology now exists to enable customers to redefine the relationship with their enterprise vendors. Despite this there does not appear to be a wholesale understanding of how fundamentally this technology platform could redefine the relationship between customer and supplier.

The latest in our series of debates anchored by Edelman’s Cairbre Sugrue, Managing Director, Technology and Jonathan Hargreaves, Head of Technology, Europe, will bring together leaders within the enterprise IT sector to understand how the Internet, in particular Cloud Computing, will fundamentally change the way that vendors engage with customers. It will discuss whether there are lessons to be learned from other industries and how other companies have been successful in this technological era. Above all it will show that with adjustments in the way enterprise vendors use socially-driven communications tools, how they can engage with their existing customers and find new opportunities.

Places are limited and need to be qualified but if you are interested in joining us for a fascinating insight into the engagement future of Enterprise IT please contact me. This isn’t open to sales people but purely senior level people in the industry.

Look forward to seeing you.

Either side of Christmas there has been a fair amount of debate about the future of the enterprise software market, particularly whether the big players such as Oracle and SAP are going to start feeling the heat from the software-as-a-service (SaaS)/cloud computing folks. Given the economic conditions and the hefty maintenance fees that many customers have been asked to pay it quite rightly led some commentators to suggest customers have a right to demand more.

SAP has been ‘victim’ of some sabre rattling in Europe as it has just announced that it is backing down on changes to its support license structure – a result of pressure being exerted by many commentators. Frankly, though, I’d rather see that as a good example of an enterprise IT vendor getting the need for dialogue with customers. In fact Dennis Howlett suggests that SAP wants to be the ‘voice of the customer.’ So rather than criticise SAP I say well done!

Rip and Replace Frenzy?

Elsewhere there has been debate about the financial performance of SAP and Oracle with some analysis suggesting the Oracle’s numbers before Christmas told a disturbing story about its reliance on support revenues for its profitability. As I’ve said before Oracle does say its higher maintenance fees are critical to future investment in product/services R&D, but given the financial belt tightening of the last year many customers don’t have the luxury of sustaining such expenditure. (A fact borne out by the growth of the likes of Rimini Street and other third party support vendors, who are seeing more and more customers turning away to them for maintenance contracts)

So does that mean we are about to see dramatic changes in the IT industry? On its home turf Computerwoche dared to raise the question whether SAP could remain independent, while the hotly debated Sapience conference saw the SaaS vendors making very bold statements about their competitiveness against the ‘traditional’ enterprise IT companies. In this more balanced piece Jon Reed did say there are merits to the SaaS model and that SAP needs to be careful, particularly with some of its older customer base refusing to upgrade, but that we are not going to see a dramatic ‘rip and replace’ frenzy.

Integration Rather Than Software to Decide SaaS Success

I tend to agree both from a practical and technical perspective. Practicalities – for instance – IBM AS/400 was around long before I started and is still around today. Ultimately it will always be up to customers to decide which products they use and they would be crazy to throw away long-standing investments. In December Ray Wang also offered advice to companies considering a shift to SaaS, listing 10 recommendations, the most important of which – for me – was a technical one about integration. We have already learnt the lesson the hard way with existing enterprise IT platforms, that unless applications are integrated companies fail to extract their full value.

Certainly, in some areas such as customer relationship management (CRM) and salesforce automation it has been possible to establish a beachhead quite quickly, because these systems can be quite distinct from core IT infrastructures. However, to convince major organisations to switch their critical applications such as financial administration to the SaaS or Cloud model, vendors must demonstrate they can integrate disparate systems to ensure a transparent picture for the customer. That means combining business intelligence with performance management with accounts payable and other core finance applications. That is no easy task and requires a depth of expertise that I don’t think I’ve seen from the SaaS gang.

Who do you Trust?

I guess they would suggest implementation partners ensure the business processes run smoothly together, but if I were a major bank who would I see as having the expertise to implement properly? If the CIO had to guarantee the trading floor had real-time data that linked seamlessly with the back-office finance applications so would the CIO trust a SaaS vendor?

For me that’s the big question. Security is an easy FUD argument against SaaS/Cloud, but integrating business processes is the major area where SaaS vendors will need to convince.

So does that mean the ‘traditional’ big guns can breathe easy? No.

Impact of Conway’s Law and Enterprise IT as a Utility

The reality is that we’re moving to the Cloud/service driven IT model. It will fulfil Nicholas Carr’s view of IT as a utility. At the moment it is driven by economic necessity, but while the SaaS vendors have their chance I am confident they are going to be working hard to get further and further inside the corporate firewall, stripping out the older proprietary systems.

Where does that leave Oracle and SAP? I once had it described to me as moving a world of ‘provices’ and ‘serducts’ rather than products and services. In this excellent overview of the challenges for the enterprise vendors Pete Swabey references Conway’s Law, which reads: “Organisations which design systems…are constrained to produce designs which are copies of the communication structures of these organisations.”

If we follow the model that software will become a commodity and accept the impact of Conway’s law there are going to be a few clear priorities for vendors:

1)      Customer service reputation: historically never a strong suit for enterprise IT vendors, but surely they are going to have to engage more aggressively with customers and be prepared for frank, sometimes awkward dialogue. How far that dialogue should go is the key challenge. If you follow the engagement model to its furthest reaches then surely vendors will involve customers more in agreeing product roadmaps, but that could be a massive, complex headache, which sees profits disappear, much to the consternation of shareholders.

2)      Brand: if you agree that service rather than product will become the priority, that means that the focus on brand identity will have to increase and change. The US technology companies are all fairly sophisticated in protecting their brands, but I’m not sure many of them recognise it as critical to their customer/employee engagement. For example, I don’t really remember either Oracle or SAP trumpeting the capabilities of the Consulting and Support teams much beyond the odd press release. Surely, highlighting the services and expertise of these teams should become even more important than product. And that is not just about tangibles, it is also about the intangibles that customers associate with a brand. For example, would an enterprise IT vendor have the courage to publicise a software implementation that went wrong (and the turn around process), as a positive example of commitment to customers? Today no, but in the future (in the right context) a brave vendor should surely be willing to demonstrate how willing it is to through the kitchen sink at a problem? Creating that kind of mythology enhances loyalty.

3)      People: And if the tangibles and intangibles become ever more important in this service driven model, then obviously people are of paramount importance. A cliché, sure, but again enterprise IT vendors have not always covered themselves in glory when it comes to interaction with their staff. Having worked for an enterprise software vendor (Oracle) and loved it, I know how exciting it can be to work in this sector. However, across the industry the approach to employee communications – more importantly engagement – is frankly patchy. And if you treat staff like mushrooms, then the obvious happens…

So neither a bloody or a velvet revolution, but it would be interesting to be in the boardrooms of SAP and Oracle to hear what they’re saying about the future.

I recently wrote about the prospect of a mood change among enterprise IT customers, in particular less willingness to accept the ways IT vendors interact with them. While I can claim no responsibility it was interesting this week to hear the comments of R ‘Ray’ Wang (should the ‘R’ actually stand for ‘revolutionary?’) at the SAP UK User Group Conference (Sugen).

Thankfully it created more thought provoking headlines than one might expect of a User Conference and Ray Wang was fairly explicit in his warning to the SAP customer base:

“…The traditional models of how we do business have gone away… We’re left with enterprise applications that do a really good job of catching data and automating processes but which are lacking in flexibility and innovation. Our antiquated technology has an impact on the way we handle change management…People need solutions right away, they can’t wait for IT to deliver.” (mycustomer)

Wang went on to criticise SAP’s ability to bring its innovations to market, encouraging Sugen members to demand more of the vendor. Given that the company spent $1.6bn on R&D in 2008 Wang felt that the enterprise resource planning (ERP) vendor had failed to communicate some of its innovations, such as ESME, which was launched a year before Salesforce announced Chatter.

“End users need to work through the user group to push SAP to unlock the innovation, to find one what is available, and to get clarity on the SAP product map so they can plan for change…” (Computer Weekly)

To put it mildly this is not the early Christmas present SAP’s management want. Elsewhere it’s been revealed the company made a New Year’s resolution to put up maintenance fees for some customers to nearer 20%, which has already led to revolt among some customers.

So what’s the answer?
It isn’t all bad news for SAP, because underlying Wang’s comment is the message that the innovation exists, which is positive for its customers. It is also not alone in facing such criticism from influential industry figures. Figures such as Vinnie Mirchandani raised serious concerns about Oracle’s ability to innovate earlier in the year, which provoked a strong response from the company. (disclaimer: I’m an ex-Oracle employee)

Therefore is this simply a return – as Ray Wang suggests – to the 1990s argument about best-of-breed vs. suite solutions, with the best-of-breed being Software-as-a-Service? (SaaS)
Certainly, Marc Benioff has done a superb job of marketing his company, as underlined by the buzz created by Chatter last week. And yet, Dennis Howlett is also right to question whether Salesforce has the genuine capability, experience etc, to embed this new model of innovation across complex enterprise IT infrastructures.

Next week will see the Oracle UK User Group and it will be interesting to see what comes out of that event, particularly as subjects such as the much-heralded and long-awaited Fusion Applications are a subject of discussion.

It is always easy for the media to concentrate on the negatives in such scenarios and it is very easy to pick on licensing and pricing as a key issue. That said it will be interesting to hear whether next week’s conference reflects the deeper issues that Wang highlights.

If it does, does that suggest initial grumblings are gaining momentum and spreading across the industry? I would trust Dennis Howlett’s assessment of the mood in the SAP camp, which suggests things are positive, but as things stands today there appears to be increasing unrest among a variety of customers.

Perhaps the reason is understandable. We are coming out of recession (supposedly) and customers want to be inspired by the companies that provide their IT systems. If that is the case then Marc Benioff is already ahead in the perception stakes.

The answer for vendors could be as simple as being more daring when communicating with their customers. As Peckham’s most famous entrepreneur said many times, “He who dares, Rodders, he who dares…”

Footnote
Interesting development to add to the suggestion of dissatisfaction among SAP customers. Two key members of Sugen, who led the User Group’s involvement in discussions around the maintenance fee issue, have resigned. It would be wrong to jump to conclusions, but it doesn’t paint a positive picture at such a crucial time.

Having just suffered at the hands of a combination of technology and customer service I feel justified to vent. It always staggers me how bad most B2C technology-led companies are, and 1.5hrs with my broadband provider today only compounded that view. Yes, dumb users and mystifyingly random technology glitches make it hard sometimes to be consistent, but when you’re told the immediate solution is to pull the power cable out of the modem box you do start to wonder.

I decided to give up when I was told that it was only a temporary solution and the real fix won’t happen for 7 – 10 working days.

Following this incident I tried to join a conference call. A nice automated lady told me to enter my details and after saying ‘thank you’ she told me that the lines were busy and hung up…all done in that matter-of-fact, yet extremely positive Californian tone that makes people from this corner of the world think they should be the ones apologising.

At times one is left with the impression that the technology companies either don’t care or just don’t have the answers. “Yes you’re our customer, yes you pay quite a bit of money, but hey it’s fickle technology…” I can even see the call agent shrugging his or her shoulders, muttering “I’m not paid enough to go the extra mile.”
I realise that’s a rather sweeping assumption and I do acknowledge it’s tougher for B2C companies working with technology. The perfect storm of the volume of inbound calls, combined with inconsistencies of scaling technology and the ‘capabilities’ of the average technology user make life very hard.

Good Customer Service
As a result I decided to do a bit of dubious research. If you type “customer service” and “technology companies” into Google, guess what? None of the major enterprise software companies appear on the first or second page. When you change the terms to “customer satisfaction” and “technology companies” again none of the big technology vendors appear.

Good customer service can be done, as this Business Week article shows: http://bit.ly/2gTBA4. And major technology companies do try to win awards, eg: Service 800 Awards (http://bit.ly/2ror56) or the SSPA Star Awards (http://bit.ly/3LmRcm), or the JD Power Awards (http://bit.ly/KhJy9).

And yet I can’t think of any major IT company that has customer service or satisfaction or loyalty at the heart of its values. For example, I’ve seen nothing to compare to this http://bit.ly/2xkAJW from Marriott Hotels. Perhaps it’s obvious that they put customers first, but they really emphasise the point throughout their culture, as does Southwest Airlines (http://bit.ly/3G6kIt).

Bad Customer Service?
I can’t think of a technology company – especially the enterprise guys – who spell it out that bluntly. Tom Siebel famously built his company around ‘always the customer first’ (http://bit.ly/23V2dw) and PeopleSoft used to be known for putting the ‘human’ in human resources.

You could say, “Where are these companies now?” and that Oracle has taken on/evolved their approach to customers. Charles Phillips, President of Oracle Corporation, is often heard emphasising the commitment to customers and to give them their dues they do get recognised (http://bit.ly/45lJu9). (Disclaimer: Oracle is my former employer)

That said it doesn’t help perceptions when its executives adamantly refuse to consider altering their approach to maintenance revenue (http://bit.ly/2hGa5q), especially when – unfairly or not – customers see articles like this one (http://bit.ly/23OWcE), showing how well paid Larry is…

Times they are a-changing…
Oracle isn’t alone in facing this challenge of balancing customer service against profitability. As an industry it has done very nicely, thank you, out of recurring revenues from customers and it is a very tough habit to break. To an extent vendors are right in that some of the revenue is needed for R&D, but are they resisting the inevitable?
I refuse to jump on the cloud bandwagon, but market stats show the likes of Salesforce rapidly growing their market share (http://bit.ly/3oASpr) – even if it is from a low base. Similarly, Government departments are becoming more and more robust – particularly in the UK, where many central Govt departments are rumoured to be facing 15% – 20% cuts (minimum) in budgets. The policy document on open source and open standards (http://bit.ly/1Ww1ka) demands greater flexibility from vendors, allowing departments more rights to transfer licenses between departments, something that would be unspeakable for most IT companies.

The suppliers would come back with that dreaded word ‘choice.’ With enterprise wide, perpetual & universal licenses, nevermind SaaS models, the vendors would claim that customers have choice. Yet, ‘perpetual’ is only as perpetual as a vendor is willing to support a platform. ‘Universal’ may have in the fine print ‘everything except the one piece of software you want…’

Additionally, vendors have the awkward habit of ‘inspecting’ or auditing their customers for under or over-licensing, which often leads to further grumbles. A practice that is on the increase in these straitened times.

Alarm Bells Ringing?
Bottom line, the technology industry isn’t helping itself. With major IT embarrassments seemingly never out of the headlines (http://bit.ly/apoCE), it is understandable that customers are becoming less (http://bit.ly/gv9Zb) and less tolerant (http://bit.ly/2ruBAF). Also the open source vendors are rightly seeing this as an opportunity to stoke the fire, as the CEO of Ingres does here (http://bit.ly/3vjaB0).

Yet the alarm bells should be ringing for the big guys. SAP said the recovery would be ‘U’ shaped last week (http://bit.ly/2AUkhV), yet is it too much of a leap to ask whether these companies are missing the point? Companies like Red Hat are much more ebullient (http://bit.ly/2AYwH3). After all the doomsayer comments about Red Hat the irony isn’t lost on its CEO, Jim Whitehurst, when he sees his share price rise above Microsoft. (http://bit.ly/1EYjMz)

Please hold the line
The major IT companies are in a strong position. Big cash reserves and large customer bases make for strong defences in these tough times. But that is breeding a touch of complacency or they are simply dragging their feet. The recession has forced customers to re-think their pre-conceptions about technologies such as SaaS. The concerns about security and reliability are gradually subsiding as platforms become more robust and the benefits outweigh the costs.

If a new era of software delivery models and support mechanisms are allowing customers to be more flexible, then shouldn’t the major vendors being responding with greater flexibility in their customer strategies?
I know what they vendors will say – they have significant customer strategies in place. But are they the right ones for today’s market? Sure the systems integrators and the vendors pull out all the stops when something goes wrong, but it shouldn’t go need to wrong for a customer to feel they are getting the attention they deserve. Certainly, automation of software asset management will help, but there is a great opportunity for companies to shamelessly promote the value of their services.

Particularly, if you are buying into the view that IT products (hardware and software) are eventually going to become more and more commoditised, then won’t the vendors have to find something more than ‘speeds and feeds’ to differentiate? Surely, a radical overhaul of customer service approaches – and more importantly how that’s communicated to the market – is an excellent opportunity to stand out.