IT Investment Research

"Flip" Filipowski re-invents himself and the wheel... again

You have to admire a guy that not only re-invents himself every couple of years but also re-invents the wheel. While getting someone else to partially fund him. The news is that SilkRoad technology (the lower case "t" is apparently not a typo) announced today that

"...it has closed on a $54 million equity round of capital led by new investor Foundation Capital, and including existing investors Azure Capital Partners, SilkRoad Equity and several individuals."

I say partially fund him because via Silkroad Equity (why not a lower case "e"?), Filipowski has some of his own skin in the game.

The nut of it is that Filipowski is now banging the drum for software as a service [SaaS], the way he banged it for dot.com 10 years ago and RAD 20 years ago. Interestingly he is hyping SaaS in the same week that Oracle (ORCL) CEO Larry Ellison, another guy with his own skin in the SaaS game along with 469 signfiicantly minority "partners" in NetSuite (N) [other shareholders as of February 29, 2008], suggested SaaS would be a slow payback investment.

To Larry, that means a long patient climb for an ERP SaaS offering to a become a billion-dollar business, a process already 10 years in the making. To Filipowski, 10 years is a dozen startups, restarts, renames, mergers, acqusitions, bankruptcies, and so forth.

As for the functionality that (I am sorry what is the name of this year's Filipowski company again?) is offering, it's called talent management software. I doubt if that is a billion-dollar market opportunity, at least on a pureplay basis and as I define the words talent and management. But the company offers more mundane things like benefits administration (called "life events") and hiring (sorry, "onboarding"). According to Filipowski it is:

"one of the greatest opportunities for value creation that I have ever personally observed in the software industry."

Adding such mundane functions does increase the opportunity. That's why a guy named Dave Duffield,, who actually knows something about human resources [HR] automation, is all over the opportunity already.

Google, IBM, Red Hat, Sun and "the great left-wing conspiracy"

Another anti-Microsoft (MSFT) front group has emerged in favor of “free and open standards,” hyping what it calls the Hague Declaration and making some absurd connection to the Universal Declaration of Human Rights. The propagandists, partially funded by publicly traded companies, have a little trouble describing what that term “free and open standards” means (or even using it consistently) but the group has no trouble indicating its political stripes. Unbelievably it calls itself Digistan, apparently to indentify with the fascist terrorists based in countries and regions using the Farsi-based suffix “stan.”

All of these front groups percolate around about two dozen individuals, mostly European. The vast left-wing conspiracy of George Soros works around the edges of their mostly web-site-only organizations. But there is a profit motive. Some seem to exist to raise money from public companies in order to hold conferences at excellent venues. Others run consulting companies to advise governments how to follow “free and open standards” or law firms that write licenses that follow “free and open standards.” Only if these lefties could be time warped back to the last century so that they could ‘fight the right’ in Spain (or sit in the Les Deux Maggot and talk about fighting the right in Spain). Then the rest of us could avoid having our tax dollars wasted and our share values diminished.

Digistan claims it has only individuals, not businesses or organizations, as members. But looking at the founders’ affiliations illustrates that the group goes right back to the same Microsoft-competitor-based organizations that are trying to manipulate free markets via government intervention around the world. Like many of the other anti-Microsoft organizations related to these same individuals, Digistan was likely created for some “critical” current event that only the founders recognize as critical and will fade away when that event passes All the while the shareholders of IBM (IBM), Red Hat (RHAT), Sun (JAVA) and others are seeing their share value diminished by every dollar wasted on donating to them or sponsoring their events.

Digistan was launched thanks to a grant from the Information Program of Open Society Institute (the George Soros connection) and matching grants from OpenForum Europe and the European Software Market Association. The latter does not list its sponsors but the former is the front group behind other front groups like NOOOXML and Document Freedom Day (that’s right--it’s all the same bizarre cast of characters back again to waste your money). The OpenForum Europe's events, as well as possibly the organization itself, have been sponsored by Google (GOOG), IBM, Red Hat, and the ODF Alliance (which of course is closely tied to Sun because ODF--the Open Document Format--is Sun’s document format standard).

If it wasn’t for the implied association with terrorism it would be funny.

Microsoft must have thought we'd all be on Vista by now

Find out how many HP (HP) AMD (AMD)-based XP PCs there are in the world, multiply by $100 and deduct the result from Microsoft (MSFT) profits over the next four quarters. It's probably peanuts but the rollout of Windows XP Service Pack 3 (SP3) is another black eye for Microsoft quality control and all-around poor planning for customer service and support.

It's probably not as bad as the "Vista-enabled PC" upgrade program in 2007. That Microsoft effort lead to everyone wanting to go back to XP because Vista's performance was so bad, even on so-called Vista-enabled PCs, after waiting months for their promised Vista upgrades. During the Vista-enabled scenario, luckily, my 6-year-old grandson Owen immediately complained that there was no Pinball on Vista. So I quickly returned to XP. No harm/no foul for me but I think there are even lawsuits ongoing on that issue.

So this year it's a poor release of XP SP3. The Microsoft master plan probably said that we all had Vista by now. Actually when I read Greg Keizer's article in PCWorld on May 9 I was happy two ways.

-- First I thought I had screwed up the SP3 download/upgrade somehow only to find that it affected at least all HP AMD-based PCs like mine. And maybe any AMD-based PC.
-- Second, I was happy that I had turned off Windows Automatic Update when I bought the PC (I don't like being that connected with anyone, not just Redmond).

Again, I was able to restore to SP2 pretty easily. But I don't know if the average home PC user would have figured it out. Especially if they had no idea the download had happended overnight because of Windows Automatic Update. Many users of my type PC found their home PC endlessly trying to reboot with probably no idea that Microsoft had automatically updated them to SP3 over nite, putting them in the repetitive loop.

I just left a message on the Microsoft support line, which is promising free SP3 support until April of 2009 (although it takes a little work to find this page so Microsoft may save a few dollars in support costs). I expected that they would inform me when a new version of the upgrade was available to download (although there was no apparent way to let Windows Update know that I had removed SP3 from my system). Instead Microsoft sent me the same steps that Jesper Johansson had posted to his blog on Thursday May 8. I don't see a lot of home PC users easily working their way through this set of instructions (especially since Microsoft's version was missing a few steps).

So see you this weekend Owen. Pinball is up and running again.

Agassi’s legacies, NetWeaver and BPX, are rays of good news to SAP

Shai Agassi resigned from SAP (SAP) 13 months ago. But because of the way large corporations such as SAP work, the Sapphire user conference in Orlando May 5-8 is really his last SAP event. Not much has happened during the first two days of the conference except for new SAP NetWeaver business process management (BPM) capabilities which strengthen SAP’s 21st century technology platform, Shai’s major legacy. These capabilities deliver on the NetWeaver innovation road map of April 2007 which he would have been working on prior to his departure.

Together with the recent release of the SAP 20-F and management comments to financial analysts after the SAP financial-results release of April 30, 2008, the Sapphire NetWeaver BPM announcement also highlights the revenue success the product is having. By my methodology NetWeaver revenue is nearing $2 billion on a trailing 12 month basis (SAP says it’s only a billion euro but I believe it uses a different methodology than I do).

Either way, the key statistic is that SAP says 37% of that revenue is for standalone NetWeaver instances. That does not mean that the user was never previously an SAP user (although that is true in some cases). It means that the middleware is being used for traditional middleware purposes such as integration, web/application serving, software development, etc. irrespective of which applications—SAP’s or other suppliers’ or in-house developed—that the middleware is integrating, serving, developing, etc. It’s not just tying two SAP application instances together (some of the other 63% is heritage SAP BI but the total does not include Business Objects). That makes SAP a major middleware player, right up there with IBM (IBM), Oracle/BEA (ORCL), TIBCO (TIBX), Software AG and implicitly Microsoft, from a standing start just a few years ago.

Also SAP has also quietly put together a community of 350,000 Business Process Experts (BPX) from among its users, integrators and other partners. Agassi was one of the early posters on the BPX when it was launched a few years ago.

In other words, by any measure, SAP is no longer a one-trick pony in the software market. In my opinion, Agassi is the person that foresaw the need for SAP to enter that space aggressively and laid out the plan to get there. Wherever he is today, driving around in one of the “green cars” he’s building in his new endeavor, he can toot his own horn.