In this research report we take a closer look at the challenges of deploying enterprise applications to the Cloud. Virtualization and Cloud Computing are transforming requirements for infrastructure and application management tools. Management automation problems that were seemingly solved ten to fifteen years ago are re-appearing again in completely new contexts and challenge IT organizations and incumbent management tools vendors. These discontinuities in the market create opportunities for startups such as XebiaLabs; - a firm focused on application release automation tools for virtualized and cloud-based environments. As part of the “20 Questions,” an MGI Research Interview Series with leading technology industry thinkers, doers, investors and observers, Igor Stenmark recently interviewed the CEO and VP of Product Management of XebiaLabs, - Coert Baart and Andrew Phillips.

20 Questions with Mark Symonds, CEO of Plex Systems

SaaS upstarts are a real threat to the established revenue streams of the major enterprise applications vendors. Even with recent activity in the space – Infor buying Lawson, Apax’s acquisition of Epicor (and subsequent merger with Activant Solutions), Microsoft’s efforts with Azure and Dynamics, and SAP’s re-launch of Business ByDesign – it may be too little, too late for these entrenched leaders to make the cultural, technology and financial shift to push the SaaS delivery model into SMB manufacturing. Plus, customers remember the pain and disruption with their last ERP implementations; are they really ready to rip and replace? In this in-depth interview, Mark Symonds, CEO of SaaS ERP vendor Plex Systems, Inc., shares his perspective on whether the Force.com platform can handle the demands of complex manufacturing platforms, how the iPad is transforming manufacturing, and why SaaS vendors struggle when selling into medical device companies. MGI Research’s “20 Questions” is a C-level interview series with leading technology industry innovators, investors and executives.

Cloud and virtualization are forcing IT organizations to completely re-think their systems, security and network management strategies.  Both the requirements landscape and the applicability of existing management tools are being challenged and redefined by multi-pronged advances in cloud computing, mobile technology, agile development, and social media. While the incumbent management tools software vendors have consolidated, a new generation of companies have taken the spotlight. The new entrants bring technologies that have been built from the ground up to address modern infrastructure and help IT address the rapidly increasing regulatory and compliance mandates. One such emerging company is LogLogic – a California-based firm focused on tools that optimize security and compliance management. As part of “20 Questions,” an MGI Research Interview Series with leading technology industry innovators, investors and executives, Igor Stenmark recently had an in-depth discussion with Guy Churchward, the CEO of LogLogic. Conversation topics ranged from how IT management and security tools will evolve in world defined by virtual resources and cloud services to the opportunities and challenges faced by LogLogic. 

On Monday, October 24^th 2011 Oracle (NASDAQ: ORCL) announced that it was offering to buy RightNow Technologies, Inc. (NASDAQ: RNOW) for approximately $1.5 billion. Oracle will pay $43 per share, a nearly 20 percent premium to RightNow’s closing price of $35.96 on previous Friday. We see the combination as a positive for both RNOW and ORCL. This is the first sizeable cloud software deal for Oracle. Remarkably, the acquisition Enterprise Value (EV) multiple is within 5% of what would have been predicted for RNOW by our SaaS valuation model in March 2011.

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Our current, October 2011 vendor scorecard provides a qualitative rating for large systems vendors such as Hewlett-Packard, Oracle, Dell, IBM, EMC and Cisco. The note contrasts these ratings with quantitative MGI Index scores measuring business model efficiency and with growth and valuation parameters. The recent upheaval at HP provides an interesting backdrop to our rating scores. With a drop in HP stock, a number of analysts and investors have been turning positive on the company. We think that such enthusiasm is a bit premature. HP's stock is cheap for a reason. In a related research note: "Who Benefits from HP Disarray?" we analyze the opportunities and threats for HP and its peer group.

Despite the huge cash hoard sitting on software companies balance sheets, perennial predictions of a massive wave of 2011 industry consolidation have not materialized. SaaS company mergers are few and far between while enterprise software companies have been cautious to avoid any non-accretive deals. We believe that amongst several possible industry merger transactions, Manhattan Associates, a provider of supply chain execution software is now the most likely acquisition target. On the short-list of potential acquirers are SAP, Oracle, Infor, and JDA Software aswell as a few private equity firms.

HP customers, investors and business partners feel like they are stuck in the HP version of the movie "The Groundhog Day". After three dramatic CEO exits in recent history, with the ouster of Hewlett Packard's CEO Leo Apotheker, and the appointment of Meg Whitman to succeed him, it is not a surprise to see both HP shares and its market position under pressure. The question amongst HP competitors is not one of "Who could benefit from HP troubles", but one of "Who will benefit the most?" Can HP really defend its turf in servers, storage and software while continuing the process of assimilating a large services business acquired with EDS? Do the immediate competitors such as IBM, Dell and EMC, have the requisite strength to attack entrenched HP market positions? In this report, we analyze HP current situation as well as the outlook for a recovery at the world's largest technology company.

A significant amount of time, money and effort is spent in the evaluation, selection, negotiation and acquisition of technology assets. In spite of all of this effort, many companies chronically over-pay for those assets and sign sub-optimal contractual agreements. Andrew Dailey of MGI Research recently conducted an in-depth interviewwith Joe Galuszka, a widely recognized expert in the area of IT Contract Optimization, Joe works directly with CIOs and CFOs to assist them in maximizing their negotiation leverage and achieving additional cost savings and advantageous contract terms and conditions.