As I sat down to write this week's article, two news items that had been floating aimlessly in my mind leaped up and shouted that they were the only story that was worthy of coverage. Since I find such bad behavior between my ears to be extremely annoying, I told them that they would have to share the same article and do so without fighting. Without further ado, here are my two stories (remember kids...no shoving).

Microsoft Embraces Open-Source Interoperability...But Why?

This month, Microsoft is mounting an all-out offensive to improve the interoperability of its products with open-source software. Three weeks ago, the software giant inked a deal with Zend Technologies to ensure that PHP applications created using Zend's development tools will run on Windows as well as Linux systems. Two days later, Microsoft linked arms with Novell to announce that it will collaborate with its long-time rival to improve interoperability between Windows and SUSE Linux. The two companies will support each other's virtualization offerings so that Windows runs on Novell's implementation of the open-source Xen hypervisor and SUSE Linux runs on Microsoft's Virtual Server and Virtual PC. The vendors will also collaborate on technologies that make it easier to manage mixed environments of Windows and SUSE Linux servers.

Last week, Microsoft joined with 23 other software and hardware vendors—including Citrix Systems, Novell, and Sun Microsystems—to announce the formation of the Interop Vendor Alliance. According to its charter, the goal of the alliance is to identify opportunities to enhance interoperability with Microsoft technologies. Besides holding regular meetings about such opportunities, the vendors are promising to conduct interoperability testing and communicate with customers about their interoperability solutions via the alliance Web site.

While Microsoft's efforts to improve interoperability are laudable, some of its announcements contain less substance than their headlines promise. For instance, PHP applications already run on Windows, though they do not always perform well on the operating system. As for the Interop Vendor Alliance, most of the members have been working closely with Microsoft for years to make their offerings work well with Windows and other Microsoft technologies. The alliance puts a more public face on these collaborative relationships, which is probably the most important thing it will ever do.

The announcement with the greatest substance is Microsoft's collaboration with Novell. If the two vendors live up to their promises, companies that run mixed SUSE Linux and Windows environments on Intel-based x86 and x64 servers will definitely benefit from the pact. Such firms would be able to partition their servers using either Microsoft or Xen hypervisors, run SUSE Linux and Windows in those partitions, and know that the servers would be stable. They could also get tools that can manage such mixed environments, albeit at a fairly high level.

That said, I cannot help but wonder why Microsoft selected Novell as its open-source partner rather than Linux market leader Red Hat. The company claims that Novell, unlike Red Hat, has a licensing model that allows Microsoft to protect its intellectual property. That may be the case, though I cannot imagine that such legal issues are insurmountable. What I can imagine is that Microsoft is trying to inject Windows interoperability code into one Linux distribution but not others. That could "fork" the Linux code base, thereby weakening its appeal versus Windows. This would not be the first time that Microsoft has used an "embrace and extend" strategy to undermine opponents while simultaneously positioning itself as a champion of interoperability.

Of course, this is just my imagination. Let us see whether my musings turn out to be an idle daydream or a premonition of things to come.

Measuring the Cost of ERP Ownership

Earlier this month, Aberdeen Group released an interesting study on what manufacturing firms are paying to purchase and deploy enterprise resource planning (ERP) systems from several vendors. The study indicates that many manufacturers may get more value for their ERP dollars from smaller vendors and service providers that specialize in meeting their unique requirements than from larger suppliers.

The study, which was based on a survey of more than 1,100 manufacturers, gathered information about how much companies paid for ERP licenses and external services needed to implement the software. Aberdeen Group also asked each firm to provide data about the number of users it supports and the ERP functions it uses.

As expected, the survey determined that manufacturers with larger numbers of users pay less per user for software and implementation services than firms with smaller numbers of users. This reflects the facts that ERP vendors offer volume discounts for larger orders and that big companies realize economies of scale on implementation services.

When the survey data was segmented by ERP vendor, a more provocative finding emerged. Manufacturers that implemented systems from Infor, Lawson, and QAD paid less per user than those that implemented systems from Oracle and SAP, though Oracle's cost per user was significantly less than that of SAP. While the customers of these smaller ERP vendors had fewer users on average than customers of Oracle and SAP, they paid similar amounts per user for their software licenses. They paid significantly less per user for implementation services than the manufacturers that deployed Oracle and SAP systems.

[Source: Aberdeen Group]

While Aberdeen Group did not offer reasons for these cost-per-user differences, I am going to hazard a few educated guesses. For years, these smaller ERP vendors have specialized in serving mid-market manufacturers (though Lawson's history with these companies comes through its acquisition of Intentia). They have developed networks of regional implementation partners that specialize in serving such firms. These solution providers know their markets very well and price their products and services for their markets. By comparison, Oracle and SAP are used to working with larger enterprises and are still adjusting their pricing models to the realities of the mid-market. Many of their implementation partners are global firms that are used to charging enterprise-level prices for their services. Unless this state of affairs changes, many mid-market manufacturers could continue to find better values from regional service providers who represent smaller vendors.

It should be noted that the Aberdeen Group study did not break down its cost data by ERP product lines within each vendor. If it had, it might have found that some Oracle and SAP product lines are as cost-effective as those of Infor, Lawson, and QAD. In particular, I suspect that Oracle's JD Edwards products would have registered highly competitive costs per user. For years, JD Edwards specialized in serving manufacturers who ran its software on the System i and its predecessors. To this day, a network of regional service providers specializes in deploying the software at manufacturing sites. That is one reason that Oracle continues to promote JD Edwards as one of its leading solutions for such companies.

That said, the Aberdeen Group study is an excellent resource for any manufacturer that wants to benchmark itself against its colleagues. To get a copy, point your browser to the Web sites of Infor, Lawson, Oracle, or QAD. Whatever site you choose, I believe you will find the exercise to be well worth it.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.

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