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Saturday, January 15, 2011

After the Tunisian Revolution, which Arab country is next?

In the late 1970's, I was a teenager spending part of the summer in my mother's hometown in Romania when the inhumanity of the Communist regime of the self-styled Danube of Human Thinking, Nicolae Ceausescu, hit me. The paucity and bad quality of goods in stores; the weird cat-and-mouse game we had to play in Bucharest when staying with a cousin so that the resident man from the Securitate (Ceausescu's answer to the Gestapo) wouldn't see us spending the night with her (yes, you've heard right, my mother, as a foreigner, was not allowed to spend the night at her cousin's house!); my great-aunt spending time in jail, after the Communists took over, because she had grown up in France where her sister (my grandmother) still lived thus making her a dangerous counter-revolutionary and Western agent; my mother not being allowed to inherit the house built by her grand-parents (because she was born in Paris and had left Romania); nobody allowed to travel abroad - it all struck me as too weird and inhuman to last. "Maman, this can't go on. Sooner or later the system will collapse," I exclaimed. My mother shook her head and replied with a sad voice, "Look around. Has any Communist regime that has taken over ever lost power?  Why do you think your grandmother insisted that I go back to France?" It was true that at the height of the Cold War the Communist-bloc dictators seemed unassailable.

And yet, at the end of the next decade, while pursuing my master's degree in the United States, I was mesmerized by a scene on my TV screen, a scene I never thought would happen. In December 1989, during a speech at the soon-to-be-renamed Revolution Square in Bucharest, something unthinkable took place: Ceausescu, who among his self-granted titles used "Genius of the  Carpathians", was booed by thousands of Romanians. Yes, the docile Romanian people who had put up like sheep for decades finally said, "That's enough, we can't stand this anymore. Go!" and rose against the tyrant. Vox Populi, Vox Dei. Three days later, on one of my most memorable Christmas Days, the hated dictator and his wife Elena were executed. Justice and democracy had finally come to long-suffering Romania. But too late for my great-aunt who had died a few years before of a lung disease contracted while in Communist jails.

In the next two decades democracy would soon conquer all of Eastern Europe, Latin America (with the exception of the Castro-engineered hell in Cuba), many Sub-Saharan African countries, part of East Asia including Chinese Taiwan. Only one region held out: the Arab world. From the (Persian) Gulf to the (Atlantic) Ocean, as the phrase in Arabic goes,  feudal monarchies, military-backed single-party regimes and presidents-for-life hold sway, impervious to the winds of freedom blowing all over the world, and often actively aided and abetted by Western democracies (now that is an irony.) It was absurdly claimed that Arabs were not wired for democracy, that Islam was the reason, forgetting that many Muslim countries such as Turkey and Indonesia had embraced multi-party democracy quite successfully, some of them even electing female rulers. But Arab countries were still the exception. No velvet revolution there, sheepish Arab citizens just seemed willing to accept their sad lot forever.

When my father's home country of Mauritania, where I spent part of my childhood, elected Sidi Ould Cheick Abdallahi (who went to school in France with my parents) as president in 2007, I held my breath: could that tiny country teach the Arabs a lesson? In Arab League meetings, "Sidioca" (as he was familiarly known) was the only Arab leader freely chosen by his people and you could tell it grated on his colleagues. And you could hear the collective sigh of relief from Arab rulers when 18 months later Sidioca was overthrown in a bloodless coup by a general who wanted to be top dog. Things were back to normal.

So when Tunisians started rioting a couple of weeks ago (almost 21 years to the day after the fateful event in Bucharest) about their economic conditions, neither Arab rulers nor the Tunisian regime's Western backers worried too much. Nothing that a good crackdown, censorship and a few deaths can't fix. And yet day after day, week after week, the ranks of protesters kept swelling as the  nature of their demands grew: from lack of employment opportunities to disgust with corruption and, as the death toll rose, to outrage at the killings perpetrated by the police and, finally, demands that President Zine El Abidine Ben Ali, whose 23 years' reign had turned the country into a police state, step down. Then last Thursday, with the whole country in full uprising,  I saw on Al-Jazeera TV  Ben Ali speak in Tunisian Arabic, to be better understood by a majority of his subjects, that " I have understood you, I will not run again in 2014." My first reaction was, "I don't think you will because you'll be gone well before that." I knew then the game was up for him and it would be just a matter of months, maybe weeks, before he was consigned to the bins of history.

I was wrong. The next day the dictator who had run Tunisia with an iron fist for so long fled the country. Vox Populi, Vox Dei.

The Tunisians had achieved something unique in the Arab world: for the first time an Arab ruler was overthrown not by the army, or a foreign invasion, or a coup, but by the people themselves. For the technology person I am, I was gratified to see that this was also the first digital revolution on record. Tunisians, especially the youth, made great use of Twitter to coordinate rallies and protests, used their iPhones to make pictures of what was happening and posted them on Facebook. With the government preventing foreign reporters from entering the country and covering the events, most of the images we first saw were amateur videos. Tunisians filmed themselves making their own revolution and shared it with the world.

I bet you anything you want that no Arab ruler slept comfortably last night. Most of them are feeling quite edgy, and several must be shaking in their boots. The military-backed FLN party-run regime next door in Algeria is wondering whether its days are counted. Ominously there were riots in Algiers at the same time as in Tunisia, but they were quickly subdued (for the time being?) The Tunisian case, however, shows that any insignificant event  can turn into the sparkle that will ignite a full conflagration (in Tunisia it all started with a college-educated street vendor setting himself to fire in protest at lack of opportunities and heavy-handedness by the police) and that no matter how long a people has been cowed there comes a moment when they conquer the fear, break their shackles and there is just no stopping them.

Tunisia's other neighbor, Libya to the east, whose buffoonish dictator has (mis)ruled it for 40 years, could be the next domino. But the biggest prize for popular overthrow of a dictatorial regime  would be the country next door: Egypt. This ancient land shares many traits with the situation in Tunisia: heavy-handed security apparatus, corrupt regime, a pauperized majority and a relatively well-educated youth who have been watching with fascination the events that their fellow Arabs have shaped in Tunisia. The current Pharaoh, Hosni Mubarak, who has maintained himself in power for an incredible 30 years (yes, you've read right, he came to power in 1981 when Reagan was president and Gorbachev had not even come to office!) through repression, rigged elections (like Ben Ali in Tunisia he claims at every election an improbable score of 90 to 99%) and support from the United States government. And once Egypt, the heart of the Arab world, falls, the other Arab countries will follow through. History is on the march and it is exhilarating to watch it.

(Tunisia also broke another record. Yesterday at noon Ben Ali was still president, in the evening his Prime Minister had officially taken over only to be succeeded this morning by the Speaker of Parliament. Three presidents in less than 24 hours, that must be  a world record, even better than the three presidents Argentina had over ten days back in the early 2000's.)

Tuesday, January 11, 2011

Can software dinosaurs reinvent themselves as cloud-based vendors?

Lou Gerstner, IBM's legendary CEO, famously claimed that "elephants can dance" when describing his amazing success at turning Big Blue from a hardware-cum-software company into a services group. This feat is, however, quite unique and cannot be easily replicated. In a recent Linkedin discussion of the HR Technology group, claims were made that traditional software vendors such as SAP or Oracle can turn their offering from on-premise systems (ERP) to web-based ones, also known by the acronym SaaS.

First, let's get the issue of terminology and acronyms out of the way. I've always hated the ERP term, so  typical of the IT industry to throw unintelligible acronyms at every technological innovation. Most laymen would just stare at you blankly if you told them they needed an Enteprise Resource Planning to manage their business functions in an integrated way. Why not call it Integrated Business System (IBS)? Wouldn't this letter combination be as good as any, with the added advantage of actually meaning something? (The rational French translate ERP as PGI- Progiciel de Gestion Intégré or Integrated Management System) Now that a new IT model is taking root, guess what? We need a new, incomprehensible acronym to befuddle people even more. And thus was SaaS born to refer to software that instead of being installed in your own computers within your company's walls, is accessed to, and your data saved, online (just like Hotmail versus Outlook.)  But why call it Software-as-a-Service, when web-based or online software does the job as adequately and more meaningfully?  But the IT industry wouldn't be what it is if it spoke in plain English. Maybe we are subliminally implying that the older, on-premise systems were software-as-a disservice? In which case it would make sense to me. (According to another buzzword and misnomer, often used in conjunction with SaaS, these applications are supposed to reside in a somewhat magical world called The Cloud. Nothing could be further from the truth as these applications are dished out by servers parked in data centers grounded on terra firma.)

With this off my chest, let us get back to whether the traditional software vendors (or dinosaurs to remain with an animal-kingdom image) can reinvent themselves by embracing this brave new world of SaaS. The first question that many people will ask is whether that is an issue at all. Surely, there will always be companies that would rather own their HR system (or other business software) than rent it, won't there? Well, if you look at the evolution of IT, not really. Why bother having huge inhouse data centers with legions of IT specialists when you can have somebody else bother about it and you just pay as you use it, like a utility? Actually the comparison with utilities is spot on. When electric power came about, most companies had their own generators. But when power transmission prices came down it was easier to be far from the source and then companies realized they could sell their surplus power to other companies. From then on it was a short hop for specialist companies to produce and distribute power. Who now in their right mind would want to have their own power generator?

Some defenders of the software ancien régime will press the point that with your own product installed within your company's walls you can customize it to your heart's content, something you can't do with a web-based application. Let me remind you that (just like with electric power) initially companies built their own business applications before realizing it was more cost-effective to buy it from a software vendor. The buy-vs.build debate was won by the package-software firms who won the resistance of the home-made lobby who led a rearguard battle to keep IT inhouse as the only guarantee that "all our requirements can be met."

The arrival of SaaS heralds another sea change in IT summarized by the phrase I used in the earlier paragraph: "Why buy it if you can rent it?" Configuration capabilities will win over customization defenders. And even if the traditional-software vendors, as befits an incumbent industry, still make out the lion's share of the business-application market, the trend is unmistakable: a growing number of HR system projects are now implemented through a SaaS model. The minority is soon going to be a majority. The question is therefore no longer whether old software companies should or want to test SaaS waters , but whether they are capable of doing so with a modicum of success.

In the Linkedin discussion I alluded to in the opening paragraph, it was claimed that the flagship product of one such dinosaur, Oracle EBS, in its release 12 variety had morphed into a full multi-tenant product. For you laymen, a multi-tenant system is one where many different companies can be managed in a single instance of the system, something that traditional software vendors never bothered to do since they sold their products to a single customer. However, now that consumers (of the corporate variety or not)  do NOT want to own the system, but are happy to access it online, it becomes vital to be able to provide it to many users at once. This issue of multi-tenancy actually predates the rise of SaaS since to be able to provide outsourcing services on traditional ERP systems (oops, sorry, integrated management systems) required such a feature and yet Oracle never managed to develop it until now. But has it?

To add to my list of bestial metaphors, can a zebra really shed its stripes? Can an old dog learn new tricks? I doubt it. Oracle's DNA was in the database business which explains why it never managed to become the leader in the applications business  thus obliging it to resort to buying the leaders in the various business software spaces (PeopleSoft in HR, Siebel in CRM/marketing, Hyperion in analytics.) But even there it remains a traditional, on-premise vendor. As Naomi Bloom, our grande dame of HR software, quite rightly said, no amount of functional enhancements can change that fact. The SaaS business is radically different from the traditional software one. Let's consider the just two points:

1. Even if Oracle has managed to add an extra layer in EBS 12 to allow storing data across several companies, that doesn't make it true multi-tenant. What about cross-customer processes? Can Oracle EBS truly launch a single payroll process for several customers at once? Produce reports? So far, the only ERP partner that has had some success in multi-tenanting  an old system is NorthgateArinso with their SAP-based platform, euHReka. (All outsourcers who did not build their own platform are struggling with this issue, from Fidelity to the big Indian  BPO powerhouses.)

2. Even if Oracle were to truly multi-tenant its offering (a big if, knowing that most of their R&D resources are focused on Fusion), there is more to SaaS than just a multi-tenant model. The existence of multiple versions, for one thing, precludes it being considered as a true SaaS offering.

The future of cloud HR

If you look at the emergence of SaaS vendors, all have been products that were designed from the start as such (Workday, Salesforce etc.) Jurassic vendors such as SAP and Oracle are not nimble enough in their business models and product architecture to reinvent themselves as true SaaS vendors. There is a reason, after all, why dinosaurs who once roamed our planet as its undisputed masters disappeared: they share many traits with these old software vendors - big strong bullies who couldn't adapt and had to make way for humans, a much smaller species. Our software dinosaurs can tweak their systems any way  they want, it will not make them a true SaaS offering. It is more likely to end up as a turkey since it will be nothing more than lipstick on a pig- and I shall stop this software bestiary at this last four-legged image.