It took Isilon, EMC’s big data storage division, three months of development and a price tag in the “high five figures” to integrate its own internal Salesforce.com customer service application with Axeda’s machine-to-machine (M2M) application.

But it’s been worth it, according to Jason DePardo, director of technical support at Isilon.

DePardo outlined the project at a session during the Axeda Connexion conference being held in Cambridge, Mass. this week. (Axeda’s decision to misspell connection in its signature event remains one of those corporate branding moves I will never quite understand). The event lured me, as well as a number of local industry analysts — some of whom elected to skip to the SuccessFactors conference on the other coast — to Cambridge to see what’s happening in the world of M2M. We weren’t the only ones intrigued, so were SAP, Oracle and Salesforce.com, who are among the sponsors and presenters at the event.

The promise of enterprise applications and big data is an intriguing one and M2M certainly has a place in that conversation. According to Axeda CEO Jack Sweeney, M2M is on track to make 3.5 billion connections by 2015 and 15 billion by 2020. There was however, refreshingly little use of the overhyped “big data” term at the event.

Instead there was some concrete discussion of bringing M2M data into business applications. EMC’s Isilon, for example, is using Axeda to send product information directly from their customer’s storage arrays into support cases in Salesforce.com. 

In the midst of rapid growth before it was acquired by EMC in 2010 for $2.5 billion, Isilon saw its business expand even faster once the deal went through. Its caseload jumped from 3,000 support cases per month in January of 2011 to 6,000 cases per month a year later.

To cope with the onslaught, Isilon launched SupportIQ, a free product for its customers using Axeda’s M2M technology.

Prior to the initiative, support cases could take up to days to even get started. Isilon ships out a proprietary hardware and operating system in its storage arrays. Yet once it’s shipped, the company didn’t know how the customer had configured the array, how many nodes they had and other details relevant to solving a customer’s issue. When an issue arose, customers would have to discuss their configuration and run diagnostic scripts for Isilon’s support engineers.

Sometimes those requests would come in after the customer contact had left for the day. Then the diagnostic upload might fail the next day. It could sometimes be two days before support techs even began looking at the problem. Plus, when customers called back a few months later with a new support ticket, they’d have to repeat all their information again.

With the Axeda-Salesforce integration, support engineers can run those diagnostic scripts right from a button within Salesforce.

“The M2M technology has taken the process of starting the support case from hours, possibly days to literally how long it takes to run the script,” DePardo said. “We’re not constantly asking them, ‘hey can you run this command for us.’”

While the Salesforce-Axeda integration was a customer service initiative, it’s had an impact on sales as well. For example, one of the alerts M2M forwards to Isilon is when a customer reaches 80% of their storage capacity. Right now there’s no formal process for taking action on that information, support just forwards it onto sales, but that’s something Isilon is investigating.

“When we sell to a new customer almost undoubtedly their data needs grow and they are a follow on customer for us,” DePardo said. “If they had a good support experience it makes the sales easy.”

To date, Isilon has about 30% of its install base running SupportIQ, though 50% have the ability to enable SupportIQ.

“Some choose not to for security purposes or more than likely it’s an education process,” DePardo said, adding that one summer project for the interns at the company is to call Isilon’s customer base to educate them about SupportIQ.

In the meantime, Isilon has been able to handle the influx of support cases without adding significant headcount and hopes to further decrease the time it takes to close out a ticket by adding features like the ability to gather data on the node configuration from within Salesforce.com.

Of course, not all projects go that easily. I spoke with one Axeda customer at lunch who asked not to be named. They’ve put their M2M project on hold for an issue familiar to anyone running enterprise applications – they’re data was so dirty that the insights they got couldn’t be acted upon. Multiple names on one customer account or outdated information meant the machine data coming into their ERP system couldn’t be addressed.

There was a fair amount of excitement around M2M, particularly from Emily Nagle Green, chairman emeritus of The Yankee Group and the keynote speaker at the show, who sees M2M as more than just machines but connecting to things – everyday things. She discusses that in the video below.

Yet, as exciting as things like big data and M2M may be you still need to do the dirty work, as in cleaning your dirty data.

In-memory! Cloud! Mobile!

There’s no question what the dominant themes were at last week’s Sapphire conference. They were writ large across the Orange County Convention Center and repeated mantra-like from the keynote stage.

Far less time was spent addressing SAP’s core ERP business. In fact, when key executives did discuss “the core” it was to explain how they were not going to change it or disrupt their customer base.

Hasso Plattner, SAP Executive Board member, said in-memory is different for OLTP and OLAP. (Image courtesy SAP)

That stands to reason, of course. Most industry observers will tell you that cloud, mobile and — maybe not in-memory, but certainly analytics and faster analytics, the core value proposition for HANA — are the key trends moving forward. A show like SapphireNow, is typically for roadmaps and grand vision.

Besides, co-CEO Jim Hagemann Snabbe did offer a few promises for enhancements to SAP’s core ERP suite.

“We’ll pay special attention to a new user experience for the business suite,” he said during his keynote address. “It’s time we get modern with interaction for our users, creating intuitive and consumer-like experiences.”

Yet, a few statements from SAP’s senior leadership should certainly have SAP customers questioning what happens to the core ERP product while SAP is focused on in-memory, cloud and mobile.

Take co-CEO Jim McDermott’s statement from the post keynote QandA with press and analysts:

“On the implementation and ready-to-run Rapid Deployment Solutions, we view the partners consuming much more of the standard ERP business of SAP,” he said. “Much more of that business will go to the partners. Their networks are more suited for that. We want to focus on mobile, in-memory, analytics and the cloud. We want to move our best people to these high value solutions and then teach the ecosystem what we do and how we do it.”

Those looking for help from SAP with the Business Suite had better get friendly with their partner instead.

In fact, Snabbe and McDermott both made the case for cloud applications being fundamentally different from on-premise. While that’s partly a shot at Oracle and it’s either/or Fusion Application strategy, it also paves the way for a new wave of applications, led by SuccessFactors CEO Lars Dalgaard.

“I think it’s a fundamental mistake to take an application designed for on premise consumption and just move it to the cloud,” Snabbe said. “It will not give you the opportunity to scale and be profitable in the cloud. It’s the easiest way to be fast to the cloud, but it’s not going to bring you a successful business.”

Indeed, Snabbe essentially dismissed a question from Foote Partners’ David Foote, who said his research showed that pay for those with SAP skills tanked in the last quarter.

“The number of people deploying ERP is not going to increase rapidly,” Snabbe replied. “Analytics is still growing rapidly, so is the cloud. Maybe it’s more about defining SAP in its new categories when you look at the total need for skills, not just ERP. Those skills are rare and we are doing everything we can to expand the skills in those roles.”

SAP’s co-founder, Hasso Plattner, who has been laser-focussed on HANA for years, also gave a clue about the future of application development at SAP.

“We can write applications that are fundamentally different than the ones we have,” he said. “SAP is not continuing to grind away on what we did 15 years ago.”

In a highly technical address, Plattner explained that SAP’s HANA in-memory technology can bring massive enhancements to OLAP that do not carry over to the same extent for OLTP.

“The difference is OLTP systems do single selects, mostly single selects, and OLAP systems do group selects,” he said. “Single selects you cannot make much faster. Any database with a decent cache is doing this today. We cannot make it much faster. That is why OLTP can only be made faster to a certain degree.”

Clearly, new analytical applications running on HANA, mobile and in the cloud — likely all at once — are the direction SAP is headed.

Of course, this does not mean the company is abandoning its core customers and all the revenue they provide. In fact, Plattner made that very case. He promised SAP would not build separate Business Suite functionality for HANA.

It does, however, provide some guidance on where SAP is headed and who’s handling and innovating on the Business Suite moving forward.

Lars Dalgaard, CEO of SuccessFactors, said this of SAP’s flagship SaaS offering during a question and answer session with press and analysts:

“Business ByDesign is a powerhouse, it just is,” he said. “But it hasn’t been marketed right, it hasn’t been positioned right or explained right and people haven’t been trained right. There isn’t much I can say that’s been done right.”

Dalgaard intends to change that. Pundits at the SapphireNow show here in Orlando are wondering how he’s going to change the culture as well. He’s taken up the customer mantra of co-CEOs Jim Hagemann Snabe and Bill McDermott.

“At SAP we’ve had too much PhD and too little customer,” Dalgaard said.

Business ByDesign will still be a sold as a suite to SMBs and divisions of larger enterprises, but the future of cloud applications at SAP is a modular one.

Lars Dalgaard at SapphireNow Courtesy SAP

In his keynote address at Sapphire, Dalgaard identified a four-prong approach to selling cloud apps: customers, people, money, suppliers.

The customer-focused cloud applications are already out with an upgrade to Sales OnDemand and the availability of a new social media tool (or the SAP Social Customer Engagement OnDemand solution if you’re, you know, not into the whole brevity thing). The people applications will be based mostly on SuccessFactors’ human capital management portfolio and was highlighted by the release today of a version of SAP’s cloud-based payroll system that integrates with SuccesFactor’s Employee Central. Supplier applications will be built off of SAP’s Sourcing OnDemand.

And the money applications?

Those will be based on existing work done by the Business ByDesign team, as well as new work being done by the developers at SAP who brought you R/3 and by developers at SuccessFactors, according to Dalgaard.

“It’s SAP’s God-given right to build financials in the cloud,” Dalgaard said. “It’s a very serious, very deep product. It’s a tiger in a cage. Today we let it out.”

The core difference is that unlike Business ByDesign, SAP’s cloud applications will be sold individually. That, Dalgaard said, is the way people buy clouds.

“They wanted to boil the ocean,” Dalgaard said. “The market wasn’t ready for a boiled ocean.”

 If that sounds familiar, that’s because SAP had already started down that path with Career OnDemand, Sales OnDemand and Travel OnDemand. It’s also the approach Oracle has taken with its Fusion Applications.

The link there is John Wookey, who in the merry-go-round of Silicon Valley, was head of development for Fusion Apps before moving to SAP to help build the OnDemand apps there, and is now at Salesforce.com, heading up application development. It will be interesting to see what comes from Salesforce.com two years from now when Wookey has moved on again.

Dalgaard vowed to continue to invest in Business ByDesign, but made it very clear that if it, or any other platform doesn’t perform, he’s ready to throw it out.

“If it’s not working, it’s gone,” he said. “I’m the first one to call out where the problems I find are.”

Given SAP’s checkered history with ByDesign, or its first OnDemand CRM applications for that matter, the market awaits the outcome.

You can say this for SAP: It doesn’t lack confidence.

Its track record of living up to lofty promises, however, is a bit spotty.

The company basically laid it all out on the table this week when it proclaimed its intention to take over the database market. During the press conference detailing its many initiatives — of which database dominance was only a part — CTO Vishal SIkka promised that SAP would become the fastest growing database vendor in the industry. Of course, that’s not much of a claim considering where SAP’s database business was two years ago. Are they factoring in the Sybase business in that growth model?

SAP has been a little more boastful about its database ambitions recently. At an analyst event in Boston last winter, it promised to be “the number two database vendor by 2015.”

The question remains whether SAP can pull that off.

SAP’s press conference put me in mind of a recent post from Tom Wailgum over at ASUGnews who did some nice reporting by digging through SAP’s year-end Form 20-F document.

Among the interesting nuggets:

“We want to become a profitable market leader in cloud computing, generating $2.6 billion in revenue in this segment by 2015.” (No. 7)

So, by 2015 SAP aims to be the No. 2 database vendor and a market leader in cloud computing with $2.6 billion in revenue. Those are lofty goals and lofty goals are good, but what is SAP’s track record in keeping its promises?

Well, in 2006 SAP’s then-CEO Henning Kagermann said that by 2010, two-thirds of the installed base would be using enterprise SOA. “Using enterprise SOA” is a tough one to define so we’ll pass there.

How about in 2007, when SAP vowed to have 100,000 customers by 2010? That claim was made largely in hopes that Business ByDesign would pump up the SMB user base. In fact, SAP also pledged that Business ByDesign would bring in $1 billion by 2010. SAP ultimately fell short, scaling back on Business ByDesign as it ran into bugs and issues making it profitable enough. And the customer numbers?

Based on the Form 20-F, SAP now has 183,000 customers.

SAP actually put forth a lot of goals for 2010. In 2008, then CEO Leo Apotheker said “all customers will have upgraded to ERP 6.0 or the latest Business Suite releases.”

That one didn’t work out so well. According to the SearchSAP.com 2010 Reader Survey, 48% of respondents were still on R/3. By the 2012 survey, two years after Apotheker’s target date, the number has improved. Sixty-six percent of respondents had moved to ERP 6.0, 18% were still on R/3 4.7 or earlier and 12% were on ERP 5.0.

For most customers, whether SAP winds up the No. 1, No.2 or No. 6 database vendor probably doesn’t matter a whole lot, as long as they get the kind of response times and value that SAP is promising with HANA. Similarly, whether SAP becomes the “fastest growing” database vendor probably doesn’t matter a whole lot to SAP customers either, outside of the dollars many of them will be contributing to make that happen.

Still, it’s always good to bring some perspective to boastful software executives.

Recent events suggest that Oracle, SAP and Salesforce.com will soon be all that’s left of the enterprise software vendors – at least when it comes to the cloud.

An examination of recent announcements from the three demonstrates that the business applications giants are investing heavily in the cloud and competitors better watch out.

Current and potential customers of SAP, Oracle or Salesforce should be also concerned because consolidation is seldom a good thing for buyers.

After the last several weeks, it certainly looks like these three vendors will be the ones reigning over applications in the cloud. We start with Oracle.

Oracle acquires RightNow

Oracle has gobbled up plenty of cloud-based application vendors over the years (and plenty of other vendors as well) but its acquisition of RightNow brought a competitor of Salesforce.com’s Service Cloud in-house.  The addition of the customer service offering also served to help round out Oracle’s cloud-based CRM portfolio.

 Competition aside, what’s also interesting is that RightNow’s architecture is not, by most definitions multi-tenant. As Oracle moves its Fusion Applications — and subsequent acquisitions to the cloud — it’s clear it’s focused on virtualization as the underlying architecture and not multi-tenancy. Why does that matter to enterprise software buyers? In general multi-tenancy creates economies of scale, at least some of which get passed on to customers. Oracle does not seem interested in that.

Salesforce.com releases the Social Marketing Cloud

Perhaps the most interesting tidbit from Salesforce.com’s Cloudforce event in New York last week was CEO Marc Benioff’s aside during a press QandA about Oracle, multitenancy and their product line. Benioff, taking great pleasure in tweaking his rival in Redmond Shores, pointed to a fundamental difference in the competitors’ approaches to cloud computing.

“We heard this week– now this is just something I heard — that Oracle is discontinuing Oracle CRM OnDemand and shutting down that organization and that sales force and moving everyone onto Fusion, which is not a multi-tenant system,” he said.

Meanwhile, Benioff continued to preach the gospel of the social enterprise with the release of the Social Marketing Cloud (Paul Greenberg has a pretty good critique of the strategy). That line of business is based on Salesforce.com’s acquisition of Radian6, a onetime independent cloud vendor. In fact, Salesforce.com has bought up more than a few independent SaaS vendors to add to its suite. That’s likely the fate for many rising SaaS companies– getting acquired by one of the new big three.

Which brings us to…

SAP to buy SuccesFactors for $3.4 billion

Compared to SAP’s acquisition of BusinessObjects for $6.8 billion, the purchase of on demand talent management software SuccessFactors over the weekend seems not nearly as big a deal. But as co-CEO Bill McDermott said on the call with reporters, “we will become the No. 1 business software company in the world in the cloud. It’s only a question of what year.”

Clearly the race is on to move existing apps to the cloud (Fusion Apps); build new ones (Salesforce.com’s Chatter, SAP’s Business ByDesign); buy up what’s already doing well (RightNow, SuccessFactors); and stake out positions (multi-tenant vs. single tenant). And, as Oracle and SAP are seeking to become more like Salesforce.com, Salesforce.com is doing its part to be more like premise-based enterprise software, offering an enterprise license agreement and a database residency option for customers that absolutely, positively can’t let some data leave their home.

What about the others?

Of course, those three are not the only companies selling enterprise software.

I suppose apologies are due to Microsoft, which has a competitive cloud-based CRM offering and is scheduled to release its Dynamics NAV ERP application on SQL Azure  in 2012. But in July, there was plenty of concern that Azure is not ready to run ERP and NAV is a newer, more Web-enabled application. Moving Dynamics GP (Great Plains) and AX (Axapta) and their client-server code bases could prove a more daunting challenge. We’ll hold off on Microsoft.

(UPDATE: one day after publishing this post, Josh Greenberg at EAC made a pretty good case for Microsoft joining this list thanks to some cross-company synergies)

What about Infor? Judging from Infor CEO (and former Oracle CEO) Charles Phillips’ appearance with Benioff in New York, it’s clear the Salesforce.com platform is their cloud platform of choice while Infor services its existing premises-based customers itself.

Bottom line for buyers?

What does that mean for enterprise software buyers in the long run? Buying cloud-based apps means savings on hardware and maintenance and, while calculations differ, generally appears cheaper on a per user basis. How long will that last? Doug Henschen at InformationWeek lays it out pretty explicitly in his coverage of the SAP news:

What’s more, cloud apps vendors earn notoriously slim margins. SAP had to reassure financial analysts that cost synergies and growing scale driven by cross selling would improve SuccessFactor’s profit picture. The company lost $12.5 million on $205.9 million in revenue last year.

As Oracle, SAP and Salesforce increasingly compete with packaged cloud applications, they as well as a host of other companies are also pushing hard on the PaaS front, bringing a new dimension to the ages-old build vs. buy dilemma.

Think another vendor should be included? Make your case below.