At todays’ LeWeb 3, Marc Canter asked a panel drawn from Google, Netvibes, Plum and the European Energy Forum whether we’re ready for radical change in the context of bringing the social to software. In his pre-session blog post, Marc said:

The paradigm of social networking works great for dating, having fun and discovering new and old friends. But we’re going to see more and more the notion of social media, social graph and social networking APIs into email, maps, Intranets, legacy systems and basically - all forms of software.

During the on stage conversation, there was much talk about OpenID and the fatigue many people are experiencing as they are required to sign in to different social computing services. Afterwards, I asked Marc about how he sees this playing out in the enterprise. His view is that one of SAP, Oracle or Microsoft will figure this out and provide standards based access that will solve many of the current problems associated with traversing systems.

I hope Marc’s right. Truth be told this will be a hard fought battle on many fronts. The enterprise apps vendors have spent years ring fencing their users and are still endeavoring to build lock-in. As Judith Hurwitz noted last week in regard to SAPs NetWeaver story:

I think that because that the strategy and platform assumes that customers will be willing to adopt a single vendor platform that everything in their enterprise will flow through. To its credit, SAP does expect that third party applications and environments can be integrated through well defined interfaces. These outside resources would be integrated through the repository. However, will a customer want to give a single vendor that much power?

Apart from arguments about just how much account control one or other vendor truly has (that’s definitely for another day) the vendor community is faced with a real problem. How will they provide controlled and secure access across systems at a time when it is becoming increasingly clear that open source community systems are most likely to solve that sooner rather than later in the consumer space? Will adoption of Microsoft Windows Live Spaces make a significant difference - assuming of course Microsoft wakes up to the opportunity?

We live in interesting times.

Larry Dignan thinks the key to IT transformation success is having the CEOs attention:

These big technology architecture overhauls require CEO participation and folks like Cisco CEO John Chambers are on board. The CEO also can’t blink when your SOA/consolidation/automation project doesn’t go well. That’s what makes HP’s overhaul a bit different. Hurd won’t blink–he’s obsessed with efficiency. What happens when another non-technology CEO blinks? The project stalls. Even worse the IT overhaul disappears and all those old apps keep chugging along. There’s a reason your company has thousands of old applications–somebody choked.

I’d like to think Larry is right but it’s not quite that simple. As Mike Krigsman often says, the key to project success comes from attending to the numerous management issues. But CEO’s have many calls on their time so their ability to supervise must necessarily be limited. That’s why they need the support of a crack team.

Transformation is almost always about how power will be redistributed. That’s a middle management issue where resistance to change is often at its strongest. In short, it’s about resistance to the breaking down of fiefdoms.

History provides excellent perspective. In ancient Chinese history:

Before the conquest of the other kingdoms by Qin and the creation of the Chinese Empire, what is now China consisted of a multitude of principalities wracked by chronic warfare. Not only did the seven kingdom go to war with each other, there were feudal subdivisions within the kingdoms which fought with each other and with the rulers of their kingdom.

If you’re engaged in an IT transformation project you might relate to that comparison. The creation of the Chinese Empire required the destruction of the feudal lords. It worked. In today’s parlance, we’d probably call it ‘creative destruction’ and yes it requires an iron will. But it also requires loyal lieutenants. In ancient China, the first emperor Qin Shi Huang relied on one man - Li Si, a lawyer. Today, that one person is likely to be the CFO.

As an aside, I’m sure Vinnie Mirchandani will be pleased to hear HP indicate that success in its transformation project can be sold as knowledge to its customers. With the caveat that in turn, it will lead to savings.

Tomorrow sees the start of LeWeb3, the largest innovation conference of its kind held in Europe. Devised by Loic LeMeur and now in its fourth year, LeWeb3 has attracted 1,793 registrants (at the last count). Unlike trade shows, LeWeb3 keeps its agenda close to its attendees’ eclectic interests. For example Hans Rosling, whose TED Talks presentation on world health trends showed smart use of visualization techniques will be speaking. Tom Raftery will discuss environmental issues, focusing on his carbon neutral data center project.

Edgy topics like ‘The Dark Side’ will see Dan Rose of Facebook, legal eagle Michel Jaccard, Six Apart’s Chris Alden and Daum Communications’ Jaewoong Lee duke it out under Laurent Haug’s moderation.  Nelson Mattos of Google will talk about technology’s impact on corporate culture while Broadband Mechanics’ Marc Canter will moderate a session on bringing the social to software. Given the recent flurry of discussion about sex and sizzle in the enterprise (or lack thereof), this should be an interesting session - especially as Robert Scoble will be in the audience.

JP Rangaswami’s ‘Enterprise 2.0…isn’t’ should be a great session, especially given his most recent post where he said:

Enterprise 2.0 is already upon us, providing us attractive, usable, reliable and secure applications. We just haven’t made the move to adopting it. But it’s happening now, with Generation M, mobile, multimedia, multitasking and here. Now.

JP is out there walking the walk of delivering innovation at British Telecom. I’ll be interested in knowing just how much he’s managed to influence change since his involvement with the SocialText wiki project at Dresdner Kleinwort Wasserstein.

Silicon Valley may be where a lot of the innovation action is located but this week, there is only one place to be. The City of Lights.

When I read Dan Farber’s piece about the newly formed Blog Council the ol’ BS detectors went on high alert. Unlike the blogerati that pounced on the idea declaring it bad, I believe it is dangerous. This isn’t about blogging, social media or whatnot but about good old fashioned command and control applied to marketing and sales processes.

Some of those involved have publicly denied that’s the case. Lionel Menchaca of Direct2Dell for instance says:

It’s also not about control. For me at least, that has been decided—companies don’t control the message, customers do. I hope that Dell (and other companies in the council that have made the leap into digital media) can work together to move companies past the false notion that we are still in control.

Lionel’s supporters - like Shel Israel, want to give the Council a chance. I would too but when I examine the “four principles”:

1. Best Practices: Promoting corporate blogging excellence through best
   practices, standards, and training.
2. Community: Providing networking and partnering opportunities for leaders
   of the corporate blogging movement.
3. ROI: Developing metrics programs that help deliver measurable ROI from
   blog activities.
4. Advocacy: Blog Council has a united voice to provide the corporate
   perspective in the blogosphere

these look suspiciously like the principles that led to the demise of knowledge management and gave it the appalling reputation it’s been fighting against for so many years.

What is more intriguing still are the companies that are not among the initial chosen few. Where’s IBM? Folk I know at IBM are saying they were not asked and even if they had, would likely decline.  The reason given is they see the risks of social media becoming tainted by the very control issues that have made KM a dirty topic. Where also is Sun? They’ve had a decent set of blog principles in place for years. They operate a very light touch policy that has served them well.

I am surprised that SAP has signed up for this - at least on these terms. I am very familiar with the company’s blogger outreach program and nowhere do I see evidence of a need to insert process in the manner implied by the four principles. Just in case folk think I’m getting confused, the development of these kinds of principles almost always has an impact on the people to whom the company is reaching out.

Finally and most worrying is the fact that nowhere in the Blog Council press release can I find reference to the need for transparency. This is something I believe needs addressing as we move into 2008 and will have a direct impact on communications and the business processes around them.

Robert Scoble wonders why enterprise applications aren’t sexy but in the process makes the fundamental mistake of assuming you can compare consumer to business in the blog model:

Instead, let’s look at the business of journalism or even of blogging. We’re paid to deliver page views. Advertisers call it “CPM” (cost per thousand viewers). Now, what’s going to get more of you interested? Consumer software that you actually have a role in adopting or purchasing or enterprise software where some CIO somewhere else in your organization decides on? I know that when I talk about enterprise software the numbers of viewers just don’t show up. So, tech bloggers quickly learn that if they talk about enterprise software they aren’t going to get many advertising impressions.

It’s not about page views, it’s about relative influence. That’s why some of us have a seat at Henning Kagermann’s table. He’s CEO at SAP, a $15 billion per year business with 40,000 plus enterprise customers, nearly a million people in its developer network and 200,000 people in its business process network. It’s why some of us also get a seat at Charles Phillips table. He’s president of Oracle and has spent some $25 billion acquiring enterprise application vendors the last few years. These are people who shape yours and my lives. That’s pretty darned cool.

Enterprise applications may not be sexy, it may, as Mike Krigsman points out be hidden but as Vinnie Mirchandani says:

You know what turns me on? To see UPS give each one of its drivers a DIAD - and they did it years before the recent wave of personal gadgets - with GPS, wifi, scanning and other technologies. And with a battery that lasts all day. Can our iPhones do that? See the massive technology behind their ops that make it so easy for their millions of customers. This time of the year, you realize they are Santa’s elves with the billions of deliveries they do daily.

Robert - you want sexy? We can do that. Check out Majority Desk built by two super smart guys from Colgate Palmolive working out of SAP’s Palo Alto labs and demonstrated around the world to thousands of other uber geeks. These are people who get things done, pay the bills, make the deliveries, run the airlines, design cars, drill for oil, deliver healthcare, grow food…the list is endless.

I like that I get to hang out with some of these folks pretty much every day and learn how they’re trying to make our lives better. The apps these folk build may not be sexy in the sense Robert expresses, but I’ll bet he’d hate it if they didn’t exist.

While I was unable to attend SAPs Influencers’ Summit, there were interesting snippets of conversation on the Twitter channel between Mike Krigsman, James Governor and myself. From what Mike said, the GRC (governance, risk and compliance) session was not particularly well attended. That’s disappointing. GRC has been a strong theme for SAP the last few times I’ve met with them and for good reason. In my opinion GRC is one of the most urgent yet difficult management areas for large scale business to address with technology solutions.

In our Tweeted conversation, I said there are two themes in play:

• Productizing what is currently more of a consulting opportunity than a software sale
• Change management

Productizing is not difficult but will take time. In SAPs case, it has a bag of tools, many acquired or in the process of acquisition, that need pulling together in a coherent manner. That will be determined by the extent to which it can figure out a way of presenting incrementally valuable solutions. Success depends on how customers respond to the challenge. This will not be a case of SAP (or anyone else for that matter) letting customers tell them what they want. It will be a case of vendors telling customers what they need in order to preserve their reputations.

Mike quite rightly picked me up on the change management element - this is always an important part of any IT project. On GRC (and its closely related cousin, corporate social responsibility or CSR), meaningful change has to go right to the heart of the business and often needs a genuine cultural change at the very top. We thought that ERP was painful and Y2K expensive. Properly executed, GRC could be an order of magnitude more difficult and complex than these past endeavors. GRC implementation is far from easy in companies where certain practices have been the norm for many years. This is particularly true in SAPs backyard - Germany where two of its long term customers, Siemens and Volkswagen, have been the subject of intense scrutiny over corrupt practices.

The Siemens case has been well documented with the latest news that the company will be restructured. Reporting remains one of the key outstanding problems:

The restructure follows a filing to the USA’s Securities and Exchange Commission, saying it had identified ‘material weakness’ in its internal controls over financial reporting which could affect its ability to report its results accurately and that its anti-corruption controls as of September 30, the end of its fiscal year, were insufficient to prevent managers from misusing funds.

That will require a lot of work in documenting existing processes, creating closed processes that are actionable and ensuring the separation of duties in such a way that it becomes much more difficult to effect corrupt practices. From a software implementation perspective, it’s not that difficult, but effecting the cultural change will be an altogether different proposition.

Looking at car maker VW, the same systemic problems of corrupt practices embedded at the highest level have, once again reared their ugly head. According to BusinessWeek:

When asked whether it was reasonable to believe that the former CEO of VW was unaware of lavish pleasure trips for labor representatives and millions in payments to Klaus Volkert, the former head of the labor council, Volkert said, in a documentary aired on German TV: “All I know is that there is very, very little that went on at Volkswagen that (Ferdinand) Piëch didn’t know.”

This is not the place to explore the ramifications of fresh allegations, but when you see cases where the problem is coming from the top, just how do you get an effective cultural change management program underway without either the force of law or a transparently documented commitment?

Software can help. According to Mike, SAP recognizes that managing different types of GRC projects is inefficient and plans to bring issues like IFRS reporting, SOX management and Basel II compliance much closer together. The current situation is not just inefficient, it’s an incomplete response that is bound to leave gaps. It is therefore good to see that SAP has recognized the necessity of bringing related issues together in what will hopefully be a coherent manner.  However, it still leaves open the question of just how companies like SAP will convince customers of the value of what will need to be a holistic solution. I suspect a good part of the answer will lay at the doors of firms like Accenture who have the consulting independence to make a clinically dispassionate case.

Just as my fellow Irregulars are getting ready to tackle SAP executives at the company’s ‘Influencers’ Summit’ in Boston comes a mea culpa from Steve Rogers, SAP UK’s managing director. According to a report from Stuart Lauchlan, Rogers said at the company’s recent UK user conference:

“When I joined, I was surprised at how remote SAP felt from its customers. It didn’t have the customer at the centre of its universe. What had happened was that there was a little complacency in the way it managed its relationships with its customers,” he said. “That is absolutely out of order so we have focused hard on [addressing that] over the last year. We have not arrived at the place we need to be, but we are making progress.

“Customers are seeing more of SAP and SAP is trying to be more proactive in how we support customers and helping leverage the assets you have. We have seen customer satisfaction scores trending in the right direction. They are nowhere near best in class [but] we have set the objective in the UK of [getting up to] best in class, against other SAP subsidiaries and other comparable organizations.

Where have I heard that before? This is an ongoing theme that stretches back to 1993 when I first started commenting on SAP and which periodically rears its ugly head. Contrast this Prashanth Rai’s report from TechEd Bangalore:

When Mike, Mark, Craig, Marylyn etc are here in India for the community day they bring the much required enthusiasm and interest, but I would think this personal connection needs to be ongoing and in fact it should be on a “reach out” mode also.

SAP has done a good job engaging the developer community - it’s SDN counts some 950,000 members and its TechEd events are enthusiastically supported.  It is doing less well with the business process people. My sense is that SAP struggles to get business acceptance of its value proposition. In part that’s because it doesn’t do a great job of communicating business value. As Stuart notes, there is a level of dissonance between what SAP markets and what its customers understand. Quoting Rogers:

“I find it frustrating that the majority of you (customers) only seem to be using a modest slice of the software you have acquired. If there really is no business value to you from an upgrade and you have to spend money from a licensing perspective, let’s have a conversation… If you are not leveraging the Business Process Platform or NetWeaver as a starting point I feel you are missing something. It is essential to leverage it.”

Frustration works both ways. It’s up to SAP to get up close and personal - not for customers to second guess. At a deeper level, SAP has to convince its customers that upgrading brings innovation that adds value. Simply repeating that technical innovation is a good thing may keep developers happy but it’s a hard sell in the boardroom - where the checks get authorized.

Evidence is coming to light that personal banking details of British citizens are being offered as free trials by criminals operating over the internet. According to the TimesOnline:

Without paying a single penny, The Times downloaded banking information belonging to 32 people, including a High Court deputy judge and a managing director. The private account numbers, PINs and security codes were offered as tasters by illegal hacking sites in the hope that purchases would follow.

This comes amid continuing concern over the disappearance of two disks containing the personal details of some 25 million people. Parents who receive state benefits are starting to receive letters from the British tax office warning them about identity theft. The letters advise citizens to check with their bank to ensure that unauthorized amounts are not being withdrawn.

The scale of the threat should not be under estimated. According to The Guardian:

On one publicly accessible website selling everything from stolen credit card details to fully operating pornographic websites, scores of vendors are lined up selling UK, European, US and Canadian bank details. It is a marketplace which illustrates the international nature of the illegal trade. The website is registered to the Cocos Islands, an Australian territory in the Indian Ocean consisting of two atolls, 27 coral islands and fewer than 1,000 residents. The salespeople are contactable through email addresses routed through servers in Russia and the USA. Most use Yahoo accounts or communicate through ICQ, an untraceable instant messaging programme.

As an indication of how rampant this kind of crime is becoming, it took me less than five minutes to discover a website operating from an Indian domain claiming to offer details how to hack CVV2 numbers from credit cards. These are the security codes which are printed on the back of credit cards as a secondary check that the user is who they say they are. Another simple search offered advice on how to hack a bank server.

The situation is becoming so serious that Richard Thomas, the UKs Information Commissioner is to ask British lawmakers for wide ranging powers to raid both business and government premises. In the meantime, British police seem powerless to protect citizens. Again from the TimesOnline:

Senior police officers are concerned that current methods of dealing with large-scale data protection breaches are unworkable. Detective Chief Inspector Charlie McMurdie, of the Metropolitan Police e-crime unit, said: “At the moment people report internet crimes to a local police station but no one locally has the resources to investigate properly.”

My Irregular colleague Jason Busch - who is an acknowledged thought leader on sourcing stepped on a landmine (metaphorically speaking) in writing off Africa as a continent with which to do business:

In my view, we would all do well to invest our tourism dollars in a continent as beautiful as Africa, not to mention our charity donations for medical care, safe drinking water and nutrition programs — among other causes — in the region. But Africa is about as far away from becoming a leading low cost supplier as it gets, unless, of course, you take the colonization and mercantile approach that China has adopted in the area (which, fortunately, is something that Western companies and countries can no longer get away with).

Ouch!  I know Jason well enough to believe that he wouldn’t make such statements in such glib fashion. Unfortunately, like many others, he demonstrated a sizeable glob of misunderstanding about the region characterizing it as a corrupt, disease ridden charity case. Fortunately, Thomas Otter - another Irregular and of South African upbringing - came to the continent’s defense in detailed and robust fashion. 

Among other things, Thomas noted:

Let’s take the automotive industry as an example. South Africa plays a major role as a supplier to the automotive industry.11% of the world’s catalytic convertors are made there. (see more about Fiat here)

The world’s largest Titanium mine is due to come online in Mozambique, a country until recently ravaged by war. The mozal Aluminium refinery in Mozambique is one of the lowest cost producers in the world. Expect to see more refining moving to Africa.

Former parts of the French colonial empire are developing their call centre businesses too. Between 2001 and 2004, 55 French language call centres have been set up in Morocco, employing 6,500 people and generating total revenue of euro 85 million (US$105 million).

I could go on but you get the picture. In the run of comments to Jason’s post, James Farrar took on the tricky topic of corruption:

We should remember that corruption is a two way street and it is my experience that foreign investors contribute to the problem on the supply side because they come to the market with a defeatist attitude and pre-subscribe to a view that corruption is an inevitable cost of doing business. We must not perpetuate this myth further. Foreign investors have huge influence and need not be in actuality or play victims. It takes competent management skill and determination to operate in these markets but it is eminently feasible.

Going forward, Africa will be one  of the principle markets for the so-called $100 Laptop. It is expected that the lack of traditional ‘copper’ telecommunications will mean that mobile applications will take on far greater importance. And as the world runs out of low cost sourcing locations, investors’ eyes are bound to look at Africa and ask whether it is possible to create the infrastructure to support viable sourcing industries. Given the cost base in many parts of the continent, it should be a no brainer.

Jason has promised a response for the coming week but in doing so I’d suggest he thinks again about the problems he identifies. They may be on a grand scale, in certain locations some problems may be insurmountable. At least for the time being. But Africa is far from being a basket case.

When I hear Simon Griffiths, another Irregular colleague in South Africa celebrating the biggest software and services deal he’s ever done for SYSPRO - then I know there is more than hope. There is the potential for a bright future.  People of goodwill need only look the problems square in the face and instead of shrugging, look for solutions. They are there to be found if we have eyes to see and the willingness to lend a helping hand.

Speculation has been rife over at TechCrunch but sources close to events (as they say) have confirmed that Six Apart has sold LiveJournal for around $30 million to Russia’s SUP.

Insiders are said to be happy with their return on a $5 million investment to a market where partners are needed but where the partnering investment was deemed too risky compared to a trade sale.