Monday, September 15, 2008

ACE is the place!

It’s very early Monday morning and I am about to head across to the ACI Customer Exchange (ACE), the annual meeting of America’s users of ACI products. The picture I have included here is of me at the hotel with my first coffee of the day. ACI customers have a very long history of using BASE24 products on NonStop. This will be the first America’s conference following ACI’s decision, late last year, to switch allegiances from HP to IBM, and I have to admit, I am very curious to how it will go.

While at the European event in Vienna, in the early Spring of this year, I saw many at ACI in high spirits and looking forward to a new IBM-centric world, but I’m not all that sure it’s panned out quite as they expected. Many key members of the management team are no longer with ACI, and ACE would give me the first chance to look at many of their replacements. It would also give me the opportunity to see how the ACE community responds, and I will be particularly interested in the questions that come from the floor following the early presentations.

And the ACI user community plans on proposing changes as well – and there will be motions before the community asking them to vote on a restructure. The Executive Committee will play more of an “advisory role”, charged with oversight of a number of committees that will focus on Retail Banking / Payments, Merchants (retailers), and Fraud and Risk products. These changes will be subject to a community vote later in the week – and will probably pass. But for me, it’s interesting to see that behind the scenes, ACI appears to be reigning-in the various user groups it now supports, and to tighten up (through event rationalization) the messages communicated. I am not sure that, where this leads, really qualifies as a user group, but I will hold further comments until after I see how it all turns out.

I recently wrote a piece in the TandemWorld Newsletter where I made a couple of observations and raised a key question:

“In other words, all the excitement around the decision by ACI to develop a strategic relationship with IBM it’s likely, when all is said and done, that just two existing System z customers became new ACI customers. When you also consider Mr. Heasley’s ongoing concerns about how long these deals take – and how they are trying to shorten the “time-to-close cycle” that continues to lengthen – and how this quarter he reported that “lengthened, traditional selling cycle … in the last year and a half to two years, we’ve been in the 9 to 12 month cycle, we’re probably in the 15 – 19 month closing cycle right now.”

“Put even more bluntly, almost two years to develop a pipeline yielding two new customers per quarter on probably existing System z platforms. Pretty spectacular stuff, all up, you reckon? How long will IBM stay excited about figures like that? And how long will it be before the System p folks begin to realize that, perhaps, they have an equal or bigger opportunity?”

For the complete story, go to http://www.tandemworld.net/ and click on: Please see our Previous Newsletters HERE . Then select the September, 2008 issue. And the key question for me is really, how long will IBM put up with only one or two wins? And will they take more direct control of the company to push ahead more firmly with their agenda – to unhook BASE24 from all NonStop server deployment?

Perhaps IBM Payment teams will return to the System z installed-base, and look at migrating many of the home-grown applications running on these platforms. For some time I have heard ACI executives telling me that the System z represents an additional platform, complementing the existing NonStop server, and that providing a standard, industry-leading solution to this System z community would be a real boost to the fortunes of ACI. However, while IBM consolidates its mainframe position at these sites, and picks up revenue (not all that inconsiderable, these days) for the added MIPS required, it doesn’t help them in their NonStop replacement program.

I want to hold back on any further commentary here until after I have attended the event. But the bigger question for me now, and with more immediacy, is what plans have HP under way to plug this gap? Surely, they cannot be sitting around with their fingers crossed hoping it all goes away, or waiting and hoping that ACI sees the error in their ways and returns to NonStop. You would have to think something a little more proactive is being undertaken.

At this year’s HPTF&E in Las Vegas, I had the opportunity to talk to some of the folks out of the AsiaPac / Japan office in Singapore. The senior management team hosted a pretty good breakfast – as they have for a number of years – and I always find the openness of the exchanges round the breakfast tables to be very encouraging. This year, Herbert Zwenger, VP and General Manager Business Critical Servers (BCS) HP Asia Pacific and Japan, said that for his market, they were already looking at their options.

So it came as no surprise to me when I received an email from the region directing me to a press announcement they made late in July and found at: http://h50025.www5.hp.com/ENP5/Public/Content.aspx?contentID=24934&portalID=377&pageID=1

Under the heading of “HP and Opus Software Solutions today announced an integrated payments solution to help financial institutions minimize operational costs and risks of real-time transactions” there was the following news update:

“HP and Opus Software Solutions today announced an integrated payments solution to help financial institutions minimize operational costs and risks of real-time transactions. The collaboration combines the availability and scalability of HP servers with Opus' proven electronic payments platform by porting Opus' Electra EFT Switch on HP Integrity NonStop servers. The open architecture of HP Integrity NonStop servers will allow the Electra EFT Switch, Opus' integrated payments solution, to authenticate and route financial transactions from multiple channels including ATMs, POS systems, web services and mobile devices.

“‘Companies whose payment applications are the lifeblood of their operations can greatly minimize business risk by leveraging HP NonStop technology,’ said Herbert Zwenger, vice president and general manager, Business Critical Systems, HP Asia Pacific and Japan. ‘HP's NonStop platform supports the majority of ATM and credit card transactions globally. Together with Opus, we deliver a robust infrastructure that is ideally suited for the financial services industry.’"

Back in the late ‘70s I could remember a couple of major vendors – MSA, McCormack and Dodge, etc. - building general ledger, accounts payable ledgers, etc., applications for the mainframe and as these packages expanded into manufacturing and elsewhere, we saw the emergence of manufacturing resource planning packages from other less-known vendors. These then went on to become the forerunners of the popular enterprise resource planning packages we have today with Miscrosoft, SAP, etc. all at the fore. Whatever happened to MSA? To McCormack and Dodge? They failed to respond in a timely fashion to newer, more agile vendors coming at them using different tools and supporting different platforms.

And this is the concern I have for ACI – they may have prematurely burnt their bridges to the NonStop community, and they may find it hard to convince the community that they still have its interests at heart. And should IBM walk away for any reason, they may not have the time to rebuild all the relationships they used to enjoy with the NonStop community. And in the meantime, smaller vendors may begin to offer new products at entry points way beneath the price points ACI have enjoyed for decades, and which they really require to sustain any return to the NonStop platform.

Now I will be the first to admit that the news above about HP and Opus, and of them coming to market with anything close to the comprehensive breadth of BASE24 will be highly unlikely, at least in the short term, but it does raise the specter that HP wants to compete. The marketplace for the product may be very regional as well and lack all the certification and compliance agreements BASE24 comes with. But it has to be viewed as a start – and pretty much anticipated.

As I said, this will be a very interesting user event and I will be listening to everything that is said and watching all the keynote presentations. And I wonder how much of enthusiasm exhibited in Vienna, less than six months ago, has been tempered from the results of the past two quarters and I wonder, how much patience persists among the customers that ACI has served for all this time.

4 comments:

Doug said...

In ACI's quarterly reports for 2008, they only mention one win for Base24-eps on IBM zSeries at Sermepa, in Spain.
There are no customer references for zSeries on their website.

I suspect your estimation of two zSeries wins per quarter is high.

Richard Buckle said...

Hey Doug - so I like to be a little generous.

Seriously, I suspect there's others out there that just didn't qualify for reporting purposes, so I "rounded up" to compensate!

LisaP said...

This paragraph seems applicable to something else that hits a little closer to home for us NonStop Vendors:

".....These changes will be subject to a community vote later in the week – and will probably pass. But for me, it’s interesting to see that behind the scenes, ACI appears to be reigning-in the various user groups it now supports, and to tighten up (through event rationalization) the messages communicated. I am not sure that, where this leads, really qualifies as a user group......."

Richard Buckle said...

Should I try and "Connect the dots"?

Thanks Lisa ...