Morgan Stanley · NYSE:MS
Morgan Stanley — Morgan Stanley Dean Witter — presentations
44 slides from Morgan Stanley's investor presentation, September 2000
Slide 1: Enterprise Software and B2B E-Commerce Presentations
MORGAN STANLEY DEAN WITTER Page 313 Enterprise Software and B2B E-Commerce Presentations B2B/Enterprise Software Databank – September 2000 Please refer to important disclosures at the end of this report.
Slide 2: MORGAN STANLEY DEAN WITTER
MORGAN STANLEY DEAN WITTER Page 314 B2B/Enterprise Software Databank – September 2000 Please refer to important disclosures at the end of this report.
Slide 3: Enterprise Software: The Business Model
MORGAN STANLEY DEAN WITTER Page 315 MORGAN STANLEY DEAN WITTER Enterprise Software Chuck Phillips Managing Director Morgan Stanley Dean Witter 1-800-MR CHUCK charles.phillips@msdw.com www.msdw.com/mrchuck MORGAN STANLEY DEAN WITTER WWW.MSDW.COM The Business Model Enterprise Software MORGAN STANLEY D
Slide 4: Beware When… Top Deals and Deal Size
MORGAN STANLEY DEAN WITTER Page 316 Beware When… Top 5 Deals > 30% of Revenues Top 5 Deals as a % of License Fees Danger 40% Zone Percent of License Revenue 35% 35% 30% 30% 25% 22% 20% 17% 15% 13% 10% 10% Upside Surprises Quotas, Headcount 5% Increasing 0% Q1 Q2 Q3 Q4 Q5 Q6 Time MORGAN STANLEY DEAN
Slide 5: Intra-quarter Revenue Pattern; Enterprise vs. Desktop Software
MORGAN STANLEY DEAN WITTER Page 317 Intra-quarter Revenue Pattern - It Ain’t Pretty Weekly Revenue in a Quarter 60 Percent closed by week 50 40 30 20 The Dreaded 10 Hockey 0 Stick 1 2 3 4 5 6 7 8 9 10 11 12 Week MORGAN STANLEY DEAN WITTER 5 charles.phillips@msdw.com Enterprise vs. Desktop Software A
Slide 6: The Suicide Licensing Model of Enterprise Software
MORGAN STANLEY DEAN WITTER Page 318 The Suicide Licensing Model of Enterprise Software l Perpetual, one time license per seat or server l Maintenance fee - 18% of license; 4% of that eaten up in support cost l So ... 14% of install base pays incremental fee each year which means ... 8 year renewal c
Slide 7: The CIO's Enterprise Toolbox
MORGAN STANLEY DEAN WITTER Page 319 The CIO’s Enterprise Toolbox Technology Infrastructure The Back Office - Operations l Middleware l Packaged Applications l Databases • SAP l Development Tools • JD Edwards • Oracle l Performance Management • PeopleSoft l Security • Baan, etc l Operations Managemen
Slide 8: A New Order
MORGAN STANLEY DEAN WITTER Page 320 A New Order OLD WORLD NEW WORLD l Assets l Information l Capital l Time l Earnings l Market Size l Account control l Community control l Critical mass in revenue l Recurring revenue model l Efficiency l Effectiveness l Customer service l Customer insight E-commerc
Slide 9: Packaged Applications; ERP Market Evolution
MORGAN STANLEY DEAN WITTER Page 321 Packaged Applications Buy vs. Build MORGAN STANLEY DEAN WITTER WWW.MSDW.COM ERP Market Evolution l MRP - Material Requirements Planning • raw material focus l MRP II - Manufacturing Resource Planning • optimizing entire plant production focus l ERP - Enterprise Re
Slide 10: ERP Oligopoly; ERP Drivers: Technology Shift
MORGAN STANLEY DEAN WITTER Page 322 ERP Oligopoly l Larger companies this cycle; not constrained by hardware platform l Critical mass allowed vendors to build cross-functional application suites - remove integration headaches l JBOPS Oligopoly (JDEC, BAAN, ORCL, PSFT, SAP) MORGAN STANLEY DEAN WITTER
Slide 11: ERP Drivers: New Functional Requirements; Constraints to Growth
MORGAN STANLEY DEAN WITTER Page 323 ERP Drivers: Customer has New Functional Requirements l International expansion l New line of business l Regulatory changes l Competitive intensity l Mergers and Acquisitions l Upgrade cycle typically 7 years but could get longer MORGAN STANLEY DEAN WITTER 17 char
Slide 12: Market Saturation Concerns
MORGAN STANLEY DEAN WITTER Page 324 Market Saturation Concerns l Horizontal apps in large accounts (customers over $1 billion in revenue) l Financials most saturated l Manufacturing and HR not far behind though l Up front site licenses accelerated penetration l ERP vendors diversifying to front offi
Slide 13: Where to Next for Growth?
MORGAN STANLEY DEAN WITTER Page 325 Where to Next for Growth? l E-commerce l Mid-market l Vertical Markets l Application hosting (outsourcing); buy vs. build l Supply Chain Management l Front Office MORGAN STANLEY DEAN WITTER 21 charles.phillips@msdw.com Mid Market Opportunity l High unit volume; 42
Slide 14: ERP Driver: Application Hosting
MORGAN STANLEY DEAN WITTER Page 326 ERP Driver: Application Hosting l Return to time sharing and outsourcing l Software vendors partnering with systems integrators, telcos, and hardware companies l Monthly charges; recurring revenue; low initial investment for the customer MORGAN STANLEY DEAN WITTER
Slide 15: Your Architecture by Default; The Problems
MORGAN STANLEY DEAN WITTER Page 327 Your Architecture by Default l Architectures in through the back door l Few if any ERP offers a full suite covering all enterprise business processes: that means integration issues MORGAN STANLEY DEAN WITTER 25 charles.phillips@msdw.com The Problems l Integration
Slide 16: Integration - The Achilles Heel
MORGAN STANLEY DEAN WITTER Page 328 Integration - The Achilles Heel l Middleware is a murky area with overlapping functionality in products aimed at parts of the problem l Slow evolution and complex l Enormous maintenance costs l Users starting to evaluate integration options up front MORGAN STANLEY
Slide 17: Release Cycle Management; Performance Bottlenecks
MORGAN STANLEY DEAN WITTER Page 329 Release Cycle Management May Ease l Release upgrades 10-15% of life cycle costs l Need the upgrade to get new functions l Still clunky today l Customization the killer; don’t touch that code MORGAN STANLEY DEAN WITTER 29 charles.phillips@msdw.com Performance Bottl
Slide 18: Uncommon Business Objects; Data Quality
MORGAN STANLEY DEAN WITTER Page 330 Uncommon Business Objects l Definition of a customer across front office, back office, and supply chain differs by package l Enterprise Application Integration platforms attempting to provide commonality MORGAN STANLEY DEAN WITTER 31 charles.phillips@msdw.com Data
Slide 19: Data Access; The Database
MORGAN STANLEY DEAN WITTER Page 331 Data Access l Relational standard helps l Customers don’t know how the data is stored in ERP as well as they did for custom systems l Data dictionaries and Meta data not the cleanest l Growing demand extract the information buried in ERP tables MORGAN STANLEY DEAN
Slide 20: A Database Table; Databases Only Do CRUD
MORGAN STANLEY DEAN WITTER Page 332 A Database Table Name Address State Record1 Jones Main St NY Record2 Smith Broad St CA Record3 King Peachtree GA MORGAN STANLEY DEAN WITTER 35 charles.phillips@msdw.com Databases Only Do CRUD l Create a record l Read a record l Update a record l Delete a record MO
Slide 21: Database Evaluation Criteria; Database Choice
MORGAN STANLEY DEAN WITTER Page 333 Database Evaluation Criteria l Scalability: 100 to 10,000 users l Parallel query; partitioning l On line backup and recovery l Performance l Reliability; referential integrity l Support l Tools, labor availability; apps MORGAN STANLEY DEAN WITTER 37 charles.philli
Slide 22: Databases on Mainframe; Data Warehousing
MORGAN STANLEY DEAN WITTER Page 334 Databases on Mainframe l Excels at bulk data movement l IDMS, IMS, Datacom, Adabase, DB2, Flat Files l Mainframe as a server - great I/O l Gateway/middleware markets bringing mainframe back into the fold as a server MORGAN STANLEY DEAN WITTER 39 charles.phillips@m
Slide 23: Data Warehousing; Reporting, Analysis, Query
MORGAN STANLEY DEAN WITTER Page 335 Data Warehousing l Deferred from Y2K; long payback l Likely to rebound; Y2K inspired clean up of data; ready to be mined MORGAN STANLEY DEAN WITTER 41 charles.phillips@msdw.com Reporting, Analysis, Query (RAQ) l Key vendors: Hyperion, MicroStrategy, BusinessObject
Slide 24: Development Tools; 6 Steps to Applications Building
MORGAN STANLEY DEAN WITTER Page 336 Development Tools Technology Summary MORGAN STANLEY DEAN WITTER WWW.MSDW.COM 6 Steps to Applications Building Problem Definition - usually manual; most important Design/modeling - Rational, Logic Works, CASE Coding - Visual Basic, Java,, Cobol, Oracle Testing - Me
Slide 25: From Code to Silicon; Development Tools
MORGAN STANLEY DEAN WITTER Page 337 From Code to Silicon Source Code@ Source Code@ Compiler # Run time Object Code#@ Virtual Machine# Operating Sys# Operating Sys# CPU CPU #CPU Specific @Source specific MORGAN STANLEY DEAN WITTER 45 charles.phillips@msdw.com Development Tools l Application developme
Slide 26: Increasing Abstraction in App Development
MORGAN STANLEY DEAN WITTER Page 338 Increasing Abstraction in App Development Enterprise Java Beans ABSTRACTION 4GLs (Forte, Powerbuilder) 3GLS (COBOL, C, C++) Assembly language Machine Code (1s and 0s) 1960 TIME 1997 MORGAN STANLEY DEAN WITTER 47 charles.phillips@msdw.com The Most Popular Developme
Slide 27: Development Tool Market; Architecture
MORGAN STANLEY DEAN WITTER Page 339 Development Tool Market l Necessary but not attractive market l Can sell only to developers; 2 mil in the world l Platform vendors view them as strategic which means low cost or free l Barrier to entry low; low loyalty MORGAN STANLEY DEAN WITTER 49 charles.phillip
Slide 28: Architecture Decision; The Shift to Thin Clients
MORGAN STANLEY DEAN WITTER Page 340 Architecture Decision DISTRIBUTED CENTRALIZED Data and Apps closer to Centralized administration users; performance and control More points of failure Single point of failure Difficult to manage Centralized management Flexible; modular Brittle; monolithic CPU inte
Slide 29: The Thin Client Case; The Middleware Mess
MORGAN STANLEY DEAN WITTER Page 341 The Thin Client Case l Get applications off the desktop l Quit distributing complexity to end user l Update the application once on the server; no code on the desktop; easier to manage and maintain from a central server l Easier to support remote access MORGAN STA
Slide 30: Distributed Apps; Middleware Everywhere
MORGAN STANLEY DEAN WITTER Page 342 Distributed Apps Things Can Get Messy Applications Applications Applications Database Database Database MORGAN STANLEY DEAN WITTER 55 charles.phillips@msdw.com Middleware Everywhere l Platform companies: Microsoft and IBM l Application vendors: SAP, BAAN l Databas
Slide 31: Layers of Technology; Middleware
MORGAN STANLEY DEAN WITTER Page 343 Layers of Technology Unlike old soldiers, old systems don’t fade away EAI Middleware XML Transformation e ram Tools? er erv inf t/S Ma et en ran Cli er eth ts tog y kno Int it Tie ut an ho wit MORGAN STANLEY DEAN WITTER 57 charles.phillips@msdw.com Middleware Gett
Slide 32: The Middleware Complexity; The Outlook
MORGAN STANLEY DEAN WITTER Page 344 The Middleware Complexity The Stack Stack TP Monitor •Manage transaction throughput App. Management •Manage application reliability PUSH •Push messages to an audience point to point Message Broker Broker •Route messages between targets/sources ORB •Send messages t
Slide 33: From Data to Services; Application Servers
MORGAN STANLEY DEAN WITTER Page 345 From Data to Services l Client will subscribe to services l From data sharing to private messages between selected applications l Publish a category of messages broadcast to interested users and applications MORGAN STANLEY DEAN WITTER 61 charles.phillips@msdw.com
Slide 34: XML - Esperanto for Data has Arrived
MORGAN STANLEY DEAN WITTER Page 346 XML - Esperanto for Data has Arrived l HTML is a common language for viewing data l XML is the common language for exchanging and describing l Data can describe itself; extensible and language/platform independent l Opens up the world of data integration and excha
Slide 35: Back to the Server; Systems Management
MORGAN STANLEY DEAN WITTER Page 347 Back to the Server l Business logic moving back to server l Fewer business rules on the clients l Should lower application distribution problems l From stove pipes, to data sharing to service architecture MORGAN STANLEY DEAN WITTER 65 charles.phillips@msdw.com Sys
Slide 36: The Goal - More Good Days than Bad
MORGAN STANLEY DEAN WITTER Page 348 The Goal- More Good Days than Bad l Get things under control; predictability Bad day l Service assurance l No surprises Good day MORGAN STANLEY DEAN WITTER 67 charles.phillips@msdw.com It’s Game Time Managing Systems in Production l Know what’s going on: events, c
Slide 37: Systems Management; Enterprise Performance Management
MORGAN STANLEY DEAN WITTER Page 349 Systems Management l Event monitoring BMC l Performance monitoring l Data management CA l Job scheduling Tivoli l Workload management l Security; User admin; Apps mgmt Microsoft Microsoft l Network management/monitoring SAP MORGAN STANLEY DEAN WITTER 69 charles.ph
Slide 38: The Systems Management Oligopoly Gets Stronger
MORGAN STANLEY DEAN WITTER Page 350 Systems Management Normal Days vs. Putting out Fires - Some days you feel like a nut, some days you don’t Administer Restore Operating Operating Environment Environment Change Configure & Adapt Adapt Service Recover Data Normal Monitor Data Predict & Detect Outage
Slide 39: Short Term Mainframe Trends; What's Hot in Systems Management
MORGAN STANLEY DEAN WITTER Page 351 Short Term Mainframe Trends l IBM G5 Product cycle; sold out through the year; G6 on the way l Consolidation of servers helpful l Cleaned up code from Y2K; incremental investment l New apps growth still modest; existing apps continue to expand MORGAN STANLEY DEAN
Slide 40: Systems Management - Still a Proprietary World; The Mainframe Software Market
MORGAN STANLEY DEAN WITTER Page 352 Systems Management - Still a Proprietary World l Frameworks provide communication infrastructure to tie vendors’ own products together l WEBM (Web Based Enterprise Management)- standard for displaying systems mgmt info l No catalyst to force standards MORGAN STANL
Slide 41: Application Development; Production Applications
MORGAN STANLEY DEAN WITTER Page 353 Application Development l COBOL still rules - 100 billion lines l Largely a testing, enhancements, and debugging market l New application growth scarce l Missed ERP wave as a native platform; used for database MORGAN STANLEY DEAN WITTER 77 charles.phillips@msdw.co
Slide 42: The Mainframe Environment; Server Operating Systems
MORGAN STANLEY DEAN WITTER Page 354 The Mainframe Environment l MIPS shipments accelerating l Pricing metric is based on MIPS capacity; but Price per MIP falling l Matters how much has been sold forward; Y2K Bubble created over capacity l Product transition to 64 bit machines and partition based pri
Slide 43: Linux - Open Source; What's Really Behind Linux
MORGAN STANLEY DEAN WITTER Page 355 Linux - Open Source l Ability to modify source code is a perceived advantage; most wouldn’t dare touch it l But $50 for per server l Consolidation - Red Hat has 54% market share MORGAN STANLEY DEAN WITTER 81 charles.phillips@msdw.com What’s Really Behind Linux l P
Slide 44: Oracle Raw Iron
MORGAN STANLEY DEAN WITTER Page 356 Oracle Raw Iron A server appliance that hides the operating system Application Application Oracle Oracle Common Management Pre-tuned Operating Solaris Kernel System Oracle on Windows/NT Oracle Server Appliance Installation Configure NT; Setup User accounts; Set up