SAP makes strange sounds

by admin on December 5, 2006

in Cloud Computing/SaaS

Fastclosesap

For those of you who are interested in the enterprise space, SAP provded a webcast of its Investors Symposium in Las Vegas yesterday. Dan Farber has extensive reporting but three things caught my attention as I ground my way through the pitches:

First, SAP has ‘fast closing’ in its ‘functionality’ stack for EP2 2007. That’s odd because CODAs Dave Turner told me they’ve previously announced fast close for SAP. This leaves me a tad confused. Is it the case that SAP is releasing its own stuff as would seem correct in a roadmap or is it integrating and re-branding acquired technology?

Sapinvestorsymposium06

Second, Shai Agassi head honcho of products put up a slide where he showed the Long Tail as one of the ‘vectors of monetization,’ along with ‘IT tax reduction‘ and with the information worker at the centre of the puzzle SAP is assembling. That immediately fired off a few synapses because it seems that the penny has finally dropped for SAP that there is a HUGE ecosystem of potential customers out there it doesn’t know much about but which are a significant part of its long term strategy.

Shai said this was ‘new’ to the company. He made clear the company’s intent to grab the potential customer’s attention as early on in their life as possible. He rationalises that once a company becomes an SAP customer, they will see how SAP can carry companies through any stage of growth. (Well almost.) The push then becomes one of building brand loyalty through the life of the business. Sounds like more sales calls to me.

Third, I got the distinct impression Shai was dropping a hint that he sees the mid-market as one where software is consumed as services. Is that code for SaaS? I could have this wrong but when you consider he was at pains to talk about consuming services AND the Long Tail at the same time, the man sure has big ambitions. I would expect that. But there’s a hole.

They just don’t want to talk in any detail about BusinessOne. Henning Kagermann, joint-CEO said: “We are happy we have BusinessOne and we will continue.” When asked to comment on an analyst question about B1, Shai parroted Hennings words – and that was that. I don’t understand. If the SMB market is so important, why do they continue to keep quiet? It doesn’t make sense.

Will Shai’s strategy pay off? SAP has a lot of competitors in its sights that have established and well oiled distribution channels. It is working on that. But then it has to get through the public perception of SAP as a player for the large company alone. At least that’s what it thinks it has to do. You may have noticed its recent TV advertising, which I first saw on late night Sky Sports.

Personally, I think it’s a waste of money. Do the general public care about SAP? I doubt it very much. The people who really care are other vendors, their distribution channels, industry observers and blog readers. SAP would be far better served connecting to ‘on the ground influencers’ who could tell the SAP story for it. These people need some nurturing because those I know about wonder whether SAP is fit for purpose at a price point they can sell to clients.

SAP is also making the mistake of assuming that people really do believe SAP is for the big boys. In so doing, it is reinforcing perceptions. That was my instant impression. And I have known SAP for some 11 years.

But then SAP needs to do something about its user interface (UI). It’s not the most user friendly on the planet. Or the most capable. This is something I commented upon at Thomas’s place. Mid-tier and lower end customers want something pretty snappy these days and are conscious of the need to have users on-side. SAP is not being a slouch. It is working on new interfaces, like delivery to Blackberry. But it will be some time before their newer generation of UIs come available.

In the meantime, smaller, more nimble competitors will find or build the services they need in order to get those applications out there. Regular readers might recall what I had to say about Sage and Blackberry. Winweb has Skype with further announcements in the mobile space to come. Other competitors, like Teqlo will see the opportunity to enter all sorts of niche whitespaces using what I like to term coupling services. Following this logic, Microsoft or Sage are no longer real competitors.

Potentially, Google could become SAPs competitor in the Long Tail of the mid-range with the likes of Teqlo providing the business use case glue that end users adopt before IT gets a look in. Then what? When I think about the variety of widgets and online services I’ve used in the last 12 months alone, there is a crying need for simplicity. The race is on to see who is first to deliver that simplicity.

Despite these misgivings and challenges, I don’t write off SAP.

  • It successfully made the technology transition from R/2 to R/3 when all around it floundered.
  • SAP managed to get the mySAP.com portal accepted in a healthy number of places.
  • It is building momentum around Netweaver. Despite the fact it has been blowing smoke about this for years.
  • It finally seems to have understood what to do about attacking the SMB market with B1.

That’s a lot of successful history.

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Jason Wood December 5, 2006 at 3:40 pm

Den,

Yesterday's presentation was very reminiscent of a few years ago when web-based computing was starting to proliferate. SAP had all the pomp and circumstance around SAP.com and mySAP.com without giving observers (myself included) any sense that they actually understood the fundamental differences of a web-based model in terms of delivering services to their massive installed base.

By the following year, SAP's messaging was so tight and the products WERE there that the PR gaffes of the year before were a distant memory. It is, after all, all about execution and SAP is on an historic run as far as that goes.

So while I was underwhelmed at the company's inability (or unwillingness) to articulate their positions on SaaS [hosting a single instance on a blade server isn't innovation], Duet and the mid-market offering; I'm willing to bet that by Sapphire '07; the shiny veneer of the message will be back.

Pantologist December 5, 2006 at 7:54 pm

The reason they're not talking about B1 is because there's something really big coming for B1. Massive, earth-shattering, industry-shaking. How do you think they're going to triple their customer base by 2010? Stay tuned, this is not your father's SAP.

Dennis Howlett December 6, 2006 at 4:20 am

Sorry Pantologist – don't buy that without detail. SAP has all sorts of things going on – sure – and some of them won't come off.

But to simply shut off any conversation around B1 is worrisome – especially on a product update day for investors. Don't you think?

Pantologis December 6, 2006 at 5:29 am

I'm telling you, its really big. hard-to-get-your-head-around-big. I can't give you any details for the same reason Shai and Henning can't, but I can say that you definately want to keep an eye on SAP in 2007.

First- forget everything you know about SAP and B1. Then think, "What would be an industry-changing move that would get SAP 20,000 small-businesses a year and generate massive revenues at the same time?"

Thomas December 9, 2006 at 3:37 pm

Den,
Just watched the analyst stuff this weekend. The midmarket play is going to be very significant. Many of the sparky developers I know have been working on it.
The challenge now will be in communicating it effectively to the market. Jason's point here is spot on. This wasnt a product launch, but a chance to show the investors that there is a significant new product around the corner.

Now the marketing types need to do their job, and get the messaging clear and simple.

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