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?
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.