The economic slowdown was not kind to SAP in 2009, and as it launched the annual Influencer Summit on December 8th, change was in the air. Messages were shifting. “Sustainability” got a big push, and there was a ringing commitment to substantial, dramatic product change to be delivered in 2010. Different faces were on display: there was no Leo Apotheker or Bill McDermott on the stage, although Board members Jim Hagemann Snabe and John Schwarz held down the fort with new Marketing EVP Jonathan Becher and CTO Vishal Sikka in key speaking slots. Like the dances I went to in high school, the event was mostly date-free, but direct questions elicited some specific, though uncommitted, statements about deliveries in 2010, especially from Marge Breya.
Becher spent too much time on silly stage business interacting with a “talking computer,” but made some important points about changes in technology architecture that are driving adaptive responses within SAP’s product portfolio. There was much to talk about. But 50% of its customers are not on the current ERP release (SOA-enabled and thus requisite for new features) after 6 years. The Business ByDesign midmarket play (one of 3) is still in beta, ramping at a snail’s pace (Snabe said Business ByDesign has “close to 100 customers.”) So there is much work to do. Although SAP asserts that 75% of its 92,000 customers are “SMEs” by its definition, 45,000 of them are Business Objects customers.
SAP faces significant economic challenges. It’s already well penetrated among enterprise firms, and fewer greenfield opportunities remain at the top. New giant contracts will not be in plentiful supply; SAP must find a volume model that works. Despite its continuing addition of new products targeted to the same base, SAP must grow in the midsize market, and that’s not going well while competitors like NetSuite and salesforce.com – and Oracle – stand in the way.
Customer power in all economic spheres has been noted by forward thinking observers for some time – and the battle has been joined in spades in the SAP community. SAP has been facing a revolt among its users over what it charges for maintenance, one of its major revenue streams. Its delivery of a more gradual, less invasive update process paradoxically complicates that further. It’s hard to convince people to pay for the right to refuse granular updates they might not think they need. So far, only some 3500 customers have taken advantage of the new “enhancement packs” = which also are only designed for the newest release.
Responding with new technology in the face of that recalcitrant community is a major challenge, but SAP knows it must deal with such model breakers as cloud computing, mobile devices and what it referred to throughout as “on-demand” (SaaS). Showing slides about how rapidly technologies are adopted made for an unfavorable comparison to those customers not even on current releases yet. Will the innovations on display help move customers forward? Only time will tell, but SAP is soldiering on.
SAP is very upbeat on in-memory software – claiming that access to databases in main memory is [edited 12/22] 1000x faster than from “storage drives” – which academics like Daniel Abadi of Yale say is an order of magnitude too high. [end edit] But there’s no question it’s a big step up nonetheless. And SAP has begun to deliver “on-demand” with Business By Design (with other offerings arriving soon and more to come. Mobility is a key theme: even the Droid was in evidence at this event, scant weeks from its public release, earning a memorable “double nerd points” score in a tweet from James Governor. Oddly, the Blackberry, so prominent in the past, was absent in the sessions I attended. (More on the tech additions below)
John Schwarz’ experience at the helm of Business Objects before the acquisition showed in his savvy acknowledgment that “We need to deliver with people who understand the customer’s business,” so specialists in the sales force are critical. This is one of SAP’s powerful advantages – it understands the businesses it’s in very well, and can leverage that if it executes well. Schwarz pointed out that “We have 7000 go to market partners,” and 2.5M developers plugged in. The ecosystem work done for the past few years by the recently departed Zia Yusuf will be another key asset. But no actual results were described, just membership statistics, other than some onstage partner anecdotes.
Oddly, the acronym “GRC” for governance, risk and compliance was rarely heard. SAP has achieved good recognition there, but at this event “Sustainability” and managing risk and compliance were conflated into a new message. SAP believes there is a 7B euro market in this newly defined space in the next few years, and has a panoply of offerings poised to exploit the needs of companies confronting new legislative requirements. The already signed customer list was impressive, and Peter Graf’s demos of the technology were coherent and interesting.
There was much talk in general sessions of the “heterogeneous landscape” in the customer and prospect base. But SAP said little about connecting its apps to non-SAP apps. It plans to “orchestrate over a heterogeneous landscape,” said Becher, but this seems to mean SAP is the point of orchestration across end-to-end processes it owns. Snabe referred to an “SAP fabric to which new pieces – from SAP, not others – could be added. “We believe in horizontal integration across business networks,” so we don’t need to vertically integrate hardware and databases, he added, in a jab at the competition’s different strategy. But why follow this thrust with the enthusiastic discussion of – wait for it – in-memory database? And pictures of blades as a key enabling technology for the planned innovations? Mostly, SAP’s message said much less about openness: despite Oracle’s “full stack” story, it talks a better game about moving data, messages, and events across other vendors’ products where the customers have them.
The exception to this came in EVP and GM Marge Breya’s discussion – call it the North American wing’s vision. She and Vishal Sikka discussed the “leaning down” of elements like app servers for ABAP to provide improvements that were as non-disruptive as possible to existing customers. While the embedding of BI into SAP’s own apps continues to be a strong and effective focus, Breya emphasized its continuing focus on supporting non-SAP data, albeit in read mode for analytics. SAP claimed to be twice the size of its nearest analytics competitor – though the tweetstream bubbled up some challenges to that assertion. SAS, Oracle and IBM would no doubt want to construct very specific collections of numbers to contest the terms of the leadership definition.
Breya is intent on driving continued development, and showed some terrific demos (herself, as is her style – kudos to her for that.) We saw Explorer running on iPhone – searching for a brand’s results, charting them, drilling down by geography, charting again, filtering again into specific products , and finally to the top 5 dealers. All on an iPhone, with a simple, clean interface. Kona, the next generation BI on demand environment, will have on demand, on premise, on device delivery, and enhanced visualizations, she said, and showed a word cloud and a heat map inside a portal during a demo of picking the best cities for a marketing campaign. She talked about marrying middleware to analytics, as we discussed in our interview in April, and made it clear that she has not abandoned the Orchestration roadmap – marry NetWeaver to BO, bring up a CEP engine and incorporate ALM in the medium term. She promised collaboration and operational BI features, and suggested that delivery midyear is possible.
The fundamental assertion of the day was clear: “the foundation has been laid. Now we can accelerate delivery.” SAP’s embrace of in-memory will mean it will change its entire stack, its application servers and provide elastic combinations and multi-tenant support. These are formidable transformations for the 92,000 customers it has after 37 years. 100 of them have been with SAP for 30 years. “And everything changes but relationship,” Snabe said. Is that enough? Execution, and the willingness of its customers to embrace the changes, will tell the tale. The future is uncertain.