(Credit: R “Ray” Wang, Insider Associates, LLC)

Co CEO’s Stabilize The Company

Both SAP Co-CEO’s Bill McDermott (Orlando) and Jim Hagemann Snabe (Frankfurt) took stage on May 18, 2010, in a simulcasted keynote.  While Bill highlighted SAP’s future vision and commitment to customers, Jim focused on communicating the SAP product strategy to match the corporate vision.  Customers, partners, and influencers sought an understanding of their road map 100 days into their jobs.  The two leaders demonstrated good synergy and gained confidence among the attendees.  In addition, CTO, Vishal Sikka took stage throughout many sessions and asserted his role as the key technologist.  Some of the main messages from the keynote include:

• Articulating acquisition strategy in key themes.  Bill McDermott discussed three key themes for SAP: real time, unwired, and sustainable.  Each of the themes tied back to a changing shift in industry trends on business requirements and shifts in customer adoption.  Each of the themes reflected a revenue stream for SAP.  A global energy concern CIO expressed, “We’ve been waiting for SAP to get mobility to work.  We can’t wait to see mobile field service become a reality in our sustainability initiatives”
  
  Point of View (POV): While the themes accurately describe SAP’s direction, the crafting of this strategy seems reactive.  In fact, it appears that this strategy builds on past acquisition decisions not concerted proactive strategy.  The good news – each of these trends represents the hot issues of the day and have finally been articulated together.   For example, real time addresses Business Objects, unwired ties back to Sybase, and sustainable supports Clear Standards.  Despite whether the strategy makes sense reactively or proactively, it does set the future direction for SAP.

• Providing choice in deployment options.  SAP plans to offer customers choice in on-premise, on-demand, and on-device.  On-premise remains the same with new enhancement packs (EhP) adding additional capabilities.  On-demand offers both a suite offering in Business By Design (ByD) and point solutions in the On-demand offerings.  On-device will include the Sybase capabilities such as mobile CRM.  The ERP director of a large high tech manufacturer noted, “We’ll be deploying a two-tier ERP strategy for subsidiaries and SAP now makes the short-list with ByD”
  POV: Jim Hagemann Snabe’s demonstration of Sales On Demand through the iPad highlights the convergence customers face going forward.  Choices in deployment options and platforms will guide customers on what to buy from SAP.   Users may face SAP to SAP scenarios, SAP to heterogeneous SaaS environments and complex hybrid deployments. For SAP on-premise to SAP on-demand scenarios, users will find a dependency requiring an upgrade to EhP 5 for more seamless integrations.  Others will turn to SaaS integration players such as Boomi, Informatica, SnapLogic, and Pervasive.

• Communicating cloud strategies. Jim Hagemann Snabe announced delivery of the latest version of Business by Design (ByD) in July 2010.  Feature pack 2.5 includes additional features.  More importantly, ByD FP2.5 provides multi-tenancy, enabling cost effective provisioning features.  Conversations with key executives hint at point solution On Demand offerings to include include expense management, procurement, people management, and sales in 2011.  The Director of Consulting Services at an EMEA regional professional services firm noted, “We’re waiting for ByD FP 2.5 because we need a project accounting and professional services solution but required a multi-tenant option.”
  
  POV: With OnDemand, SAP can now take a SaaS offensive and offer a solution that could compete with best of breed point solutions.  At some point, SaaS solutions will be bundled into suites and customers will seek a core SaaS suite offering and additional point solutions.  SAP customers will need more details on this road map before pursuing such a strategy.  SaaS integration will play a key role.

• Battling Oracle with ecosystem strengths. Both Co-CEO’s made inferences to their view that Oracle has a closed ecosystem.  They also tried to position SAP as partner friendly in working with technology platforms and technology stacks.  Hence, SAP reemphasized the importance of key partnerships such as RIM, Sybase, Syclo, Intel, Cisco, VM Ware, and EMC.  The Partner Alliance Manager for a high tech partner noted, “We have to work more closely with SAP because we need a counter-weight to Oracle”
  
  POV: Oracle’s acquisition of Sun has shown other competitors the importance in partnering to compete against Oracle.  Those who seek a large apps partner will turn to SAP for access to a large base of apps users and potentially a large base of mobile customers.  Expect more alliances to emerge by industry and by value chain.

Figure 1.  Flickr Photostream From Sapphire 2010

Credit: R “Ray” Wang, Insider Associates, LLC

The Bottom Line For Users – First 100 Days Show Signs Of Progress, Customers Still Need More Details

SapphireNow (2010) raised overall confidence among customers, prospects, partners, and influencers.  SAP articulated the why, the what, and the where.  However, SAP must now highlight how they will deliver and execute and when they will meet expectations.  Open questions still remain including:

• Could $5.8B have been spent to deliver on the functional requests customers have sought over the past 5 years?
• How Sybase will be integrated with SAP technologies?
• What time frame will NetWeaver be ready to support social business?
• What will the on demand Go To Market strategy look like?
• When will SAP resolve its master data management strategy?

Customers and partners will await the next 180 days with much interest.

Your POV.

Are you a SAP customer?  How do you feel about SapphireNOW?  Will you have more confidence in SAP’s ability to innovate?  Do you feel more confident about SAP’s ability to execute?  Take the poll here.  You can post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Please let us know if you need help with your apps strategy efforts.  Here’s how we can help:

• Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployements”
• Optimizing your SAP costs
• Evaluating SaaS/Cloud integration strategies
• Assisting with legacy ERP migration
• Planning upgrades and migration
• Performing vendor selection
• Providing contract negotiations and software licensing support

Related resources and links

• 20100512 SoftwareInsider – R “Ray” Wang – “News Analysis: SAP Bets On Innovation With $5.8B Sybase Acquisition”

Disclosure

Although we work closely with many mega software vendors, we want you to trust us more.  SAP is currently a non-retainer client of Altimeter Group and not a client of Insider Associates, LLC.  Oracle Corporation is a retainer client for Altimeter Group but not Insider Associates, LLC.  For the full disclosure policy please refer here.

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

As always, thanks for your emails and alerts. If you’ve got a change or know of a promotion, keep dropping me a line! If you need a referral, and we’ve worked together in the past, don’t hesitate to reach out to me via Linked In.

Paul Alessi is now a Buyer at Universal Orlando.  Paul brings decades of purchasing and procurement experiences including work at Reed Elsevier.

Nenshad Bardoliwalla has an updated current title: Co-Founder, Products at PROFERI. The Co-Author of “Driven To Perform: Risk-Aware Performance Management From Strategy Through Execution”, he last served as the Vice President, Technology, EPM & GRC, Office of the CTO at SAP

Ivan Chong has an updated current title: Executive Vice President, Data Quality Product Division at Informatica Corporation.
Ivan’s been a veteran of Informatica, NetGravity, and Oracle.

Oliver Claude has an updated current title: Program Director, InfoSphere MDM Product Strategy / Product Management at IBM. Oliver brings significant MDM/CDI experiences from IBM and Siebel Systems.

Donna Goodwin returns to Bank of America as a Senior Architect.  Donna’s a crackshot at data modeling, SOA, and master data management with stints at IBM, COMSYS, and Check Solutions.

Mick Gunter has an updated current title: Senior Vice President, Operations at Primo Water Corporation

Matthew Halliday has an updated current title: Producer / Creative Director / Tech at CPC Live

Alp Hug has an updated current title: SVP Products & Chief Marketing Officer at The Frayman Group. Alp was formerly the Senior Vice President for ECM Suite Technology Group at Open Text.

Karla Rose Hanson has an updated current title: Business and Communication Manager, Customer Service & Support / Commercial Technical Support at Microsoft. Karla’s a 12 year veteran at Microsoft.

Dawn Habgood has an updated current title: Vice President, Global Shared Services at Forrester Research

Alex Kao is now Managing Director at Stravantage LLC.  Former roles include a stint a tStrategy & Portfolio Management for Global Information Systems at Kraft Foods, Director, Enterprise IT Strategy at Sears, Roebuck and Co, and management consulting work at KPMG.

Jim Kaskade is now Chief Of Cloud at SIOS Technology, Inc.

Koshy ALEX is now Business Development Consultant at Oracle Corporation.  Koshy brings ERP experiences as a Business Development Executive atSynaptris, Pre-Sales Consultant for MS Dynamics ERP at Mahindra Satyam, and Resource Lead for Microsoft Dynamics Competancy at Mahindra Satyam.

Ed Maguire has an updated current title: Managing Director at CLSA Asia-Pacific Markets /Credit Agricole Securities (USA) Inc.

Bill McDermott has been named Co-CEO at SAP.

Jeff Onesto has an updated current title: Director of Product Management at OptionEase, Inc.

Anil Patrick R has an updated current title: Chief Editor – India Operations at TechTarget. Prior to his new position, Anil served as an Editor for Online Initiatives & Special Projects at Saffron Media Pvt Ltd’s Travel Division, and an Assistant Editor at Indian Express.

Jeff Ralyea has an updated current title: Senior Software Executive at Apex Charter Management. Ralyea brings software product management expertise from Infor, FrontStep, and MAPICS.

Anshu Sharma has been promoted to Vice President, Product Management at Salesforce.com. A fellow Enterprise Irregular, he was the Founder & Group Product Manager of Oracle’s SaaS Platform and Senior Development Manager/Technical Staff at Oracle.

Jim Hagemann Snabe has been named Co-CEO at SAP.

Brian Swift has an updated current title: Integrated Workforce Experience – Enterprise 2.0 at Lowe’s Companies

Jozsef Terenyi has an updated current title: IT Manager – SAP Systems at NuStar Energy. Jozsef brings a strong Energy IT background with similar experiences at Valero.

Katharyn White has an updated current title: Marketing Vice President, Global Business Services at IBM. Kathryn has served in various marketing roles over her 13 year career at IBM and has also worked at HP and DuPont.

David Anthony Wilkins has an updated current title: OSS /BSS Contracting Director, EMEA at ICI – the technology people

New Changes Hint At Hasso’s Priorities

In a not surprising update, SAP makes changes to Executive Board and management.  Here are the changes:

• Gerhard Oswald becomes COO. Gerhard has experiences in support, consulting, education, custom development, and quality.Gerhard’s contract has been extended till December 31, 2011.

  Point of View (POV):  Gerhard’s been a long-timer at SAP with 30 years of experience.  He replaces Erwin Gunst who’s been out for almost a year with medical issues.  SAP needs a strong COO in place and Gerhard has the credibility and experience to execute.  Hasso’s putting a trusted lieutenant in charge.

• John Schwarz resigns. The former BOBJ leader leaves.  He was responsible for SAP BusinessObjects, Ecosystem and Corp Dev.

  POV: After being passed up for the CEO job, it was obvious that John would be leaving.  Expect many of the BOBJ members in product management,  product marketing, and development to be reshuffled as their support will be shifted.  Those who didn’t fight hard for embedding T-Rex (inMem) and pushing out “Timeless Software” may be most impacted.

• Peter Lorenz named as a corporate officer. Peter currently is the Executive Vice President for Small and Mid-size Enterprise (SME).  He reports to Jim Hagemann Snabe.

  POV: The corporate officer position serves as an extended board member role.  This hints at the importance of SME to SAP’s strategy.  SAP also needs to build bench strength in SME.

The Bottom Line – SAP’s Making Big Changes.

Hasso’s acting fast to make changes.  John Schwarz will be missed by many of the BOBJ team. Expect a ripple of changes as the management shake out finalizes over the next 8 to 12 weeks.   Look for new product road maps to arrive prior to Sapphire 2010.

Your POV

Are you an SAP customer?   How do you feel about the transition?  Would you like to learn more about:

• Building a next gen SAP roadmap?
• Improving your SAP apps strategy?
• Augmenting SAP with SaaS?
• Putting third party maintenance and optimization to work?

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related Links And Resources

Official SAP Press Release

Here’s a list of related reports.

20100114 News Analysis: SAP Revives Two-Tier Maintenance Options

20091211 Event Report: 2009 SAP Influencer Summit – SAP Must Put Strategy To Execution In Order To Prove Clarity Of Vision

20091125 Speaker Notes: Keynote – SAP UK & Ireland User Group Conference 2009

Here’s a list of related links of news during Léo’s tenure.  They will be added on an ongoing basis and updated as appropriate.

• 20100208 Computer Weekly – Warwick Ashford ” SAP admits enterprise support plan was a mistake”
• 20100208 DestinationCRM – Lauren McKay “After CEO Ouster, Plattner’s Plea: “Please Trust SAP. We Have Not Forgotten You.” “
• 20100208 SearchSAP.com/TechTarget – Courtney Bjorlin “SAP’s new CEOs need to show vision, clear product roadmap to customers, observers say “
• 20100208 Bloomberg – Ragnhild Kjetland “SAP Upheaval Pits Plattner Against Ellison in Market-Share Spat”
• 20100208 ReadWriteCloud – Alex Williams “Will SAP CEO Shakeup Lead to a Unified Cloud Computing Strategy?”
• 20100208 Wall Street Journal – Vanessa Furhmans ” SAP Chief Quits; Co-CEOs step in”
• 20100208 Associated Press – Matt Moore “Shares slip on CEO’s ouster; questions”
• 20100208 Computerworld UK – Elizabeth Heichler and Mike Simons “SAP CEO Leaves”
• 20100208 LeMag IT – Reynald Fléchaux “SAP : Apotheker évincé, Plattner place la jeune garde sous surveillance”
• 20100208 Wall Street Journal: All things digital – John Paczkowski “SAP Board to CEO: Auf Wiedersehen, Sweetheart”
• 20100208 IDG News Service -  Joab Jackson and Chris Kanaracus “SAP Hits Reset Button With CEO Change”
• 20100208 ComputerWeekly – Warwick Ashford “SAP moves to restore customer and employee trust”
• 20100208 Information Age – Pete Swabey “SAP CEO Steps Down”
• 20100207 Wall Street Journal – Archibald Preuschat “SAP Returns to Co-Ceo Leadership, Apotheker resigns”
• 20100207 Information Week – Doug Henschen “SAP CEO Apotheker Resigns; Co-CEO’s Named”
• 20100207 Managing Automation – David Brossell “SAP CEO Resigns Suddenly”
• 20100207 ZDNet Irregular Enterprise – Dennis Howlett “SAP: Apotheker gone, Co-CEO’s in place”

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Apotheker’s Contract Not Renewed.  SAP Puts Snabe and McDermott In Co-Ceo Roles.

Rumors began circulating early this weekend that Léo Apotehker’s contract would not be renewed.  The highest level sources had confirmed this early in the morning and the afternoon press release provided confirmation of the details.  A few key facts:

• SAP moves back to Co-CEO management structure. Bill McDermott, head of field organization and Jim Hagemann Snabe, head of product development become Co-CEO’s. Point of View

  (POV): For undisclosed reasons, Leo’s contract was not renewed. Both Bill and Jim have extensive experience at SAP and have been hard at work revitalizing the organization from both the sales and product sides.  Many observers may be surprised not to see former Business Objects CEO John Schwarz in the running.
  
  

• Executive Board elevates role of products and technology. Vishal Sikka, chief technology officer (CTO) now appointed to the SAP Executive Board.

  POV: Vishal has the trust and ear of Hasso Plattner and Jim Snabe.  The net result may be more unified road maps, better prioritization of R&D assets, and less issues with product development.

The Bottom Line – Timing Is Everything, But SAP’s Inflection Point Is Good News For Customers

Though a seasoned executive with over 20 years with SAP, Leo was in the wrong place at the wrong time.  He was responsible for doing a bang up job in sales when Henning Kagermann (i.e. the former CEO) was around.   In fact, he made Henning look good despite the difficulties in launching mySAP ERP 2007, SAP ByD, and a host of other failed projects.  Unfortunately, he entered a down market while in charge of a sinking ship.  Low morale among the Walldorf engineering team, the issue with Enterprise Support and maintenance, and uncontrollable poor quarterly performance proved to be factors beyond his control.  Customers over the past 2 to 3 years began to wonder how to tap SAP’s innovation.  A clear need emerged for having more technologists at the helm.

Putting McDermott as Co-CEO makes sense.  He is an excellent sales guys but the issues is not sales.  It’s products.  Snabe and Vishal will need strong product vision to right SAP and point it in a forward direction.   Engineering and products need more attention to bring out trapped innovation at SAP.

Your POV

Are you an SAP customer?   How do you feel about the transition?  Would you like to learn more about:

• Building a next gen SAP roadmap?
• Improving your SAP apps strategy?
• Augmenting SAP with SaaS?
• Putting third party maintenance and optimization to work?

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related Links And Resources

Here’s a list of related reports.

20100114 News Analysis: SAP Revives Two-Tier Maintenance Options

20091211 Event Report: 2009 SAP Influencer Summit – SAP Must Put Strategy To Execution In Order To Prove Clarity Of Vision

20091125 Speaker Notes: Keynote – SAP UK & Ireland User Group Conference 2009

Here’s a list of related links of news during Léo’s tenure.  They will be added on an ongoing basis and updated as appropriate.

• 20100208 Computer Weekly – Warwick Ashford ” SAP admits enterprise support plan was a mistake”
• 20100208 DestinationCRM – Lauren McKay “After CEO Ouster, Plattner’s Plea: “Please Trust SAP. We Have Not Forgotten You.” “
• 20100208 SearchSAP.com/TechTarget – Courtney Bjorlin “SAP’s new CEOs need to show vision, clear product roadmap to customers, observers say “
• 20100208 Bloomberg – Ragnhild Kjetland “SAP Upheaval Pits Plattner Against Ellison in Market-Share Spat”
• 20100208 ReadWriteCloud – Alex Williams “Will SAP CEO Shakeup Lead to a Unified Cloud Computing Strategy?”
• 20100208 Wall Street Journal – Vanessa Furhmans ” SAP Chief Quits; Co-CEOs step in”
• 20100208 Associated Press – Matt Moore “Shares slip on CEO’s ouster; questions”
• 20100208 Computerworld UK – Elizabeth Heichler and Mike Simons “SAP CEO Leaves”
• 20100208 LeMag IT – Reynald Fléchaux “SAP : Apotheker évincé, Plattner place la jeune garde sous surveillance”
• 20100208 Wall Street Journal: All things digital – John Paczkowski “SAP Board to CEO: Auf Wiedersehen, Sweetheart”
• 20100208 IDG News Service -  Joab Jackson and Chris Kanaracus “SAP Hits Reset Button With CEO Change”
• 20100208 ComputerWeekly – Warwick Ashford “SAP moves to restore customer and employee trust”
• 20100208 Information Age – Pete Swabey “SAP CEO Steps Down”
• 20100207 Wall Street Journal – Archibald Preuschat “SAP Returns to Co-Ceo Leadership, Apotheker resigns”
• 20100207 Information Week – Doug Henschen “SAP CEO Apotheker Resigns; Co-CEO’s Named”
• 20100207 Managing Automation – David Brossell “SAP CEO Resigns Suddenly”
• 20100207 ZDNet Irregular Enterprise – Dennis Howlett “SAP: Apotheker gone, Co-CEO’s in place”
• 20091203 IDG News Service – Chris Kanaracus ” No quick resolution likely for SAP KPI saga”
• 20091201 Computerworld UK – Mike Simons “SAP users wait for vital support announcement”
• 20091201 InformationWeek: Global CIO – Bob Evans “Global CIO: Will SAP Move To Tiered Maintenance Fees?”
• 20091201 Managing Automation – Jeff Moad “SAP postpones maintenance hike”
• 20091127 IDG News Service – Phil Sayer “SAP Enterprise Support KPI Project Leader and Sponsor Resign”
• 20090429 ComputerWorldUK – Mike Simons “SAP Maintenance Fee Reversal is Big Win for Customers”
• 20090429 The Enterprise System Spectator – Franck Scavo “SAP postpones its maintenance fee price hike”
• 20090403 ZD Net Enterprise Irregulars – Dennis Howlett “Zut alors! the French are revolting”
• 20090402 Computerworld UK -Peter Sayer “Update: SAP users get tough about Enterprise Support KPIs”
• 20090402 LeMagIT – David Castaneira “Tarifs de maintenance : les utilisateurs haussent le ton face à SAP”
• 20090401 IDG News Service – Chris Kanaracus “SAP: KPIs coming soon for Enterprise Support”
• 20081210 ZD Net Irregular Enterprise – Dennis Howlett ” We Made A Mistake”
• 20081209 IDG News Service – Chris Kanaracus “SAP Makes Support Contract Concessions In Austria, Germany”
• 20081209 SearchSAP.com – Courtney Bjorlin “Many German and Austrian SAP users delay Enterprise Support contracts”
• 20081209 ZD Net Irregular Enterprise – Dennis Howlett “Breaking:SAP Maintenance Price Hike: Partial Victory”
• 20081127 IDG News Service – Chris Kanaracus “SAP User Group CEO Leaves”
• 20081126 Information Week – Mary Hayes Weier “SAP User Group Fires President”
• 20081125 ZD Net Irregular Enterprise – Dennis Howlett “Breaking: SAP User Group Fires CEO”
• 20081111 Computer Weekly – Warwick Ashford “SAP Enterprise Support dominates User Event”
• 20081110 ZDNet – Dennis Howlett “SAP’s UK users don’t get it – yet”
• 20081110 IDG News Services – Mike Simons “SAP users: we won’t pay higher prices “
• 20081110 Computing – Phil Muncaster “SAP customers told to bargain hard”
• 20081109 Information Week – Mary Hayes Weier “SAP Outlines Updated Maintenance Fee Plan”
• 20081106 IDG News Service – Chris Kanaracus “SAP tweaks support offerings”
• 20081105 IDG News Service – Chris Kanaracus “Top SAP executive grilled on support hike at software conference”
• 20081029 SearchSAP.com – Editorial Team & Axel Angeli, “SAP: What Went Wrong? Blame Marketing, NetWeaver”
• 20081024 SearchSAP.com – Courtney Bjorlin, “SAP and Oracle vs Third Party Support”
• 20081021 CIO.com – Thomas Wailgum “7 Ways to Get More For Your Increased SAP Maintenance Fees”
• 20081020 CIO.com  – Thomas Wailgum “Why SAP’s ERP Maintenance Prices Should Be Going Down — Not Up”
• 20081015 SearchSAP.com – Courtney Bjorlin “SAP Customers Should Push for Added Value in Enterprise Support, report says”
• 20081010 IDG News Service – Chris Kanaracus “Update: Forrester: Discontent persists over SAP maintenance hike”
• 20080923 ComputerWoche (ComputerWorld Germany) – Frank Niemann “AP macht in Sachen Wartung keine Zugeständnisse” Translated version courtesy of Babelfish
• 20080825 IDG News – Chris Kanaracus “SAP users seek proof of support plan’s benefits”
• 20080821 Compuerworld UK – Mike Simons “SAP extends maintenance deal to thousands of R/3 customers”
• 20080820 IDG News Service – Chris Kanaracus “SAP, user group to shed light on enterprise support”
• 20080813 IDG News Service – Chris Kanaracus ” SAP users: Support debate isn’t over”
• 20080801 IT News.com – Rosalie Marshall “SAP refuses to budge on hikes in support costs”
• 20080731 Computing – Tom Young and Janie Davies, “Fury as SAP raises support costs”
• 20080730 Enterprise System Spectator – Frank Scavo “Mad As Hell: Backlash Brewing Against SAP”
• 200807289 Enteprise AntiMatter’s Joshua Greenbaum, “Friendly Fire: SAP Flubs the Maintenance Business”
• 20080728 The Register – Chris Williams “SAP Defends Forced Price Hike”
• 20080728 MyCustomer.com – Stuart Lauchlan “UPDATED: SAP customers furious at 29% hike in support costs
• 20080728 Irregular Enterprise – Dennis Howlett “More dissent on SAP Maintenance Price Hike”
• 20080728 Information Age – Pete Swabey “SAP support costs to jump 30%, says user group”
• 20080728 IDG News Service – Chris Kanaracus “SAP, Oracle price hikes open door for license optimization”
• 20080728 CIO Magazine – Thomas Wailgum “As SAP Support Costs Spike, Users’ Group Leader Preaches Collaboration — Not Rebellion”
• 20080725 IT World – Mike Simons “SAP maintenance backlash grows in UK and Germany”
• 20080725 ITPRO – Nicole Kobie “UK SAP user group slams support pricing increase”

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

• Official SAP Press Release
  

(Photos by R Wang & Insider Associates, LLC.   Copyright © 2009 All rights reserved.)

Re-innovation Now At The Heart Of SAP’s Focus And Strategy

SAP has faced a rough two years.  From the continuing market pressure on new license revenue, false-start launch of Business By Design (ByD), management restructuring, and issues with user groups and Enterprise Support, one could kindly say its been a brutal period.  Looking forward to a fresh start in 2010, senior executives and key personnel have been hard at work “re-innovating” SAP at both the product and marketing level.  As intended, many of the 275 analysts, bloggers, customers, influencers, and media attendees of this year’s SAP Influencer Summit left Boston with the perception that the company is in the midst of such transition. However, the clarity of that message and the perception of innovation depended on the topic at hand.

Five key themes drove most formal and informal conversations throughout the event:

• SAP continues to be innovative. John Schwarz, SAP Executive Board Member, keynoted on stage that ” We are not your grandmother’s SAP” and addressed SAP’s aspiration to become more customer focused and innovative.  Jim Hagemann Snabe, Executive Board Member in charge of Business Technology and Solutions, touted the product vision.  Vishal Sikka, SAP’s Chief Technology Officer (CTO) focused his conversation on Timeless Software and SAP’s cloud orientation.  He emphasized the size of future data volumes and the case for why In-Memory applications would provide the access speed and key meta-data required to draw inference for usage in business intelligence and analytics.  Meanwhile, John Wookey, who leads SAP’s OnDemand for Large Enterprise effort commented on the Cloud by stating, “SAP sees On-Demand as the next major change in computing models and we’re very serious about on-demand. Innovation in on-demand (deployment options) is still largely in front of us.”

  Point of view (POV): SAP’s working hard to highlight its innovations.   With €1.6B spent a year in R&D, innovation exists in SAP Labs but management and tribal politics often keep good ideas from becoming productized.  Users will need to work closely with SAP to identify needs and requirements and help SAP prioritize what should go to market.  Cloud strategy remains hazy in specifics. In-memory approach will benefit customers but will take time to develop across all products.  OnDemand for Large Enterprises could slow in-roads by pure-play SaaS vendors.

• Business analytics and intelligence play a key role in the platform. Executive Vice-President and General Manager, Marge Breya spent much time talking about SAP’s support for heterogeneous data sources.  As the BOBJ assets integrate into NetWeaver, her emphasis would be to deliver information across new platforms and use cases.  Project Kona for business intelligence (BI) OnDemand in mobility would play a key role in changing how users access SAP information.

  POV: Customers need better information in order to make key decisions.  BI plays a significant role in delivering such value to customers and the Business Objects acquisition provides the enabler.  However, SAP users still find data quality and data governance to be a key hole in the SAP information strategy.  SAP will need to address the different approaches in master data management (MDM) and help customers understand which set of tools should be applied in each customer scenario.

• Future growth rests with success in small and medium enterprises.  With most of the large enterprise saturated with packaged apps such as ERP, SAP’s future growth rests on its ability to move down market.  The SME team led by Hans-Peter Klaey shared progress on their 3-prong product strategy with Business One (B1), Business All in One (BAiO), and Business by Design (ByD).   B1 continues to gain traction in the small end of the market and SAP has published a product road map well past 2014.  The key issues remain the future of ByD and how SAP plans to scale growth.

  POV: With hopes of getting ByD to scale, Feature Pack 2.5 promises to bring in-memory analytics, multi-tenant support, mobile device enablement, Microsoft Silverlight UI’s, and a software development kit based on Microsoft Visual Studio.  Scaling remains a big issue but now becomes technically feasible.  Conversations with Rainer Zinow, Senior Vice President for SME Strategic Solution Management; Christoph Behrendt, Senior Vice President for Midsize Enterprises; Peter Lorenz, Senior Vice President, SME Solutions; Jeff Stiles, Senior Vice President for SME Marketing; and others, highlight the advanced progression in SAP’s SME thinking.   Early indications show promise that they will eventually approach the market with the right scaling, go to market plan, and cost structure to succeed. Movement towards more Microsoft technologies will help attract B1 partners, especially many at Sage who may be disgruntled but technically competent and customer service oriented.
  
  

• Sustainability is more than a trend.  Building on its Clear Standards acquisition, SAP continues to drive mind share in the field of sustainability tracking.  Key topics include the usual suspects of carbon emissions, energy consumption, and compliance. The Business Objects Sustainability Performance Management offering showcased new areas such as product and workplace safety.  Its recent Sustainability Report highlights how SAP uses its own software to achieve its corporate objectives.  Sustainability shows growth as a board-level topic and issue of concern.

  POV: More than just buzzwords, SAP’s making a considerable investment in sustainability.  By providing the right templates and KPI’s for external reporting, SAP will transform social responsibility aspirations to reality for its interested customers.   Peter Graf, SAP’s Chief Sustainability Officer, has harnessed the do-good spirit of SAP’s employees in building out SAP’s offerings.  Expect sustainability to be a key area in repairing SAP’s current image.  Conversations with customers indicate that sustainability may not be a primary reason to choose SAP today, but SAP’s investment and commitment in this arena brings SAP into conversations with key business leaders and has led to deal flow.  However, long term success in sustainability will require good master data management (MDM) and SAP must rapidly address this issue or face the prospect of false promises.

• Partners and ecosystems matter. The partner ecosystem team continues to evolve and innovate with new programs that not only attract new partners, but also improve partner readiness.  SAP currently works with 7000 go to market partners and the SAP Developer Network boasts 2.5M developers.  Efforts such as the SAP Mentor program, SAP Partner Edge, SAP EcoHub, and SAP Community Network by Zia Yusuf and his successor, Singh Mecker, Senior Vice President of GEPG provide proof points of progress and success.
  
  POV: The EcoHub provides customers, partners, suppliers, and internal employees with a collaboration point for subject matter experts, trouble shooting, and fostering community.  SAP’s partner ecosystem remains its strongest asset.  In order to capitalize on their success, SAP must make the necessary investment in revamping the technology platforms partners build on.  Should they fail in providing an easier platform, they will lose traction and adoption.  Partner-led innovation will move to easier platforms to work with and business models that sustain profitability.

SAP’s Efforts In Strategy To Execution Rates A “B-” For Now

Applying a quick Vendor Scorecard grading system, here is a subjective evaluation of SAP’s 2009 efforts to date*:

• Leadership: “B-”. Leo Apotheker and Bill McDermott failed to show up again at a key event.  While this was Q4 and a tough quarter, customer and influencer perceptions remain low on Leo given his decision to push Enterprise Support and the lack of clarity into his vision and approach to date.  To be fair, he has faced a tough hurdle in cleaning up mistakes from his predecessor, Henning Kagermann, and has had to streamline research and development as well as a sprawling bureaucracy.  The good news – their absence highlighted the emerging bench strength of talent within SAP.  This brought some confidence to many in attendance that SAP may have the right stuff to emerge. The bad news – rumors abound on when a successor (Co-CEO) would be announced as Leo’s contract expires in June 2010.
• Product strategy: “B+”. Sustainability, integration of Business Objects componentry, Enhancement Packages (EhP), and In-Memory apps receive praise.  Meanwhile, adoption of ERP 6.0, remains slow.  SAP cites 50% of all product instances on to ERP 6.0.  However, actual customer counts may be less given the fact some customers have 25 to 50 instances of SAP.   Only 3500 customers have used Enhancement  Packages.  Customers remain confused on the value of Business Suite 7, upset with paying twice for BW and Business Objects, and disappointed with SAP’s slow approach to SaaS and onDemand.  Successful relaunch of ByD in 2010 may help SAP gain traction.  Customers await delivery on OnDemand offerings for Large Enterprise but can not wait much longer.  InMemory Apps planned for 2014 must be delivered on-time to compete with Oracle’s Fusion Apps.  Despite the lack of clarity, SAP still has the richest set of business functions and ability to handle the greatest set of complex scenarios.
• Technology strategy: “C+”. Middleware strategy remains murky at best.  SAP should revamp NetWeaver or junk it.  NetWeaver is to Blackberry as Salesforce.com’s Force.com is to iPhone.  It’s so much easier to build apps on Force.com and iPhone than it is for SAP’s NetWeaver and RIM’s Blackberry.  The decision to emphasize the NetWeaver ABAP stack over the NetWeaver Java stack will leave customers and partners confused despite how much more efficient it is to build on ABAP.  In addition, the lack of good business process orchestration at both run time and design time remains a critical hole for investment and gives vendors such as IBM and Cordys opportunities to sit on-top of SAP apps.  Mobile strategy at first seems less emphasized with the rare mention of native apps development on Blackberry and other platforms.  Nevertheless, SAP’s decision to leave mobile platform integration of Blackberry and others at the NetWeaver Mobile layer may prove to be the most efficient and effective approach.  The move to in-Memory will help with future development, yet customers lack confidence in SAP’s execution of the Timeless Software argument, despite its best intentions.  It appears that SAP will have 2 OnDemand strategies.  Lighter applications will be built on Java.  More complex applications to be built on the OnDemand stack.
• Go to market strategy: “B+”. “Best Run Now” packages deserve credit for bringing business value from analytics into core business processes.  Slow adoption can be blamed on a sales teams who treated this as a new license sales opportunity instead of an entry point to showcase SAP value.  Customers could see the sales reps salivating with each interaction for a new sale.  Kudos go to SAP for finally admitting failure with ByD and working hard with customers and partners to revamp efforts.  SAP’s marketing team remains the most innovative and effective.  Just wait till they get products that keep up with their marketing.
• Innovation agenda: “B-”. SAP’s making in-roads in the right areas.  Project Constellation, integration with Google Wave, and social networking investments highlight some movement towards disruptive technologies.  SAP must rapidly productize innovations from the SAP Imagineering team, worldwide SAP Labs, SAP COIL, and its consulting partners.   SAP needs to tap into its ecosystem and bring out innovation.
• Service and support: “C+”. Customers continue to self-support and question SAP’s value.  As more customers consider third party maintenance, SAP will have to fight harder to demonstrate value.  On the positive front, SAP’s Value Academy shows promise in helping customers optimize their SAP investments.  Initial discussions with Chakib Bhoudary, SAP’s Chief Value Officer, indicate the deep level of experience and data provided.  Customers will want to see how to access these services with minimal investment or redirected maintenance investment.
• Customer satisfaction: “C+”. Conversations with over 400 customers in 2009 highlight severe disappointment with their SAP relationship.  Sales reps compensated on net new license sales no longer invest in guiding customers through the SAP offerings.  Customers fail to adopt due to lack of knowledge.  They no longer trust their SAP sales reps nor do they have high confidence in the system integrators to guide them to the most cost effective solution.  SAP sales reps need to understand their products better.  Those customers who are able to make a trip to Walldorf (WDF), find solace that the old SAP still exists with passionate and dedicated engineers.  Customers appreciate the honesty in WDF about what can or can not be accomplished with SAP.  However, this is not a scalable model for SAP.  SAP will need to retrain and reincentivize its sales reps.  Applying social enterprise methods to the great SAP ecosystem may prove to be fruitful in scaling out more personalized approaches.
• Execution to date: “C-”. Failures abound in execution in Enterprise Support, NetWeaver adoption, ByD roll-out, Duet usage, and Solution Manager capabilities.  SAP’s current state is similar to Microsoft’s prior to the launch of Bing and Windows 7.  SAP needs a success story soon to not only raise morale, but also gain customer confidence in its ability to deliver.  Jim Hagemann Snabe’s efforts at streamlining and centralizing development provides at least a positive indicator.
• Partner ecosystem: “A”. The team has built one of the best technology partner ecosystems in the market.  The emphasis on community outreach, influencer participation, and investment in a partner’s success continues to be a differentiator.  SAP’s ecosystem strategy should be credited with saving SAP during this round of crisis.  A move towards Microsoft technologies such as SharePoint and Silverlight will help in gaining developer traction and adoption.  Fix NetWeaver and the ecosystem will have a tool they can innovate from.
• Overall reputation: “B”. SAP carries significant brand presence in emerging markets and the SME space.  Many companies equate ownership of SAP as a sign of success in their markets.  Yet, existing customers have soured on the brand and continue to wonder when SAP will innovate in their requirements and not be distracted by other pursuits.  In general, SAP still carries considerable brand equity which will buy it time as it reinnovates.

* A=4.0, A-=3.7., B+=3.3, B=3.0, B-=2.7, C+=2.3, C=2.0, C-=1.7, D+=1.3, D=1.0, D-=0.7, F=0

The Bottom Line  – SAP’s Turning The Corner

Credit must be given to SAP for charting a new course.  A shift in the management philosophy and product direction will take years to realize, however, its not too late for change.  SAP must remember its roots and become more German and less American.  The renewed focus must put customer requests and priorities ahead of SAP’s bureaucracy.  The emphasis must focus on the relationship.  When that reemerges in how SAP works with customers, partners, influencers, and its own employees, SAP will be back in good graces.  In the meantime, it’s  time to get to work and deliver.  Oracle’s Fusions Apps are coming soon and competitors such as IBM, Microsoft, Epicor, IFS, and SalesForce.com will not relent.

Your POV.

If you get a chance, let us know:

• Which SAP products do you use?
• What do you think about the progress with SAP?
• Are you considering alternatives to SAP?
• Do you feel SAP is innovating fast, ok, or slow enough?
• What do you think of SAP’s new reinnovation strategy?

Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

Other related links and good resources

SPECIAL: Video clips from the SAP Influencer Summit from SAP

20091211 ZDNet Software & Services Safari – Brian Sommer “SAP Business ByDesign Update: Multi-tenancy, In-Core Memory DB and More”

20091211 MichaelFauscette.com – Michael Fauscette “SAP Coming Out From the Clouds”

20091210 ZDNet Collaboration 2.0 – Oliver Marks “SAP: The clear path forward for the supertanker…”

20091209 ZDNet IT Project Failures – Michael Krigsman “Is on-premise ERP obsolete?”

20091209 ZDNet Social CRM: The Conversation – Paul Greenberg “SAP Business Influencers Summit: A Clear Path Forward?”

20091209 Spend Matters – Jason Busch “SAP Influencer Summit, Dispatch 1: On-Demand Differentiation and Vision”

20091209 Monkchips – James Governor ” SAP: Out with the Old, Shrugging off the Tag”

20091209 Merv’s Market Strategy For IT Suppliers – Merv Adrian “SAP Promises Acceleration on a “Clear Path” – Will it Be Enough?”

20091209 CIO Reinvented Blog – Prasanth Rai “Interesting Data/Statistics About SAP…(Influencer Summit)”

20091209 DealArchitect – Vinnie Mirchandani “SAP and The Boston Park Plaza”

20091209 Cloud Avenue – Zoli Erdos “Twitter in the Enterprise – Round 56745327″

20091208 ZDNet IT Project Failures – Michael Krigsman “SAP Influencer Summit: First Impressions”

Copyright © 2009 R Wang and Insider Associates, LLC. All rights reserved.