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SmartData Collective > Uncategorized > SAP coming out from behind the Clouds?
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SAP coming out from behind the Clouds?

mfauscette
Last updated: 2009/12/11 at 10:56 PM
mfauscette
8 Min Read
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200912110918.jpg This has been a tough year for many enterprise software companies but in many ways SAP seems to have suffered more than most. The core ERP and ERP upgrade business has been near a wasteland of activity. Maintenance revenues have sustained many companies as new license sales faltered. We’re starting to see some evidence of moving out of the worst of the economic troubles, but even so I believe that next year is really about establishing a “new normal,” not about “recovering.” In Boston this week SAP reviewed its strategy with a group of industry influencers and started to reveal what SAP leadership sees as its “new normal.”

The morning general sessions were heavy with marketing buzzwords but did start to show the extent to which SAP seems to be embracing some change. It was a little odd to hear the words “cloud” and “on demand” used as common fare for SAP executives a mere 7 months after I heard CEO Leo Apotheker answer, when asked about SAP’s cloud plans at the Business Suite 7 launch, with something like “we are researching cloud but we don’t think it’s scaleable.” The buzzword barrage included cloud, on demand, real-time, mobile, innovation, sustainability and of course the …

200912110918.jpg This has been a tough year for many enterprise software companies but in many ways SAP seems to have suffered more than most. The core ERP and ERP upgrade business has been near a wasteland of activity. Maintenance revenues have sustained many companies as new license sales faltered. We’re starting to see some evidence of moving out of the worst of the economic troubles, but even so I believe that next year is really about establishing a “new normal,” not about “recovering.” In Boston this week SAP reviewed its strategy with a group of industry influencers and started to reveal what SAP leadership sees as its “new normal.”

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The morning general sessions were heavy with marketing buzzwords but did start to show the extent to which SAP seems to be embracing some change. It was a little odd to hear the words “cloud” and “on demand” used as common fare for SAP executives a mere 7 months after I heard CEO Leo Apotheker answer, when asked about SAP’s cloud plans at the Business Suite 7 launch, with something like “we are researching cloud but we don’t think it’s scaleable.” The buzzword barrage included cloud, on demand, real-time, mobile, innovation, sustainability and of course the new SAP technical mantra of in-memory database / applications, which they have used in the Business Objects BI Accelerator that was demo’ed at the last Sapphire. The overall theme from SAP CTO Vishal Sikka was “Timeless Software.” Most significantly though, we did start to see a much clearer strategy around cloud (which they still usually call on demand).

I have to admit that I’ve been very confused over SAP’s SaaS strategy for almost 3 years. The initial positioning of the Business ByDesign (ByD) as a lower mid-market solution (and as a stepping stone to A1, I think) was quickly refined within a few months and the initial release was a mid-market offering. With obvious technical and quality issues, sales of ByD were basically shuttered for some time and SAP has been mostly silent on SaaS until the last few months. In the afternoon session by John Wookey (ex-Oracle Apps Exec now leading SAP’s Enterprise On Demand strategy) and Peter Lorenz (who leads the ByD and SME business), we had a much more detailed explanation of the overall on demand strategy. SAP now has three on-demand initiatives: 1. Line of Business On Demand (LOB OD); 2. Business Objects On Demand (which I have been briefed on in the past but did not get an update this week, as the session conflicted with the broader on demand session); and 3. ByD.

1. LOB OD: The basic concept is to build SaaS applications that are deployed as extensions to the core SAP ERP suite by enterprise customers. This is a little reminiscent of a strategy that SAP talked about 2 years ago called “side-by-side,” where they laid out this idea that customers could keep the on premise “core” and add new functionality through SaaS. The apps are built on the platform acquired with the purchase of Frictionless in 2006 (which also will be offer to ISV’s as a Platform as a Service offering like Salesforce.com’s Force.com and Netsuite’s SuiteCloud). Currently there are 4 apps available, HCM (a partner app from Northgate Arinso), CRM, e-sourcing, and Carbon Impact. Planned for release next year: SCM, Travel & Expense, Services Management and a new version of BOBJ project Kona.

2. ByD: The current ByD release (2.0) has ~100 customers in several industries (mostly services focused) and includes some partner add-ons. BbyD is model driven, with the business logic in deployment units, has an open msg based architecture, integrated under SOA & configurable. The next release, 2.5 (slated for mid-next year) according to Lorenze will be the true “ready for prime time” release adding things like true multi-tenancy. The UI is now built with Microsoft Silverlight and frankly, during the demo, look a bit dated. Using Silverlight does provide good MS Office interoperability features. The UI model is decoupled from UI rendering and the UI model is used for mash ups, mobile (which will be available for several mobile OS), etc. ByD uses in-memory technology and has real-time analytics. The 2.5 release will also include a full partner SDK for partner extensions and integration. SAP will take ByD to market through 2800+ partners.

According to SAP they’re now serious about the cloud and at least the strategy is becoming more clear. A lot of details are still missing from the story and there’s still a lot of “next year” in the strategy. SAP seems to be learning from its competition and emulating the best of what is in the market today. The focus areas for LOB OD, for example, are clearly aimed at specialty SaaS vendors that have made inroads in the SAP base through innovative features like HCM/talent management solutions from Taleo and Successfactors, salesforce automation from Salesforce.com, Services management from Netsuite OpenAir and Travel & Expense from Concur. The PaaS offerings are certainly aimed at Salesforce.com and Netsuite and the in-memory technology is already in use by Workday and Salesforce.com. Next year will be a challenging year and we will no doubt see if SAP can execute against its strategy of redefining a new normal.   

TAGGED: sap
mfauscette December 11, 2009
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