Software strategies and more…

(Boston, MA) With the formal inclusion of Sybase into the SAP family, SAP’s leadership team outlines their strategy for enterprise mobility and unwired business intelligence.

It’s encouraging SAP will continue with its model of acquiring market leaders, yet rather than ‘shoehorning’ them into their corporate culture it will continue to cultivate the innovation and expertise those organizations developed as a independent units. Its my opinion that given rampant consolidation, shifting market trends, and dynamic customer requirements this model allows broader flexibility for SAP and its functioning sub-brands in developing and delivering relevant enterprise solutions.

In today’s briefing by SAP’s executive team, Bill McDermott, Jim Snabe, John Chen and Vishal Sikka, they unveiled their strategy across three lines of business:

• enterprise mobility,
• business analytics, and
• enterprise information management.

Key components of today’s announcement included:

1. A roadmap for their mobile enterprise platform, due to go live by Summer 2011 and supporting all mobile O/S, market leading devices, and integration with SAP Business Suite and SAP Business ByDesign.
2. An industry portfolio for enterprise information management focusing on broad database support for SAP business applications.
3. An update to their business analytics and business intelligence road map outlined at this year’s SAPphire conference.
4. And, an outline of their advances and proposed solutions in in-memory computing and database technologies.

So why is this all relevant?

In a market that is becoming increasingly mobile and as devices (phones, laptops, slate computers, etc.) are making near quantum leaps in processing power and sophistication the value of enterprise technology is at the highest where it is nearest to the end user. Combine this with on-going globalization of manufacturing, distribution, financial, and retail networks and the ever increasing socialization of customer and market data and SAP is attempting to leap frog its competitors in this space, namely IBM, Oracle and Microsoft.

The integration of SAP and Business Objects + Sybase starts to realize the opportunity in the long-tail of decision making. As outlined in Chris Anderson’s Long Tail theory, and applied to the enterprise, few but high value and broad impact decisions are made at the CxO office but many micro-decisions are then made on the shop floor, customer service engagement, etc. The challenge has been to turn these executive strategies into a profitable business acted on by everyone equally. Today’s announcements are about leveraging the SAP’s solutions in conjunction with Sybase in-memory and mobile information management so that business information can readily be cascaded to end-points across the organization in an increasingly effective manner.

SAP promises to continue to build upon the individual ecosystems of SAP, BOBJ, and Sybase to drive innovation within each company’s ecosystems to create a multiplier effect that will allow SAP to become the premier provider of enterprise information management and delivery. This bolsters their combined ability to address core system differentiation as well as advanced line-of-business solutions and services.

Just reading how Google’s employees are being switched to Google OS and those that aren’t are choosing between Apple or Linux. The article goes beyond just the trials and tribulations between Google and Microsoft and adds additional food for thought with regards to whether Steveb and team can right the listing Microsoft Titanic.

To see the writing on the wall, one only has to look as far as the turmoil currently happening within the Windows Consumer division, a restart with Windows Mobile that leaves Windows Mobile 6.x users (including nearly every MS employee) out in the cold with a dead product, long-time partners jumping ship for new tablet and tablet-like O/S platforms, and its own inability to launch a competitive product in a space it was once the pioneer, not to mention a music player and store that never was…. What is left Live and XBOX? Both which have had and are being challenged by other services that are often seen as easier and more in tune with the needs of their users. It my opinion that without a tangible connection to what people want to do with computing (consume information about their business, their activities, their customers and their friends) tools that Microsoft continues to decrease its own relevance in the modern computing space.

Of course an argument is that Microsoft is tied tightly into business technology and is it’s platform of choice because they offer everything from the data centre to the desktop, but if we look at changes that are now starting to reshape the enterprise (and by this I mean all businesses that transact with customers large and small) market we see the client/server world coming to a end in the not-to-distant future.

Start by looking at the combined Software as a Service offerings and the Platform as a Service offerings that are enabling both traditional and up-start business to manage their financials, customers, inventory as well as computing and processing power you soon can conclude the tools that Microsoft offers for managing, deploying and developing are quickly becoming yesterday’s news. In fact, I would further argue given IBM, Oracle and SAP’s focus on developing in-memory databases, web-based, mobile and business intelligence solutions that these will have an near term immediate impact on sales of Microsoft’s SQL database as instances of this product will be replaced by solutions that can run complex transaction and data mining queries in-memory and report in real-time rather than via traditional I/O coding. If you combine this with the cloud becoming a repository for web-platform tools like AppExchange for the business and Apple’s Appstore or Google’s Apps for business for consumers and businesses alike and you see how on-premise is quickly becoming a model of the past.

It seems that the market also continues to question the relevance of Microsoft in the future. During the past decade there have only been two periods when the stock showed life, those being the end of the dot.com boom cycle and when Microsoft was expected to buy into the search wars by acquiring Yahoo! but failed. The stock market seems to question Microsoft’s future plans since the company is no longer rewarded with a premium multiple that innovative leaders such as Apple receive.

Yes, I know Microsoft has launched its Cloud strategy and has promising applications from Office 2010, SharePoint, Azure, and CRM – but many of these are still tied to heavy enterprise investments in Microsoft’s traditional tools and platform solutions. So for hybrid environments (Software+Services) this may forestall rapid migration, but it doesn’t mean that Microsoft is truly “all-in” in my opinion.

My final thoughts are these:

1. Microsoft has lost its way at the worst time in the consumer space, its customer and its partners are looking to Microsoft’s competitors for innovation and sellable solutions. Dell and HP are the first off the boat, so how will Microsoft shore up the army of independent and small developers that may soon follow. This space is critical because it connects the data, information and systems to the jobs people are doing in and away from the office. Innovation begins with the consumer these days not with corporate IT, even SAP gets this.

2. Ballmer has bet on a long term strategy over short term gains. I agree that technology investments are not something you should tie to quarterly results, but looking at the quarters and yearly figures above. Seems it’s time to put up or shut up about this.

3. The ‘elephants’ Windows, Information Worker Group, and AppPlat are massive parts of the companies ~$60B in revenues. These massive businesses have the company committed to a course that makes innovation hard and political. While there are forces at work (Azure, Office On-line, CRM) that may effect a change of course – it will take significant management and ethos re-direction to make this work. I am not confident Microsoft has the hutspa  to make the bold and risky choices needed for this to happen. As such Microsoft may loose the enterprise market just as it is loosing the consumer market.

* Full disclosure, I worked at Microsoft and had an amazing experience while there, opinions in this blog are based on my person view of the company given the challenges they face in the market and the publicly available sites I have referenced in this blog. I do not hold shares in Microsoft.

Not that much of a surprise to those watching SAP‘s moves over the past 5 months. The changing of the guard combined with a big promotions and promises of in-memory based ERP and BI tools meant SAP needed to bolster its assets and the acquisition of Sybase just made sense. In addition, the need for SAP to start building a bit of an empire like nemesis Oracle has done meant that SAP needed to step outside its more traditional lines of business and incorporate adjacent solutions and technologies needed by its customer base.

Make no mistake about this deal though, SAP needed to back its in-memory promises with some substantial clout. Sybase has invested heavily in the development and testing of in-memory databases with its Adaptive Server Enterprise and SQL Anywhere technologies.  With SQL Anywhere this should boost SAP’s ability to deliver functionality its customer needs for transaction, inventory and financial applications across the business more effectively and across more devices and platforms. ASE gives a big boost to SAP Business Suite users and the power they are looking to handle incrementally more and complicated transactions across large office locations. By moving to in-memory and optimizing its ERP applications and BI tools for them SAP is hoping to lure more customers who may be looking to rid themselves of expensive database license and maintenance costs. And by doing so these customers may get significant boost in performance, scalability and reporting flexibility.

As far as the impact on cloud and SaaS business, in-memory tools may have a growing impact on virtualized servers, application and hosted data centers are looking to bring more services into an as a Service model. Also the partnership of SAP and long-time customer Research in Motion (RIM) may get a big boost as SAP (with SQL anywhere) offers a significant boost to business users using RIM’s popular Blackberry mobile devices to augment and deliver business insight.

My point of view: This was as much an needed move by SAP to both aid in business growth as well as deliver the road map its been preaching to its customers for nearly the past year. Its no accident this happens right before SAPphire in Orlando and we can expect even more in-memory news in the coming weeks. I also expect SAP to continue acquiring firms that it can add to its ecosystem, most likely a server virtualization player – and to do so in the next 12 months.

I am not sure.

After hobbling thru the choppy live webcast yesterday and trying to piece together all the PR fluff, blogger commentary and random 140 character posts on Twitter I am still not sure how VMforce will be a monetize-able joint venture between VMware and SFDC.

On the surface it seems to be a great new sandbox for developers to play in to develop future cloud and on-premise applications for their organization and/or for the market at large. Folks that already utilize SFDC’s appexchange and chatterexchange to develop add-ons for SFDC user communities now have access to an even more robust and dynamics infrastructure – but what is VMware’s cut in this?

My gut says VMware is trying to position themselves as a leader in cloud based infrastructure as a service. Potentially even helping companies not only shed business software, but also the hardware needed to support these and other client/server apps. It a bold gambit that vaults them into competing on higher footing with the likes of Amazon’s AWS and both Cisco’s Smart Grid and HP’s Cloud Assure IaaS plans.

Of course the interesting play here is how both of these companies through VMForce are looking to attract the Java developer communities and enable them to create connection across both application and infrastructure software realms. This should further bolster interest in FinancialForce.com, making it easier to build out its core accounting and financial solutions to include industry and role-based users and business processes. Finally this also may allow for BI as a Service to also take off by utilizing virtual machines to power processor hungry analytics, reporting and planning tools.

Personally, I think this makes them a very interesting M&A target for SAP or a merger with SFDC themselves – both to compete more effectively with Oracle. Time will tell as more information and customer adoption of VMforce.com comes to light.

Today I attended Jive Software’s Get Social tour stop in Toronto and left impressed not only with the company’s software and strategy, but with the quality of attendance at the event. The event featured a hour and a bit of keynotes including a look at how Canada’s RIM has used Jive’s SBS to deploy mybackberry.com. What impressed me the most was the level of interest and activity from Canada’s largest companies. In the breakout I attended there was representation from 4 of the 6 largest banks, well known national law firms, ad agencies and professional services companies.

Personally, my interest in attending came from discovering significant interest in the integration of social software tools within business processes. In fact I have touched on this in several blogs already (here, here and here) and have found myself spending an increasing amount of time fielding questions from financial professionals on the topic of how their investments in tools like SAP or Microsoft Dynamics along with SharePoint can be further leveraged to move people from communal watering holes of information (ala SharePoint, Stellent (now part of Oracle), OpenText, etc.) to proactive, automated community distribution networks. All the while business execs these social services/tools to be part of existing business processes and applications from ERP to CRM to BI – and not to have to rip and replace investments they’ve already made.

To address this need Jive has developed its Social Business Software platform. This platform is based on a addressing a need to leverage existing technology investments – both on-premise and software as a service – made by organizations and intertwine social tools which are quickly maturing from the consumer technology world (Facebook, twitter, DIGG, etc.) into the business arena.

The Jive SBS solution should be very interesting to companies who’ve found themselves sinking in email, departmental collaboration websites, individual shared drives with unique folder structures, client-based office productivity tools, or aging client server business applications with little web extensibility. Their idea is to offer software solutions to organizations seeking to bring current consumer focused social features into the context of a secure, robust business processes and integrate these into the existing information and presentation layers used by their employees. Think ‘facebook’ that allows individual users to create ‘friends’ of co-workers, partners, suppliers and also applications – ERP, data repositories, content management systems, etc.

An interesting quote from the Jive Software presenter was that one of their goals is “…to enable the solutions from being ‘place-centric’ (e.g. a data or content repository) to ‘you-centric’.” The promise of this approach is to enable content relevance to the job you and/or your employees are doing – further amplifying the time to value that the business or community can benefit from. This can be achieved by using technology to enable systems to constantly seek information based on your criteria and deliver internal and external content in a timely fashion to the end-user.

I’ll be writing more on this topic, but for now my advice (based on what I have seen so far) for organizations  looking at social technology solutions that can fit into existing business processes is to:

• Plan – Look at (audit) how your employees are communicating in the office versus outside the office. Determine how this may or may not fit into different aspects of your business process and technologies.
• Promote – Promote activities which promote collaboration that benefits the organization, team and individual. Begin to recognize good ideas from individuals and identify who might be a super user by department and even age group (e.g. don’t have a 20 something trying to sell social tools to a 50 something CEO)
• Execute – Pick a part of the business that demand business process rigor, but also has an affinity for new technologies. Obtain the buy-in and support from the executive in charge and pilot a solution that brings together social technologies with financial, customer and partner data. Observe its usage, recognize individual contribution and learn from the effects this has on average and advanced users.
• Deliver – Realize this is a game changer. IT must be involved, but the business user will in some cases control the success of the project based on how they adopt and use the technology in conjunction with their specific needs. Don’t bury the data in a common format you make them adhere to – rather encourage them to rank and promote what they find valuable. Deliver an experience rather than a product.
• Hand over control – The hive of users will self organize around value and efficiencies. This is seen in nature and technology and is paramount to successful social software. In your planning you should have covered the governance and controls needed that are required by your business and ensured these are documented for your users. Now let them drive the interest and improvements of the software going forward.

The last part (IMHO) is the innovation aspect that is key to socializing your business.

Woke up to read (amongst a weekend worth of posts) the following article from Information Week’s Global CIO: Oracle’s Larry Ellison Declares War On IBM And SAP.

I must admit it hasn’t been a secret that Oracle has been marshaling for this battle, after all any company that spends approximately $25 Billion in acquisitions since 2005 (source) must start making money back at some point. The ‘billion dollar’ question in my opinion is whether the promised fusion of all its applications really works?

Having worked for a company that at one time stated an intent to unify its ERP code across all of its disparate applications only to find that neither customers or partners wanted this – not to mention the engineering pitfalls that become readily apparent – I doubt whether the current plans for fusion can be met in a way that will appease all the stakeholders Oracle needs to oust IBM or SAP as the respective market leaders in high-end servers and business applications.

In the Global CIO article, “Ellison promised that the second half of 2010 will be a momentous one for not only Oracle but also the entire IT industry and its enterprise customers because that’s when Oracle will roll out its completely reengineered Fusion software lineup along with more integrated and optimized Oracle-Sun systems, along the lines of the wildly successful Exadata 2.” Given this promise happened during the Oracle earnings calls, I cannot see how this is much more than a rally cry to sales that he hopes to the Wall Street will echo in an increase of stock price.

By the way Oracle’s stock price, much like Larry’s bid to win the America’s Cup back for many years prior to this one, has been stuck in the doldrums - neither rising or falling much over the past several years – recently it has grown at market average but still trailed SAP, IBM and Microsoft’s growth. A reflection that while Oracle has been busy amalgamating and consolidating many IT players there has not been an overwhelming belief that will pan out for Oracle or its customers.

One important aspect of fusion that Oracle promises, but again trails some of its immediate rivals, is that Oracle promises many of its fusion application can be run either on-premise or via the cloud. SAP realized the need for this hybrid strategy when it attempted in 2007 to launch Business By Design and Microsoft has been working on this since 2005 with its Software+Services strategy. And IBM has been driving its ability to deliver infrastructure as a service and many of its applications as a service for the past several years as well – these have culminated into its Smarter Planet initiative. So Oracle is far from being a thought leader here.

Personally, I think the most telling quote is at the end of the article, Larry says, “So we’ll be delivering those applications both by selling the software directly, kinda the old way of doing it, which is still the most popular, by the way; we’ll be selling the Fusion applications integrated with our hardware—our servers and our storage and our networks; and we’ll be selling it on the cloud.” He later added, “our cloud or somebody else’s”.

This is worth noting if you read the article on Oracle sniffing (original post by Dennis Howlett). Might one conjecture that by acquiring SUN and (especially)  JAVA that Oracle will start charging customers relentlessly for access to any products Oracle deems ‘fused’ thus boosting revenues at the potential expense of customer privacy and satisfaction? Will customers stand for this (thus allowing Oracle to achieve the stated path of dominating IBM and SAP in their respective markets?) or might their customers seek out comparable solutions from IBM, SAP and others for database, BI, ERP, CRM, etc during their next refresh?

Time will tell.

SAP’s non-renewing of Leo Apotheker’s contract and subsequent replacement with the appointed of Bill McDermott, head of field organization; and Jim Hagemann Snabe, head of product development has raised many questions about SAP, it’s future and impact this might have on customers.

While I don’t pretend to have all of the answers, I do feel this is a positive move for the company, its shareholders and the market in general. Why?

Well as for Mr. Apotheker, he was a great contributor to SAP’s growth for over fifteen years and was key to developing the company into its leadership as a world-class enterprise business applications provider.  It’s most recent focus on sustainability was overshadowed by the controversy of raising maintenance fees and the delays in SAP’s Business By Design SaaS ERP offering. Nonetheless my experiences hearing Leo articulate strategy and his focus on growth never led me to doubt that SAP would continue to grow with him at the helm. I wish him well.

Nonetheless, the markets have changed. The global recession hit everyone hard, but especially the global manufacturing and supply chain sectors. Also known as SAP’s bread and butter. While I have seen SAP successfully win share from Oracle (and others) in finance and energy sectors, they have only begun to grow in the midmarket and lag in areas of collaboration tools and partnerships.

Enter the two rising stars. Since the departure of Shai Agassi in 2007, Bill McDermott and Jim Snabe have both been on everyone’s radar as the heir apparent. Both of these two gentlemen have incredible talents in growing the business (McDermott) and with the new technology trends of the current decade (Snabe).

Given SAP’s focus on competing with Oracle, Infor, Microsoft, and others, having a person like McDermott at the helm promises a very competition and customer savvy change that SAP may very well need – at least in the eyes of many of its customers and stakeholders – in order to remain independent and continue to attract new business. Combine this with Snabe’s technology savvy skills that are crucial to leading SAP’s charge into both hosted line of business offerings for large and midsized organizations – and you may very well have a company ready (once again) to engage its competition with teeth barred.

In my opinion, the real question is the role Hasso Plattner will play in grooming, developing and allowing these two leaders to co-exist and grow the organization.

It’s my opinion to get SAP re-engaged in the eyes of the market that these two leaders must show a unified front, play to one another’s strengths, and manage the corporate culture change that will ensue. Ensuring that top talent continues to grow at SAP all the while being more aggressive in seeking innovation from outside rather than defaulting to home grown whenever possible will be key. SAP must boost its education efforts which have lagged and work to attract more engineers to its platform and promote further integration with industry and role-based technologies.

If I were a customer of SAP, I would not worry about the investments you’ve made. Rather I would look forward to a re-invigorated competitor with two very capable helmsmen. (After all this has worked for Oracle for quite some time.) SAP will be out to prove its business value its software brings, bring new hosted solutions to mid and large organizations so that deployment becomes more timely and effective in helping get the job done, and work more collectively with other market leads in adjacent sectors (collaboration, CRM, unified communications, etc) to give business assurance that interoperability and standards will make it easier for them to deploy and grow.

There has been much adieu about Oracle in the news latest and their promise to deliver a stack. Fellow analyst Ray Wang has a good write up here , and there are other notable reports here , here and here  .

Meanwhile SAP reported down but leveling earning for their fiscal Q4; reports here , here  , and here (as well as many others across the web).

Nonetheless, SAP still remains the top dog in the business software space and is revving up its engines to grow into the mid-market via partners, expand its footprint in BI through its investments in the BOBJ toolset and strengthening partnership with Microsoft and of course driving more value for its enterprise consulting and implementation partners.

But given the nature of large ERP implementations and the strong investments that went on from 2004-2008, can we really expect SAP to continue to drive sales as the level that many investors and technology analysts has grown to expect? Moreover, can SAP keep up growth in an environment where two of its largest competitors are preaching one-stop stack solutions?

My feeling is “Yes”.

However to do so, SAP will have to focus on building go-to-market approach that leverages their installed base and offers them the flexibility to expand via a Software as a Service (SaaS) model. Whilst Oracle wrestles with aligning all the packages it has acquired over the past decade into a suite and Microsoft depends of partners to drive innovation and interoperability across both Microsoft and other partner solutions – SAP should rapidly adapt itself to something similar to SalesForce.com’s Force.com model. Thereby making it easier for line of business needs to be met with ‘cloud-based’ software that has strong integration into SAP’s core solutions and middleware.

SAP must also invest in its mid and lower enterprise sales channels. Over the past 5 years, SAP has done a lot to develop this channel and build competencies in selling to the midmarket industry segment. This channel is now both competent and ripe for the picking by its competitors who can offer them the ability to sell solutions from databases to collaborative tools. SAP needs to reassess its commitment to these partners by either strengthening its own partnership with vendors that can provide incremental business to its ecosystem or acquire some of the emerging vendors that can meet this need – potentially allowing their partners to position leap frog technologies.

SAP also needs to continue to grow its channel business if it is serious in gaining midmarket ground. Microsoft Dynamics has over 10,000 partners globally. SAP is no where near that. Given the softness many tier 2 ERP vendors are feeling (read Syspro, Epicor, Sage) SAP needs to selectively go after some of these companies more established partners. If not, then you can bet that a re-energized Oracle will making it even harder for SAP to grow in the midmarket in the long term.