Software strategies and more…

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.

Salesforce.com continues to ramp up its cloud offering and bolster its position as a leading business applications provider for companies of all sizes. All indications show that later this month there is a big announcement coming from SFDC and VMware about their joint product launch that combines SFDC’s could applications with VMware virtualization technologies. You can see the mock up landing page created here .

Now I am going out on a limb here, but I expect a lot to be made of this partnership as SalesForce.com and VMware bring two big trends together to offer scalable applications and infrastructure environments for their customers – perhaps being one of the first to link Software as a Service (SaaS) with Infrastructure as a Service (IaaS). This positions them very well against Microsoft and IBM and in some cases ahead of Oracle in terms of dynamic customer offerings. A successful partnership may also continue the trend away from maintenance agreements that many large software vendors rely on for earning reports and re-invest back into development.

What else may this mean?

Well given the growth of virtualization (take and assessment here)  in corporate data centres and an increase in the usage of  web-based software to meet employee and business needs – these two technologies have a natural fit. By combining the ability to support growing server needs to an ability to dynamically apportion computing, application and processing resources needed for spikes in business demand (say a large payroll run to the opening of a new store and IT needs for adding people, processes and applications based on projected not real commerce) companies may flock in droves to an offering like this with pretty clear ROI and limited risk.

Build on top of this the growing application platform that SFDC brings with AppExchange and ChatterExchange and real-time application deployment, messaging and even management of both physical and web-based resources becomes readily available to businesses big and small.

Granted this is all speculation – but I’ll definitely be updating this blog in few weeks when the cat is out of the bag.

I have been thinking of a hybrid cloud for a while.

Over the past several years it was my opinion that certain technologies made sense to offer as a SaaS business model. Tried and true IT services such as datacentre, processing power, storage, application hosting etc. allowed for businesses of all sizes to access infrastructure or platform technologies in a fairly vanilla format to scale their IT capabilities at the rate of business need rather than and invest and wait or wait and invest approach.

Now it occurs to me that many mid and large organizations are better off utilizing a ‘hybrid cloud’ architecture to meet the needs of their employees, business processes and the extended business. This hybrid cloud focuses more on the client side applications and business processes. Yet this model is far from simple.

One article I recommend reading is by Vanessa Alvarez and is called “Management Tools will be the Cloud Glue”. In short, the article talks about new management tools that utilize web and open source tools to address the different workloads and functions that businesses need as their data, applications and business processes – that are enabled by IT travel across mainframe, client/server, and SaaS/PaaS/IaaS models – and make these visible to the IT department. Interesting companies doing this include CloudSwitch , enStratus, and Intelliden (now part of IBM).

Another by Charles Babcock is “Hybrid Clouds Floating to Enterprise Forefront” . In his InformationWeek article Babcock also talks about the challenge of adopting infrastructure and platform as a Server tools while also addressing governance and security requirements. Again the theme here is the need of more complex businesses to manage their data and ensure that custom processes are effectively implemented across the business – whether this is on-premises, hosted, or integrated with a pure cloud solution.

Both of these articles touch on the needs of more mature organizations and their challenge to combine technology that has been customized to meet existing business processes with the scale and availability of cloud services. It has been my opinion, given my experience in the ERP space as an analyst and product manager for Microsoft Dynamics, that partners and ISVs would be well positioned to offer line of business applications as a service. This would allow for organizations that had a stable core ERP (finance, operations, supply chain, etc) environment to implement and grow in a more ‘dynamic’ fashion.

Yet, as I continue to think about why this has been slow to happen it occurs to me these partners and ISVs must still struggling with multitenancy issues. In other words, the line of business processes that I assumed would naturally lend themselves to the cloud are also those that may have been most customized. Thus while they can be hosted, this is typically in isolation (single tenancy). Such a model is not (profitably) scalable the way platform as a service and even ‘office’ as a service is.

So what may be the next step?

I feel the future for many organizations will still be a hybrid cloud model. The maturing of management tools and services will help many organizations focus on managing their data and information security while optimizing its provisioning across on-premise and cloud services. In the case of business applications this may take the form of core accounting tools being brought into the cloud akin to how many HR and payroll apps already are. Through management and security tools more accounting, billing, payable information can be exposed to a greater number of planning, operations and eco-system tools that live both locally and within the cloud.

I am still working collecting more insight on how mid and large organization can successfully adopt a hybrid solution and welcome your point of view.

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.

I am a huge fan of BI as a Service.

I first started thinking about BI-a-a-S when I attended a FAST Search and Transfer analyst conference back in 2005 when they were talking about BI applets rather than search applets. Their vision at the time was that BI needed to be web enabled and customizable by the user of the data and the job at hand. In January 2008, FAST was gobbled up by Microsoft (a BIG SAP miss in my humble opinion) and its enterprise search thought leadership seemed to dissipate.

But the need for web-based enterprise business intelligence has continued to gain momentum. Both the need and opportunity for this technology has recently come back into the limelight with the Economist article Data, data everywhere and has been furthered in blogs like Retention and Compliance: The other side of the big data problem by Ramon Chen. Its my opinion if you combine these with social business trends as cited by Michael Fauscette in his recent blog post Applying social to business , web-based BI is well placed to automate and make search intelligent to hone business and customer experiences - all the while taking advantage of the dynamic storage and processing power coming on-line from a wide variety of infrastructure as a service offerings.

I expect savvy organizations will pay close attention to BI-a-a-S and how it allows them to make sense of their markets, customers and processes. I also foresee BI co-existing as both on-premise solutions and web-based depending on need and scale requirements, thus being more of a software+services solution rather than an either or solution.

Note: Microsoft promises we’ll see much more of FAST technology in the new version of SharePoint which is sorely needed given the poor search in previous versions.

Recently I noted that SaaS vendors that specialize in business applications are attempting to roll out new programs to attract channel partners and reduce customer churn based on more stickiness in their contracts. One example is here.  As such, I did some research around the web and found a really good blog here that is worth a read to the growing market of ERP, CRM and BI SaaS providers.

The blog articulates the three critical areas for SaaS vendor success, those being (and I quote):

1) Number and cost of prospects acquired

2) Velocity rate and conversion costs of turning prospects into customers

3) Churn Rate

Mr. Cleveland then goes on describing why addressing churn rate is crucial to long term success and as such it needs to be someone’s daily job. I wholeheartedly agree with this point.

In my most recent role with a very large software multi-national, I lived in a world where teams and virtual teams constantly mulled over business strategy, marketing execution, sales excellence, etc. More often than not these teams failed if there was not two things 1) a clear leader 2) a leader with authority.

The reason I feel this is important is that in a very recent discussion I had with a VP of Operations at a North American company that uses SaaS happened to comment the reasons they continue to stick with SaaS are:

1) the trust that the vendor can do the job better than they can (b/c its their focus);

2) the belief that SaaS is the future; but most importantly

3) they forged a strong relationship with the vendor and have someone accountable on their side if there is a problem.

It’s interesting to me that to address this that vendor’s might try to develop a partner network to displace this responsibility. Not to say it cannot work, but I question for how long? And how committed is the vendor to the partner and their ability to support the end customers?

Rather than SaaS customers waiting for vendors to define the engagement model that best suits them, it is my opinion that this is the best time for end-user and those ‘fence sitters’ that are starting to seriously consider SaaS to run, manage and secure business applications that they begin sharing ideas and examples of what assurance they needs/expect from a provider.

My advice for end-user when engaging a SaaS supplier, they need to ensure they have a master agreement of their expectations in place. A good starting place is here with the SaaS customer bill of rights. Take this very well written document and use it as a starting place for a SaaS Master Agreement template – potentially similar to current IT vendor/support Master Services Agreement that you may current have.

(update) I was referred to a document “All About Cloud ROI” can be accessed at http://www.itincanada.ca/itpublic/All_About_Cloud_ROI.pdf that outlines Cloud ROI that was brought to my attention by a reader. Thanks!

Having worked on the analyst and vendor side of the ERP equation I have learned there is one thing that means more to a CEO and CFO than the cost of the software and its implementation. That is the time it takes to ‘go live’ once the selection has been made. A common term for the costs during this time is ‘time to value’.

For midsized firms investing in ERP can be one of the most expensive investments to the business. The costs can go far beyond software and services as these projects often impact all employees, partners and customers. The wrong choice – or the right choice poorly implemented or adopted – can impact careers, business effectiveness, and (potentially) customer confidence. To address this, vendors have invested in implementation templates and methodologies to address how their partners and customers can see results faster and manage moving from phase 1 of an implementation to the second and even third.

One methodology that seems to be getting results is SAP’s Fast Start. SAP began training its partners on Fast Start in 2008, but uptake has been accelerated by the recession as the vendor has looked to grow its midmarket presence all the while companies wary of long implementation times from tier 1 solutions felt they were in many cases better off doing what they could with less. Partners who have adopted Fast Start have reported go live with SAP Business All in One of less than a month. A figure unheard of in the past and placing SAP’s offering in line with implementations of solutions like Sage’s Accpac, Microsoft’s Dynamics GP and even many of the emerging ERP SaaS offerings. To SAP’s credit they’ve made information about Fast Start open to not only their channel but to the customers as well.

Time is money and if a solution (esp. with small or midsize firms) takes too long to implement both motivation and interest in adoption can wane quickly. Not to mention the impact that a prolonged implementation cycle can have on profits, business stability, and the organization ecosystem of partners and customers.

Regardless of the solution selected, customers should take it upon themselves to understand what can be expected in terms of ‘time to value’. This can be deduced from past deployments (references), partner implementation capabilities and tools, and vendor frameworks and training programs. Business executives/sponsors and IT decision makers should consider these when developing the RFP used to identify the vendor and/or partner solution fit with their needs.

Have you ever noticed the price premium of duck over chicken in restaurants?

There are many reasons (e.g. numbers raised in captivity, diversity of usage across products, cost to domesticate, maintenance, etc.) and I am sure you can come up with more on your own,. Fundamentally though, ducks and chickens are both birds and I imagine that if consumers wanted eat more duck that vast farms wouldn’t be outside of our capabilities.

Nonetheless, comparing the domestication of common water fowl versus a staple of our diet isn’t the purpose of this blog. (And yes, I did both Bing and Google my question and did not find a discrete answer. Has nobody but me wondered this question?) Rather my analogy came to me on my walk home as I was thinking about a debate I listened to and read/researched about today.

The latest in the ERP SaaS debate arose from recent research released by the Panorama Consulting Group and was commented on by others. The report stated, “Software as a Service (SaaS) implementations take less time than on-premise ERP, but deliver less benefits: 6.2% vs. 6.9% cost as a percentage of sales, and nearly 50% less likely to deliver expected business benefits.” These concerns were not new and after a simple search I found older posts on this topic (see reference below).

In response to Panorama’s release and webcast, vendors on both sides of the SaaS discussion began promote their views. As an analyst, former ERP product manager, and marketer I can see why the arguments on each side make sense, but fundamentally (repeated from paragraph 1) I think that there will be fewer and fewer large, intricate on-premise ERP implementations over the coming decade. The challenge then becomes not whether the vendor has ERP SaaS solutions, rather how their approach fits the needs the customer is seeking to address.

In my analogy, the ‘duck’ represents more complex line-of-business SaaS offerings that integrate into existing systems and can be entwined with other systems via industry standard (.Net or J2EE) code or in some cases proprietary legacy code. Think of the later as that layer of fat on a duck beast that needs to be cooked perfectly to create that flavour and texture worth paying a premium for – or in the context of an business application it represents the custom tailoring to generate competitive advantage.

Meanwhile ‘the chicken’ in most cases may be the ERP SaaS for the rest of us. It’s not as glamorous as the duck, but do we really need it? This version of ERP SaaS will be easier to deploy and something more apt to be ‘just turned on’ to deliver just in time, flexible, yet secure business application services to our users. Think of this as the ERP SaaS that addresses the commodity part of the market – currently serviced by a wide variety of packaged financial, billing, accounting and payroll applications.  This version will offer simple core functionality, but will be dressed up by vendors, partners and end-user that are then able to share their customizations and tweaks within their organization and across others. 

From a consultant or integrator’s perspective, the duck will always be a better choice than the chicken. Yet, for the customer while the exotic nature of the former may seem enticing, often the needs of the organization may be better suited to choosing the later and leaving room for other investments that can improve the implementation, adoption and sustaining of their business application needs.

Research shows we are still at the early stage of ERP SaaS and while certain parts of the ERP portfolio are commoditizing (core financials, accounting, etc) other business applications components are continuing to provide significant value to an organization (lean manufacturing, quality management, global sourcing and inventory management, etc). As such, vendors and their partners should work together to outline roadmaps that assure customers their current and future investments are sound.  Clarity is a key to customer satisfaction.

In the customer’s eyes, the ‘hero vendors’ will offer a choice of how to deploy, support and integrate a mixed ERP environment that grows (and contracts) with the needs of the business. Successful ERP SaaS solutions will allow customers and their partners to invest in standards based technologies to amplify the usage of the commodity components (e.g. extending financial data to line of business professionals) in a format that ‘makes sense’ to their users. At the same time, more complex ERP SaaS solutions will be deployed to meet the needs of select requirements (e.g. discrete operations modules for pharmaceuticals). These SaaS solutions will be sought after as both on-premises and via the cloud.

Customer and vendors can benefit from both versions of the ERP SaaS as they share the benefits of high quality solutions while mitigating costs. Moreover they can deploy solutions more equitably throughout their business and ensure many of the latest innovations are applied seamlessly.  In fact by adopting the cloud approach to SaaS, both ERP vendors and customers may benefit from the network effect of innovation at fractional costs.     

In conclusion, it my opinion that the choice the customer makes should be based on the relevance and business need to move, consolidate, rip and replace their current business application for something new. None of the current business assessments, benchmarking, research/consulting efforts should be foregone with the expectation that an ERP SaaS will deliver the goods without equitable investment on the parts of all parties. The market is evolving and there are choices out there to fulfill different needs and expectations and often the choice that is most appealing may also draw a higher level of scrutiny resulting in greater opinions on satisfaction. So consider your needs and willingness to take risk and the ability of your organization from its IT department to its users to stomach the exotic versus the staple.

References:

http://www.sdn.sap.com/irj/scn/weblogs?blog=/pub/wlg/17888

http://panorama-consulting.com/saas-vs-on-premise-erp-software-understanding-fact-and-fiction/

http://mybibeat.wordpress.com/2009/09/27/is-saas-right-for-your-business/

http://panorama-consulting.com/2010-erp-report-erp-implementation-costs-and-durations-declined-last-year-but-so-did-business-benefits-realized/

http://www.successfactors.com/company/technology/

http://seekingalpha.com/article/149603-why-gartner-s-saas-satisfaction-survey-is-misleading

http://www.gartner.com/it/page.jsp?id=1062512

http://www.crmforecast.com/tco.htm

http://www.enterpriseirregulars.com/5055/the-future-of-financial-force-com-how-salesforce-com-benefits-too/

http://blog.financialforce.com/2010/02/15/accounting-billing-fastest-growing-area-for-saas-utilization/

http://news.cnet.com/8301-13846_3-10453066-62.html

http://www.informationweek.com/news/software/erp/showArticle.jhtml?articleID=221600849&subSection=CRM

http://en.wikipedia.org/wiki/Duck

http://en.wikipedia.org/wiki/Chicken

Face it. How many of us use Word anymore?

We still use Excel and PowerPoint, but writing is seldom done in Word anymore. It’s done in email and on the web. We write, more often than not, to share ideas. Word has evolved into Outlook – or more realistically – the multitude of email applications and text editing software products have come crashing together. Combine this with the plethora of ‘free’ text editors, both on and off-line that do all the things we need to post (blog, publish and email) and share (email, tweet, and instant messaging) information in a one to many format, and the drive to use a text editor isolated from the web just doesn’t make sense.

What has sparked this change? After a bit of web research, it seems the amount of reading has continues to decrease while the amount we are exposed to increases. An interesting write up (but not the only one) on this can be found here . To summarize, people are addicted to information – the more the better. At the same time we have become woefully impatient readers and want ideas encapsulated into snippets we can re-tweet’ at will. We constantly search for a grand idea that adds value or validates our own and with any luck may help yet another person make a decision that creates more information (adding to the global conversation) for us to access and share in a never ending cycle.

But I digress, my point is that we write (via email, messenger, tweets, blogs, etc.) to share our ideas with others and solicit feedback. And technology is evolving to meet our needs. The rise in social media based is based partially on inability of email to keep up with how we communicate to larger and larger audiences. Micro-blogging services combined with social media (Facebook, Twitter, instant messenger clients, etc.) are supplanting our use of emails to communicate with friends, family and co-workers. Furthermore what writing we do is being augmented by multimedia (pictures, audio, and video) to become more interactive resulting in conversations that are more compelling to our audience.  As such, this decade promises to take the preferred mode of communication in the digital age to the next level.

We have started to see products like Google’s Wave, IBM’s Lotus Live and Microsoft’s Office Live take form in an effort to make the sharing and collaborating of information and people more real-time. SAP, a world leader in structured business applications, seems to see an opportunity to provide its customers and the market with a solution for visually and graphically sharing what the other person is seeing, reading and conversing about. Nurturing the ability of many folks to generate and exchange ideas on a subject based on the information they are exposed to and expressing this to others in a means that are easier to follow.

SAP’s response to this model is interesting as they are the first large company that hails from a structured, data-centric world to offer a collaborative tool that is inherently based on the unstructured world of digital conversations.  Their product, tentatively called StreamWork (nee 12 Sprints) , is very un-SAP in that 1) its free and 2) its build to be used across web-platforms like Evernote, Discussit, and more products without the use of propriety code or back office development.

In my opinion, the up-side for SAP and StreamWOrk is huge. First, people can start seeing SAP as more than just a company that provides core business applications, but also a partner that facilitates the conversations between employees, customers and partners. Second, StreamWork can bring value from the wealth of business and customer data locked in business applications, databases, and the web by creating a simple form factor for sharing ideas. Finally, by allowing people across an organization or ecosystem to collectively share their opinions new products and services can be brought to market and change/customer benefits accelerated.

Much like my experience trying Google’s Wave I am still waiting for people to ‘wave back’, yet given my experiences with other social tools (twitter, facebook, blogs, etc) I have no doubt that one day I will wonder why we had email (in much the same way I wonder why we ever used Fax machines). While I don’t think that alone SAP will make Word irrelevant, it is now part of a pack that together quickly is changing the way we communicate with one another. And it’s my opinion it’s better to be on that bus than not.

In closing, SAP is taking a big gamble on how its brand and services are perceived by the market in an effort to gain share in the collaborative market. But with great risks comes great reward.

Note: Updated 12Sprints to SAP’s official name “StreamWork” on March 23, 2010.

Resources:

http://sapstreamwork.com/

http://12sprints.com/

http://www.youtube.com/12sprints#p/

Http://www.google.com/wave

http://www.officelive.com/en-us/

http://www.evernote.com/

http://www.google.com/buzz

http://en.wikipedia.org/wiki/Collaborative_software

http://www.hyperoffice.com/index.php

http://www.google.com/apps/

http://www.sap.com

https://www.lotuslive.com/en/

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.