2013 (not 2012!) SAP Sapphire Keynote - 2 part series

2013 (not 2012!) SAP Sapphire Keynote - 2 part series

Summary: What will Jim Snabe SAP's co-CEO, say at next year's Sapphire conference? Some of the clues were present at the recent Madrid Sapphire event but Brian Sommer fills in the gaps and targets some strategic decisions SAP must make. Enjoy this two-part piece.

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Snabe’s 2013 (not 2012) Sapphire Keynote

A few weeks back, immediately after Salesforce.com’s Dreamforce 2012 event, I wrote a couple of pieces anticipating/predicting what Marc Benioff might say at his event the next year. In these pieces, I offered up a vision of where Salesforce might be going with its product line.

As I leave SAP’s Madrid Sapphire event, I thought I’d try a similar bent with SAP co-CEO Jim Hagemann Snabe. So, sit back and imagine you’re a year in the future and seeing Jim on stage once again.

 

“Welcome everyone to this year’s Sapphire conference. It promises to be the best one ever and we’ve got a number of announcements to make.  But first, let me thank you all for travelling here. I hope we make it some of the most productive time you’ve ever spent at one of our shows. So, let’s get started.

In the last year, we learned a lot about cloud, your firms and what you and our prospects want in a solution today. Let me share some of that insight with you now.

Each of you has one or more special competencies. Some of you have outstanding customer relationships and processes. Some of you are great innovators. Some of you have perfected your processes to world leading efficiencies and effectiveness. And, we have been honored to have been a part of that.

Your core competencies have a direct effect on what and how we innovate at SAP. For those of you from customer intimate firms, we can’t build enhanced CRM, e-marketing and social relevancy application functionality fast enough. Likewise, process excellence firms are challenging us on all fronts to remove non-value activities, re-imagine existing processes, create new methods and use new technologies to deliver lower costs, better service and faster response times. And, I can go on and on.

My job is to guide the development and vision of over 20,000 developers across several product lines, delivery methods and technical architectures.  In the past, we were a firm that tried to control every aspect of our products. Now, we continue to embrace more partners, more customers and more and more small, entrepreneurial and new generation software firms.

Our strategy must be one to build applications at the speed of business today. Let me give you some perspective.

The average cell phone goes from introduction to obsolescence in a matter of a few months. We can’t take 18 months to build a mobile application when the form factor, display graphics, transmission speeds and more will also change six times in the same timeframe. No, we must create the tools and application platforms that enable the development of mobile, analytic, social and other applications in mere weeks.  That’s right, “weeks” not “months” or “years”

Last year, I saw the software world evolving this way

SAP slide 1
Copyright 2012 - TechVentive, Inc. - All Rights Reserved

 

ERP vendors, SAP included, often had major software releases occur every three years. Many of you, like me, remember those days.  We thought that was a cause for celebration as it represented a Herculean effort to create all of that code, do thousands of regression tests for all of the different computing environments your firms had, etc. When we shortened this timeframe to 18 months, we thought we were really delivering value. That was then – now – we must do more.

Cloud solutions today, the true multi-tenant solutions like Business ByDesign and SuccessFactors, deliver major new upgrades every quarter. We can do this because there is only one code base, one technical environment and one system to support. Multi-tenancy makes it so much easier to deliver new capabilities to our customers with incredible speed. And, as a result, I believe that much of the SAP product line must become cloud-powered, multi-tenant and rapidly evolving! (applause)

While some of our competitors have resisted cloud solutions, especially multi-tenant solutions, we embrace them. We’ve been embracing multi-tenancy for years with our Business ByDesign solutions.

But, there is another change element afoot.  When I mentioned cell phones a moment ago, I indicated how short-lived these devices are and the networks they operate on. 3G is yielding to 4G and we will soon be able to utilize and render complex, three-dimensional graphics on tablets and other mobile devices anywhere in the world. I fully expect to use tele-presence technology on mobile devices with an experience that almost parallels a face-to-face meeting. Businesses and business processes are going to become video enabled – not just on the periphery but in virtually every process and workflow.

I see our product line needing to expand arithmetically. We will need thousands of new partners, including more new, hip, entrepreneurial startups, and more help than ever from our established partners to design tens of thousands of new process flows, to create and enable previously unattainable analytics, to bring video to every aspect of your organization and to deploy this via an incredible and fluid array of new mobile devices.

SAP will create many of the new processes and their attendant functionality. We will deploy these mostly in multi-tenant cloud solutions. But, we will enable every one of these to be extended, enhanced, sometimes simplified, sometimes made more richer, through simple but powerful tools. Our role in the new business ecosystem is to create the broadest possible functional solution set with the most powerful, easiest to use and fastest developmental capabilities. When we nail our role, we enable you to do more than compete – we power you to expand your reach and results at the speed of business.  (applause)

SAP slide 2
Copyright 2012 - TechVentive, Inc. - All Rights Reserved

  

Last year, I believed that the Enterprise Suite customers would never place some portion of their SAP software on a cloud environment. I believed they would want to keep some portion of their software and data well within a private cloud world. That private cloud or on-premise portion was what I called the “Core”. Yet, I thought you would, though, embrace multi-tenant cloud solutions in non-core processes.

I thought the model would look like this. In this world, we would create cloud solutions around customers, suppliers and other constituents.  These solutions would tie into processes that might have cloud and on-premise components. Non-core applications would then become excellent candidates for cloud solutions.

I have since changed my mind.

Why?

What’s core to one firm or one industry is a commodity to another. As the largest solution provider to businesses worldwide, virtually everyone in this room thinks some aspect of SAP’s product suite is core to their firm while others will violently disagree. I cannot see how we can all agree on some portion of the software as core. How can we fulfill the vision of the last slide if we cannot agree on what is core?

I needed a new model – a new approach for the future of our applications.

I believe we need to make almost every SAP application a cloud-enabled, multi-tenant application. We will re-platform our Enterprise solutions with the SAP HANA CLOUD PLATFORM SERVICES and will remake our solutions in their entirety.

SAP slide 3
Copyright 2012 - TechVentive, Inc. - All Rights Reserved

 

But, I’ve also concluded that the argument for retaining some functionality on local systems is a privilege that keeps eroding. Yes, some exceptionally fast manufacturing applications should be local and may stay local for more than a decade to come.  Look at highly automated warehouses that make routing decisions in sub-second times. While Internet speeds continue to soar, unexpected latency issues could be expensive in some environments.  Notwithstanding this, I expect continued migration to the cloud to occur.

Why? The economics are incredible. The speed with which we can innovate for you is so much faster. Our ability to deliver out-sized value increases dramatically with each and every process we cloud-enable.

We can’t very well empower the mobile, cloud, social and analytic future of business if we let ourselves continue to be trapped by the past. (applause)

I know some of you may have some strong feelings about this but I want you to know that we will listen and we are still sorting out exactly which pieces of functionality will remain on-premise. So, please, engage with us – we’d love your thoughts, ideas and suggestions.

Now, let’s turn our attention to the cloud and to value delivery.

We have maintained a focus on value delivery for years. Our enhancement packs in the Enterprise Suite, our rapid implementation configuration tools, our SAP-updated multi-tenant software and other innovations have helped deliver additional value for customers for years. This focus will continue as it will give us and you continued competitive advantage.

For the foreseeable future, many of you will follow one or more of three paths.

SAP slide 4
Copyright 2012 - TechVentive, Inc. - All Rights Reserved

 

We are concurrently working on three different deployment technologies (on-premise, hosted and multi—tenant cloud). But, within each, we are devising some similar and some very different mechanisms for reducing your total cost of ownership.

If you’re currently an on-premise shop, we’ve substantially improved your ability to more quickly implement new software releases. This was important to both your firm and ours as we created an ability to reduce the time between our major releases from 15 months to 7.5 months. Now, we can deliver twice as many enhancements for the same maintenance fee.

Second, different SAP partners, like VMware and Panaya Inc., can further reduce the operation and upgrade costs your firm incurs. I’d like to challenge each of you on-premises customers listening today to have a virtualized SAP environment within the next year. We can help with our VLM services as can our partners. What virtualization can save your firm in hardware, electricity, real estate and other costs is amazing.

I’d also like to challenge you to invest in technology like Panaya’s. This software can examine your installation and virtually test for potential upgrade and integration issues. It will save your software support team a lot of time and headaches. We don’t believe maintenance and upgrading activities, by themselves, add a lot of value to an organization. We want to take all of the non-value added time and cost out of this part of the software ownership equation.

The bottom line for on-premise customers is that we will continue to work to reduce your TCO and to help you refocus your IT team on the tasks, applications and other activities that add value to your firm.

And, we believe the eventual transition for you on-premise customers will be to move 95% or more of your systems to a multi-tenant cloud solution powered by SAP. (applause)

For those of you already pursuing a cloud strategy, we’re seriously gearing up the TCO and value realization efforts here, too.

First, we’re going to expand our multi-tenancy initiatives in a number of functional areas. We’ve already got multi-tenant cloud offerings in SuccessFactors and Business ByDesign. Last year, we expanded beyond HR and Financial applications and moved into supply chain functionality. Ariba was the catalyst for change there. This year we’re announcing the following new multi-tenant cloud apps:

-          (Briefly discuss each new app here)

 

Possibly, the biggest news is that we’re expanding the code for Business By Design. It’s multi-tenancy and functionality have been market tested, bulletproofed and technically on target. So, we’re using the Business ByDesign solution as the starting point for further application development. In time, we expect this software will move beyond a solution for mid-market and divisional solutions to larger enterprises.

For those of you using Business One and All-in-One, those applications (and the Enterprise Suite) will remain fully supported and enhanced for years to come. However, when the time is right, I’d strongly encourage each of you to migrate to the growing, powerful Business ByDesign product line. Why? Our ability to grow the functionality of your on-premise solutions will likely lag that of ByDesign. Multi-tenancy and a single instance of the software just make that environment so much easier and faster to upgrade. The newest functionality will appear in the multi-tenant apps first.

SAP slide 5
Copyright 2012 - TechVentive, Inc. - All Rights Reserved

 

This is a revolutionary time for SAP and we very much want to have each of you along for the journey.

Let me recap a bit here. First, we want to be the most relevant, current and innovative provider of applications for businesses globally. Second, we must embrace cloud technology as its benefits are just too great to ignore for many business processes. Third, we believe a significant number of business process components can move to multi-tenant cloud solutions. Fourth, we will continue to support on-premises solutions and some process components may remain on-premise for years and years. And, fifth, we will continue to work with a growing group of partners to create solutions, extensions, enablers, and more that both reduce TCO and drive new value to your firm.

If you walk away from this SAPPHIRE with any one thought, I want you to walk away thinking: WOW! SAP is on top of the app space, has a vision for us and will drive more value than we anticipated.

Enjoy the rest of SAPPHIRE 2013.”

 

Continue to Part 2 - Why I believe in this vision

 

Topic: Enterprise Software

About

Brian is currently CEO of TechVentive, a strategy consultancy serving technology providers and other firms. He is also a research analyst with Vital Analysis.

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