I imagine many colleagues reading that title will gasp. Stick with me. What follows is a highly simplified assessment that may or may not come true.
Before proceeding, why pen this piece? Why not pick upon Oracle or Microsoft? My assessment is that SAP is already a company in transition in a way the others are not. SAP has the most to gain and lose. That combination makes SAP the most interesting vendor to analyse in this context.
Earlier in the week, Steve Gillmor said:
I read a funny post today about normal people, a subject also popularized on the Gillmor Gang by Robert Scoble. The idea is that technology people should pay attention to the normal people because that’s the road to real success. Millions of users rather than thousands. The mainstream user rather than the early adopter.
The context was very different to enterprise but it is relevant to what follows because the technology we have available opens a door to those millions of 'normal' people. But having an open door and being able to walk through it are different things. Now step back.
Last July Ben Bajarin wrote an interesting piece entitled: Why Competing With Apple Is So Difficult. The central premise was that Apple could outplay any of its competitors because of the way it has mastered a vertically integrated stack.
But competing with Apple is difficult because Apple, Inc. is actually four diverse and thriving companies all wrapped up into one. It’s a hardware company, a software company, a services company, and a retail company. Most technology companies in the world can manage one or two of these disciplines, but only Apple has all four entities working in harmony.
Apple, as we say, is vertically integrated. It controls all the major critical parts of the chain used to make and sell products. Apple builds great hardware, owns the core software experience, optimizes its software for that hardware, equips it with web services (iTunes and iCloud), and finally controls the selling experience through its own retail stores.
Looking at SAP in 2011 you'd be hard pressed to draw the same comparison but scratch the surface and a different picture emerges. What do we see today?
- Business applications designed to span the whole business market from SME through to the largest enterprise, mostly concentrating on systems of record but with analytics plus a smattering of lighter weight applications for line of business.
- Mobile infrastructure in the shape of Sybase Unwired Platform.
- Sybase database, a minor player in the scheme of things but with strong presence in some markets and especially financial services.
- HANA, a fledgling in-memory technology that represents a combination of services, hardware and software.
- Consulting services designed to support early adopters of new technology.
- A huge ecosystem of technical and functional consultants/implementers but with power concentrated in the hands of a few SIs.
Note that I make no mention of SaaS/cloud as a separate class of asset. That is because for this argument, I am assuming that long term, most assets SAP possesses will move to a platform that SAP delivers as services.
The last year, I have seen two major themes emerge:
- HANA, promoted as SAP's platform for the future
- Recognition that third party developers matter
Why have I omitted mobile when SAP claims to have significant traction in this area? Its just another physical platform with software but it could be turned into a platform building block for the future. I frequently argue this is an imperative as sales of 'the platform' tail off. The fact it exists makes my argument easier to swallow.
How does this apparent rag bag of applications and technology come together Apple style?
The HANA Thing
You'd be forgiven for thinking HANA has been hyped to death and you'd be right except that the real message for the future comes into focus when you can see the whole picture - or at least the whole picture as we currently know it.
Today, commenters tend to concentrate on HANA's immediate appeal although bright minds are suggesting many areas where HANA could have a significant impact. I sense there is much more in play. From what I gather, Vishal Sikka, SAP board member and the company's technical lead is determined to put HANA everywhere possible. Basically - if it cannot be HANA-ised it doesn't exist. That goes all the way down to BusinessOne, SAP's entry level system. What started out as an in-memory column store database is morphing into much more.
Making that happen will require precise and focused execution. It is early days and my current sense is that SAP could benefit from strengthening its operational HANA delivery team. But - there is a genuine shot at transformation.
The key will be getting the Business Suite to run on HANA. When that happens then SAP becomes positioned to own hardware/services and software across the whole of its premium business unit and top money spinner. Assuming it delivers, then medium term (think 2013-15) HANA will start to ease out Oracle and Microsoft as databases used by the majority of its customers in support of its applications. The rationale to customers is that SAP can carve out cost via replacement of both operating system (HANA uses Suse Linux Enterprise Server) and database. If it is really smart SAP doesn't have to charge for HANA in all situations. I must admit to struggling with that idea given SAP's proclivity for monetizing anything that carries a SAP sticker but stranger things have happened.
SAP will not operate the same tactic among its IBM customers who are on DB2 because that relationship needs to be nurtured. In any event, IBM will continue to claim significant account control. There's also the small matter of IBM being the premium supplier for HANA appliances although rumors persist that SAP will introduce its own HANA appliance at some point in 2012. Hold that thought.
Josh Greenbaum looks at this topic from a customer-centric perspective, asking whether this is enough of an advantage for SAP over Oracle. It is well worth the reading.
Vinnie Mirchandani provides nuance to some of these points. Again, well worth the reading
Throughout 2011, colleagues pounded SAP executives about its limited developer resources or rather their availability at affordable cost. This was against the backdrop of an evolving mobile platform and availability of technologies that allow relatively easy extension of SAP technology. As the year unfolded, SAP made a series of baby steps with most progress shown in the mobile area.
Data is in short supply about how many applications are out there in the whole of the SAP ecosystem. Google searches produce several clues but there is no central resource where customers can find all solutions. Yet there is plenty of anecdotal evidence of developers producing a surprising range of interesting solutions that would appeal to current needs. Unfortunately, nearly all I have seen suffer the same problem: once showcased they disappear.
That can change in 2012. At the last major SAP customer event of 2011, my colleague Jon Reed sat down with Aiaz Kazi to talk about the Developer Center. During that conversation, Kazi acknowledged that the challenge for success is getting the SAP culture to understand where money has to be invested and where it is monetized. In the run up to Christmas, Reed, Kazi and I spoke about possible initiatives in 2012, all of which hold promise. There will be more to say on this as the year unfolds.
If SAP thinks the developer angle through then the logical steps are:
- Consolidate all 'stores' to one destination
- Encourage all partners to showcase on the SAP Store
- Create a level playing field for all developer shops to participate
- Promote the value of developers to customers
- Encourage fast track development
This isn't rocket science. The difficulty comes in getting a board level sponsor who will make developers a priority. The logical home would be under co-CEO Jim Snabe's leadership possibly shared with Lars Dalgaard (CEO SuccessFactors) once he gets his feet under the table. Whether that happens is another matter.
Is that it? Yes. Are you not over simplifying a complex set of issues? The best solutions are the simplest. But how does this equate to learning from Apple? Read on.
How it works and the challenges for success
Direct comparisons to Apple would be a stretch but that's less problematic than it might seem. Most commenters trying to understand Apple point towards the customer experience and asset integration. My analysis suggests that broad parallels for SAP can still be drawn.
Apart from the challenges outlined above, colleagues will query the need for data center investment, supply chain, certification, onboarding and other pre-requisites where Apple has successfully innovated. Those issues are secondary because in order to get this far you need intent and assets.
SAP has the assets. No-one can deny it's extraordinary reach to both developers and customers.
Some colleagues will query SAP's depth of expertise in database but then what does that say about Sybase? The nit is that Sybase is a largely disconnected business unit but that can change. It has to for this scenario to play out.
What about the operating system element? SAP has a large store of assets that are more accessible than at amy time in the company's history. Whether you are looking at on-premise or SaaS, SAP has tools and technology that lend themselves to a variety of developer opportunities. Tools for ByDesign are less than fully baked but they will be much more mature by the end of 2012.
What about the hardware piece of the puzzle? There's money in HANA for everyone right now so short/medium term there should be no problem for partners. Longer term? If you believe in the potential to reach millions of users, then SAP could put HANA appliances into its data centers without harming those partner relationships.
The only question left - does SAP have the intent? That is what made Apple's strategy successful. SAP does have intent in places but not as a coherent whole. Its collegiate style has served well but this strategy will need someone capable of getting everyone inside SAP onside because the risk of internecine warfare is ever present.
What do you think? Whether you are a diehard SAPper, customer, technical consultant or jaundiced observer there will be plenty of nuance on this topic. Let me know in TalkBack.