SAP CEO Henning Kagermann warms up for A1S launch
SAP CEO Henning Kagermann did one of his last warm-ups before the company rolls out its A1S midmarket suite on Sept. 19.
Speaking at the Citigroup 14th Annual Technology Conference, Kagermann didn't break a lot of new ground, but did note some interesting developments for software licensing. He also discussed the importance of A1S.
Some highlights:
A1S is coming. Kagermann was asked whether the A1S launch meant that there was no growth to be had in the large enterprise market. Kagermann said that the biggest reason for A1S is that it expands SAP into a midmarket that it currently can't reach with existing products. “We’re doing this to expand our market," said Kagermann.
Newfangled licensing models. When A1S launches--it will be renamed the same day--it will usher in a software as a service model for SAP. It's no coincidence that the launch occurs that same time Salesforce.com kicks off its Dreamforce conference.
Kagermann noted that he sees a mix of software models arising at SAP. For starters, SAP will still have upfront licensing deals since that's what large enterprises prefer.
In the mid-market there will likely be "rental models" that resemble traditional leasing arrangements with customers. These models aren't new, but are rare today. Kagermann indicated that these software leasing models may gain traction again for some customers. Software as a service is another model that's already here. "There is more flexibility coming to the market and I don't believe there is one answer," said Kagermann.
How disruptive will A1S be? Kagermann argued that A1S will be disruptive on many levels. For starters, A1S will be an on demand service that operates as a full ERP suite. For SAP A1S is disruptive because it's entirely new and reaches a new set of customers. Kagermann added that he sees A1S as a high-volume business. The SAP CEO also didn't back down on his A1S projections calling for 10,000 new customers and $1 billion in revenue over a short period. When asked why he was so confident about A1S Kagermann noted that the suite "runs the entire business."
The financial services crisis hasn't hurt enterprise demand yet. Kagermann like a lot of other technology CEOs is being asked repeatedly about enterprise IT spending as the big spenders--financial services firms struggle. Here's what he had to say:
"The crisis in the sector is not a secret. It's surprising since the global economy is strong, but we don't see an impact. A few months from now it could have an impact," said Kagermann.
And no SAP discussion is complete without some Oracle comparisons. Analysts at Citigroup repeatedly brought up SAP's organic strategy when it comes to growth. Oracle gobbles up software companies and SAP makes small acquisitions if at all.
On this point, Kagermann noted that Oracle's strategy has resulted in many mixed accounts--customers that may only have one big vendor, but numerous applications. "If (an environment) is mixed you have a good chance to replace it," said Kagermann. "One vendor doesn't mean your relationship is easy because the product landscape may still be complex."