Handicapping the Fall Enterprise Software Race: SAP vs. Oracle vs. Microsoft

It’s leapfrog time in enterprise software land, and the next frog to jump will be Oracle, which is hosting industry analysts next week in Redwood Shores and then hosting the entire world at its much-too-massive Open World Conference in San Francisco the following week.

Oracle is jumping into the marketing fray following a summer in which its two major competitors, SAP and Microsoft, both trotted out their respective strategies for market domination. Microsoft was the first to jump, dragging its partners to the summery beauty of Houston for its Worldwide Partner Conference. SAP jumped next, holding a two-day summit in Boston that provided a massive core dump for its Business Objects and mid-market strategies, and in the process cut my summer vacation in two.

With Oracle set to bring its latest and greatest strategy to bear on the market, it’s appropriate to sum up the essence of what its competitors have been up to on their summer staycations.

Microsoft’s major news came on two fronts: online and CRM. As I’ve written elsewhere, of the big three, Microsoft is leading the pack with a strong hybrid on-demand/on-premise strategy that will become a major differentiator in the marketplace, absent some action from SAP or Oracle to counter its effect. This Software+Services strategy does a lot to support customer needs for choice when it comes to on-demand and on-premise deployments, and while very much in the nascent stage of development, the strategy looks good, and looks like it will potentially help move Microsoft, and its Dynamics enterprise software, further up the competitive food chain.

Only one problem – S+S will need a new breed of partner that can leverage all that enteprisey stuff in a hybrid environment, while making use of the growing number of moving parts – like Sharepoint and Office Business Applications – that will make S+S a competitive dream come true. That’s going to take a lot more hard work, on the part of Microsoft and its partners, and, like all great ideas, how Microsoft executes on this vision will make all the difference, the excellence of the vision notwithstanding.

The other highlight of WPC, and Microsoft’s enterprise apps in general, is CRM. The product is moving online, it’s becoming a platform, and the CRM sales team is nailing down some major accounts – they now have a handful of deals in excess of 5000 seats. While the focus in on SME, the impact will continue to be heard up and down the CRM market.

Now for SAP. There was a lot of evidence that the Business Objects acquisition doesn’t just make sense, but has the potential for giving SAP a much needed leg up in its battle royale against Oracle. Two major highlights from the BOBJ side: the get-Hyperion strategy is looking like it’s working (which means it’s now Oracle’s turn to prove that it’s not working), and the ability of SAP to go after non-SAP accounts through a variety of mechanisms – BOBJ offerings and the BOBJ sales teams, SAP’s market-leading GRC offerings, SAP’s market-leading and very anti-Oracle in-memory database technology, and its strong industry focus – is making SAP look very competitive these days.

Highlights from the other day spent interrupting my vacation –SAP’s SME summit – show a company that is doing a lot more than just trying to build a brand in SME. While SAP has a liberal definition of SME that extends up to $1 billion in revenues, if you look at the number of customers for its two principal SME brands – BusinessOne and All-in-One – the total is over 32,000. Strip out the approximately 25 percent that are at or near that $1 billion mark, and you’ve got 24,000 SME customers. That’s a very legit number, and gives SAP the street cred to claim a significant share among the “non-other” vendors in this market (“other” being the perennial number one winner in the SME market.) And that’s without a Business Objects SME customer base that numbers, at the low end, in the hundreds of thousands.

While SAP is successfully proving its place in the SME market, the cloud hanging over the SME summit was, of course, Business By Design, which has been stalled amid concerns about how to make it efficient enough to run at a profit. There were some decent reassurances about an eventual re-launch next year, which boiled down to the following statement: There’s too much invested in BBD to let it fail. While sounding more like an epitaph than a hopeful spin, I came away convinced that BBD’s technical problems would be solved, and that SAP would be back to the real problem with BBD: how to grow a so-far non-existent channel and safely build a line of business that could seriously undermine the company’s traditional direct-sales revenue model.

So, with Oracle about to play its cards, here’s the bottom line: Enterprise software’s fall race is going to be run on multiple tracks simultaneously – the SME track, the BI track, the GRC track, the vertical track, the SaaS track, and the CRM track. On each of these six tracks – and there will be more – the top three players have varying degrees of competency and legitimacy. What’s important is that none of the three dominate all these categories, which makes each individual race as exciting and competitive as the next. Which means one overriding thing: customer choice has never been better. And that’s what will make the coming fall enterprise software race a great one for customers and vendor alike.