SAP as a company has always been risk-averse, even as it takes some risky steps. But its perhaps most risky step ever – the acquisition of TomorrowNow – in 2005, has apparently turned the already anodyne company into an almost non-competitive stupor, and frankly, it’s becoming a problem.
I’ve just come back SAP’s two-day analyst summit, an event inaugurated five years ago by the riskiest executive SAP has ever had, Shai Agassi, who has since decided he’d rather do something easy like create a new electric car industry from scratch than try to fight his way to the top of SAP. And, while SAP had a lot to say about a lot of things at the summit, one thing that was almost never mentioned was its Machiavellian struggle against Oracle. (Here's some links to other blogs on the Summit from Michael Krigsman, Dennis Howlett in exile, and Vinnie Mirchandani in extremis.)
The immediate reason for this is TomorrowNow. Mired in a lawsuit alleging top executive complacency in what actually looks to be more of a second-rate burglary of Oracle’s IP, SAP recently announced the resignation of the top execs from TomorrowNow amid rumors that a settlement with Oracle is in the works. And such a settlement would be a good thing: I personally believe that a settlement is in everyone’s interests, including Oracle, which has much to lose by a public discovery process that will air a lot of dirty laundry about the cost and value of the 20+ percent maintenance fees customers pay every year for their enterprise software.
But while we’re waiting for the lawyers to get this monkey off of everyone’s back, the effect on SAP’s already reticent leadership to do a little competitive positioning has been stultifying, to say the least. At a time when all eyes are on these two dedicated competitors and their relative market positions, SAP is pulling its punches, to the detriment of, well, everyone.
I’m not asking for a bar-room brawl, but it would help to hear a little push-back from SAP regarding how it plans to compete with Oracle, in terms that are more plain than we heard from SAP’s top execs at the analyst summit. Because in the absence of that kind of direct talk – more of an American phenomenon, admittedly, that one found in the corridors of Germany’s business elites – the question of how well SAP is prepared to engage in an definitely American-style fight for the hearts and minds of customers is answered by its silence. And that perceived negative answer doesn’t do justice to a competitive position that is much more in SAP’s favor than SAP seems to realize.
There was one breath of fresh air, or should I say fresh data, at the summit, coming from Doug Merritt, the head of SAP’s Business User group, the part of the company that is leading SAP’s legitimately competitive position against Oracle with its Duet, GRC, and other offerings. In Doug’s breakout session on his group’s products, there was some of that old fighting spirit that we observers thrive on and customers depend on to help them balance the different versions of reality their vendors feed them.
Doug took on Oracle with some impressive-sounding wins against its flagship products – Hyperion and Siebel, notably – and otherwise left it clear that, at least when it comes to his line of business, the gloves are off and the engagement is on.
While all this sounds like just a lot of titillating tit-for-tat, it’s more than that. Americans love a winner, and we’re – for better or worse – sorely tempted by the easy, quick messages and sound bites that hit hard and semi-true, even if they turn out to be shallow and evanescent down the road. We see this in the presidential race every four years, where the winners, for better or worse, are judged as much if not more by their ability to kiss babies and wrap themselves in the flag as they are in wonkish displays of policy-making legerdemain. And, in the current enterprise software election campaign, Oracle’s got the flag and babies thing down pat, while SAP is still hoping that wonkishness is enough. Anyone want to take bets on the outcome based on how things stand today?
So it’s no accident that the one SAP exec who took a few swings at his competitor was one of the few high-ranking Americans left in the organization. All the other keynote speakers weren’t just European, they’re northern Europeans, culturally averse to public displays of disaffection. Doug tried to take the fight to Oracle’s turf, and in the process opened up some potential wounds that might help change the dynamic in the marketplace. The idea that Hyperion and Siebel can be beaten is one of those wounds: if there’s a systematic way in which SAP can prove its ability to steal these customers from Oracle, then everyone’s assessment of the apparent invincibility of Oracle’s acquisition strategy will need a little rewrite. Just hinting that things might be different than Oracle claims they are is a vast improvement over the current alternative, which is to try not to mention them at all.
The problem is that SAP would prefer to govern the market from a position of gentility, when its major competitor’s top executive is used to seeing his name appear in the same sentence as Genghis Khan. Gentility and sincerity are nice, but we also need a little caffeine in our coffee too, and that’s really all I’m asking for here. Just a little caffeine, a little push, a little dose of Doug in the morning. It might, no, it will make all the difference, particularly for confused customers trying to sort out a confusing marketplace. We all want our babies kissed and our flags well-wrapped, and SAP needs to learn how. Sooner rather than later.