This week, some analysts and media had the privilege of attending both Dreamforce and SAP Influencer Summit. Comparisons are inevitable but worthwhile for an industry that I sense is on the cusp of real as opposed to marketing driven change.
Many people like to think that SAP represents the old, legacy way of the world. Salesforce is often portrayed as the face of the new world: brash, confident, fun loving. There is truth in that but it is not the whole picture. The best way to think about the contrasts can be summed up this way: Salesforce throws a memorable frat party, SAP offers fine dining. Each has its place but in the enterprise world one has to wonder which represents the ultimate preference of those who sign checks for IT vendors.
Salesforce is in a place where it seems able to do no wrong. The list for Fortune 500 companies quoted on the many overhead cloud shaped banners bears testament to a company that has figured out what matters: delighting users. As its CFO said during the first day analyst lunch: "Being CFO of Salesforce is often an easy job." The contrast at SAP could not be more stark.
SAP is going through one of those periods where change comes at a price. Battered but not cowed by the decision in its lawsuit with Oracle, re-examining its place in the world, figuring out where it wants to be and what it represents all take their toll. The revolving executive suite door has been spinning at noticeable velocity this last year as the company attempts a feat few IT vendors successfully pull off: responding to a new reality. I think it's getting there.
But it is when you get into the detail that things become more nuanced. Marc Benioff, CEO Salesforce rounded out Dreamforce by reeling off nine 'clouds' the company is using as its way of categorising its applications and platform portfolio. It's a simple way to corral what is becoming a behemoth of apps. In doing so however, he trivialises the complexity of what lies beneath. Someone (I forget who) remarked that Salesforce now offers an application portofolio that makes Oracle's price book look simple. As example, Salesforce can claim the Heroku acquisition adds 105,000 apps to 185,000 apps on the App Exchange. If anyone can find SAP's price book (other than the Business ByDesign example price configurator) then I would be grateful to receive it.
Salesforce makes its apps portfolio look simple to consume but it hides the fact that integration is not the slam dunk it would have you believe. Plus there are big holes in its analytics strategy that will become painfully apparent in the coming year.
SAP on the other hand has trouble restraining itself from describing a complex landscape that I doubt more than a dozen people on the planet can truly understand. And even then I wonder if any of them would agree what that landscape means.
But the real differences between the two companies comes when the applications rubber hits the road in the large enterprise. During our informal lunch with Vishal Sikka, SAP board member, we heard about how companies internally move at different speeds. Redmonk analyst James Governor has previously described this as pace layering. It's a good way to represent an IT landscape where some applications - typically those at the back end like accounting - evolve slowly, while others like Heroku's situational applications move at a much faster pace.
SAP sees its job as one where it melds those two worlds as seamlessly as possible while recognising that the notion of process centricity is being augmented by placing people at the center of how applications are used and consumed. That's far more than a UI makeover. It is a fundamental shift in the way applications are designed. John Wookey EVP for SAP's OnDemand LOB and David Meyer, VP of SAP's OnDemand, Productivity and Sustainability officer each described how features like Streamwork (for which read Salesforce Chatter) should be viewed as integral to the way we view process. This is precisely how I see these socialised IT services: content, provided in the context of processes that end up as a transaction.
Salesforce on the other hand is not handling a single business critical process. Shocked? Go figure. It is parsing pieces of the pie but it cannot legitimately claim ownership of entire processes. For that it needs its partners like FinancialForce, Appirio and Workday on the apps side to get to a whole view of the transaction. On services, there was something of an irony in that Accenture made an appearance at both Dreamforce and SAP Influencer Summit. Add it all up and Salesforce is no longer a cheap option for sales force automation alone but a premium offering that needs the same close attention to cost detail as any SAP quotation.
What does this all mean for the IT buyer? Salesforce is unquestionably delighting its customers with ease of consumption and functionality that does what people want, most of the time. Chatter is providing the bridge between otherwise siloed departments, coincidentally driving demand for more than Salesforce can currently offer on its own. That's all good news for Salesforce and its expanding ecosystem of partners. New apps development is proceeding at blistering pace meaning that Salesforce appears agile and easily capable of meeting demand.
SAP on the other hand has the technical problem of hefting massive IT landscapes. Listening for example to how it plans on managing virtualised landscapes, it should be no surprise the company wont have a solution before this time next year. Yet it is moving ahead remarkably quickly in attracting partners and developers to its Business ByDesign solution. It is no coincidence for example that Accenture is eyeing the claimed 143,000 subsidiary companies it does not reach in its current client list as a market for ByDesign. And just to add spice to the mix, SAP finally confirmed what many of us realised a long time ago: ByDesign IS the future of SAP and its on demand strategy. But rather than having to manage a single and frenetic pace of development of the kind Salesforce is traversing, it has to deal with multiple speeds of adoption.
As for the cloudy outlook? We all know where Salesforce sits: everything is going to the cloud. SAP is far more pragmatic: it rightly sees a hybrid world where its customer may - and I stress may - move everything to the cloud. Unlikely in my lifetime. As both Dr Sikka and Mr Wookey said, there are still instances of SAP R/2 happily running some global companies. We may have forgotten McCormack and Dodge, Siebel may be fading from memory but their softwares are still out there. All of which harks back to a time when I was wet behind the ears and before Marc Benioff was out of short trousers.
What of 2011?
As I left Dreamforce I could not help but think that Marc Benioff had thrown the mother of all parties for an ecstatic crowd of attendees. When the music stops and we look back with fond memories of Stevie Wonder, Will.i.am and ex-president Clinton taking to the stage I sense we will be left considering that Salesforce days as an adolescent player in the apps vendor landscape are over. The days of easy forgiveness for functional deficiencies are gone. User delight will still play powerfully in deals but 2011 has to be the year where Salesforce matures and grows into becoming a powerhouse player we can respect as well as admire.
SAP on the other hand has no such issues. 2010 has been the year when it swallowed the pill of rejuvenating growth in getting ByDesign out the door albeit to a handful of customers. Now it needs to re-acquire a sense of confidence that was all but shattered in a Californian courtroom. Provided that comes with a healthy dose of humility, I predict SAP will once again become the company that all others have to beat.