Software AG: China not innovative

HANNOVER--Despite the financial growth of Asian powerhouse China, IT innovation is still more than two decades away for its companies, says Software AG CEO Karl-Heinz Streibich.

In an interview with ZDNet Asia, Streibich said the vast majority of Chinese companies are in the midst of implementing their enterprise applications layer, which consists of "siloed applications" such as ERP (enterprise resource planning) and CRM (customer relationship management) systems.

In contrast, Software AG preaches a process-oriented architecture, which occurs above the applications layer at the services layer. This, in an SOA (service-oriented architecture), is aimed at allowing the different enterprise applications to communicate. The German software vendor has been beating the SOA drum in its drive to upgrade its customers' legacy infrastructure.

But, China's companies are not taking the process route.

"We listen to customer demands. They want to start out with apps. We are not yet big enough a [technology vendor] for us to be able to influence all our customers to turn to process-oriented architecture," Streibich stated.

He said the reason Chinese companies are not jumping on the process bandwagon is due to a lack of innovation.

Likening China's current financial growth to Germany's after World War I, he said war-ravaged Germany at the time was often criticized for copying and pirating other countries' goods.

This lack of respect for IP (intellectual property) was eventually reversed when the company amassed a sizable amount of its own IP, he said. "The more IP a country has, the more it will value it."

"I'm sure China will put in place stringent IP laws in 15 years. Only then will innovation develop. Then [IT vendors] will be able to go and innovate with [customers] there," he said.

Furthermore, China's absolute wealth will have to match that of countries such as the United States, in order for its companies to have the spending capability to invest in IT innovation, he said.

China's growth trajectory prepares it to catch up with Western powers only in the next 25 years or so. So Streibich does not expect the country' adoption of Software AG's infrastructure products to match that of companies in Europe or the U.S. anytime soon.

Nonetheless, China is one of Software AG's key markets to invest in, he noted.

He said the country's drive toward modernization provides much potential for the company to make new sales--even if, for now, this is not its process technologies but new SAP application implementations, for which Software AG sells consultancy services.

Back in 2008 and 2004, the company was cautious on China, and did not have a presence in the country yet. However, IDS Scheer, which Software AG recently acquired, has a presence in China, which the company is now looking to expand, Streibich said.

Processes to lead Software AG's analytics
The buzz surrounding BI (business intelligence) as an analytics function has been growing of late. German software giant SAP has said BI is providing an inroad to organizations and putting up competition against small BI vendors in the space.

But the company prefers to apply its analytics to the process space. Since the acquisition of IDS Scheer--which has released a number of process management technologies such as the ARIS platform--Software AG has been touting "process intelligence" technologies, which refer to the monitoring of a company's processes in order to predict changes.

PI (process intelligence) is the analytics layer of process management, intended to trigger alerts when a company's processes stray from the intended flow.

BI and PI are not competing but complementing technologies, Streibich pointed out.

"BI is backward-looking, but PI is forward-looking. BI looks at historical data to predict trends, but PI is real time," he said.

Plus, Software AG isn't about to follow the herd and chase the BI dollar. "Customers don't come to us for BI. They often have their own [standalone] BI implementations already," he added.

PI, not BI, will be the company's competitive differentiator, Streibich said.

Victoria Ho of ZDNet Asia reported from the CeBIT technology show in Hannover, Germany.