The Sunday New York Times started a little blogo-versy going about whether Microsoft should have made an offer to buy SAP instead of Yahoo. It's an interesting thought, if revisiting history is your idea of interesting. But if you're living in the present, as many of my fellow bloggers (Vinnie Mirchandani here, Dan Farber here, have pointed out, it's kind of a silly idea.
Of course, it's also silly to give Micheal Cusumano as much credit for foresight and perspective as he is given by the Times. He holds a bully pulpit at MIT, and, as the Times' writer Randall Stross accurately points out, has written "several books about the software industry". But he's hardly the oracle of enterprise software that Stross would have us believe he is. I've read two of his books, or at least tried to. And while one of them, "Platform Leadership", is an important addition to understanding the role of ecosystems in the enterprise space, the other, "Japan's Software Factories", is a monument to misunderstanding the software market and what drives innovation, insofar as Cusumano postulates that Japanese savoir faire will create a global software industry that will dominate software the way Toyota and Honda dominate the automobile industry. The success of the book's premise, published in 1991, speaks for itself.
I think Cusumano could have come up with a better idea, taken from Platform Leadership . If Microsoft + SAP is such a good idea (and I think it is, to a degree) then how about skipping the M&A chaos and go for a much closer platform partnership?
Here's what could happen without the disruption, regulatory scrutiny, and massive executive bandwidth drain that an M&A would require. There would still be some swapping of assets, but no big, ugly, expensive merger:
SAP and Microsoft formally join forces in enterprise software, with SAP endorsing .NET and giving it a prominent position in NetWeaver (calling it .NETWeaver), and, of course, even further promoting SQL Server as an Oracle DBMS-killer in the SAP customer base. Microsoft in turn would take over SAP's mid-market, on-premise ERP offerings -- BusinessOne and All-in-One -- while Business ByDesign, the new on-demand ERP system from SAP, would remain SAP's and become a joint offering that leveraged Microsoft's extensive channel, a lack of which is at present looking like a problem for SAP's BBD plans. Meanwhile, SAP would infuse Microsoft with much-needed business process and vertical industry knowledge, and Microsoft would help SAP build the volume, SMB business it has promised to its shareholders.
Guess what that would do to the insomnia and Tums index over at Oracle? And IBM, while we're at it? And Google too?
I put Google into the list because this fantasy doesn't have to be taken off the table if Microsoft succeeds in buying Yahoo. Yahoo and SAP, as I wrote earlier, have eyed each other more than once, and the possibilities of a volume, low-end, marketplace and delivery channel for SAP business process knowledge and services could make Yahoo an even greater incentive for bringing SAP and Microsoft closer together.
Okay, so I admit this is farfetched, and just a little off the wall. But it's so much less crazy than suggesting Microsoft revisit buying SAP, or that the Japanese can rule enterprise software development, for that matter, that I had to weigh in. Again. SAP and Microsoft would do well to get closer, I think they have more in common -- in terms of culture, enemies and friends -- than they sometimes realize. This could be the start of a beautiful friendship.......