Jon Reed, independent enterprise analyst focused on SAP technologies, was an important contributor to this report.
Barely a month before SAPPHIRE Now in Orlando, SAP has provided an update on its mobility strategy and outlined a plan to becoming the number two database vendor by 2015. It will give CIOs plenty to think about before the schmoozing starts around May 13th. Do these strategies make sense?
SAP realises that to achieve a critical mass of applications will require a significant contribution from its large ecosystem of developers. The company says as many as 75% will need to come from this source. Despite SAP’s acquisition of Syclo – which for the record was purchased NOT for the platform as some have speculated, but for the apps – SAP is still thinking ecosystem for mobility app development.
Right now it is wooing the large SIs on the assumption they can seed the big deals among SAP's larger customers using the Sybase Unwired Platform and surrounding technologies. Device management figures large in SAP's thoughts as the justification for tempting SIs and developers onto its platform.
Until very recently, pricing for both applications and the platform have been the subject of much to and fro. SAP believes that it has figured out a way to monetize while retaining broad appeal. It is believed to be in the process of developing pro forma price points for different types of user. SAP has not yet made those price points public and will almost certainly refine the model.
What might some of these applications look like? The next video shows SAP Mobile BI analytics in a retail setting:
If SAP releases refactored apps from the desktop then customers will legitimately argue that this is only access via another device and therefore should be part of their existing maintenance arrangements. SAP is proposing 'active per user' pricing regardless of device access. That is to be welcomed. What is less clear is how this will work in large scale deployments for net new applications.
Expecting a large company to pony up (say) $700 (plus maintenance) for each of its (say) 10,000 field sales or service reps is going to be a big ask unless it is self evident that the application will deliver breakthrough value. That theory has yet to be tested but even so it will be interesting to see just how much customers are prepared to pay at the top end, which is where SAP will make its real money in the short term.
What Appirio has mastered is the automation of professional services using today’s global networked connections — part of a trend I call frictionless enterprise. It’s not just a matter of automating repeatable processes within the service model (though that’s a helpful starting point). It’s also breaking them down into more readily assembled components so that some can be productized or cloudsourced, as appropriate.
I don't see evidence that SAP or its large SI partners have truly understood this model. Instead, I continue to see legal roadblocks that prevent developers from gaining easy and affordable platform access.
Sanjay Poonen, President SAP Global Solutions & Go-to-Market has assured developers that he will do everything he can to make access as painless as possible, noting that SAP has to embrace an attitude that is more closely aligned to the open source world. Only time will tell whether he can deliver on everything that is required. What we do know is that as of today, SAP is officially running mobility – not Sybase. During his keynote, Executive Board Member Vishal Sikka officially presented the Sybase Unwired Platform and Sybase 365 as the SAP Mobile Platform. As Jon Reed tweeted, “Sybase as a mobile brand is transitioning to SAP-run, SAP-named.”
But what does rebranding mean to the individual developer? Judging from SAP’s contorted struggles with developer engagement, not much. But announcements of new mobility development partnerships with Adobe, Appcelerator and Sencha today indicate that SAP’s glacial pace on developer engagement may be quickening. A couple of influential SAP Mentors I met while in Australia were cautiously receptive to what Poonen said in a closed meeting on the topic. From what I saw and heard, their views are representative of the broader Mentor/developer community in that part of the world. There is no reason to think those sentiments would not be replicated elsewhere. (see video at top.)
During a blogger meeting with Sencha CEO Michael Mullany after today’s announcements, SAP explained that using Sencha’s open source HTML5 development tools, some two million Sencha developers could now build mobility apps for SAP environments. Using the Odata connector which Sencha built in partnership with SAP, developers can call on back end SAP data via the SAP Mobility Platform to develop SAP apps with contextually relevant data. The example shown was a fashion app where clothing items and SKUs could be pulled from SAP systems and displayed in a lightweight, interactive environment.
Needless to say there is a major hitch: developers who want to build apps with SAP data need access to a NetWeaver instance to test and model. Customers would have that, but small developer shops without an SAP license would not have that access without pricey, hair-pulling hurdles, which Sikka acknowledged during the press conference was a “19th century” approach. When pressed on this issue, SAP’s Fawad Zakariya, VP of Mobility and a key player in mobility ecosystem development reporting directly to Poonen, asserted that good news on this front was coming.
Zakariya was reluctant to give a firm delivery date for developer access to NetWeaver, but was willing to commit to “Sapphirish,” so SAP clearly has its foot on the accelerator with Sapphire looming a month away. According to Zakariya, cloud access to NetWeaver sandboxes is on this roadmap also. Jaded SAP developers will surely greet this news with open arms if it comes to pass. Blogger Vijay Vijayasankar, a frequent critic of SAP’s spotty past of developer engagement, said to Jon Reed after the meeting with Sencha: “This was the best thing I’ve heard all day.”
My only caveat is that the halls of SAP are littered with the bones of those who have committed to taking on this Herculean task. For SAP to reach the developers it needs requires active and vocal developer advocacy from the board down into the second and third management layers such that SAP's immensely powerful legal team is brought to heel.
In contrast, SAP sometimes shrugs its collective shoulders and says that while it does well at 'big game hunting' it doesn't always see the opportunity from the much larger developer community. That is a poor excuse in today's world and serves to deny some of the brilliant innovations I have seen from within its own walls among tiny research teams. SAP has more than enough resource to make this model work. The issue now centers around its DNA and willingness to step into a market that is rapidly evolving whether they like it or not.
The SAP message could not be clearer. 'We aspire to being the number two database vendor in the world by 2015 as an alternative to the tyranny of Oracle.' Whether you believe that or not matters less than whether SAP can deliver on the revenue dollars needed to support that sentiment.
Right now and depending on whose numbers you want to read, SAP would have to grow its overall HANA and Sybase database business something around six to seven times from the existing numbers over the next few years. That assumes a static market whereas the indications are that database demand will grow rapidly. SAP can benefit from that growth organically but then so will everyone else. In the meantime, it has major obstacles to overcome.
SAP makes much of the fact that HANA accounted for $160 million in net new sales last year but then I see that Oracle grew its DB licenses by $141 million in the last reported quarter. (p8 - PDF download) You can be certain that Oracle will make Q3 sales seem paltry when it closes out the fiscal year next month. By any measure, SAP has a mountain to climb when compared to the number one database company. Add in the fact Larry Ellison, CEO Oracle will relish in ribbing SAP for sipping its own brand of milkshake and you have a heady mix of FUD, counter-FUD and plain silliness ahead.
SAP argues that Oracle has no incentive to innovate on the database while SAP sees its database innovation (for example ASE plus CEP) as a pathway to creating entirely net new markets. I am far from convinced. SAP has homed in on financial services and telco/utilities as examples where it is strong due to Sybase penetration in those markets and where it believes it can grow its business. That may be true though I hear there is some evidence of FIs moving away from the Sybase platform. More worrying, SAP doesn't seem to have fully grasped that in financial services for example, companies like TIBCO and Progress Software have already captured large swathes of the CEP ands related markets. What more is there to do here? The same goes for telco/utilities. If it really wants to go after those markets then a TIBCO acquisition moves into focus.
More broadly, I believe Oracle has much more to fear from Microsoft than it does SAP. That's because Microsoft is in the best position it has been in for years to sell more database licenses, largely as a result of three things:
Dynamics AX is well positioned to move up market and sell well into mid sized businesses at a price point that is highly competitive. Running on SQL Server is the only way to go.
SQL Server has been getting strong endorsements from the likes of Gartner and Forrester as a BI engine that can massively scale out.
That in turn impacts the extent to which SAP is able to overturn Microsoft centric customers or SIs used to deploying Microsoft SQL Server. And what of IBM and DB2? SAP has made soothing noises in IBM's direction but that counts for nothing when the sales people hit the streets.
It is conceivable that in the short term, SAP's new database offerings will fare well in net new customer deals but the price point will be crucial. Even then, we need to know more about SAP's net new sales expectations. HANA can do well in the BusinessOne market but that won't bring the big bucks SAP will be looking to deliver to its top and bottom lines.
Regardless of the initial $337 million incentives SAP is putting on offer for switching, no-one I speak with believes that SAP will manage to orchestrate a mass defection from competitive offerings in the three year time frame to which SAP has nailed its market messaging and which is clearly aimed at BusinessSuite customers.
Technically, it is not a big deal to move the underlying database in an SAP landscape. That's not the point. The question comes in the extent to which a move from any other database will yield significant ROI/TCO in as risk free a manner as possible. Equally, companies have spent many years building stable financials/HR landscapes. They have the functionality needed and much else will be tweaking and bug fixing. Why would you disturb that and for what gain?
The $155 million startup fund for developers putting apps on HANA is more interesting. Nothing encourages developers more than seeing a large enterprise player putting skin in the game but as always, the devil will be in the details. Personally, I would have preferred to see SAP announce matching funds in the mobile space because that is where the immediate wins will be seen.
Right now, SAP is playing the FUD game with remarkable success. The HANA story has resonated well in the market to the point where CIOs are at least asking what this is all about. Ratcheting up the game to include the more traditional database market is no bad thing if it gets customers to reconsider what they're getting for their Oracle/Microsoft/IBM maintenance dollars. But it counts for nothing unless SAP delivers on its promises of functional parity, innovation and improved TCO/ROI. We're at least two years off seeing that and in the meantime you can be assured that SAP competitors will not stand still.
As always, watching these dramas unfold will provide plenty of fodder for the chattering classes.