SAP's co-CEOs hit the 100-day mark with a SaaS plan, jabs at IT stack obsessions

SAP co-CEOs Bill McDermott and Jim Hagermann Snabe hit the 100-day mark of their joint tenure by outlining the company's on-demand software plan, saying Business ByDesign is ready for mass volume by the end of July, dissing middleware and outlining a strategy to navigate the evolving IT stack.
Written by Larry Dignan, Contributor

SAP co-CEOs Bill McDermott and Jim Hagermann Snabe hit the 100-day mark of their joint tenure by outlining the company's on-demand software plan, saying Business ByDesign is ready for mass volume by the end of July, dissing middleware and outlining a strategy to navigate the evolving IT stack.

The news of the joint keynotes at SAP Sapphire in Orlando and Frankfurt revolved around SAP clarifying its on-demand strategy. As noted on Monday, SAP is looking to on-demand services as a way to enhance on-premise software for large companies. For small and mid-sized outfits, Snabe said that Business ByDesign, an on-demand ERP suite three years in the making, is ready for volume adoption.

However, if you zoom out a bit on the keynotes you see quite the contrast in SAP's co-leaders and an illustration of how the joint role can work.

The keynotes by McDermott (top right) and Snabe (bottom right) come at an interesting time for the company. For starters, it's the 100th day for McDermott and Snabe's tenure. Insiders at SAP seem to be generally enthused relative to their takes when former CEO Leo Apotheker was at the helm. I've been told by SAP employees that they haven't seen this amount of energy around the company for a while.

And why not? SAP has made a bit bet on mobility with its $5.6 billion purchase of Sybase. Sure, SAP has a few loose ends to tie up and its software as a service strategy needs better messaging. But the company isn't a sitting duck anymore.

Can this co-CEO arrangement work? The roles of each player seem to be fairly defined. McDermott is cheerleader in chief. As Dennis Howlett notes, McDermott is a master salesman and carries a lot of enthusiasm. Snabe is more measured and engineer friendly. Put the two together and the marriage can work. But it's still early in their tenure.

See all SAP Sapphire coverage.

Indeed, the keynotes of the two co-CEOs showed the contrast. Both were focused on the business implications of enterprise software. Tomorrow, Chairman Hasso Plattner will talk technologies along with Vishal Sikka.

Here's a look at the McDermott-Snabe keynote and a tale of contrast.

McDermott's talk focused on SAP as a company taking bold steps. The headliner here is the Sybase acquisition. McDermott talked m-commerce and m-payments. In this unwired view, SAP plans to extend business processes to mobile devices. "We will share the combined jewels of SAP and Sybase to the benefit of customers," said McDermott, who added that the company will be open and give customers choice. "We truly believe in an ecosystem," he added.

"This is a significant moment in IT from the boardroom to the shop floor," said McDermott.

McDermott talked three themes: Real-time (think Business Objects and analytics); unwired (Sybase) and sustainable (a potential big business for SAP). McDermott noted how HP became more sustainable by cutting IT and standardizing on SAP.

A few points worth noting from McDermott's talk:

  • On the mobility point, McDermott said that "consumers are leading an in China they have skipped the desktop." This need for mobility extends to the enterprise. "Enterprise workers are business consumers," said McDermott. "They are the core of the unwired enterprise."
  • McDermott spent a lot of time calling out customers like Lexmark and HP for projects well done. Sotheby's got a plug for real-time auction tracking, traceability and regulatory controls.
  • "We've worked very hard in the last 100 days to make our message clear," said McDermott. "The trust you have is everything to us. Trust must come one customer and one business consumer at a time."

Bottom line: McDermott laid out a vision and you came away knowing what SAP was at least trying to do. SAP's mission is to get customers enthused and McDermott is a master salesman. Warning: Reserve judgment until later as McDermott creates a bit of his own reality distortion field. The man is an evangelist of sorts.

Snabe's talk from Frankfurt was more professorly, but brought all the substance. Snabe positioned SAP as an innovation partner on issues ranging from real-time data to sustainability. As companies position themselves for growth after a year and a half in the economic fox hole, there's a feeling of cautious optimism across companies.

According to Snabe corporate IT is at an inflection point. Snabe walked through a history lesson. First, companies went horizontal and moved to get economics of scale. Then, came the nimble movement with unique delivery. "Some cause this phase mass customization," said Snabe. "The business response was business process optimization. In this phase, IT changed to meet the new needs of business with more decentralization to be nimble." Snabe touted R3 as the inflection point leading.

Now we're at a new IT inflection point led by collaboration with customers and partners and faster decision making. "We're empowering individuals, but not giving up on economics of trends," said Snabe. Collaboration will happen "at an enormous speed." The new information flow can't be decided by a process because people will decide on the fly what comes next.

"This requires complete new IT," said Snabe. "This is an era that requires collaboration." He added that the IT response is simple. If you believe business processes go between companies and employees are mobile then you will need to go to the cloud for computing horsepower. Next generation analytics will also be needed to find the enterprise knowledge needle in the haystack.

Snabe said that SAP can lead in the next generation IT. Snabe's pitch is that SAP will remain on-premise software as well as the on-demand flavor and mobile tools. The three together and the intertwined software are dubbed "orchestration" by SAP.

Digging deeper Snabe made the following points:

  • On-premise software will remain SAP's sweet spot. The company will work to reduce total cost of ownership and bridge a customer's strategy and execution with real-time analytics. "We have a very strong position in the on-premise world," said Snabe. "We are committed to keep and extend that leadership." Snabe will deliver a business process update to its Business Suite 7 in an enhancement pack later this year. Snabe also previewed in-memory technology and how it can enhance analytics.
  • Snabe also defined SAP's on-demand strategy. "We're committed to the on-demand market," said Snabe. SAP's on-demand plan is to extend Business Suite and seamless integration with on-premise systems. SAP will have two approaches to the on-demand market. "The first is line of business extensions" to on-premise software," said Snabe, who showed a few screenshots of Sales OnDemand, a SaaS CRM play. These processes would be shared. Line of business on demand parts cover Expense Management, Sourcing OnDemand, Sales On-Demand and People Management. "This enhances your on-premise systems," said Snabe. The second approach revolves around Business ByDesign, which is a suite of on-demand ERP. "I know there has been a lot of talk about Business ByDesign, but you better get it perfect before you go to mass volume," said Snabe, who said that BBD will be in volume by the end of July. "Now we go for volume."
  • Naturally, Snabe talked up the mobile ability acquired in the Sybase deal. But the big idea here is that SAP will design on-premise, on-demand and on-device software so that data will be defined in the same way. These pieces will be networked together. "We don't believe that middleware should hide inconsistencies in data," said Snabe. If you add it up SAP will be open for multiple architectures, but clearly wants to cut out the middleware.
  • On the IT stack, SAP said its focus is on applications. SAP said it wants to lead the applications environment that will include mobile, enterprise software and the cloud. "We believe that the stack will change over the years," said Snabe. "Why would you provide an integrated stack that's going to move to the cloud? We believe the current stack will be challenged."

Here's a demo of Business ByDesign on the iPad for good measure.

Bottom line: Snabe definitely brought the meat of the talk. With McDermott cheering and Snabe outlining the strategy, this leadership arrangement is crazy enough to work.

See also:

Editorial standards