Part one of this post establishes the premise that cloud-computing has reinvigorated enterprise software and describes the importance of feelgood mojo in creating a sense of customer delight.
Related: Sexy enterprise software, part one: Salesforce.com gets its mojo
As I explained in Part One, three events last week foreshadow the renewal of enterprise software as an exciting and interesting place to be:
Of course, enterprise software and the cloud are far larger than these three companies and we should not forget competitors such as NetSuite, a public company that sells an on-demand ERP system. Each of these organizations plays an important role in today's enterprise cloud ecosystem.
Part one discusses Salesforce.com, so we now turn attention to SAP and Workday.
In part three, which is coming tomorrow, I discuss the importance of competition and explain the five principles of sexy enterprise software.
SAP: THE SLEEPING GIANT ARISES
As Salesforce wowed tens of thousands at Dreamforce in San Francisco, SAP held its annual Influencer Summit in nearby Santa Clara. Due to the conflict with Dreamforce, I missed most of the Summit, but attended a special day that SAP held for bloggers.
Hearing from other analysts who attended the first day of SAP's event, I expected a boring session that rehashed old marketing messages. Blogger Jon Reed heard the same stories:
At the end of day two, a couple of sleep-deprived analysts who traveled long distances to get to Santa Clara pulled me aside and said, “This is the same message as SAPPHIRE, nothing has changed.”
Like Jon, I came away with an entirely different, and much more positive, impression. Rather than boring rehash, SAP presented a resurgent, invigorated, and engaging presentation focused strictly on the company's cloud and on-demand strategy.
The day began with SAP going on the offensive against NetSuite, even though SAP did not name the competitor explicitly. SAP accused NetSuite of misrepresenting facts in a recent anti-SAP marketing campaign related to total cost of ownership.
This exchange is significant because it may signal the start of a shift from SAP as complacent, sleeping giant to more nimble street fighter. Whether this healthy change continues remains to be seen.
Just to be clear, I have no clue which side is right or wrong in this marketing dispute. In response to pointed questioning, NetSuite's CEO, Zach Nelson, personally assured me that his company's facts are correct, while SAP defends its position with equal vigor.
As an aside, SAP replaced the disputed TCO calculator with this message:
We are disappointed to see this tool, which was intended to provide customers transparency into all aspects of ownership costs for on demand solutions, be used in competitive posturing. We've decided to take down this TCO comparison to on-premise software until we can ensure that unfair and inaccurate conclusions cannot be drawn.
SAP strategies. As they day progressed, SAP shared key points of its cloud strategy. Here are a few observations and interpretations:
SAP's comprehensive on-demand architecture is summarized in the following image. This diagram represents the broad scope of the company's cloud-based efforts:
Strategic analysis. SAP's confidence, strategy, and technology are coming together into a coherent vision for cloud computing. After a long period of uncertainty, hubris, and missed opportunities SAP is finally building cloud products and gaining cloud customers. Based on numbers provided by SAP, Business byDesign traction will likely increase during 2011.
Some critics will proclaim that I give SAP too much credit; those folks are welcome to their opinion but I respectfully believe they are wrong. Positive changes, products, and innovations inside this huge company now seem to be bubbling to the surface. That said, it's equally true that some of SAP's competitors pump out innovation at a blistering pace and SAP must prove execution over time.
I specifically want to praise Senior Vice Presidents, Jeff Stiles and Rainer Zinow, for their work in helping create, execute, and explain SAP's cloud vision. These men deserve kudos for exercising transparency and driving positive change inside SAP. I urge SAP's Executive Board to support and protect folks like this without reservation.
SAP faces a crossroads in which misguided, reactionary, internal forces will attempt to inhibit, and perhaps even subvert, the company's drive toward cloud innovation. SAP's success depends on its ability to innovate even while retaining stability for customers. This means even-handedly pressing forward despite the internal naysayers.
WORKDAY: FEISTY PLANS FOR THE LARGE-SCALE ENTERPRISE
During the SAP Summit, a side conversation about human capital management (HCM) cloud vendor, Workday, erupted on Twitter between myself and analysts Frank Scavo, Naomi Bloom, and Zoli Erdos.
Frank suggested that Workday plans to remain out of both manufacturing and distribution, core elements of SAP's traditional ERP market. In an unexpected Twitter response, Workday's co-CEO, Aneel Bhusri, retorted:
No intentions for MFG, but maybe distribution:-)
This surprising response, signaling possible clarification of Workday's ERP plans, ups the competitive ante in enterprise cloud computing. In an IDC thought leadership report about Workday (not yet published), I explain the company's plan to expand beyond its HCM base:
Over time, Workday plans to expand its on-demand suite to include the administrative (non-manufacturing) aspects of enterprise resource planning (ERP), putting the company into competition with large vendors such as SAP and Oracle.
Workday is one of the few pure cloud startups possessing the resources needed to compete directly with SAP in ERP, so the competitive threat to SAP is real.
In Part Three of this series, which is coming tomorrow, I discuss the five principles of sexy enterprise software! Part Three also explains the role of competition in making enterprise software sexy. Come back and read more -- you'll love it!
Photo of Steve Wonder and will.i.am, performing at Dreamforce, by Michael Krigsman. This performance demonstrated the feelgood mojo that enterprise software needs to delight its customers. The photo reminds us that enterprise software truly can be sexy and fun.
Disclosure: Salesforce.com and SAP split the cost of my travel to San Franscisco. SAP is a current client.