Apologies for the late arrival. Travel arrangements made it tough to get this done in a more timely fashion plus I wanted time to ingest what I saw and sense test against other voices.
The SAP Influencer Summit is an odd event. Several hundred analysts, bad boy bloggers and a handful of customers are assembled to get a refresh SAP style on recent achievements and then a peek into the future. It's a bit like SAPPHIRE and TechED rolled together but without the theatrics demonstrator Ian Kimball brings, even if some of the same props are used. Two hours in and I'm wondering why I'm there. The turgid re-run of SAP recent history is un-necessary. It assumes that nobody did their homework before turning up. It was only when CTO Vishal Sikka stood up and started showing some cool stuff, including a Surface Computer based demo that I started to get the feeling there was method in the madness of my schlepping 4,000 miles each way in less than 72 hours. So what were my big takeaways?
What does SAP want to be?
I couldn't help thinking SAP needs to decide what it wants to be and is painting a picture that could be regarded as confusing. It's trying to be both a good ol' boring ERP player while being seen as a cool innovator into what can broadly be described as 'cloud.' Both positions are valid but not necessarily complementary in a company that is consensus driven. As things stand it can't be both at the same time and hold credibility in the market although Paul Greenberg sees SAP messaging as more about a lack of clarity than outright confusion. SAP attempts to overcome this by talking about a hybrid model with the familiar on/off-premise argument. Making full sense of this is not easy.
Too often I heard everything being pushed as innovation when in reality it's not - or at least not as I understand the term. I wonder if people know just how much cool stuff SAP Labs are working upon. Too much it seems as almost nothing gets to product. That's the nature of innovation inside a large company like SAP and especially true of a company that tries to innovate within the context of a legacy hierarchy and organization. Contrast that with Financialforce.com which is really CODA but with investment from Salesforce.com. A separate and clear identity are helping it create the new without killing the old and doing so without confusing the marketplace.
SAP could solve this. It could for example pick out innovators among its developer partners and marry them to work it is doing but doesn't feel meets SAP revenue/margin targets. That way, projects don't die but stand a good chance of being taken forward. Apart from the obvious benefits to the ecosystem and customers, SAP could accelerate time to market for thousands of add-on products while preserving the best of innovation.
More troubling still is what I see as a mismatch between communications to influencers and communication to customers. This is something Jason Busch noted in his conversation with me (see video above) and which I have expressed elsewhere to SAP with my Mentor hat on. It is something that SAP could easily resolve by getting Mentors, influencers and customers more closely engaged. How ready they are for that level of engagement remains to be seen. It is a risky strategy because both Mentors and influencers are not short on opinion which is not always complimentary to SAP. The flip side is that customers get a more complete picture that augments their existing knowledge from people who can pick up the nuances of product and strategy very quickly. My feeling is that having spent several years engaging directly with blogger/analysts and Mentors, SAP is well aware of what 'we' bring to the table and can take that risk confident it knows the likely outcomes. It's either that or customers will find a way of engaging that excludes SAP from those conversations.
The SAP egosystem
It was executive board member Jim Hagemann Snabe's turn to hear the blogger gripes. He did so with grace and what I sensed as a genuine desire to listen and understand. SAP needs to get a grip of its partners who run amok with the on-premise product at premium prices. It's still the case that the very best SAP engineers - who are invariably SAP employees - spend far too much time firefighting someone else's mess, usually one of the Big Five (Accenture, Deloitte, KPMG, EY, PWC.) Who gets it in the neck? SAP. The company has to decide what it's going to do. It has created a great channel but at the same time it is a monster that often looks like an over indulged over fed child. The content it produces is testimony to a legacy that's no longer relevant and that doesn't help SAP appear the modern company it wishes to portray.
Coincidentally, I ran into Eric Macdonald, global COO, SAP education. I have a bee in my bonnet about SAP certification. In the minds of many I meet, it's worthless as currently constituted although it is changing for the better. SAP certification that means something in that it tests a practical understanding of implementing SAP could be a major part of the solution. The partners don't want to hear that as it means they might need to be professional as I understand the term and value driven rather than hourly rate entitlement holders. I'd like to remind partners that SAP CEO Leo Apotheker doesn't much care what they think. He wants happy customers.
In another post, Vinnie speculates that SAP will turn to its old partners to learn the new but speculates that:
But its's time for SAP to get selfish and ask each of its partners: What can you do to take me to the new world, not keep me grounded in the old? Two trillion reasons why it has earned the right to expect more from its partners. Frankly, it would be better off getting a new generation of partners.
I don't recall Vinnie and I having that conversation but it is certainly one I've had with SAP execs. What's interesting is that those same execs nod quietly when the idea of building something new is proffered. They know they're shackled and seem ready to cut loose. Perhaps 2010 will be the year when the unruly child aka the egosystem gets a sharp reminder of whose software we're talking about.
Revving the engine for Business ByDesign
Business ByDesign is back on the agenda in a big way. Technical updates on what will be the go to market 2.5 release are high on SAP's agenda. According to my spies, and subject to all the usual SNAFUs, BYD will arrive with a splash at SAPPHIRE 2010. That's mid-year. The good news is that SAP now has its 100 referenceable customers which was always seen as a go to market requirement. This was always bound to get attention given that SAP muffed the marketing and engineering issues for a cost effective multi-tenant solution. Even now there are doubts.
SAP didn't convince me that they've got the go to market right. Given that BYD and All-in-One Solution are complementary in a sales cycle, I was shocked to hear that SAP is not giving the A-i-O channel much thought when it comes to BYD distribution or enhancement. Why it is not self evident, espeically when SAP is developing a BYD SDK is beyond me. On the other hand, I was pleased to see that service performance keeps on getting better. At least in the controlled demo environment. Others are less convinced as noted in this panel discussion video.
I am one of only...err...two I know...who thinks BYD is going to be a market killer. I make no secret of my liking the service despite being critical in other areas. I was pleased to hear Rainer Zinow, SAP's outward facing BYD tech guy confirm the 100 customer reference case book has been delivered on time. Yes, you can argue about the numbers and gripe about them being the same as they were a year or so ago. But these are referenceable customers and a different BYD to that which was launched in 2007. There's a big difference and a point that almost everyone else has missed. That means those customers are either live or very close and are prepared to speak with other potential customers. I'm less happy about the company's ambitions for numbers going forward. Low to mid hundreds by end 2010 seems to confirm ongoing hesitancy, a current trait I see a lot at SAP.
It was interesting that on a show of hands during Rainer's presentation many thought the UI to be 'boring.' Compared to those shown for Business One and All-in-One you'd be hard pressed to disagree but then does everything have to look cool? In the meantime, Rainer is sticking to his guns. Good for him. He's trodden a tough path the last couple of years and has not given up. If anything he's more enthusiastic than when we first met.
See also Brian Sommer's deeper BYD dive and then Brian's take on on-prem ERP as obsolete
Tier 2 'r' Us
In a natural follow on, SAP showcased recent development in Business One and All-in-One Solution including customer and reseller panels. Customers were frank, taking tough questions from the floor and handling them with aplomb. One reseller showed a cool way to include LinkedIn and Twitter feed data in a portal dashboard. What made it cool is that you could 'see' if a person is online so know whether it is worth communicating in a time constrained situation. That goes some way towards solving what for me is a situational issue with services of the Twitter variety. The UI's look slick and, as SAP executive board member John Schwarz might say: "It doesn't look like your grandmother's SAP."
The support SAP is giving its Tier 2 customers/partners is troubling. It's an 80/20 thing in that 80% of customers seem to be getting 20% of the attention in the SAP communities. SAP disagrees but I am going on what I hear and see. I'd like to see that change along with a different emphasis put on the Business Process Expert community. SAP should be leveraging the 'business' in BPX and not the technology. It understands this but has yet to execute something that resonates well with the business buyer. Getting that right would help place SAP as a more natural Tier 2 vendor that is not so obsessed with technology but about problem solving. I sense SAP get its but once again it's about execution. At least one customer said he'd like to see SAP use its influence to persuade the user groups place more emphasis on the Tier 2 SME segment. It's a point well made.
Where I disagree with some colleagues is on SAP's definition of SME - another potential confuser. Paul Greenberg felt that showing a 5,000 person group split over 30 companies doesn't constitute SME. I'm glad SAP showcased that example. For too long, SAP ignored the satellite companies around say an Adidas and left that to other vendors. As a result, SAP has lost billions in potential revenue to Microsoft, Sun systems and others. If SAP can build marketing around such examples then it has the potential to provide customers with a way of integrating large groups in a way that adds value.
See also: Oliver Marks on some of the cool stuff in Business One
SaaS, on-demand and clouds
John Wookey gave a polished presentation on the work he's been doing in the off-premise world. It was a refreshingly honest assessment and positioning of SAP as lead partner in customer engagements where not everything is wall to wall SAP. I hope he can deliver. The absence of conflating 'cloud' was particularly noticeable and welcome. SAP's position on 'cloud' topics isn't well articulated and at times seems uncoordinated but then by avoiding the problem of self inflicted definitions, SAP was able to keep its message simple and understandable.
In the above video, Jason Busch and Dan McWeeney present their impressions of what SAP is talking about in the saas/on-demand space. It's interesting to note that while Jason believes part of what SAP is saying is different to that of other vendors, Dan is much more bullish, noting that SAP seems to be saying that customers can innovate without necessarily touching the core. If correct then SAP can re-message more effectively around the 'no upgrade' story so many of us struggle to believe. It should also play well in any value statements it chooses to make. However, we will need to see the proof points.
See also: Jason Busch's take on differentiation in the procurement space
More around maintenance
While this topic remains top of mind for me I didn't attend the topic specific sessions. Vinnie Mirchandani has opened up the next battle line on this arguing:
I am on record as saying the $600 military toilet looks cheap compared to what SAP charges at that unit of measure level. As I have written several times before even 17% maintenance is too high for many mature customers. Let’s start with that cost=plus hypothesis rather than 22% is justified based on “value” which SAP may or may not be influencing.
In Vinnie and my last conversation, it became clear that while we have tended to concentrate on pressuring around the 22% number, there is much more that should be brought to buyers' attention. I'm not convinced that buyers truly understand how the economics are impacting them both now and into the future. It's a topic to which we'll doubtless return.
The message I'd like Jim Snabe to take home is that SAP needs to think not just about the egosystem but about how SAP addresses the maintenance cost as its customers go through the product lifecycle. It cannot be right that from the get go, customers are expected to pay a homogenous price that has no tie to value but to whatever was negotiated in the original deal. If it can get that right then its customers will be a lot happier than they are today.
SAP will want to see the back of 2009. Way too many negatives, jittery investors and a spate of rumors that did nothing to enhance SAP's reputation in the marketplace even if some of them were outlandish or conflating one issue into something new that turned out to be wrong anyway. The influencer summit is SAP's final big event of the year and for many seemed to end on a quiet note. While there are still a couple of hectic weeks to go before the company closes out the year I'm sure they'll take away all the feedback they're getting and move forward. The days of smiling sweetly while our words went in one ear and out the other are over. There are too many people saying broadly the same thing. The next big thing will be the earnings call in January. Don't expect that to be a time of rejoicing.
See also Paul Greenberg's assessment and Ray Wang's deeper dive
Endnote: in the video at the top of this post, Irregulars Jason Busch and Dan McWeeney express two views on SAP communication. Jason talks about being slightly uncomfortable about knowing more than customers while Dan believes SAP has done a great job avoiding confusion around cloud topics.
Disclosure: SAP covered most of my travel expenses.