SAP and Oracle: the knives are out

Oracle Open World is an event I am passing on this year. Too much long distance travel the last months combined with a need to be at home while builders rip it apart means I don't need to feel bad about missing OOW.

But it doesn't prevent me from observing the keynotes via the Internet delivered livestream or, for that matter miss the thinly veiled attacks coming at Oracle via the Tweetstream and the advertorial SAP contributes at Forbes. It's worrying.

Ever since Henning Kagermann was at the helm, SAP rarely if ever publicly dissed the competition and especially not Oracle. It was something that distinguished the company in the public domain and was to SAP's credit. Why? While the antics of Silicon Valley CEOs may be entertaining fodder for media types and insiders, buyers don't give a crap. If anything they find such things confusing. From my perspective, I'd much rather see a company talk up its own accomplishments with customer case references than have to put up with the childish bickering and sniping that characterizes so many quarterly results calls and,increasingly, customer conferences.

That doesn't prevent SAP execs seething internally but at least in the public domain, having a public 'go' was off limits. OOW seems to be heralding a new reality.

Take this piece from hack turned flack Bob Evans entitled Oracle President Safra Catz Suffers SAP Hallucinations where he says (among other things):

Here’s the direct quote from Catz via my transcription of a video taken during the session by a blogger known as “The VAR Guy” and who first publishedCatz’s fact-challenged contentions:

“You know, um, there’s the folks at SAP, which, I have to tell you, we started Fusion Applications—which I think you got shown today—we started, like, six years ago, or something like that? They’re still selling products they built—what—20 years ago? 17 years ago? They haven’t even—as far as we can tell—they have not even started building modern systems! So, you know, I’m gonna starting getting into real trouble—no—I’m—okay—well, you know—and then, of course, there are our good friends in Redmond.”(End of excerpt—Catz then goes on to shoot some arrows at Microsoft.)

Now, I would bet that the vast majority of the world’s leading companies that run their businesses on SAP software would be shocked to find out from a top Oracle exec that SAP not only has no modern software, but that SAP hasn’t even begun building any modern software.

OK - so Catz is engaging in the kind of truth bending one expects of senior Oracle execs but then Evans goes off on a mad tangent declaring:

If Safra Catz believes what she said, then one of the top three executives at one of the top 10 technology companies in the world needs to get her hands on some better competitive analysis. I’d also recommend that she spend a few minutes either (a) talking to her salespeople who compete with and lose regularly to SAP; or, (b) checking with some market analysts who follow SAP; or, (c) surfing this newfangled thing called the Internet to see what discoveries she might unearth about SAP’s massive set of new, modern products and technologies.

Let's pick this apart:

1. Lose regularly? Really? I suggest Evans does a bit of digging of his own and I think he'll find that there is a certain amount of 'swings and roundabouts' on this one - when either company isn't losing to or suffering attrition to the likes of Salesforce.com or Workday, that is.

2. Checking with market analysts - well, some people think I'm one of those though I don't take that title to myself. But I spend a LOT of time in conversation with other accredited analysts and they all say the same thing (roughly): SAP is great at putting out visions of grandeur (as is Oracle) but at the end of the day it is about consumption. If Evans check the job boards at IBM and Accenture for example he'll find there are thousands (yes thousands) of vacancies for SAP implementers for existing, in the market technologies.

3. 'SAP’s massive set of new, modern products and technologies.' This is where, as far as I am concerned, Evans is either drinking too much kool-aid or lost perspective. My colleague Jon Reed sums up the HANA thing very well when he says:

The biggest complaint of existing HANA customers I’ve heard is that HANA isn’t nearly “plug and play” enough, requiring way too much elbow grease for something called an “appliance." A deep HANA apps store would solve a big part of that complaint, so from that angle, even HANA is not immune from SAP’s ecosystem obstacles.

As some of us feared, Vishal Sikka’s Las Vegas keynote turned out to be “all HANA, all the time.” Yes, there were some big nods to mobility, but Sikka emphasized HANA as the innovation that would tie together everything SAP did from here on out. There’s nothing wrong with the idea that HANA could play a major role in SAP’s economic future – clearly in-memory will be a key factor across SAP’s entire product line (including its SME products) going forward. But based on the reports I get from early HANA projects, I believe SAP is pushing HANA too aggressively.

It is. And when Evans with another bloviating re-run of Vishal Sikka, executive board member SAP's TechEd address, triumphantly announcing:

SAP hopes to usher in a new generation of business-network optimization in which companies can do more than just share information: instead, they can collaborate in deeper and richer ways, and in real time, in a combination of processes that can fulfill such dreams as fusing supply chains and demand chains; being able to do extensive cost-and-profitability analysis instantly; planning, scheduling, and doing real-time adjustments to trade promotions; and peering over the horizon into the future with analytics tools that are inseparable from transaction systems.

In this way, these force-multiplying business networks become the ultimate manifestation of a transformational idea expressed by SAP executive board member Vishal Sikka: the liberation of high-value content (ideas, software, information) from its increasingly inflexible containers (antiquated hardware, restrictive software, outdated processes).

...I have to wonder if we were at the same conference. I guess Evans didn't listen to the interview between Bruce Richardson and Tom Wailgum at ASUGNews where Richardson said - and I paraphrase: 'We've seen nothing new on supply chain from SAP in years.' Back to Reed:

Current HANA use cases are too limited to qualify as “game changing” in my book, especially when you consider the custom heavy lifting that is often involved. This is no insult to SAP, which deserves full credit for getting HANA out the door in record time. There is every indication SAP is totally committed to making HANA all it can be, and that should be reassuring to any customers kicking tires on HANA’s capabilities.

Yes, we’ve all seen SAP co-CEO Bill McDermott making the media rounds in his inimitable fashion, (yes, I mean that as a compliment), citing the HANA pipeline as the fastest growing in SAP’s history, with close to a half billion US dollars in the sales pipeline now. But those I trust don’t believe it’s ready to deliver on that kind of volume – yet. “To reach those kinds of numbers, HANA needs apps; it needs to be much more out of the box,” one HANA expert told me. “BW on HANA in the fourth quarter is a major next step, but I think we’re still two years out from HANA as a significant revenue stream for SAP.”

Reed is being kind. Check this as representative of some confusion around the need for apps delivered as Reed suggests.

More to the point, SAP said at TechEd there are 20 HANA apps yet the whiteboard I saw only counted 17 and of those only three are working - after a fashion. SAP executives know this. Then there are HANA hardware problems. Not to put too fine a point on it, when senior 'in the trenches' representatives from some of SAP's best partners are kicking off because of hardware issues for their customers, then you know HANA, as currently iterated, is not in great shape. If Evans doesn't know about these things then I suggest he pounds on a few doors to discover the reality. To be blunt, where the heck all this 'stuff' Evans talks about is coming from is a mystery to me. It simply doesn't blend with the reality I (and Reed and others) see on the ground.

To its credit, at TechEd, SAP jumped sharply to start resolving the SI problem but it should never have gotten to that point in the first place.

Does this make what Catz said a 'hallucination?' That depends in part on how you want to look at SAP's so-called innovations. At the time when SAP co-founder Hasso Plattner was exciting the TechEd crowd talking about in-memory database, I asked if the Business Suite would ever move to (what is now called) HANA. He didn't think so because the Business Suite architecture was not designed for that style of working. Now we're told differently.

So far, the best we can hope for is 'feeds' and speeds' in analytics plus a clutch of apps that may have some wider appeal. And that's in the next year. Given the scale of what it means to redevelop a suite of the size and complexity SAP's Business Suite represents then we're looking at at least five years before anything viable comes to market. FIVE YEARS. That's in line with what long in the tooth SAP watchers expect. It's the distortions between what's real at SAP and what's a vision that make Catz sound plausible. That's what Evans fails to comprehend. At one time SAP could get away with it because it was genuinely bringing something new to the party. That ended in 1999. As I said to Sikka in one of our conversations: "In the late 90's everyone wanted to be SAP. Today, everyone wants to be Salesforce.com."

In the meantime, Workday has quietly gotten on with the job, winning enough business to manage more than two million people with its HR/HCM solution, rolling out good enough financials plus having in-memory, real time analytics that simply work. Staggeringly well. It must be pretty good stuff because whenever I try call up Workday execs they always seem to be closing one major deal or another. That's the dividend you get when meeting current needs and not just throwing out grand visions.

You can argue then that what Catz is saying is broadly correct because the foundation upon which the Business Suite rests is coming on towards 20 years old. Yes, HANA may be the foundation for the future but it is not one that exists today. What about ByDesign? After a rough start in 2007 and a reboot in 2010, it seems to be waning from the conversation except as a solution that is trying once again to go up market. Good luck with that one folks. In the meantime, Reed and I are putting the whole SAP Community Network to the test.

But none of that contents SAP supporters. And this is where things start to get a tad rough. In the Tweetstream I noticed:

@MarkYolton: Love this blog with attitude about the "hallucinating" Safra Catz of Oracle onforb.es/qm9PV6 < laughable

@Bbillwohl61: #sap #oracle I've watched Catz for years. There is a reason she never smiles...cause she knows Oracle is full of it forbes.com/sites/sap/2011…

Those refer to Evans first piece. Ugh. Well...sort of.

But this is what I believe is the real problem - and it cuts both ways for SAP AND Oracle. For as long as they are sniping at one another they're missing the real threats which are coming from the pure play cloud vendors plus those who understand the quantum value of delivering real-time data in context. Not just more analytics albeit at 'the speed of thought.' That's not enough.

The counter argument to all of this is that SAP (and Oracle) set out big visions that its customers will buy into...eventually and is, therefore to be applauded. That's entitlement thinking. I don't believe that is as true as it once was. Having watched the pace at which Salesforce.com in particular has built a thriving ecosystem of developers and is clearly feeling its way up the food chain, having observed the meticulous manner in which Workday is delivering value (think TCO at 50% cost of SAP/Oracle) and good will for a relatively immature solution set and having also seen how a new breed of fast paced SIs are swooping on opportunity, I wonder, like Reed, whether SAP is even in the same ball park.

More pointedly, in conversations with one of SAP's biggest customers, I learned that it is streets ahead of where SAP is on mobility and situational applications. Its not hanging around waiting or platforms or appstores to emerge from the new SAP. The pace of change is such that SAP customers will not wait for them to solve what are SAP's real issue - an incumbency that drags on its ability to move quickly in the big areas that matter. When SAP solves those problems, then I'll start to believe what Evans and others are saying.

The troubling thing is that SAP knows all of this and more. It continues to wrestle with the past while looking to the future. Like Reed, I can only hope it overcomes the problems which are largely of its own making in time to remain relevant. Those hefty maintenance fees won't last forever and HANA's initial allure is fading rapidly.

In the meantime, two Tweets kind of sum it up for me from this morning:

@jamesy_boy: @dahowlett @steverumsby SAP Browser support is an utter nightmare. They would have much more love if they stopped using JavaScript !

@santiagojreig: @jpenninkhof: @dahowlett / @dgraversen vid about dev licenses. IMHO things got worse in 3 years instead:http://t.co/vKy5Yl45 <- agree!