December 1st, 2008
See You in the Cloud
This post marks the end of my relationship with ZDNet — though not the end of my blogging career by a long shot. I’ll still be blogging — can’t seem to give it up now that it’s in my blood — but over on my own Wordpress site, where the requirements for making this blog a money-maker by CBS’ standards won’t be a problem. I want to thank Dan Farber for dragging me, reluctantly, into the blogosphere, and of course everyone who has taken the time to read and comment on this blog (excepting the trolls who think anonymous blogging is an justification for rude, obnoxious behavior of the worst kind.) It’s been fun, and I hope to see you over at the new blog soon.
thanks,
Josh
November 13th, 2008
Microsoft, Creative Financing, and the Bank of EAC
Microsoft’s announcement that it would offer 0% financing to new customers of its Dynamics product line is a welcome offering at a time when the credit crisis requires out-of-the-box solutions to the fact that a bunch of ungrateful banks are unwilling to loan the taxpayer those megabucks we lent them as part of the recent “bailout” package.
I genuinely like Microsoft’s approach, for the simple fact that making it as easy as possible for companies to buy enterprise software is absolutely essential at a time when the spirit may be willing but the flesh all too weak. In fact, the benefits for customers can be huge: Microsoft execs told me last week in a pre-briefing that Microsoft will effectively “buy down” whatever the standard loan terms are to zero – meaning a customer looking at a 10 percent loan would be effectively getting a 10 percent discount on the cost of the software. Not a bad deal in times like these.
As I sorted through the details of the announcement, and its rationale and potential impact, I realized that Microsoft isn’t the only one offered creative financing to its customers. In fact, having recently spent some time looking at my company’s books, I realize that I actually beat Microsoft to the punch: a look at my receivables shows that I’ve been extending a 0% line of credit to a number of my customers, for the last six months in some cases. Never mind the fact that some of them, unlike Microsoft’s target customers, aren’t exactly cash-poor or unable to raise money: Altruism is its own reward.
This unexpected realization makes me feel like I’m a front-line warrior in Depression 2.0 – doing my part for God, country, and enterprise software by helping my deadbeats, er, clients, as they struggle through these uncertain times. It’s a lovely feeling not too dissimilar to the feeling I had when I heard that the ex-head of Lehman was roughed up in the locker room at Lehman’s own club by a now-unemployed, but still buffed, banker. Satisfying, as only enormous irony can be.
Of course, I don’t have the kind of bank account that Microsoft can fall back on, in fact things are getting perilously low at the Bank of EAC. As a result we’re cutting back on unnecessary items all around, such as that new yacht I promised my gardener, my second Ferrari, and three square meals a day for the wife and kids. (Don’t worry about the food part, here in Berkeley we get all our nutrition grazing in the fields of liberal self-righteousness, especially since the election. So delicious and so filling.)
But the sacrifice is worth it, particularly for the smaller companies who are genuinely struggling. Seriously. My fees may not represent that big a chunk of the credit shortfall by themselves, but I’m sure if more individuals like me offered 0% financing to our clients, we’d be out of this financial mess in no time. Or my name isn’t Alan Greenspan.
And lucky for me it ain’t. I don’t want to get roughed up at the gym either….
November 11th, 2008
SAP Makes A Dramatic Move: Ex-Oracle Exec John Wookey To Head up SAP’s New On-demand Market Effort
It’s hard to know which was more significant, the announcement that SAP is going to tackle on demand at the top of its market, or the name of the person – former Oracle apps exec John Wookey – who was picked to lead the effort. Off the top of my head, I’d say it’s a draw: an almost amazing segue into a new, and very challenging market, and an amazing pick to head up the effort.
John won’t lack for challenges in his new job, the title of which is executive vice president for large enterprise on-demand. Having lead Oracle’s efforts to rationalize its ever-growing, and increasingly heterogeneous acquisitions until he abruptly left last year, John has some experience in accomplishing what looks almost impossible to do.
Why this job will be so hard only starts at the technical challenge of figuring out how to push the quintessence of on-premise software into the cloud. That may turn out to be the easy part of the job. And that’s saying a lot. SAP’s software portfolio is so huge, and so complex, that nothing in the cloud today remotely comes close to matching its capabilities or capacity requirements. In fact, that complexity probably signals one of the design goals of John’s team: don’t try to put it all in the cloud any time soon. Because it won’t be possible, period.
(That sentiment was echoed to me by Microsoft’s Dynamics team at their analysts’ meeting last week. With Azure, Microsoft’s new platform in the cloud set to launch next year, one of the things the Dynamics group is not doing is rush headlong towards hosting their full- blown ERP systems on Azure. Microsoft CRM, yes. But not AX, NAV, or GP: not yet, and, as they are currently constituted, not ever, either.)
The bigger challenge for John and SAP will be that elusive on-demand business model. Look at Salesforce.com’s margins (which are starting to look as negative as its stock price), and Netsuite’s struggles, and you can see what SAP is trying to avoid.
Mixed up in John’s mandate is the on-going struggle about how to rationalize SAP’s Business ByDesign mid-market on-demand product, which its users tell me is highly functional, and which SAP tells me still can’t run in a profitable fashion. And that’s before anyone figures out who will sell this and how SAP will keep BBD from cannibalizing everything else SAP sells. BBD isn’t a large enterprise product, so I doubt it will come under John’s bailiwick, but it’s impact will loom large over his efforts going forward.
Here’s where I think he’ll start first, and in many ways this is similar to what Microsoft told me about Azure and Dynamics: SAP’s large enterprise, on-demand efforts will likely start with running specific processes and services in the cloud that are both highly discrete and have a distinct value-add above and beyond the cost benefits of merely flipping on-premise functionality into the cloud a la Salesforce.com. That latter model eventually ends up in a price war, and flies in the face of SAP’s higher value market position.
Here’s what else I imagine John will get to do. Help guide SAP towards strategic on-demand acquisitions, which he will then have the pleasure (genuinely, I believe) of synching up with SAP’s on-premise and on-demand offerings (remember SAP CRM On-demand? It’s still out there, poised for a come-back this spring). Considering his integral role in the heady days of Oracle’s initial acquisition spree, I think John will be rather good at this.
Final point: John’s resurfacing at SAP says a lot about SAP’s perception of its own strengths — and weaknesses – at a time of incredible uncertainty in the market. SAP clearly sees that there’s no time like the present to invest in the future, and bringing John Wookey on board is a remarkable vote for future success that SAP is willing to make at what otherwise might look like a pretty bleak hour for the global economy. The fact that the company went outside to find a high-profile executive to lead this effort is a welcome recognition that an infusion of some new blood is exactly what is needed for this critical effort. Hopefully John will be able to navigate the somewhat complex SAP culture and put SAP in the leaders’ circle in a market it can no longer afford to sit back and watch unfold without it. Regardless, it’s going to be a helluva ride.
November 6th, 2008
Maybe CRM for Facebook Does Make Sense :)
My friend and colleague Jim Shepherd of AMR set me straight this morning about what Salesforce.com is doing with Facebook, and I’m embarrassed to admit I didn’t get it right the first time. According to Jim, when it comes to SFDC and Facebook, CRM actually stands for Child Relationship Management. This realization comes as a relief to me personally and professionally. On the professional level, I was honestly feeling confused about why Salesforce would bother to do a deal with the teen/tween market leader. And on the personal level, I can’t wait for my beta system and get started managing my own ill-bred brood according to established industry best practices.
This new definition of CRM is a desperately needed addition to the enterprise software market, and I for one applaud SFDC’s leadership in this arena. In case you haven’t noticed, the kids on Facebook do tend to run amok, not only in terms of what they post on Facebook, but what they do with all the social interactions they spawn (pun intended) through their unmanaged use of social media. With teen pregnancy up, drug use through the roof, and disrespect to their elders rampant, it’s time parents become empowered to manage their child relationships in a proactive, comprehensive manner.
While I know I’m violating an NDA (no dads allowed) agreement when I reveal this, here are the main features of the new CRM capabilities in Facebook.
1) Friend Manager: The essential starting point for Child Relationship Manager. As a parent, you get to control all friendships in Facebook, block the ones you don’t like, and force your kids to befriend the ones you think will be better role models, even if your children actually loathe your nerdly choices. The ROI on this feature alone is worth the product’s price.
2) Kid Watch with GPS: Use of Facebook CRM automatically initiates the Kid Watch feature, which provides a direct Google Maps mashup feed to a PDA or laptop. You can define off limit geographies in Kid Watch — such as a smoke shop, liquor store, or tattoo parlor — and use the Obedience Analytics (below) to maintain a running score on your child’s compliance with your commands.
3) Stud Watch: Parents are alerted to friendships with known sexual deviants, especially young unmarried fathers who father children with the daughters of self-righteous social conservatives. Depending on the relative Stud score, this feature can automatically trigger the Virtual Chastity Belt feature (below.)
4) Bikini-line Watch: Using some rather impressive visual analysis tools, Bikini Watch can search photo albums and alert parents to suggestive pictures that show too much flesh, too little fabric, or promote Abercrombie and Fitch products. This feature includes controls that allow parents to adjust the allowable amounts to reflect geography, season, religious values, or sexual orientation.
5) Comprehensive Obedience Analytics: This is one of the best things about Child Relationship Manager. Obediance Analytics allow parents to maintain a comprehensive obedience tally on such important key performance indicators like overall room cleanliness, percent homework completed, number of emergency teacher conferences, net sibling punches, and other factors that make up a well-managed child relationship. This feature ties into KPIs that are segmented by race, religion, gender-preference, voting record, among others, and then allows parents to manage according to best practices in their demographic.
6) Virtual Chastity Belt. Despite its name, this feature is actually not meant to be gender specific, though early beta tests reveal it to be a favorite feature among the fathers of teenage girls. Basically, the VCB is an upgrade of the Virtual Birth Control feature: by using patented remote electro-shock technology, VCB can anticipate when a child is potentially in a compromising position, and, by inducing a low-grade electric shock, force the child to call a parent and get them to either unlock the VCB, or come and take them home.
There are many more features, but those are the highlights. So, hats off to Salesforce for this ground-breaking development. This is truly the first-ever CRM meets social meets the home enterprise, and I’m excited about how much better everyone will be able to manage this uncontrolled and dangerous social world for children and their parents that Facebook has created. Who says enterprise software can’t serve society in a positive manner?
November 4th, 2008
Social to CRM to Enterprise: Not So Fast....
Darn, I missed it: Salesforce.com is opening itself up to Facebook. Or is it the other way around? I had received a belated invite to attend SFDC’s Dreamforce from Marc Benioff, but too much real work prevented me from attending. So I had to read the press releases and my fellow bloggers’ reports on the show, and, of course, they covered and uncovered and upholstered the news of the FB/SFDC alliance. Here’s my take.
First, I have to set the record straight. We are not “seeing social meet CRM and the enterprise for the first time,” as Benioff suggested in his press release on the deal. Oracle definitely showed CRM and social and the enterprise in a big way at its Open World conference last September, and should get all of the credit for “first time” bragging rights.
Second, I’m really having to stretch to understand why Benioff picked Facebook. SAP’s investment in LinkedIn seems to make so much more sense. After all, my inbox is flooded with LinkedIn requests (mostly from people I’m already in touch with, which is one of the reasons I so far have deigned to join LinkedIn), proof positive that the business community, at least the high tech community, thinks LinkedIn is the social site of choice.
Facebook, which COO Sheryl Sandberg claims has 300,000 business pages already, is still largely the playground of kids like my niece, who really has even less business playing around with CRM apps than she does posting bikini-clad pictures on her Facebook page. I think there is some potential for Facebook to grow up as its core audience grows, but right now I look at it mostly as a place where teenagers and tweens play games that make parents and uncles a little nervous or a little “whatever”, and we old farts wander around wondering what it is we’re really doing in the kid’s section of the Internet playground.
A final comment, apparently SFDC’s new marketing mantra is love, according to Venture Beat. Apparently it’s all you need. Apparently I’m having trouble with this concept, so it’s time to go write on someone’s wall or snoop on my niece and her friends again. Meanwhile, social meets CRM meets the enterprise already had its first mover, and, from what I can tell, it’s still awaiting its second.
October 30th, 2008
More optimistic views on the future of enterprise software
With SAP’s decision to forgo its 2009 guidance a paradoxical beacon of truth in a falling market, I have decided to return from vacation a day early and get busy trying to gauge the market for enterprise software in the coming year. It’s not an easy task, needless to day, or SAP wouldn’t have risked punishing its stock with a frank admission that it has no idea what to expect next year. But I can’t resist trying, and here’s what I’m coming up with.
At first, I was tempted to disagree with George Colony’s optimistic assessment that the tech market won’t suffer through the current downturn as much as it did in the dotcom implosion. He’s right that, last time around, tech was front and center in the downturn, and took it in the shorts when it became clear that, as the dotcom fluff headed for the dustbin of history, the tech companies that had been minting money on the upside began bleeding red ink. Yet another example of garbage in, garbage out, in this case those ridiculous, disintermediating business models that seemed so simply ingenious even a fool could become a billionaire. And more than few did, until it all became the fool’s errand we now know the dotcom boom to have been.
I even began to feel that the dean of Forrester Research had made an error in being overly optimistic by discounting the fact that, unlike last time around, enterprise software is so intertwined with the global economy that a downturn of this magnitude has to hit everyone, everywhere. This time around, so I believed, there’s no place to run for cover when it’s the entire global economy that’s disintegrating: Companies like IBM, SAP, Microsoft, and Oracle, and pretty much anyone else that’s catering to the global economy now has to feel, and ride out, that global economy’s pain. In that wonderfully flat world that Tom Friedman made as if on order for an all too eager technology sector, if you live by the sword, you’re destined to die by the sword (and, apparently, in a hot, crowded way, so his new book claims). We’re all flat worlders, right? Ergo, we’re all doomed.
October 10th, 2008
Remember IBM at $10.50 per Share? Oracle as a penny stock? Tales of Hope from the Great High Tech Depression of ‘89
Ah, distinctly I remember it was in the bleak …..October.
Paraphrasing Edgar Allen Poe’s The Raven seems somehow appropriate to this moment, when it seems that everything we’ve all worked and dreamed about is going up in smoke. And yet, having seen a version of this movie more than once, I’d like to offer a little comfort to those who look at what’s happening around the globe and think, as I have several times this week, that dreams of retiring, much less paying the mortgage next year, are looking rather bleak.
Back two recessions ago, the stuffing got knocked out of the market and, with it, a lot of gloom and doom was bruited about not just regarding the macro-economic disaster of lower output and heightening unemployment, but the disasterously permanent effect this was going to have on high-tech.
No company was more a bellwether of high-tech than IBM, and no stock took it in the shorts – pun intended – the way IBM did. Before the dust had settled, IBM’s stock was down to $10.50 a share. Yes, for approximately the cost of two lattes at today’s prices, you could have owned a share of the great IBM.
Actually, one stock did even worse, relatively speaking. Oracle, at the time a nascent player in the nascent relational database market, hit absolute rock bottom at 13 cents a share – as in, that and a dollar won’t get you a cup of joe, not to mention the aforementioned latte. (Note: I’ve since been told that the 13 cents price is the split-adjusted price, not the actual price, which was, according to my fellow Enterprise Irregular, Anshu Sharma, at something over $5 at the time.)
It was that bad out there.
It always seems to happen in October. Whether it was October 1990, when Oracle hit its nadir, or October 1993, when IBM hit the skids, the tendency of the market to tank as the leaves start changing is yet another indicator of the psychological nature of what we often mistaken for a rational, objective process. The fact that this collective psycho-freakout always punishes tech stocks is indicative of the role these stock play in the overall global economy. So the sellers in today’s market think.
But things are very very different than back in the ‘89-’92, as well as in the 2001 recession we think we were just getting over. For one, high-tech has more of a hypercritical role in running companies than it did in the last two recessions – the core footprint of IT extends across more people and processes than ever before. And there’s more proof, real proof, that IT investments yield genuine value in terms of per employee productivity, competitive advantage, and customer satisfaction.
This means that one of the more shortsighted things one could do right now is place a long term short on tech stocks, and yet as a sector they’re getting beaten up along with everything else. In reality, when the mass hysteria of the moment settles down, what we’ll see is that, no matter how deep and dangerous the current recession is, technology will emerge as not just an essential budget item that must be maintained no matter what, but as an essential component in the cost-effectiveness of the overall enterprise that will continue to be maintained regardless of how grim the immediate future may look.
And once this realization settles in, those with the memories, and the cash, to remember what IBM at $10.50 and Oracle at $5-ish meant both as potential investments back then – had you bought either stock at its nadir, you’d be sitting on a golden nest egg even after today’s market close – as well as what they and the rest of the core of high tech mean to the future of the market once the recovery comes, will start buying tech stocks like crazy.
In the midst of this panic is a fundamental truth: There will be a recovery, and when it happens, high-tech will be in the lead. Within two years of its nadir, IBM’s stock had more than doubled. And Oracle, starting so low, tripled its value in the ensuring 12 months.
Ready, set, buy……..
September 25th, 2008
Oracle's Second-Ever Hardware Product: In the Beginning, There Was The Network Computer
Larry Ellison can be forgiven for sometimes making a mistake, particularly when it comes to marketing new, or not so new, concepts. His statement yesterday that Oracle was unveiling its “first-ever” hardware product is factually challenged by the 1996 launch of the Network Computer, Oracle’s real “first-ever” hardware product. The NC, as it was called, was a diskless, Internet-only computer that looked pretty good on paper, but failed to take the world by storm for two reasons. One: The Internet was a pretty primitive beast in 1996, and running a business using only the Internet was like chiseling an epic poem in stone a la AD 25, as in slow, painful, and not particularly productive. Reason two: an NC cost $800, while a PC at the time could be had for $1200 or so, if my memory serves me. Not a big enough difference to justify a wholesale switch in the enterprise market targeted by the NC.
The resulting failure of the NC, and the subsidiary that Oracle set up to handle the flood of NC business that never arrived, is one of those chapters in Oracle’s history that Ellison would want to forget anyway. Shortly after the NC was introduced, Microsoft, IBM, HP, and Gateway — all scared diskless by the thought of the end to the PC franchise — came up with an alternative standard that took some of the buzz effect of the NC away. But the final straw that broke the camel’s back was the reality of the Internet’s lack of productivity. Very few companies had email — at the time companies like HP eschewed email, and made it hard for employees to have an email address — and even fewer had high-speed connections. And then there was the software, or lack thereof, to actually do something in a completely diskless environment. Game over.
I wish Larry luck in his next endeavor, though I think he’s playing a potentially losing game of catch up this time, as opposed to playing a losing game of being too far out in front of the market. Not only is the Oracle database appliance very me-too, considering all the competitors who are already in the market, but putting a relational database on a dedicated hardware appliance is never going to provide the kind of throughput that a column-based database can provide, and that’s before you run a column-based DBMS in RAM, the way SAP is now doing with its BIA in-memory data warehouse. Seeing Larry on stage with a massive chunk of metal and calling it an innovation made me think of all the times Detroit responded to a sales crisis by unveiling yet another over-sized SUV. Game…over.
I have sinking feeling this isn’t the last time Oracle will unveil its first-ever hardware product. First there was the NC, and now there’s the Exadata. Third time’s a charm, Larry. Good luck.
September 24th, 2008
Oracle, the Innovation Company: Core Innovation, Fusion Applications' Debut, and Why It’s All Up to AIA
If I had to distill a vast and complex product strategy into a single, admittedly simplistic description, Oracle of late would have been known as a company that innovates through acquisition: This has been largely true since Oracle’s acquisition binge started five years ago. And until now innovation through acquisition has been one of the simplest ways to differentiate Oracle from SAP, which, using similarly simplistic language, largely innovates at the core of its flagship product line.
So it’s only fitting that, during the same year that SAP made a major innovation-through-acquisition play by buying Business Objects, Oracle used this week’s Open World shindig to showcase an impressive amount of innovation at the core of its now vast software portfolio. Perhaps the most impressive, due only in part to the huge hype riding behind it, is Fusion Applications. Oracle gave industry analysts a two-hour mind-melting core dump earlier in September on Fusion Apps and is planning on showcasing some of the new functionality during Open World on Day Three. And here’s what I can say without blowing the terms of an NDA agreement I signed two weeks ago: Oracle has made good on its promise to deliver Fusion Apps, and has greatly exceeded my expectations in doing so. A very impressive debut.
But Fusion is far from the only core innovation. E-Business Suite has new talent management, supply chain, and MES integration capabilities, for example. PeopleSoft has global payroll support, and is planning new talent management functions as well. JD Edwards is adding more real estate management capabilities, and cost accounting, among others. And so on. In short, each of the major suites has new releases and new functionality that can definitely be called innovative.
And then there’s net new functionality, like some of the Social CRM apps (which represent in my mind the best example of enterprise-class Web 2.0 functionality I’ve ever seen) that Oracle highlighted on Day One of the conference. These are net new applications that can be placed into an existing portfolio, regardless of whether a company is running EBS, PeopleSoft, some versions of JD Edwards, and even (or especially), SAP. Included in the standalone innovation category are new products like the Demand Signal Repository – a product that helps supply chain managers deal with fluctuation in demand, and Beehive, a new version of Oracle’s Collaboration Suite that hopes to be more acceptable to the customer base than Collaboration Suite ever was.
Oracle’s Business Intelligence apps are also getting some new functionality, with new capabilities regarding spend analytics, project analysis, recruiting, and asset management, among others. And the list goes on and on.
Of course, Oracle is innovating for all the usual reasons, customer requirements being only one of them. The other reason is all about the bottom line: Oracle, like everyone else in the business, needs a lot of net new license revenue – and with it the recurring revenue that comes from a 22 percent maintenance fee – in order to keep the financial picture rosy. Putting these standalone applications into the market place has a potential 2-for-1 benefit to Oracle: Benefit number one comes from buying a license for, say, Demand Signal Repository. Benefit two comes from potentially having to upgrade to Fusion Middleware, Application Integration Architecture (AIA), and the latest release of EBS, PeopleSoft, Siebel, or JDE in order to run the new application, all of which can have a license revenue upside.
Which is a great segue into the importance of AIA: I used to think that Fusion Apps (did I say I was impressed with what I saw? So what, it’s worth saying twice) would be the make-or-break development on which would ride the future of the company. But more and more that make-or-break role is falling to AIA. This product, which orchestrates all the different processes across the vast, and disparate, Oracle Applications stack, is the place where the vision of Oracle becomes reality: There is no way for Oracle to pull off rationalizing its massive acquisition strategy without AIA making all the interprocess communications between, say, Glog, Siebel, Oracle Financials and PeopleSoft HR (and SAP, while we’re at it) seamless, easy, and fast. Absent a highly performant AIA middleware layer, Oracle’s dream of cross application process functionality becomes a user nightmare.
So how is AIA doing? So far, it looks good on paper, but the numbers are a little slim for now. Again, the NDA police are watching closely, so I can’t really say much except this: growth in AIA deployments will be a major measure of how well this innovation at the core strategy really works. Without a huge uptake – and it’s way to early to use that word today – Oracle’s core innovations won’t be worth anywhere near what they should be for Oracle or its customers.
Here’s why: The more AIA becomes deployed in the Oracle customer base, the more Oracle’s twin visions of core innovation and innovation through acquisition can be realized in a competitive manner against SAP’s core innovation strategy. Right now, innovation at the core in SAP-land implies a high-degree of out-of-the-box integration: for the most part SAP’s core innovations, even if they incur a separate license cost, don’t need a massive middleware layer to tie them to the rest of the suite. If you buy core SAP innovation, integration comes with it.
Meanwhile, in Oracle-land, core innovation will likely require AIA to connect to one of the many product lines that might make use of this innovation. Customers of PeopleSoft, JDE, EBS, Siebel, Hyperion, Agile, and iFlex – to name the major product lines – will need some middleware to truly leverage the innovation Oracle is providing, or that innovation’s value will be potentially limited.
So, it’s hats off time to Oracle for coming up with a lot of net new functionality, thus proving that there’s more to the company than its financial and M&A acumen. Now it’s time to breach the next hurdle, and grow AIA’s critical mass. The product supports a wide range of integration options today, but it’s up to Oracle customers to prove that this integration strategy — and by inference the company’s entire acquisition strategy – makes sense. So the next stop on the Oracle train is AIA customer uptake. I’ll be watching carefully, and so should the rest of the market.
September 18th, 2008
Léo Apotheker’s Leadership Opportunity: SAP At the Crossroads
Léo Apotheker is slated to take over the helm of SAP this January, and while many have worked with him, broken bread with him, and generally admired his business acumen and very successful career, there’s one problem with his ascension to the top executive position in the enterprise software market: No one knows what Léo actually plans to do when he takes over.
Sure there are some indications here and there, and some basic notions like “grow market share”, “grow stock price”, “grow revenues and customers” that go without saying, but beyond those generalities, there is little known – or said – about what the Apotheker Era will look like.
I’ve written about what I think he has to do already – but my guesswork doesn’t replace some specific direction about where he plans to take the company, its customers, its employees, and its partners. Not to mention his competitors and shareholders. There’s no doubt he will have his hands full – a resurgent Oracle, more nasty allegations about SAP’s conduct in the TomorrowNow suit, a spasmodic global economy, a complicated merger with BusinessObjects, restless customers – and his carefully weighed words will by necessity be even more carefully weighed as he tries to sort these issues out.
But having just had my nth conversation with an SAP employee on the subject of the Apotheker Era, which followed quickly upon a similar nth conversation with an SAP customer and an SAP partner, I think it’s time for Léo to make a statement about what he plans to do, and make that statement now.
I’ve even prepared a draft for him to try on for size, it goes like this:
Welcome to the new SAP, which promises to be much like the old SAP, only better. My name is Léo Apotheker. For the record, Léo rhymes with mayo, and Apotheker rhymes with… nothing, so just call me Léo. Please try to pronounce (and spell it) it correctly. I promise I’ll be gracious if you get it wrong and appreciative if you get it right.
We have a lot of challenges ahead of us, and together we’re going to surmount them. We also have a lot of opportunities, and together we’re going to take advantage of them and make the company grow significantly. We’ve been executing well, and our stock price is leading the market in terms of maintaining its value in the last quarter. My primary goal is to maintain this momentum in the market, and keep moving the company forward, despite the economic uncertainty: we can and will continue to prove that investing in SAP products can improve productivity and profitability, even in a down market. .
Now let’s talk specifics, and I’ll address comments to each of my stakeholders, as well as my competitors.
To my employees: There will be no shakeups, no layoffs, no restructuring. Your jobs are safe, so stop worrying and speculating and get back to work. We’ll be watching closely to make sure we improve overall productivity and revenues per employee, as well as our margins, so don’t think for a minute you can relax: we expect to keep working as hard or harder than we do now. Most importantly, my goal is to maintain our key initiatives pretty much as-is for now: we will be reviewing and modifying our strategy going forward, but the processes will be very similar to what we’ve used before, which means there will be no rocking the boat for the foreseeable future. On January 1, 2009, the biggest change you’ll see is…no change.
To my customers: Your priorities will be our priorities, and the first thing I’m going to do is make sure everyone one of you understands the value of the license and maintenance revenue you’re paying us. We didn’t do a good job of explaining why we upped your maintenance to 22 percent, and we owe you a better explanation of what in it’s for you than we’ve done to date. The second thing I’m going to do is make sure you understand how our existing products and our roadmap give you competitive advantage today and in the future. The third thing I’m going to do is commit to lower your total cost of ownership significantly. And the fourth thing I’m going to do is listen to you more than ever before. This company cannot exist without happy, satisfied customers, and my number one goal is to make sure every customer fits that description.
To my partners: Mi ecosystem es tu ecosystem. Together we have a tremendous competitive advantage, and the work our ecosystem team is doing is unlike anything in the industry. We’re going to keep moving towards an ecosystem that is healthy, symbiotic, and not just about making SAP look good. You’ll get a bigger stake in the growing market with us. Just hang in there while we get a few more kinks out of the system: once we’re ready, we’ll take it to the bank, together.
To my competitors: That stumble we announced earlier this year regarding Business ByDesign was just that, a stumble. We’re coming back to the table with an invigorated and highly competitive BBD next year, along with a half-dozen other market-shaking innovations. We also have an existing portfolio of innovative products, products that have suffered from a lack of strategic focus, that we’re going to put some marketing clout behind. We’re going to catch up in social media, we’re going to maintain our lead in vertical industry functionality, and we’re going to make the fruit of our Business Objects acquisition your worst nightmare. We’re going to change the market’s thinking about the necessity of Oracle’s database, make our total cost of ownership unrivaled in the industry, and we’re going make sure that our users are the most productive and the most efficient in the industry. And we’re going to be a lot less shy and quiet about it. Mark my words. This is your last warning.
To my shareholders: I promise more of the relative value you’ve seen in the last three months, during which our stock price has grown 5 percent, compared to competitors like Oracle and Salesforce.com that have taken a 20 - 25 percent hit. If we can focus on the above goals and make them real, we’ll be taking marketshare and returning profits that ought to make the market skeptics shut up once and for all. Hang in there, it’s going to be a great ride up.
In sum, the coming years will see a bigger, stronger, more influential SAP than ever before. And we’ll do it the SAP way: calmly, deliberately, steadfastly. Or my name isn’t Léo Apotheker.
Thanks for listening.
Would Léo ever actually say these things? Hard to tell – as I’ve said, not a lot is known about what he’s really thinking. But if he doesn’t say something to this effect, and say it soon, my sense is that it will be a cold day in January when he finally takes over the helm Personally, I think SAP would be better served by getting off to a hot start to the Apotheker Era. The sooner, the better.
Joshua Greenbaum's opinions on enterprise software have annoyed enough vendors that he now checks under the hood of his PC every morning before he boots up. For disclosures of Joshua's industry affiliations, click here.
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