August 12th, 2008
SAP: Oracle price-gouges customers even more than we do
Doug Merritt, SAP’s EVP and GM of Business User Global Sales, predictably came up with quote of the day on day one of the BusinessObjects influencer summit. During a ‘fireside chat’ in a near freezing air conditioned room with fellow Irregulars Mike Krigsman, Sandy Kemsley and Brian Sommer and myself, Merritt said: “Oracle price-gouges customers even more than we do.” To put this in context, we were discussing SAP’s general go to market strategy which now seems to be even more tortoise like than the past - if that is possible.
Merritt implied the company will continue to focus on large company sales within its existing market share, using the BusinessObjects enterprise performance and GRC portfolio as the feed mechanism for the sales funnel. This is a core part of its strategy to ramp profitability rather than go for volume from products like Business ByDesign. While that doesn’t imply the death of ByDesign, it is clear the company’s distribution strategy for ByDesign is not yet aligned to SAP’s requirement to grow profitably.
I question whether this is a sustainable play, given the current attention focused on issues that are surfacing as a result of the recent price hike in SAP maintenance charges. Why would existing customers choose to continue investments when they are already concerned about affordable future cost commitments? One way this works is if the BusinessObjects portfolio can truly benefit from the halo effect of being under SAP’s stewardship.
Paradoxically, according to Marge Breya, EVP and GM of the Business Intelligence Platform group, BusinessObjects stellar performance in the last quarter was down to: “Salesforce, salesforce, salesforce.” This is a volume play yet the BusinessObjects on-demand group only has 50 people so is constrained in its potential sales footprint. Merritt said this is an issue that will get increasing attention.
In talking to the on demand team, with the exception of Business One, there was very little discussion of on demand business intelligence for SAP products. Instead, they talked enthusiastically about success they are seeing from the relationship with Salesforce.com. So which way is it?
As always with SAP, the splintered nature of the management team means that the answer depends on whom is discussing the topic. It is however worrying that so far, SAP/BusinessObjects is not really showing products that demonstrate innovation yet the company wants more money from its customers. Even so, as Jonathan Becher, SVP Marketing, Business Objects said in conversation with me: “The curious thing is that if you’re SAP, you can still win if you take the tortoise strategy.”
Dennis Howlett has been providing comment and analysis on enterprise software since 1991. See his full profile and disclosure of his industry affiliations.
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