Category: SAP
June 18th, 2009
Cheap jibe sullies SAP's SaaS strategy
My jaw dropped as I read this just-published CIO.com interview with SAP’s CTO Vishal Sikka. Last week, John Wookey, executive vice-president of large enterprise on-demand, set out SAP’s commitment to on-demand in a widely-reported speech in Amsterdam (SAP this week reiterated the commitment in a corporate press release). This week, the company’s CTO had this to say about leading SaaS vendor Salesforce.com:
“When [vendors] call their little salesforce-automation application a ‘platform’, that does actually bother me, as a technologist, to be honest with you.”
If SAP wants to be considered a leader in the on-demand space, as John Wookey proclaimed in Amsterdam, then the last thing its top executives should be doing is going around belittling the achievements of other SaaS players.
I find it astonishing that Sikka — who works out of the same Palo Alto facility as John Wookey — could be making such statements at this time. Was he not aware when he gave this interview of the likely content of Wookey’s presentation in Amsterdam last week? The message this sends is that Wookey’s initiative doesn’t have the wholehearted support of SAP’s board.
Unfortunately for SAP, the outcome of Sikka’s intervention may be the opposite of whatever was intended. His smug contention that the entirety of SAP’s supported software catalog is “timeless” is just an invitation for ridicule. Read the rest of this entry »
June 10th, 2009
Wookey: SAP's future is on-demand
Citing the spectre of long-forgotten titans of previous generations of business application software, SAP executive VP John Wookey set out the software giant’s commitment to embracing on-demand applications in a keynote presentation at the OnDemand Europe conference in Amsterdam today:
“On demand is the next stage in the evolution of application development … It is absolutely essential from SAP’s perspective that we embrace this change,” he said. “On-demand is what our customers are looking to invest in. If we do our job well and listen to our customers, these are the applications we have to be delivering. We have to drive to leadership in on-demand applications.”
As previewed by articles in the WSJ and FT today, Wookey (pictured) outlined the company’s strategy for bringing on-demand applications to SAP’s existing customer base of large enterprises. This is separate from the more widely publicised Business ByDesign offering being developed for midmarket companies and the BusinessObjects on-demand portfolio, although lessons have also been learned from those initiatives, he said. As EVP of large enterprise on-demand, Wookey heads up a team with a portfolio of on-demand products targeted at large enterprises, including CRM, strategic sourcing and expense management.
The core of the strategy, targeted for availability mid next year, is an architecture where new on-demand applications can be deployed instantly because they’ll inherit the existing policy settings from the installed Business Suite infrastructure. “The on-demand applications we deliver can behave as an extension of the Business Suite,” Wookey explained. “[Customers] just turn it on. They don’t have to redefine anything to the on-demand service.” The principle has already been tested with Read the rest of this entry »
February 23rd, 2009
Coghead's demise highlights PaaS lock-out risk
The problem with PaaS, as Coghead’s customers are now discovering to their dismay, isn’t so much lock-in as lock-out. They knew they were locked-in to Coghead’s platform, but that’s nothing unusual in the world of software development. In exchange for the convenience built into a specific platform, developers willingly give up the freedom to move elsewhere. With conventional software, they know they run the risk of ending up on a dead-end platform that’s no longer supported because the vendor lost interest or went out of business (or in the case of open source, the platform simply falls out of favcr). But although that’s a disappointment, it’s not a disaster.
What’s different with PaaS is that you don’t always have the option of staying on. Coghead’s new owner SAP will impose a lock-out from April 30, leaving all its current customers suddenly in the impossible position of having around eight weeks to completely rewrite all their applications on an entirely new platform. It’s small comfort to know that your data’s accessible if all the automation you’ve built up to process it is about to disappear. I would be crushed right now if I had built any kind of functionality using Coghead (and I’ll be honest, I had been considering it). The long list of rival PaaS providers offering a new home for my application would be small consolation.
What this highlights is the lack of any standard for transferring not just data but application logic between such platforms. As Coghead’s erstwhile CEO Paul McNamara ruefully admitted to InformationWeek last week, “Customers can take the XML out that describes their application, but the reality is that only runs on Coghead, so customers will need to rewrite their app with something different.”
There’s never been a compelling need for this type of capability on conventional software platforms because there’s less urgency to move functionality elsewhere. With PaaS, the lack of such mechanisms could become a huge barrier to adoption as customers Read the rest of this entry »
January 12th, 2009
Hooray, 2009 starts with a SaaS backlash
I welcomed Harry Debes’ outburst against SaaS last summer, because being attacked is always better than being ignored. After years of indifference to SaaS, the conventional software world has suddenly woken up to the threat and started attacking it in the hope it will all go away.
2009 has begun with a renewed onslaught — perhaps enheartened by Salesforce.com suffering a total shutdown for almost 40 minutes last Tuesday, when a network device failed and took out its failover at the same time. Even the system status dashboard was inaccessible, leaving customers feverishly twittering for updates.
On the same day, Bill McDermott, SAP America’s CEO and president of global field operations was telling Information Week that large enterprises will “never” use SaaS as a platform for running their core business operations (Oracle’s CRM chief Anthony Lye advanced a similar argument at November’s SIIA OnDemand conference).
Instead, former Oracle technology chief John Wookey is heading up a strategy to offer SaaS modules that “snap on” to SAP’s on-premise applications — rather like Microsoft’s ’software-plus-services’ approach. As if that will eliminate all likelihood of anyone ever suffering a 40-minute outage. Perhaps a sprinkling of FUD about SaaS vendor viability will do the trick instead …
Yet the harder these holdouts rage against SaaS, the more steadily it advances. Today, Evans Data released the results of a developer survey that found almost a third of developers in North America are already working on SaaS projects, and more than half worldwide expect they’ll be doing so in 2009. Meanwhile, an analysis of Google search data by Pingdom has found that SaaS is still holding its own as a buzzword, even while both ‘Web 2.0′ and ‘cloud computing’ have shown sharp declines in 2008.
Faced with such a relentless surge, the anti-SaaS chorus is hitting ever more frenetic notes. For example, the ComputerWorld blogger who last week argued that SaaS hurts a fragile economy by eliminating IT staff from unproductive positions that are a drag on their employer’s operational efficiency. Or the astonishing calculation that if you power on your desktop computer and then power it off again each time you do a Google search, you’ll soon burn more carbon than if you boil a kettle.
When the attacks become this desperate, you know you’re onto a winner.
January 5th, 2009
Debunking myths about the SaaS partner channel
There are a couple of widely-held myths about the SaaS partner channel that I saw being debunked in the closing months of 2008. No, neither of them were the hoary old myth that SaaS vendors don’t need partners because they can use the Web to sell direct — the dot-com bust proved that one wrong. Solution providers are still alive and well on the Internet, but to succeed they have to ignore some common preconceptions. Here are two statements I often hear from vendors and other experts when talking about SaaS:
- SaaS vendors need channel partners because customers will only buy business solutions face-to-face
- SaaS partners have to run lean operations because their margins are slimmer
Both of these assertions are just plain wrong — and I have to confess, that’s not something I would have expected until I heard the evidence.
First up is the assertion that SaaS business solutions have to be sold face-to-face. I heard this point made very firmly by SAP last year talking about its experiences with its Business ByDesign offering. It had originally hoped this would be bought self-service via the Web, but later found it required at least a day’s face-to-face requirements discovery. This led SAP to conclude that it would have to rely on partners with specialist vertical expertise or existing local trust relationships. It seemed a logical conclusion, knowing that another SaaS business suite vendor, NetSuite, operates a network of regional sales offices precisely so that it can be close to its customers.
But then in November I moderated a solution provider discussion at the SIIA OnDemand conference in San Jose, in which four solution providers who work with, respectively, Intacct, Intuit, NetSuite and Microsoft, spoke from their own extensive experience. There’s a very good video of the complete session online now. The most surprising insight of this very informative panel discussion was that SaaS solution providers are getting smart at using the Web to sell, close and deliver solutions remotely — often without any face-to-face contact at all. What this tells us Read the rest of this entry »
July 7th, 2008
SaaS star leaves SAP for Salesforce.com
Enterprise software giant SAP has lost one of its brightest software-as-a-service stars to SaaS titan Salesforce.com, I can exclusively reveal. Steve Lucas, who spearheaded the development of SaaS at Business Objects, acquired by SAP last year, left the company at the end of June and began work straight away at Salesforce.com, where his job title is (bear with me, it’s quite long): senior vice-president of platform marketing, AppExchange and Force.com. [Disclosure: Salesforce.com is a recent client].
Lucas (pictured right, courtesy of SAP) is well regarded in the industry for his track record at Business Objects and would likely be seen as an asset for any SaaS vendor. I think his appointment sends a strong signal that Salesforce.com is determined to make a success of its platform strategy, which he and I discussed in a brief call just ahead of last weekend’s holiday — more on that in moment.
I discovered another surprise recruit also started at Salesforce.com last week. She is Erin TenWolde, who has been IDC’s lead analyst on SaaS for the past two years and spent a total of some five years on the analyst firm’s SaaS team. TenWolde knows the industry inside-out (as I joked last week, she knows where all the bodies are buried) and will be a tremendous asset to Salesforce.com’s competitive intelligence, messaging and analyst relations in her new role.
The loss of Lucas is a blow to SAP, which is battling to retain credibility for its SaaS initiatives after delaying the public roll-out of its Business ByDesign project earlier this year by 12-18 months. Lucas is proud of what has been achieved at Business Objects, but he said that SAP’s ability to make broader progress with SaaS is stymied by the lack of a central vision for the model. “SAP doesn’t have a SaaS strategy,” he told me. “They don’t have a single piece of paper that states what their SaaS strategy is.” That lack of direction was a source of frustration that contributed to Read the rest of this entry »
May 21st, 2008
ByDesign, the younger person's ERP
Many of the small and mid-sized businesses to whom SAP would like to sell its Business ByDesign SaaS offering are family-owned, especially in sectors like manufacturing, distribution and retail. SAP seems to feel that ByDesign will appeal to the forward-looking younger generation of those families — the future heirs of the business.
“The younger generation of midmarket leaders are computer-savvy,” SAP’s co-CEO Leo Apotheker told me this week at the company’s SAPPHIRE Berlin conference [disclosure: SAP paid my travel costs]. “They rely on their own wits to make a decision.”
Looking around, they can see that their businesses need to increase their use of software automation. Many smaller manufacturing companies are still heavily reliant on manual processes, said executive board member Peter Zencke, who has overseen the Business ByDesign project since its inception. “They feel the pressure to deliver just-in-time to quality [standards],” he said. “There is this pressure on these guys to deliver process quality.”
Electronics manufacturer WIMA, an early adopter of ByDesign who met with a gaggle of Enterprise Irregulars and other bloggers on Tuesday, provided a case in point.
“We are a sixty-year-old company,” said David Suntinger, in charge of corporate development at WIMA. “Many of our internal processes are old-fashioned. For us it’s very important to see how process can be. We think it may be a good thing to change to some of the processes in ByDesign.”
What is the likelihood though when those Web-savvy heir apparents research the options before making a decision, that Business ByDesign will come up as the answer? By far the largest element of WIMA’s ByDesign implementation project has been Read the rest of this entry »
May 19th, 2008
Is BBD hoist by SAP's on-premise petard?
On-premise vendors never have to run their own software*. This is by far the largest (and least often anticipated) handicap suffered by on-premise vendors when embarking on the on-demand model. [*OK, maybe some of them 'eat their own dogfood' by using it in-house. But they never really experience it as their customers experience it.] They are in blissful, utter ignorance of just how difficult it is to install and run their own products. They have always imagined that the problems their customers experienced in doing so were due to special factors in each customer’s own infrastructure. Such problems never come up when testing in the development labs. But as soon as any vendor becomes a software operator, forced to grapple with the realities of running its own software to achieve a business result, suddenly all those lab certainties disappear, overwhelmed by the fuzzy compromises of the real world.
I was forcefully reminded of this when I read about why SAP said it had delayed the release of its SaaS offering, Business ByDesign. Fellow Enterprise Irregulars reported on the account given by SAP executives at the company’s recent SAPPHIRE Orlando conference. It so happens that I’m writing this having arrived today for the European sister show, SAPPHIRE Berlin, where several of us will do some further probing [disclosure: SAP has paid my travel costs to be mere]. Co-CEO Léo Apotheker, who some of us met with this morning, says that any new project starts out with assumptions that turn out to be incorrect. “Fine, you change them.” But I’d argue that shifting to SaaS throws up more issues of much more significance than you’d get in the average new product development project. You’re not simply creating another software product, you’re grappling with all the operational headaches of running business software reliably and at scale, while working out how to deliver it within a completely new business model. Any SaaS stalwart will tell you how steep that learning curve is.
Indeed, many of us in the SaaS world had an ‘I-told-you-so’ moment when we read of the reasons for the slippage in Business ByDesign’s release schedule. “The initial deployments showed Read the rest of this entry »
May 14th, 2008
Putting Workday on SAP's radar
Now that SAP’s SaaS project Business ByDesign has gone on the back burner, I’ve been wondering how I’m going to pass the time next week at SAPPHIRE Berlin. One thing I’ll be asking the enterprise software giant is how it feels about losing out to SaaS startup Workday for a 200,000-seat deal at contract manufacturer Flextronics. Oracle was also reportedly a bidder for the deal.
Workday’s win has caused quite a stir after being billed by InformationWeek as the “Software Industry’s Biggest SaaS Deal”. It’s certainly up there with the largest, although privately-held SaaS HRM vendor Authoria claims to serve 340,000 employees at its largest customer, while employee services SaaS vendor Concur already had 180,000 employees online at a single financial institution more than a year ago (see My SaaS deployment is bigger than yours …).
SAP can probably retort that the deal is just for Workday’s human capital management software rather than the complete spectrum of financials-to-manufacturing-to-people functionality that is SAP’s hallmark. Although Workday last year released the first iteration of its financials software, it has just four customers signed up for it, VP of applications strategy Mark Nittler told me in a briefing last Friday, compared to more than forty for the HCM product.
But the size of the deal certainly brings Workday into the same market segment as SAP in terms of company size and should concentrate the minds of SAP management on how to combat the competitive threat from SaaS rivals. There’s plenty to mull over, too, because Read the rest of this entry »
May 2nd, 2008
SAP's SaaS pull-out will help rivals in Europe
The news that SAP has pushed back the roll-out of Business ByDesign by twelve to eighteen months should be music to the ears of its SaaS competitors, especially on SAP’s home turf in Europe. By announcing its own SaaS product for the midmarket late last year, SAP put its stamp of approval on the on-demand model. Now that it has said customers will have to wait another year or more before they can buy it (due to scaling problems, no less), the company has created the worst of all worlds: it has validated a market and then vacated it, giving competitors a free run. Even SAP can’t spin FUD (fear, uncertainty and doubt) for as long as 18 months — especially not in the on-demand market, where customers can be up-and-running within weeks of placing an order.
Whereas prospective customers and partners might have taken a wait-and-see approach if Business ByDesign were due later this year, delaying it until late 2009 or into 2010 will drive both camps into the arms of competitors (perhaps we should rename the product ‘Business ByTwoTen’). I suspect this will especially help smaller local players whose marketing and partnering efforts in the European market would previously have been overshadowed by SAP’s looming presence.
It’s certainly welcome news for UK-based CODA, which next week at Dreamforce Europe releases phase I of its on-demand CODA2go application, built on Salesforce’s Force.com platform. “Of course we’re not looking to deliver as broad a portfolio as SAP, but we have designed a truly international, sophisticated accounting system that will support not just small and mid-sized companies but also enterprises. That space is going to be a lot clearer without SAP in the market yet,” commented group marketing director David Turner by email yesterday.
Andre Kwakernaat, CEO of Netherlands-based Twinfield, probably Europe’s most established on-demand financials vendor, was more cautious, but saw SAP’s move as Read the rest of this entry »
Phil Wainewright is a commentator and strategist on emerging software industry trends. See his full profile and disclosure of his industry affiliations.
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