SAP’s Sapphire conference is coming next week, June 1st to 5th– so it’s time to get some thoughts down on what SAP should address this Sapphire. If you care – my takeaways of the 2013 Orlando Sapphire are here.
But first of all kudos to whoever is in control of messaging – as no major leaks have come out of SAP till now. 2013 was a very different story, where pretty much all that could be announced before – has been announced before.
No doubt it will be a mega event for SAP – let’s just hope there will be less hyperbole and more a focus on what can be done in the next 12 months with a new executive leadership setup. Obviously the spot light has to be on product leadership, which after Vishal Sikka’s surprising departure now rests in Bernd Leukert’s hands. Sapphire may be too early to understand who is who in SAP product development, but it will be key to at least address directional changes. Leaving a product like ByDesign ‘rudderless’ in the ‘refactoring doldrums’ [apologies for the nautical vocabulary, I have done a lot of sailing the last two weeks] – needs to be addressed
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The Future
The 1 Billion user ambition has been toned down from my perspective. We will see if McDermott resurrects it or replaces it. No matter what, SAP needs to create a vision for the next generation business applications. Putting the Business Suite on HANA is a great technical achievement, but does not enable enterprise to operate successfully as digital businesses in 2014 and beyond. And let’s not forget that most business automaton in Business Suite on HANA is coming courtesy of the good old R/3 – so it’s certainly proven and trusted – but is the byte incarnation of last century's business best practice. Before the ascension of the internet, BigData, Mobile etc.
Whatever McDermott will present – we would like to see him err on the side of realism for what customers want and SAP can deliver. If he asks for patience to sort it out and come back later in the year is a better outcome than over promising and under delivering. This was a trap a former SAP CEO who came from the sales side – Leo Apoteker – stepped into – with his promise of ‘no more upgrades’.
To be fair to SAP – its ERP competitors have not successfully addressed that either – as all vendors are more focusing on technology advances than business practice thought leadership. This was the area where SAP excelled in the last century and has now the opportunity to get some of that mojo back.
The Integration Story
I keep raising this area prominently as SAP and its customers have massive integration projects to implement, run and operate. And with SAP's clear direction to hybrid cloud the need for very good integration options and platforms does increase even more. What we learnt in the last twelve months is that NetWeaver is not the platform, but HANA is. Sure – with re-purposed NetWeaver code fragments – but it is new. SAP will have to address the vision on how customers can run hybrid cloud and 3rd party applications. As long as SAP does not address the integration areas successfully, the never-ending Tibco (replace by Software AG / Informatica etc.) acquisition rumors will not ebb away.
SAP needs to realize that the ‘grass looks greener’ at the competition: Oracle has a now well proven Fusion Middleware, and even Infor has a better story with Ion. And this has been a looming problem since a few years – so the executive changes should not affect SAP’s ability to address this topic. The product plans have to have been in the making… somewhere. Hopefully.
Cloud
It is 12 months now that SAP threw customers, partners and observers in the HCP vs HEC confusion. There have been too many attempts to explain it, but confusion remains abundant. Time to clarify and simplify the messaging. Competitors just call it e.g. the IBMCloud. Then of course you need to open the hood and find all what is beneath it – but that’s an ugly picture for all vendors that can automate all of ERP and CRM.
The irony is that the IaaS vendors are all chasing load to make the economies of scale for their cloud infrastructure investments pay. And SAP has a huge, relatively conform enterprise load to offer. That SAP does not loudly and proudly partner with all major IaaS vendors remains a mystery to me. It might be the ugly picture under the hood that holds SAP back – but the alternative is a huge capital investment with the risk that customers will be demanding SAP to run e.g. on Amazon AWS anyway – and not trust a proprietary SAP cloud infrastructure. The inflection point for customers is Infor’s plan to run its products in production on AWS by this summer.
As a minimal goal it would be good to see SAP joining the OpenStack band of vendors – this is and remains a trusted way of doing cloud for most CIOs and will rope in most of the SAP hardware partner ecosystem (HP, IBM etc.). On the PaaS side it will be interesting to understand SAP’s relationship with Pivotal better.
HANA
This area certainly has made the most progress, no debate. And with SAP recently announcing that the Suite on Hana customer numbers have moved beyond the magic 1000 marker – it is also getting traction in an area where it matters most – running SAP applications. And as HANA was clearly Sikka’s baby – it will be interesting to see who will now look after the product that is in kindergarten age by now. Probably Hasso Plattner will take that role in the short term, but it will be crucial to see who will be SAP’s future technology vision leader.
It will be key for SAP to articulate vision and roadmap on the technology side going forward – as Oracle 12c (with the in memory option) is coming along this summer, and given the large install base of SAP customers on Oracle’s RDBMS, SAP needs to account for Oracle aggressively vying for the Wall Street Journal advertisement on page one, stating that more SAP customers run on Oracle 12c than on HANA. All we know that if it happens, the advertisement will be seen on a…. Thursday.
Mobile
Two years ago SAP was trying the 100 mph start for its mobile business, unleashing over 100 mobile applications. It then has become quieter. Mobile applications have been built in questionable areas for a B2B enterprise software vendor - like fashion and sports. And as well as they may have been a good consumer grade proving ground for SAP – the real B2B application automation strategy for mobile needs to evolve. Similar like the integration story, there should be no excuses from the recent executive changes – SAP has to have had something cooking in the mobile area. An absence in the messaging would be questioning what SAP has been doing in this area in the last 2-3 years. Mobile has been an area that it has been deeming as important and strategic all the way back starting with the Sybase acquisition.
Social & Collaboration
My challenge with SAP and Social is, that I have never seen SAP executives talk as comfortable about Social and Collaboration as I see them addressing e.g. Mobile or Analytics. This is a pity as Social has tremendous potential in the enterprise world of truly transforming the way people work. So my hope is that the valiant team around Sameer Patel will go beyond the ‘5th wheel’ and become a more integral part of the keynotes and overall SAP strategy. That may require more than the capabilities acquired and built around Jam / Cubetree. In the meantime that team is doing the right thing with priming the ecosystem to build social capabilities, but that is more likely out of necessity than ideal product strategy. There I would much more see SAP establishing a roadmap for each of its LOB applications on how they will uptake social and collaboration techniques to enable modern processes.
BigData
Given all the focus on HANA, SAP has neglected its relationship and vision of BigData. At the TechEd conference it looked like SAP was going for the co-existence strategy between HANA and BigData. If that is enough is questionable in my view, as SAP’s reliance on RAM for HANA storage puts it on a defensive position cost wise. And while it is true that RAM prices are falling, even falling fast, the amount of relevant data that businesses need to crunch for crucial insights is growing faster. That unequivocally leads to BigData and if SAP wants to have a piece of this vital business, it needs to address the area of Hadoop / NoSQL etc. better sooner than later. SAP’s whole Business Intelligence and Datawarehouse franchise is at risk here.
Line of Business – what is the vision?
Compared to the technology side, acquisitions on the core ERP (or as SAP calls it LOB) application side has been quiet. And while SAP has acquired hybris and Fieldglass in the last 12 months, it has not painted the picture for its next generation enterprise application vision. And that ultimately has to come from its Line of Business product development teams.
We may see a new Finance module that is under development – but what are the next steps in Supply Chain, Purchasing, CRM etc.? It will be interesting to see if these will make it to keynotes – or remain relegated to the product sessions. It is vital for SAP to realize that attendees are looking for arguments from SAP why they should not buy e.g. Salesforce.com or Workday - just to mention two examples.
The only area with noticeable noise and traction has been the HCM area – with the former SuccessFactors products winning very good positions in the quadrants and waves of our analyst colleagues. But in HCM SAP will have to address what will happen beyond Employee Central – more focus on Payroll, Workforce Management or moving the Talent Management modules of SuccessFactors over to HANA?
The overall question in the LOB area remains – when will acquired products like SuccessFactors and Ariba (or more recent ones like hybris and Fieldglass) be running on HANA and / or integrated with traditional in house built SAP products. But maybe the need to use HANA for everything will reduce itself and a more tactical approach will take its place in regards of data migration. The latter would not be of disadvantage to SAP in our view, as a pragmatic approach usually wins over (a maybe) overzealous technical strategy. Nonetheless it is good see the recent move of some Ariba functionality to HANA (our view on it is here).
Pricing and maintenance
SAP has largely overcome the issues around rising its maintenance prices – at least we do not hear that quite often making noise in the install base as in the past. But the key question remains – how much innovation do maintenance paying customers receive for their quite substantial payments. That has led to some debate in the ecosystem around SAP’s mobile applications (e.g. for HCM) and other SAP innovations like Fiori. SAP will do well at clarifying what customers can expect for paying maintenance and what not. It will have to address in that context – as SAP wants to become a cloud company – what the difference between a subscription paying and a maintenance paying customer is. At the very moment it looks like the subscription paying customer maybe better off in regards of product innovation – a situation that SAP should not let be un-addressed for too long. Even if the communication will not be popular – a clear direction by McDermott on what is the return of a maintenance payment in regards of innovation will be well received by customers and the ecosystem overall.
Vision & Thought Leadership
So the question really is which way will it be for SAP going ahead. It took the company a few years to become an applications AND a technology company. This Sapphire will be a good test if SAP is still following the same direction – or if there are more applications in its future (my prediction here).
If the technology side will remain prominent, we should see a follow up on the direction shown at the last TechEd in Bangalore, where SAP made a big pitch for the developer (read here). Granted the typical Sapphire audience is not the developer – but there is a community of technical attendees that should hear more SAP’s plans around the development language River and SAP’s overall direction towards PaaS. We will pay attention if that happens.
It’s probably more likely that we will see a lot of mobile, Fiori, Analytics in McDermott’s keynote – and more HANA and hopefully cloud infrastructure with Plattner. But it’s all speculation now. Maybe not worth the bytes it is stored in right now by next Wednesday…
MyPOV
A key Sapphire for SAP is coming up. While the executive changes are in the books and it will be interesting to see how McDermott and Leukert will perform – the key is going to be if and how SAP will address its vision for next generation applications. It is getting time for SAP to find its business automation DNA again. The technical innovation work with HANA has been done, SAP is now at a cross roads on how much the technology message vs the application message will be first of all in its overall messaging and then in its product roadmap and lastly product delivery mix. We will be there to observe.
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And more on overall SAP strategy
- News Analysis - SAP becomes more about applications - again - read here
- Market Move - SAP acquires Fieldglass - off to the contingent workforce - early move or reaction? Read here.
- SAP's startup program keep rolling – read here.
- Why SAP acquired KXEN? Getting serious about Analytics – read here.
- SAP steamlines organization further – the Danes are leaving – read here.
- Reading between the lines… SAP Q2 Earnings – cloudy with potential structural changes – read here.
- SAP wants to be a technology company, really – read here
- Why SAP acquired hybris software – read here.
- SAP gets serious about the cloud – organizationally – read here.
- Taking stock – what SAP answered and it didn’t answer this Sapphire [2013] – read here.
- Act III & Final Day – A tale of two conference – Sapphire & SuiteWorld13 – read here.
- The middle day – 2 keynotes and press releases – Sapphire & SuiteWorld – read here.
- A tale of 2 keynotes and press releases – Sapphire & SuiteWorld – read here.
- What I would like SAP to address this Sapphire – read here.
- Why 3rd party maintenance is key to SAP’s and Oracle’s success – read here.
- Why SAP acquired Camillion – read here.
- Why SAP acquired SmartOps – read here.
- Next in your mall – SAP and Oracle? Read here.
And more about SAP technology:
- News Analysis - SAP moves Ariba Spend Visibility to HANA - Interesting first step in a long journey - read here
- Launch Report - When BW 7.4 meets HANA it is like 2 + 2 = 5 - but is 5 enough - read here
- Event Report - BI 2014 and HANA 2014 takeaways - it is all about HANA and Lumira - but is that enough? Read here.
- News Analysis – SAP slices and dices into more Cloud, and of course more HANA – read here.
- SAP gets serious about open source and courts developers – about time – read here.
- My top 3 takeaways from the SAP TechEd keynote – read here.
- SAP discovers elasticity for HANA – kind of – read here.
- Can HANA Cloud be elastic? Tough – read here.
- SAP’s Cloud plans get more cloudy – read here.
- HANA Enterprise Cloud helps SAP discover the cloud (benefits) – read here.
