Monday – I look back on the last two weeks. It is May – the time of year when SAP’s annual customer conference SAPPHIRE NOW takes place. Actually, this wasn’t an event I intended to cover as I already took a stance on the acquisition of SuccessFactors and there no other groundbreaking news was expected. That’s why I followed the event online. Advantage: I was able to see all the sessions I was interested, even though they were held concurrently in reality. Disadvantage: conversations with partners and customers are unfortunately – or rather fortunately – irreplaceable.
Anyhow, before it became to lazily two “incidents” occurred which led me to write an entry: the release of SAP board member Lars Dalgaard’s internal mail by Wirtschaftswoche and an FTD article about stockholders’ reactions in regard to the intended acquisition of Ariba at SAP’s shareholder meeting.
In what follows, the (potential) implications from my point of view shall be reviewed, while the details can be looked up in the sources mentioned.
SAP
Even though it seems that the takeover of Ariba and SuccessFactors will be likely to help SAP to achieve its goal to surge its revenues until 2015 to 2 billion euros ($2.5 billion) in this division that they expect, the negative experiences of Business ByDesign (ByD) shouldn’t be forgotten entirely. The in-house development missed its original goal by far and as often mentioned, SAP had to change or specifically adjust its Cloud Computing strategy. While Dalgaard at the event this legacy positively described as “...it was a beautiful vision,” he was straightforward in his internal mail – “Customers: not enough. Sales: not enough.” Subsequently, it can be hoped that SAP’s marketing is becoming more canny with its predictions (“worldwide leading Cloud provider until 2015”) while the current management watches more closely for the respective KPIs and their execution. This can be assumed when accounting for Lars Dalgaard.
Customers
As already mentioned in my previous blog entry in regard to the acquisition of SuccessFactors, customers now have more options to choose from. But it is a long way to a consolidated solutions portfolio. Different solutions, components, technologies and platforms certainly do not simplify the selection. Furthermore, the multifold anticipated cost reductions resp. increase in flexibility when using Cloud Computing will not be reached to the desired extent as customization and integration efforts can be expected in most cases. For many customers, it will be essential to find a competent “solutions architect” or someone who really reviews the challenges and is capable of developing a comprehensive solution.
Partner
It can only get better for partners, right? What has been held out in prospect at the introduction of ByD. There were talks of up to 10,000 customers until the year 2010. What assumedly was not spent by partners on certification, training, marketing and others? Due to the announced and recent acquisitions, several possibilities will open up by nature for some SAP partners in the areas of consulting, implementation and development. what even ,ore got intensified by the complexity (s. Customers). However, this time a partner will be advised to use caution and look around (s. Competition) because “there are plenty of other fish in the sea.”
Market
The acquisitions by SAP in the Cloud Computing area, like those made by Oracle and other established players, demonstrate once again quite clearly that those companies are missing innovation or having difficulties with it. Hence, I’m afraid that I can’t assess Co-CEO Jim Hageman Snabe’s rather depressing if not so intended remark “…some buy Harley Davidson to renew themselves, we bought SuccessFactors!” in any other way. Subsequently, the number of “available” Cloud Computing providers that offer a real added value will be smaller, and thus more expensive to acquire.
Competition
In his internal mail, Lars Dalgaard himself named the competition – No. 1: Workday, No. 2: salesforce.com. This will delight the mentioned providers because it proves that they not only “play along” but could even win considerable customer and market share from SAP. The two protagonists’ advantage as well as those of the others mentioned in the mail can doubtlessly be found in their sole focus to offer Cloud Computing solutions. Those companies do not have internal competing solutions like SAP does (e.g. HANA) and their development, sales and service is aligned with one common goal. Among other things, this allows them to be not only innovative but also adaptable and fast. There is no question that SAP will have a large customer base in the future. The question of whether SAP will be able to extend its shares and regain lost ground will be answered only if SAP is capable of communicating its solutions and strategies convincingly and quickly.
One thing from a personal point of view – even though Larry Ellison has a colorful personality, Oracle and SAP do have something in common: their Cloud Computing solutions have no leadership with vision like that of salesforce.com’s Marc Benioff who is able to electrify customers, partners and employees. On the contrary, Co-CEO Bill McDermott presumably laughs as an example of how not to do it: “…if you are 18-24, it is more likely to have a smartphone than a job.”
