At the SAP conference last week I sat through Shai Agassi's keynote presentations for both the EMEA Enterprise Services Partner Summit and SAP TechEd '06, as well as an open session with press and bloggers. He's got an easy, relaxed style and more than one SAPper at this show suggested to me that half the $400m that Henning Kagerman paid for TopTier back in 2001 was to buy his successor. During the first of those keynotes, Shai got frustrated and dispensed with the corporate slides, to just talk and go "off message" - something which must send the PRs into nervous breakdowns. It's part of this new SAP that I wrote about, but inevitably leads to the company being somewhat conflicted. This is reflected in the fact that they don't want to stoop to the level of comment that has come recently from the likes of Larry Ellison, but comments and asides aimed at Oracle were peppered through the presentations.
When Shai was positioning their move in to middleware and creating the NetWeaver platform, he was emphasising the openness of the application, the open API, but joked that they had this great encryption mechanism, because everything was documented in German "which really worked, because we've never had a virus!". He talked about SDN, which you know I'm impressed with, and that "partnering is in their genome". He highlighted that 5 years ago they only announced 1 product in the year, whereas this last year they have announced 26.
At both keynotes, he related a conversation with a major customer, who had told him that he didn't want SAP to touch the core of his application, except maybe once every 5 years on a Saturday! However, the same CIO said that his CEO wanted him to innovate every 3 months, and so this was how Shai explained their upgrade path for mySAP ERP 2005, which won't have any major revamp until 2010, but will have regular Enhancement Packages every few months that you can pick and chose to install. This appears to be the way they are managing the rapid change required by business, alongside a monolithic application that IT is grappling with managing.
Which brings me to the topic of "choice". During all of the sessions it was painfully clear to partners and developers alike, that if you want to be doing the "cool" stuff, you have no choice but to upgrade to mySAP ERP 2005. They have over 10,000 customers on ERP '05, but even more still on R/3. As a customer, there was a lot of emphasis on your roadmap and action plan to get there from R/3. As a partner, you were left in no doubt that this is where you should be aiming your marketing and development resources. As an aside, I was interested by the metrics. Shai mentioned the 8,500 developers SAP has, and talked about the partners in terms of "where you should be aiming your 20 developers", and that the sweet spot for your partner application, to get the SAP sales guys attention, should be around $250,000 (and remember that's in addition to the SAP software the customer has to buy). He was suggesting those partners need to build a business plan and set their expectations so that it might take 3 years to be successful. This was Enterprise oriented with a big capital E!, both for customer and the partner. I'm not sure how many partners or systems integrators could handle 3 years of investment before they get any payback. Dennis amplifies this with one of the best Shai quotes, which takes us to the SAP Deathstar Ecosystem.
In the TechEd keynote, Shai said that SAP are:
"Not aggregators, we design and build"
"Not like Oracle, we don't tell you what to do"
But how does that stack up with their heavy emphasis on moving you to ERP '05? In addition, they are definitely conflicted over another topic, which is the database. One of the ironies of the SAP world is that they are their major competitors number 1 reseller. They sell significant Oracle database licences, although they can also deliver on DB2, SQL Server, or their own certified flavour of MySQL - MaxDB. Shai also highlighted the fact that, until recently PeopleSoft had been the number 2 Oracle reseller, with Siebel the number 3
"and look what happened to them".
I asked Shai directly about this after the open session, and wondered why they didn't level the playing field, so that there sales guys weren't motivated to sell Oracle because of the extra revenue they make. He told me that they didn't operate like that, and they would continue to offer their customers choice, although it felt like he was saying this through gritted teeth! Later in the day I asked the same question of Richard Probst, VP Enterprise Services Continuity, and he assured me that the sales guys made no different commission from any of the DB choices. If I was them, I would be steering the customers to MaxDB, unless there were specific business reasons that made Oracle or DB/2 the best choice.
The last thing I'd like to highlight, is the emphasis on mySAP ERP 2005, to the exclusion of any other products. When questions were asked about mySAP All-in-one, we were asked to wait and see. When a question was asked about Business One, the answer came back that the strategy is unchanged. I asked Richard that as well. He said that it was the SAP way - all of the messaging was focussed on ERP '05, but that didn't mean anything sinister for A1 or B1. I'm afraid that there will be several people at this show who might draw the same wrong conclusion I am drawing, and wonder about the future of both products.
However, my overall conclusion is that SAP is transforming for the better in to a different organisation, but which is conflicted between the new "cool stuff" that they are doing, and the more rigid legacy of the core of their application. They have a toe in the Software as a Service waters, but are selling the strengths of their on-premise case and how customers should customize the hell out of the application to get real value. They wish they could be much more aggressive towards their key competitor Oracle, or the upstart Salesforce.com, and say the kind's of things that Larry Ellison and Marc Benioff get away with, but they feel that is not the high ground of the SAP way. As the pace of change increases, inside and outside SAP, the way Shai steers the ship is going to be very interesting.
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