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Thoughts on the SAP Picture for 2010

by Joshua Greenbaum | insiderPROFILES

April 1, 2010

Today’s SAP is “not your grandmother’s SAP” — and with the aid of some Danish poetry, you'll better understand the future of SAP. Explore the company’s different challenge areas for 2010, including defining TCO, redeeming SAP Business ByDesign, and exerting market leadership.
 

When SAP co-CEO, Jim Hagemann Snabe gave his keynote address at the SAP Influencer Summit last December, he quoted an aphorism attributed to a fellow Dane, Piet Hein, one of the greatest minds of the 20th century you’ve probably never heard of.

Never mind that the aphorism he used — “Predicting is really hard, particularly when it comes to the future” — has also been attributed to that great quotemeister Yogi Berra (who also did something famous regarding sports, I believe). Hein is noted in his home country for being one of the more creative polymaths Denmark has ever known. Inventor, philosopher, designer, writer, artist — think Leonardo DaVinci, Ben Franklin, or R. Buckminster Fuller — Hein also penned some 20 volumes filled with the humorous, rhyming aphorisms that he called “Grooks.”

With Snabe’s reference in mind, a little tour around the world of Hein is warranted, not just for the timelessness and humor of his wisdom, but for the insight Hein’s work brings in understanding the future of SAP, the universe, and everything. It turns out Hein knew a thing or two about current SAP problems and prospects.

Overcoming SAP’s Past and Laying the Groundwork for the Future

In his keynote address at the SAP Influencer Summit, former board member John Schwarz claimed that the company was “not your grandmother’s SAP,” and that convincing the world this is true is perhaps one of the most important issues SAP faces in the market today. The pace of internal innovation is actually quite rapid, but the market is having trouble catching on to the notion that it’s time to exchange the old SAP for something newer and fresher.

Hein penned a Grook that captures this problem well:

PAST PLUPERFECT

The past, – well, it’s just like our

Great-Aunt Laura,

who cannot or will not perceive

that though she is welcome,

and though we adore her,

yet now it is time to leave.

In other words, how can SAP prepare the way for the future while still “adoring” the past? It’s becoming evident that one of the great dilemmas SAP faces involves how to go to market with some of its new products — particularly pending products like the one code-named Constellation, which has the ability to position SAP as a genuine leader in the collaborative, social Web market. Constellation is so radically different from SAP’s traditional, transaction-based systems, though, that it has people inside and outside SAP wondering how the company can take the product to market. Overcoming the perception of “your grandmother’s SAP” — or to use Hein’s image, getting your great aunt to leave — isn’t as easy as anyone would like.

Part of paving the way for new and different applications like Constellation requires that SAP overcome its cultural bias against failure — after all, taking a leap into an entirely new application paradigm and market comes with a not insignificant risk. And SAP takes failure far more seriously than its competitors. As a result, there has been a reluctance of late to brag about forthcoming innovative products and services that have even the slightest chance of failure, even though the demands of the marketplace require a faster pace of innovation than your great aunt ever imagined.

The following Grook may not provide the solution that SAP would like, but in terms of the reality of success and failure, you have to admit that Hein has a point:

THE ROAD TO WISDOM

The road to wisdom? – Well, it’s plain

and simple to express:

Err

and err

and err again

but less

and less

and less.

Redeeming SAP Business ByDesign

There is one area where SAP is about to see one of Hein’s guiding principles to its hopefully ultimate conclusion. SAP Business ByDesign, which had a rough start on “the road to wisdom,” is now positioned to be re-launched in 2010. Paradoxically, one of the interesting points about the product’s initial market failure is how important that failure has been in defining its future success — the point of this Grook:

PROBLEMS

Problems worthy

of attack

prove their worth

by hitting back.

What’s important to bear in mind in watching the return of SAP Business ByDesign to the market in 2010 is how much wisdom SAP will have acquired by taking a hit with the first release. The answer is: A lot. This added wisdom will be very much in evidence when the time comes to compare SAP Business ByDesign with Oracle’s Fusion on-demand application suite, also slated for release sometime in 2010. Fusion will hit the market without SAP Business ByDesign’s stress-testing, extensive customer usage, and proven economic model.

Will Fusion fall down the way SAP Business ByDesign did? Probably not — SAP’s travails were hardly lost on Oracle — but in a head-to-head comparison, SAP Business ByDesign will have the edge in experience, while Fusion may have to ride that road to wisdom the hard way. 

Fighting the TCO Fight

Also looming over SAP’s prospects for 2010 and beyond is the problem of defining the TCO that its customers face as they buy and consume SAP’s products. The battle royale about maintenance costs in the last year successfully obscured the larger and more important issue of TCO. And, the fact that SAP alone bore the brunt of the market’s anger over a maintenance cost structure that merely brought SAP in line with its competitors highlights how much this is an issue that transcends pure fact and reason.

SAP’s biggest opportunity in 2010 will come from its ability to articulate not just its own TCO, but, more importantly, the TCO of its solutions relative to those of its competitors. That won’t be easy;  it’s pretty clear the competition has a disincentive to participate in the process, as it may not come out looking as squeaky clean as those companies would like. Which means that SAP should expect some stonewalling on the part of its competitors as SAP begins to articulate a more comprehensive — and potentially a more favorable — TCO than its competitors can muster. Here’s a good mantra for SAP’s comparative TCO efforts:

THE UNTENABLE ARGUMENT

My adversary’s argument

is not alone malevolent

but ignorant to boot.

He hasn’t even got the sense

to state his so-called evidence

in terms I can refute.

Market Leadership

In the end, SAP will only succeed as the industry’s sole software-only, top-tier vendor if it exerts exceptional market leadership. SAP has to be known as a leader, an innovator, a company that excels in bringing new ideas and products to its customers. To do otherwise — to hunker down and eschew leadership in favor of something else — is to guarantee failure. And — it’s no surprise — there’s a Grook for this aspect of SAP’s dilemma as well:

ABREAST

He who aims

to keep abreast

is for ever

second best.

And second best, I think we all agree, isn’t what any of us — SAP or its customers — is really after.

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