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Why SAP Store Represents a Brave New World for Enterprise Software Platforms

by Joshua Greenbaum | insiderPROFILES, Volume 7, Issue 3

June 28, 2016

SAP Store main image

With the introduction of SAP Store, SAP has prominently set itself at the forefront of the new digital store model for enterprise software applications. Customers can easily purchase software and services from the store without fear of integration issues and without the need of a massive contract. Learn how this new venture is expected to revamp the SAP sales model inside and out and help entice developers to create new and innovative applications. 

The definition of platform differs wildly from vendor to vendor, and even within vendor portfolios. SAP’s own platforms are almost too numerous to mention: There’s the new flagship platform, SAP HANA Cloud Platform, and there’s SAP Mobile Platform. There’s a platform based on SAP NetWeaver, and depending on how you parse your search terms, SAP BusinessObjects portfolio and SAP Business Suite can also be put into the SAP “platform” category. This is why calling the new SAP Store a “platform” may seem confusing: Its mission and purpose is quite dissimilar from the rest of SAP’s platforms. And yet, SAP Store is one of the most important platforms SAP has ever put into the market, and its success isn’t optional: SAP Store represents a brave new world for SAP and the future of enterprise software.

3 Reasons Why SAP Store Is the Future

SAP Store offers SAP three important opportunities that tie directly to its future; One is simply providing a site to discover, try out, and buy easy-to-consume and easy-to use enterprise software with a credit card and without involving a sales executive or a massive enterprise software contract. From the buyer’s perspective, it’s hard to argue that having an SAP app store isn’t a good idea. The concept aligns with how the software market and customer buying intentions have evolved, and potentially opens up SAP’s customer base to new users even as it provides access to a net-new set of apps and services to existing customers.

Second, SAP Store allows SAP partners to create new apps and services and sell them to SAP’s massive customer base (and reach that net-new customer crowd) on a site that curates the apps, ensures they meet SAP’s quality requirements, and makes it dead easy to buy. In other words, it’s a marketplace for digital content that can — and should — entice developers to build next-generation applications for the overall enterprise market as well as an important subset: the SAP market. Think Etsy.com for SAP independent software vendors (ISVs) and independent developers — all you have to do is excel at your craft and make a compelling product, and SAP Store will give you a place to sell, a way to collect revenue, and a chance to connect with prospective customers. This store will be hugely important for existing and wannabe new partners.

The third opportunity is perhaps the most important and the trickiest: The ability to transform SAP into a modern enterprise software company that knows how to sell a growing segment of the software that its customers need in the way they would like to consume it — easily, with a credit card, and without a complex contract or a protracted sales effort. This transformation isn’t meant to completely change all SAP sales efforts into a “one-click” shopping experience; flagship products like SAP S/4HANA and SAP SuccessFactors Employee Central aren’t likely to fit this model any time soon. Partner products and smaller, discrete apps and services from SAP, however, do fit this model, and as the market for apps and micro-services grows, customers are going to want to buy apps and services that are more specialized, more on-demand, and more consumable.

Where SAP Store Can Excel

We’ve already seen what the App Store from Apple has done for consumer technology purchasing — even if we acknowledge that faster, better access to Candy Crush is a dubious improvement. Being able to grab the latest add-on to SAP S/4HANA or SAP SuccessFactors Employee Central, or a net-new service like SAP Digital Consumer Insight (which was unveiled last May at SAPPHIRE NOW), buy it online, download it then and there, and start using it right away is a definite improvement. That’s what the market wants, and that’s what the market will get.

And SAP has put some major effort into SAP Store already. Regardless of the initial interest, the success of SAP Store rests on two major changes that need to take place inside SAP and its ecosystem. The ecosystem will need to embrace this model and ensure that its development efforts include apps for the SAP Store — a digital store without apps is worse than a grocery store with empty shelves. Apps are what it’s all about in digital commerce, plain and simple, as Microsoft showed with its now largely defunct Windows Phone division.

The other major change is one that has to take place inside SAP, and that’s going to take some effort. SAP Store won’t subvert SAP’s dominant direct sales model in a significant way at first, and, even if it’s wildly successful, the subversion will take some time. But it would be foolish to assume that the disruption won’t come eventually: It didn’t take long for Border’s Bookstore to go from raking in the profits to being buried under a sea of red ink. Time destroys older business models in the digital age.

Disrupting something as sacrosanct as the current SAP direct sales model is guaranteed to be fraught with danger. One of the important reasons the enterprise software market took so long to embrace the cloud had nothing to do with customer acceptance or reluctance. A significant factor delaying the uptake of the cloud came from vendors fumbling around, trying to figure out the optimal compensation model for a field sales force that felt threatened — rightfully so — by the shift in licensing and contracting that moving to the cloud meant. Without the right incentive plan, it would be ludicrous for direct sales people to sell cloud products, and many of them balked until the incentive plans were tweaked enough to make it safe to sell the cloud. Ultimately, however, the effort to convert the sales model will quickly be subsumed by the need to seed SAP Store with a boat-load of compelling, third-party apps as well as the need to win the hearts and minds of developers who have more than a few platforms to choose from when it comes to building their killer apps.

The Next Generation of Enterprise Apps

This is where SAP Store as a platform truly deviates from all other SAP platforms, past and present. In every other platform offering, the main measure of success has been uptake inside the SAP community — as long as everyone running SAP was using SAP NetWeaver or SAP Mobile Platform, or is using SAP HANA Cloud Platform today, SAP wins.

Not so with SAP Store: Winning means reaching out to a developer community that has shied away from SAP and its convoluted partnering models by making the case that SAP Store is the best place to sell the next generation of enterprise apps to the next generation of SAP users. And SAP needs to do so quickly, before its competitors succeed in luring these developers to their platforms, and, ultimately, their versions of SAP Store. 

The vision of the market that SAP Store represents is well considered. I don’t think there’s a rational argument that says that an increasingly important percentage of enterprise software won’t be developed and consumed in a digital store model. Whose store is the big question, and with SAP Store now alive and selling, SAP has placed itself firmly in line to be the answer — as long as the rest of SAP and its ecosystem agree to play along.

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Joshua Greenbaum, Enterprise Applications Consulting
Joshua Greenbaum

Joshua Greenbaum has over 30 years of experience as a computer programmer, system architect, author, consultant, and industry analyst. He began his career at the dawn of the PC, database, and enterprise software markets, and has observed firsthand the evolution of the products and technologies that drive enterprise innovation today. Josh works extensively with end-user organizations to align their business and technology strategies, as well as assisting leading enterprise software companies to understand the needs and requirements of their customer and prospect bases. Josh is frequently quoted in the technical and business press and blogs at www.eaconsult.com/blog-ematters. You can reach Joshua at editor@insiderPROFILESonline.com.



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