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Innovation Applies to More Than Just New Products

by Dave Hannon

August 8, 2011

By Dave Hannon

@Daveatwispubs

The traditional software model goes like this: we make cool new software, sell it to companies that need it, they install it and use it to run their business. That’s obviously a dramatic oversimplification, but you get the idea. And for a long time, SAP has functioned like most other software vendors, in this broad sense. Granted, SAP has been one of the best at this model and taken that model to places it has never been before, but it’s the same basic model.

But true innovation is about more than just developing cool new products – it’s about bringing your business model to unexpected places. And a few of SAP’s more recent products and acquisitions combine to provide a clear example of a business model being innovated – in this case, the ability to sell SAP-owned products to customers that are not currently and perhaps never plan to be users of SAP software.

Case in point: SAP HANA. Yes, this is a very valuable innovation for SAP customers, who likely have collected more data than the average company. But from everything we see so far about HANA, it’s pretty clear HANA could certainly benefit non-SAP customers. In fact, it could be of more benefit to non-SAP customers, who may have slower data processing systems than a typical SAP user. Basically any company looking to analyze its “big data” faster could benefit from using HANA. And that’s a pretty big customer list to go after.

“We had tremendous success with R3 and wave after wave of innovation at SAP did not quite reach that point where we cou ld renew the company around it until HANA,” Vishal Sikka told Bloomberg this week.

The same goes for the SAP BusinessObjects line. That deal certainly brought a number of non-SAP users into the family, but BOBJ is a dynamite solution set for both SAP and non-SAP users alike, right? There are many companies that don’t run SAP that would love to see their data presented through BusinessObjects’ technology. Bang – another massive new customer list to go after.

And of course the Sybase acquisition provides similar opportunities in the mobile space – sure SAP would love to have all Sybase users running SAP ERP, but at the same time, there are many companies trying to get their mobile strategy up and running and could benefit from the Sybase Unwired Platform as well as other Sybase solutions. Come to think of it – do you know a company that isn’t working on mobile innovation right now? So there’s another nearly limitless customer list that SAP might not have been able to look at before.

I want to be clear – I’m not suggesting SAP would ever or should ever – stop pursuing that traditional software model. Heck, this quarter they saw 35% increase in software sales alone. When was the last time we saw 35% growth in anything (except, maybe gas prices)? Clearly the software segment will remain SAP’s bread and butter and it continues to out-innovate the market in these areas. But finding a way to branch out to sell to these new customer lists just makes business sense. It’s diversification. It’s market expansion. It’s…dare I say…innovation!

Bonus Material:

To read an detailed case study about an SAP user has innovated its business model, see How ACH Food Companies, Inc. Became a Consumer-Focused Business

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