ISG Software Research Analyst Perspectives

At this year’s Influencer Summit (Twitter: #SAPSummit) SAP’s executive leadership team summarized the company’s progress in 2010 and described its plans for the coming year in a range of technologies. The event led off with co-CEO Jim Hagemann Snabe discussing by video from Germany the business and technology areas in which SAP expects growth in 2011. Jim focused SAP’s efforts in on-premises and on-demand delivery, mobility and in-memory computing, which are important to a new generation of products the company is bringing to market. He asserted that SAP does not need to acquire a lot more technology to innovate and grow its portfolio. While I thought the apologetic attitude about being late in updating SAP’s on-premise applications was unnecessary, the emphasis on its growth and technology was well communicated.

Vishal Sikka, leader of the technology and innovation platform area, was next and discussed its work to provide a solid foundation; SAP NetWeaver is at the center of its applications and efforts to operate across form factors from mobile to cloud. The latest release, NetWeaver 7.3, advances its standards-based interfaces for identity and life-cycle management and adds application interfaces to Duet Enterprise (its collaboration with Microsoft) and enterprise workspaces to its enterprise information management (EIM). In addition the next generation of business intelligence (BI) technology from Business Objects, code-named Aurora, is built on the NetWeaver platform, which is an approach similar to Oracle’s with its Fusion middleware platform. The Aurora platform integrates multidimensional or analytical data with relational structures and will be formally brought to market in 2011. Vishal has done a great job in personalizing the SAP technology environment, which is no easy task following in the steps of the dynamic company cofounder Hasso Plattner.

SAP has embraced Sybase technology significantly since closing the acquisition that I assessed earlier this year (See: “SAP Taking Sybase for Mobility and Database Technology”). Sybase is something of an industry secret, but its technology processes two billion messages a day and it provides a range of mobile application development tools. Raj Nathan, the CMO of Sybase, discussed cost-effectiveness in bringing mobile computing to banking and business processes. Sybase also has significant technology in complex event processing (CEP), which I regard as key to enabling operational intelligence, that it acquired from Aleri and now is part of what SAP calls Event Insight. Vishal Sikka made reference to the role of these technologies in a new class of capabilities and applications. This advance in CEP will keep SAP up with Oracle (See: “Oracle Complex Event Processing Advances Operational Intelligence“) and IBM with its Streams technology. As well Informatica has acquired two companies in this segment, 29West and AgentLogic, and eg solutions, Progress Software and Vitria are part of this technology movement. CEP is the latest evolution of an information architecture that dates back decades to banking ATMs and retail point-of-sale systems where I first was personally involved with it.

SAP’s strongest push seems to be in the area of in-memory computing. It has introduced its High-Performance Analytics Appliance SAP HANA, which can perform analytics on large data volumes at heightened scales; SAP says it has run a customer benchmark of 460 billion rows 20 times faster and 200 times better in price/performance ratio than others by leveraging multicore processing. SAP ran this configuration for a very large consumer packaged goods company to demonstrate the detailed level of analysis it can deliver for performing trade and promotion analysis. This step is significant to compete directly with IBM, Oracle and SymphonyIRI, which specializes in large-scale analytics with what it calls Liquid Data (See: “SymphonyIRI Hosts CPG Summit for Manufacturers and Retailers to Collaborate on Innovation“). This focus on in-memory computing continues up from the company’s SAPPHIRE user conference earlier this year where Hasso Plattner eloquently described the possibilities. This technology can operate on HP hardware, and I wonder whether it might replace HP’s efforts with Neoview, which I recently discovered is being discontinued (See: “HP Gives Up on Business Intelligence and Analytics Markets“). SAP is taking in-memory computing very seriously and sees the potential to impact the entire database and middleware markets with its new offering.

Continuing on the executive stage, Sanjay Poonen, group executive for solutions management and line-of-business solution sales, provided some perspective on SAP’s approach to the lines of business and in deepening its efforts across vertical industries. SAP is combining its expertise with its business analytics portfolio and technology platform to bring new products to market rapidly. Sanjay has been working behind the scenes to advance its analytics portfolio in BI, EIM, governance, risk and compliance (GRC) and enterprise performance management to advance the company’s 50,000 application customers. I recently wrote about SAP’s new analytics efforts (See: “SAP Unveils Next Generation of Business Analytics“) that are designed to interoperate across platforms. Though SAP mostly has offered its products in an on-premises approach, it now is working to utilize its experience in on-demand and on-device technology assets. It is good to see this executive leadership, which has worked for years behind the scenes to advance products and sales, recognizes this transformation.

SAP always presents a lively customer panel as part of its events, and EVP of Marketing Jonathan Becher brought a range of companies and roles to the stage, including the CFO at Sambazon, a strategist from Intel and technology executives at Centric and EMC. Their dialogue provided some perspective on key points of SAP’s overall ecosystem of customer and partner efforts. The event transitioned into an executive Q&A that touched a range of key points. It was interesting to hear a technology discussion about the partnership with Microsoft in Duet Enterprise, which my sources say is not advancing as fast as desired because many organizations are not anxious to upgrade to the latest release of Microsoft Office, which is necessary to derive the true value of Duet. This caution by organizations to update their underlying platform has good reasons in terms of cost and resource constraints, and SAP is not able to do anything about that.

To follow up on the line-of-business solutions, I attended EVP Richard Campione’s session. He said that SAP is shifting its advertising and messaging to be more about the customer and what it is doing to ”run better,” which might seem simplistic but did provide examples from the real world of users. Also he emphasized SAP’s rapid deployment solution (RDS) that focuses on providing value in 90 days compared to its reputation of taking 12 to 18 months to reach that point. Richard also spoke about efforts in business collaboration with SAP StreamWork, which can help find talent and use social graph techniques to assemble the right people for discussion or a new team. He made clear that SAP’s approach to business collaboration is about solutions and not horizontal like those of IBM, Microsoft or Salesforce Chatter. It is refreshing to see SAP thinking outside the box on what is possible in using its technology for new line-of-business solutions. Our research finds this is the largest growth area as business is involved in directly acquiring applications with limited support from IT.

A downside to the whole event was having it occur on the same day as salesforce.com’s major conference Dreamforce, which had over 18,000 attendees. SAP seemed to dismiss the timing conflict along with my question to executives about partnering with salesforce.com to help customers interoperate applications and data across their environments. Unfortunately SAP had nothing to add here, which highlights the opportunity for other companies including Informatica, iWay Technology, Jitterbit and Pervasive that provide the ability to connect applications from separate companies. I found it puzzling that SAP has a conflict with the fastest-growing CRM company since SAP’s efforts in CRM have been challenged to support the changing needs of marketing, sales and customer service. In addition getting attention for its CRM effort should be a priority, but Salesforce Dreamforce far outdrew the SAP event; I myself attended Dreamforce the rest of the week as our firm is often asked about its applications by partners in the lines of business.

Nevertheless I did stop in to see how CRM is going at SAP, and since our firm is on record that CRM is a dying category (See: “Is CRM Technology a Legacy or Innovative Investment?“), it was good to see that SAP is beginning to get that idea, too. I will publish a separate analysis of SAP’s efforts in focusing on business processes affecting the customer, but for now I’ll say that overall SAP is making some wise strategic investments into industry-specific applications, coming from SAP Imagineering. I did not get the impression that SAP understands the dynamics and solutions that attract the lines of business and drive current buying in customer experience management, agent performance management and sales performance management, to name just a few areas. I also must point out that SAP does not have the pizzazz you need in marketing to the marketing and sales functions and is not able to crisply demonstrate what is needed to succeed. It was disappointing to see only a series of canned demonstrations running off a DVD. It is seems probable that only acquisitions will help SAP escape its own CRM dilemma. It has tried bringing new leadership in over the years, and maybe they will get it now, but it was not apparent from these sessions. Again, I will cover this in a deeper perspective in coming days.

Elsewhere the buzz and live demos were happening in the business analytics sessions, where SAP presented a range of new planning and analytics technologies, and customers actually showed why they are important. Organizations such as Lincoln Electric and Lionsgate conveyed upbeat feeling in their sessions led by group marketing executive Stephanie Buscemi and head of analytics marketing Jeff Veis. Demonstrations on the Apple iPad to show the next generation of sales and operations planning contributed to a very good session.

In general, the SAP Influencer Summit was useful, and the executive direction on its applications and technology was clearly communicated. Many glitches in the logistics of the event and a lack of readily available copies of the presentations made it critical to keep detailed notes and do some digging, but I am used to that as part of my job. SAP did not spend much time talking about its cloud computing efforts besides the midmarket effort of SAP BusinessByDesign, and while I was hoping to hear how it might deepen its partnership with HP to provide analytics and other line-of-business solutions in the cloud, I realize that SAP must protect its current revenue-generating ecosystem of on-premises sales. In time, we expect to see SAP shift more to this effort as line-of-business buyers choose to spend on alternative approaches. This challenge is the same for IBM, which I just finished assessing after its global analyst summit (See: “IBM Struts Its Software Solutions and Middleware Stuff “). SAP’s positive activities in analytics, mobility and in-memory computing will arm it to introduce new and retrofitted applications for years to come.

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Regards,

Mark Smith – CEO & EVP Research