In the aftermath of SAP’s TechEd conference in Las Vegas last week – a few things have crystallized out – that really are setting up the company for the years to come.
A few months ago I blogged about how SAP wants to be a technology company, based on my impressions of a visit in Palo Alto. Well after TechEd you did not have to read between the lines to understand that SAP wants to be a cloud company, that was made abundantly clear in keynote, sessions and briefings.
SAP – a tech company already!
The surprise in an early briefing with Steve Lucas and his Platform Solution Group (PSG), was, that Q3 revenue done by PSG was slightly above 50%. That by itself is an inflection point for SAP, and it looks like SAP is becoming a technology company much faster than (at least I had) anticipated. Now of course it remains to be seen how Q4 goes, a critical quarter for the company – and in Q4 applications may well take over the majority of revenue. Definitively something to keep an eye on – and if I was one of the financial analysts to ask questions on the earnings call in January 2014 – there goes my question.
HANA everywhere
Already at the Success Connect user conference 2 weeks earlier, SAP executives tried to make sense on of the very practice of naming everything HANA. It’s a product (database) and an adjective (platform) was one of the best attempts at sorting out the confusion that SAP has created. Worse to hear, that there are rumors that only products named HANA can get funding. SAP would be well advised to sort out the naming confusion – it makes it just easier for all in the SAP ecosystem… Hoping for a Sapphire cleanup here.
HANA – database – moves along
The HANA database offering is moving along, with good uptake of the Suite on HANA and equally on the function and feature side. The upcoming release (service pack) 7 is interesting and makes appetite for more, the ecosystem is eager to know what will be in release (service pack) 8.
The concerns for HANA remain around insert performance, elasticity and the need for a standard benchmark. On insert performance SAP is the most silence, on elasticity SAP has made progress (though I wasn’t briefed, but trusted the sources) – on the benchmark SAP needs to put a stake in the ground. No database offering of recent time has been out there without a standardized and published performance test. The longer SAP lets this linger, the worse for HANA adoption.
HANA – platform – good news
This was actually the most encouraging piece of TechEd. SAP has taken the former skunkworks project around the lean Java Sever from some years ago and formed a pretty compelling, open standards based platform. And it can do more than just develop applications for HANA – the database – so this makes is a general platform – and SAP would like to see it as a PaaS. Not positioning it like that, and non even naming PaaS in the keynote was an omission in my view. You can see some of the success and uptake with the meta framework on which the SuccesFactors EmployeeCentral application has been built. Or equally the soon to be release employee helpdesk application.
SAS and HANA
This was one of the more exciting announcements – if you ever worked as a data scientist or looked at how they work, you know moving and crunching data with ease is key. Making it easier with a bundle is a good move. If SAP executes this partnership right then it could make HANA the default platform of choice under SAS – a huge win for the company. On the flipside – given HANA’s in memory speed advantages, it is very close to not building models in the traditional way – but simply bootstrapping them – something that will not be favored by the data scientist using SAS. SAP will have to balance the two capabilities and interests.
Fiori needs to grow up fast
In his keynote drawing session, Sikka painted Fiori as the to be user interface for the future SAP applications and anything to be build on the HANA cloud platform. And while Fiori has great DNA (e.g. built on top of HTML5) - it needs to grow up quickly to become more than a casual, light weight user interface. Both SAP and coveted developers building enterprise applications on the HANA cloud platform will need a more dense, professional user interface. That's where business is done in today's enterprise applications - and while it's not the perfect usability, professional user productivity is well there. So Fiori (Italian for flowers) needs to become Alberi (Italian for trees) quickly.
Mobile
I highlighted the new mobile environment and platform as one of my key takeaways of the keynote – and more detailed briefings confirmed that first impression. Similar to the HANA cloud platform, SAP moves away from many of the older Sybase products and solutions and favors more attractive standard and open source based components for the next generation of mobile applications – both to develop internally and to be the tool in the developer community.
Technology vendors need adoption and mind share
As SAP becomes more a technology vendor – it needs to cater more to the independent developer and get mind share in the development community. This is probably the largest challenge for SAP from a perception and positioning side – and there are no easy answers, no shortcuts to get there.
The SAP Startup program is doing a very good job, aided by generous budgets and certainly has caught the attention of startups. But a similar effort needs to happen as an outreach to the traditional SAP SI partners and to the next generation of developers – if SAP wants to compete as a technology company. When asked by a SAP executive how SAP was doing with developers, a colleague simply stated that SAP is buying them. And there is some truth to that.
It was encouraging to see that SAP executives start to mention Salesforce.com as the de facto standard platform for building enterprise applications more often – which is correctly perceived in the market and by development resources as the platform to beat momentarily.
So SAP TechEd will need to become one of the conferences – or change its nature dramatically – to cater more for ISVs, for partners, who create value added applications and ultimately – for the independent developer. And then SAP needs to do even more for mindshare. The developer meetup organized in parallel to TechEd in Palo Alto is a good start, but it's like getting ready for the Ironman, you are on the way the start line - haven't even started to race yet.
Elasticity remains a concern
And while SAP is committed to be a cloud company, bringing up the elasticity of the offering (in my view the most important – make it or brake it feature of a cloud platform) with SAP technologists is almost a deer in the headlights situation. And partially the way how SAP does cloud – with bring your own license and yearlong sign ups – is not something that makes elasticity the top of mind issues.
The good news is when talking more about it – SAP executives understand why it matters for the TCO of running in the cloud – and with that for price performance and profitability. We will have to see how well SAP can tune it’s offerings – or even better - design them from the ground up for an elastic world.
MyPOV
SAP clearly wants to create the business application cloud platform of the future. We need to see if the existing corporate DNA will allow that – it’s a long way from being the market leader for on premise business applications to become an infrastructure (and hopefully also a successful business application contender / ) leader in the cloud. And we previously observed that the new organizational structure points to cloud here.
On the road to cloud SAP faces a number of significant challenges – but equally has made good progress (HANA – database) and a promising start (HANA – platform).
My biggest new concern for SAP will be a separate post and coming soon.