May, 2009

Could Oracle be making an entrance into SAP’s SMB market with Virtual Iron?

At Sapphire, I had the chance to speak with Rob Enslin, SAP’s new North American president. We got onto the topic of the small and medium-sized enterprise market, where SAP has been successful in winning more customers than Oracle, according to analysts.

But the financial crisis in September slashed spending by SMBs, sank SAP’s earnings and sparked hundreds of millions in cost cutting measures across the organization.

So I wondered how SAP would spur sales in this segment again. Selling software to small and medium-sized business remains one of the main legs of SAP’s strategy, Enslin said. He said, in general, the industries SAP is selling well into now include the public sector, financial services, retail and utilities. Plus, Business ByDesign, its on-demand ERP, is still coming — though he couldn’t say when.

Moreover, SAP will be “flexible” in terms of how it sells software to these customers.

“We’ve got a big financing [program] on right now. We would do different commercial models today how we sold to these customers,” he said. “It’s not one commercial model, up-front. It’s whatever suits the customer.”

But Oracle, which has been pretty absent in this segment, may have signaled its entrance by purchasing Virtual Iron, which makes server virtualization management software.

Virtual Iron was nipping at the heels of Citrix, VMware, Xen and Hyper-V, mostly in the SMB market, according to Chris Carter, CTO and CEO of CCI, a Milwaukee-based consulting firm which specializes in SAP virtualization.

What remains to be seen, Carter said, is whether Oracle will take Virtual Iron and make it part of its virtualization software, Oracle VM, to bring to the enterprise market, or whether whether Oracle will take its applications to Virtual Iron, and therefore, the SMB market, Carter said.

In that case, they’d be able to offer SMBs a complete package of hardware [i.e. the Sun acquisition], virtualization software and business software.

SAP’s approach to virtualization – agnostic to what platform its customers use and leaving its execution to partners — has so far served it well, according to analysts. Plus, it has far more to offer in terms of business software — including SAP Business One and SAP Business All-in-One, its flagship ERP software packaged for SMBs.

But does SAP need to do more now that Oracle could be entering one of its major markets?

SAP maps out its sustainability strategy at Sapphire

Having just returned from my first up-front exposure of the SAP world at Sapphire this week, I’m left to sort though all of the sessions and news announcements to see what I thought was the most interesting. At first thought, I’d have to say it was the company’s approach to sustainability.

The idea of “going green” is nothing new for the company; late last year, SAP said it wanted to help its customers drive corporate sustainability with its ERP software. But it was SAP’s approach, which leans more towards the business benefits of sustainability rather than the environmental, that grabbed my interest during a roundtable session Wednesday.

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SAP still trying to bring cloud computing down to earth

Business ByDesign, SAP’s on-demand ERP, didn’t get too much play at Sapphire this year. With the product still under construction, there wasn’t too much to announce.

The big problem seems to be delivering on-demand software in a “profitable” way. This InformationWeek article offers a great behind the scenes look at what’s going on with Business ByDesign, including what types of “major reconstructive surgery,” it may need before it can be profitable enough to make generally available.

Cloud computing is the “OctoMom” of the technology news industry. And it’s tempting to think that because SAP doesn’t have an on-demand ERP in the market, it’s, as this Reuters article states, “being left behind” as other vendors sell the software.

But just because Business ByDesign isn’t on the market yet, does it mean SAP’s behind in cloud computing?

I spoke with many customers at Sapphire about what types of projects they’re working on this year, and what their strategies are for the future. Few mentioned any cloud-based projects.

Some still weren’t exactly sure what is indeed meant by the term “the cloud.”

In turn, SAP certainly wasn’t trying to hide Business ByDesign, or the company’s on-demand efforts — which include delivering on-demand expense management and human capital management “soon.” Apotheker pointed out that SAP sells CRM, procurement and sourcing and SAP BusinessObjects software on demand.

CEO Leo Apotheker included, albeit briefly, Business ByDesign in his keynote and invited attendees to demo it themselves to “kill a rumor” at one of the booths on the show floor. It’s something analyst Joshua Greenbaum did and said in his blog it “looked and acted pretty robust.”

And Apotheker certainly didn’t discount “the cloud” as a very important delivery model. In fact, most of his keynote focused on how SAP would make its software easier to deploy, lowering the total cost of ownership for its customers.

“I firmly believe that cloud computing is coming down to earth,” Apotheker said in his keynote. “Private clouds are becoming a totally feasible possibility.”

 What do you think?

Four SAP products that can save you money now, according to execs…

Bill McDermott and Jim Hagemann Snabe picked up the evening keynote at SAP Sapphire with a theme similar to Tuesday morning’s address — we’re out here for you.

To that end, the executives named pieces of software or products a company could buy now to have an almost immediate impact on business.

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SAP vs. Oracle: Who’s ahead in the count on the maintenance fee issue?

“Does Chuck Phillips really get it?”

That’s how SAP’s Bill Wohl, who wanted to chat about SAP’s new Enterprise Support agreement, opened up a conversation with me Wednesday. He was referring to Oracle’s decision to give its users on older releases a couple more years at the rates on their current contracts – 22% of net licensing fees

My ears perked up. Nothing like a little SAP vs. Oracle baiting– the Red Sox vs.Yankees of the enterprise software world — to brighten a dreary Wednesday afternoon.  

SAP, of course, is riding a wave of good will churned up by its recent decision to delay implementing an SAP maintenance fee increase until it proved it was worth the money. It’ll do this by tracking certain KPIs on a group of 100 customers.

“We have really worked exceptionally hard through some very painful moments in collaboration with our user groups to figure out a formula and I think we’ve found one now,” Wohl said. “That’s pretty much game changing.”

“The best [Oracle president] Chuck Phillips can do for his customers is say ‘I’m going to delay raising your price for a year or two’ on a bunch of legacy applications that we’ve not innovated in three to four years?,” Wohl said. “And so I’m left asking the question, do they really get it over there?”

OK Oracle you’re up. And SAP’s just thrown strike one.

But before we play any further, let’s remember that SAP sort of threw a ball on this issue to begin with. SAP introduced Enterprise Support back in July, and launched it in January. It didn’t have this formula attached to it then — that was something negotiated by user groups.

“I admit it, we went to the woodshed and back and for some user groups this was really a serious issue,” Wohl said.  ”But I still maintain through it all the issue was really a function of, how do we describe the value proposition for our members? Price became a lightning road, but it wasn’t the biggest issue. The biggest issue was —show us the value.”

Fair enough, but what about those like Salesforce.com’s Mark Benioff — who say these software maintenance fees aren’t even worth it in the first place — you know, his recent calls for “the end of maintenance?”

“Mark would like the world to believe that because it’s a good sound bite that there is no cost of maintenance in on-demand software and that’s just not true and he knows that,” Wohl said, adding that it’s “baked in” to the per seat cost.

Moreover, Benioff is also “trying to play in a big-boy’s game without a solution that gives him legitimacy to play. He’s not offering a solution comparable to SAP, or to Oracle for that matter, by any stretch of the imagination. He just wants to play in the game.”

So who’s really ahead in the count on when it comes to maintenance fees?  Does SAP now have the upper hand on Oracle? Or do vendors like Salesforce.com, who, like the Tampa Bay Rays in the American League East, still threaten to be a contender?

SAP makes Business Suite 7 available — should you upgrade?

The newest versions of CRM, SCM, SRM and PLM — all acronyms now flanked with the number 7 — are all available for purchase or upgrade, SAP announced today.

Along with ERP 6.0, they collectively make-up SAP Business Suite 7. Customers on these releases will never have to upgrade in the traditional way again, SAP says.

When Business Suite 7 was announced back in February, SAP was pushing the “value” message.  “We are ready to help our customers get through the current crisis, and Business Suite 7 is designed to do exactly that,” SAP executive Jim Hagemann Snabe said at the time.

Sure, ditching the traditional upgrade process should save customers money. But most ERP customers, and all of the ones running SAP’s other Business Suite apps, have to go through one more upgrade before they can leverage these enhancement packages.

So how can you get there?

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