July, 2009

Predicting the next move in the predictive analytics software market

This week’s big news was IBM’s SPSS acquisition. We’ve been assured by SAP that it won’t affect its partnership with SPSS. SAP BusinessObjects sells predictive analytics through an OEM agreement for the SPSS PASW Modeler.

“IBM’s a great partner,” SAP exec Bill McDermott said in an interview. “There’s no reason we wouldn’t continue to work with SPSS in those areas.”

Plus, in a statement released after the SPSS acquisition, SAP said it sells a number of predictive and statistical analytic tools, including Analysis Process Designer integrated in SAP Business Warehouse and CRM applications. It also pointed to its recent acquisition of SAF AG, which is helping retail customers improve forecasting and replenishment.

“I think SAP has the lead,” McDermott said. “Others are acquiring to play catch-up.”

But analysts like Forrester Research’s James Kobielus think that for SAP’s analytics stack to be “primo,” like IBM’s, SAP still has to acquire or develop its own predictive analytics software. Information Builders, MicroStrategy and even Microsoft will likely be looking to do the same, according to an article by my colleague Jeff Kelly on SearchDataManagement.com.

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The business of making good SaaS…that’s good for business

With 55 employees and light-manufacturing operations, NetSuite was an ideal enterprise software choice for GestureTek when it deployed the SaaS ERP application four years ago. But having worked with SAP at a previous employer, Gerry Sylvia, the production and logistics director, gladly would have thrown the vendor into the mix –if he knew they had a product.

“I had no idea what a NetSuite was from a hole in the ground,” said Sylvia, who was charged with picking new software. “But I’ve used Oracle, I’ve used SAP. If they had a similar product, I would have more than likely gone that way.”

The Tier 1 vendors still don’t have a true widely available SaaS ERP. SAP seems to be the closest — with Business ByDesign, the product it trotted out and then yanked from the market about two years ago, citing functionality concerns. It now says 40 customers have gone live with it, and another 40 will be online in the coming weeks.

There’s no doubt in my mind that the engineers at SAP can make, or even perhaps already have made, Business ByDesign work. The engineering prowess lies in making it as profitable as SAP wants, or needs, it to be. It’s something SAP itself admits.

The question of whether SaaS is a profitable business model seems largely to have been answered for the niche vendors. Salesforce.com achieved a profit margin of between 6% and 7% this year, up from 4% a year ago. NetSuite is also pulling in a profit, and today, NetSuite acquired QuickArrow to advance its creation a cloud-computing application suite for services-based companies.

But that question hasn’t faded for SAP, Oracle or Microsoft, which are used to margins up around the 30% mark.

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What’s SAP’s next move in a consolidating middleware market?

It’s been the million dollar question — why didn’t SAP buy IDS Scheer?

All the signs pointed to the beginning of a beautiful friendship — consistent rumors that SAP may make a play for IDS Scheer, the long-time partnership, the 60% overlap in customers. When I started covering SAP more than a year ago, “keeping an eye” on IDS Scheer was one of the first things my boss told me to do.

The truth is — I don’t know why SAP didn’t buy them. SAP didn’t want to comment on the deal when I asked.

The past being the past, let’s pose the next relevant question. We talk a lot on this blog about consolidation in the ERP space. But as Forrester Research analyst Ray Wang said when I spoke to him about the Software AG/IDS Scheer deal, this bodes more consolidation in the middleware market.

To that end, what are the consequences of continued consolidation in the middleware market — and what’s SAP’s next move?

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Is there innovation in SAP’s SCM software strategy?

“SAP’s Supply Chain Management Strategy and Offerings,” the topic of a recent report by Gartner Research’s Andrew White, brought to mind a question that was batted around the blogosphere last month.

Can the big vendors drive software innovation?

For its part, SAP has a strong supply chain management vision, White said. Partnering with supply chain management vendors like i2 early on and jumping on the RFID trend have proved beneficial.

Plus, SAP sells some innovative, out-of-the-box supply chain management products, White said. Take, for instance, SAP’s supply network collaboration software. It’s completely independent of the ERP backbone — it has its own database. It grew out of procurement capabilities and acts as a hub for manufacturers to communicate better with suppliers. Customers are using it to better coordinate sales, supply and even to integrate different ERP systems.

But for a company that bleeds supply chain management, can SAP’s software really be considered innovative?

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As Oracle advances Fusion middleware, what’s SAP’s next move?

“SAP will stick to software,” was the headline from SAP CEO Leo Apotheker’s interview in the Wall Street Journal last week.

I don’t think anybody’s really speculated that SAP will do anything but stick to selling software. It seems unlikely that they’d target this “one stop-shopping” approach Oracle is pushing (Sun acquisition) when the partnership approach SAP’s taken to infrastructure has worked so well over the last few years.

However, SAP’s also been very open in the past year that in terms of selling software, it knows it can no longer develop everything organically that it needs to stay competitive.

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