Cloud

SAP SAPPHIRE Now: Key Takeaways

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In an earlier article, ”SAP 2011: Still a Cloud Contender,” I opened with the statement “After a couple of turbulent years, SAP is upbeat and looking forward again.”

In hindsight, having spent some quality time with SAP since then—including attending my first-ever SAP SAPPHIRE Now event last week in Orlando, Florida — I was dead on target with that statement.

SAPPHHIRE was an extraordinary and extremely well organized event — it’s no exaggeration that this is one of the best events in our industry. However, what impressed me most were not the event’s glitz, glamour, and scale nor its flawless execution. I was moved more by the upbeat mood, positive enthusiasm, and quiet confidence of the SAP team. Of course, you would expect everyone to put up the best face in what is touted as one of the largest industry events (10,000+ attendees on site and 40,000+ on the Web!). But underpinning that confidence is a strong foundation of a solid strategy, impressive innovations, and a company on the verge of transforming itself.

I mentioned some of the products and innovations that SAP is introducing in my earlier blog post. SAPPHIRE focused on three themes: in-memory computing (HANA), mobility, and cloud. With HANA, SAP made a very strong entry into the data management and analytics space, which is the hottest market right now due to the explosion of BIG data. The in-memory, elastic, scale-out design of HANA lends itself to cloud deployment both private and public. Case in point: HANA was shown running on a Mac mini. HANA is an exciting innovation from SAP and can define its long-term growth story.

HANA has come a long way since its prototype introduction last year. HANA’s coming of age was introduced at the conference in the best possible way: several customer video testimonials and live demos. This was a refreshing move away from self-promoting marketing product pitches and canned demos. Next time, SAP should have customers tell their stories LIVE on stage instead of showing canned videos. That would add more credibility and take the event to the next level. (Note: There was one customer on stage: Avon. This was a nice demo of sales on demand on the iPad).

There have been many excellent blogs on SAPPHIRE such as this post, this post, and this post. Rather than recounting all that again, I will focus here on some of my personal impressions, surprises, and takeaways from the event.

First, I was pretty impressed with how well SAP is engaging with the ecosystem, its customers, critics, and business influencers. In particular, it takes courage and an open mind to engage with and listen to your critics — especially since SAP got the brunt of the criticisms in the past couple of years from these critics — but that’s exactly what SAP is doing. Bringing in outside thought leaders to speak on its behalf is a smart strategy. In fact, the first day keynotes and panel discussions did not include any SAP executives at all.

I always thought — and I’m sure many others have this same impression — that SAP is too big, too expensive, and not a good fit for small and medium- sized enterprises (SMEs). I was pleasantly surprised to discover that nearly 80,000 SMEs are SAP’s customers. That’s 77 percent of the entire SAP customer base! Many of them are very small companies with less than 100 employees. Check out this SAP myth buster video—SAP is too big for SME.

I got a personal tour at SAPPHIRE around all of SAP’s offerings for SMEs. My first impression was that there were too many offerings and too many options. The SME market is a complex one with very small companies, fast-growth companies, midsized companies getting ready to move to the next level, etc., and differing needs depending on the industry. Thus, one size doesn’t fit all and SAP’s products evolved organically over the years in response to these diverse needs.

As the Business ByDesign cloud platform matures, SAP should rationalize their SME portfolio around this one platform, which can scale from the smallest customer to the largest one in their SME customer base. Cloud platforms have the ability to provide scale and elasticity. When this one platform is meshed with the HANA in-memory computing database, what you get is a powerful solution that is capable of meeting the diverse needs of the SME customer base.

The good news is that SAP is rapidly improving Business ByDesign. With 500 SME customers so far and a target of 1,000 by the end of the year, this is a very credible solution particularly for manufacturing and professional services. The perception that SAP is an expensive solution for large enterprises seems to be changing: many customers are getting SAP on an SME budget.

SAP should continue to build this SME-friendly face that is as cost-competitive and as agile as the smaller pure-SaaS players. This is going to come down to executing sales and marketing strategies that focus on the SME channel and LoB and IT executives. The success of the channel strategy is crucial for ByDesign’s success. SAP says it has signed up 150 partners so far. I doubt SAP will have much luck with partners who are also selling on-premise products at the same time. SAP will get the most traction from partners who are focused purely on on-demand products.

All in all, SAP is indeed upbeat and looking forward again. Despite their size, legacy burden, and some pretty rocky times in recent years, SAP has come back strongly with rapid innovations and is moving forward towards a brighter future. Despite a late start, SAP has a shot at establishing itself as a leader in the cloud era.

Disclosure: SAP paid for my hotel and air ticket to SAPPHIRE.

Kamesh Pemmaraju heads cloud computing research for Sand Hill Group. Follow him on Twitter @kpemmaraju.

 

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