We’re Bigger than You, We’re Better than You, and We’re Special
One reason is that SAP was always an application company and what they know really well are business processes, the backbone of business applications. Thousands of the world’s largest companies run on SAP and you cannot this away from them. But when you are creating a new SaaS service you have to not only think about the applications, but the database and the overall system architecture differently, and for a company that never ran a data center this was apparently a bridge too far.
But it’s not like SAP was the first into this market. Their were literally dozens of SaaS providers by the time that SAP stepped into the fray. But apparently none of them provided any guidance or wisdom to SAP when they made decisions about how to do a SaaS offering.
That they screwed it up royal is not a joke. It’s a sad truth. Nothing would give the SaaS model more credibility than an offering from SAP. NetSuite’s CEO Zach Nelson has often said that he knew a large competitor would announce a SaaS offering and then fail to deliver, validating the market and then not delivering all in the same graceful fall down the stairs. But, as I was kidding a friend the other day, it’s almost like they are doing it on purpose at this point. By not delivering and having as many issues as they have, are they causing the market to question the viability of SaaS?
Well, that’s madness, plain and simple, but what else can you say about a product launch this poor? It’s hard to compute. But I have learned never to underestimate the sheer arrogance of people, especially after having ridden a 20 year wave of success. Is it possible that we could be wrong? You stop asking this question at some point in the ride that SAP enjoyed.
One Response to “We’re Bigger than You, We’re Better than You, and We’re Special”
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Great post Tom.
This once again proves that taking an on-premise software and hosting it in the data center, doesn’t make it SaaS. This is just like putting wings on a car and calling it an airplane. The most that companies do is put virtualization – but that doesn’t address the core issues.
The big on-premise companies have missed the fundamental aspect of SaaS, and that is “On-Demand”. This means the ability to get access to a functional software adapted to your needs in days or weeks using less skilled resources instead of months and years using expensive consultants. Even Zinow acknowledged it when he said- “There are two topics customers are generally nervous about. Firstly how many consultants are needed to implement the system, and secondly whether the end users are smart enough to be able to work it.”. Siebel CRM had the same problems – it took a Siebel trained person charging $250/hr, 2-3 days to add a custom field to a screen and you had to bring the server down to do this. Contrast this with Salesforce.com’s point-and-click configuration.
Virtualization doesn’t solve the above problem. SAP’s BusinessObjects on Demand is taking the flawed approach, with the BI solution. By rolling out the same old complex interfaces along with the need to build and maintain complex DB schema, doesn’t make their “hosted” BI, On-Demand. Recently Cognos made an announcement for a lighter version of the product for mid-market. In their case this is just old-wine in a new bottle – restricting screens and creating a new pricing.
There is a fundamental shift happening in technology, that Oracle, IBM and SAP are ignoring
- Business users are becoming computer savvy and are demanding faster adaptability of their business software. They want easy to use Self-Service software.
- IT must be unburdened. Businesses don’t want to be stuck with huge cap-ex with the infrastructure of the technology and the people required to manage it. They want to be able to adjust the technology investment with the ups and downs in the business cycle.
- The Role of IT is changing. It is no longer sufficient to know how to write SQL or debug a network issue. The mundane maintenance will get outsourced to lower cost providers. IT is being forced to become strategic and interface between business and vendors and know how technology can be leveraged to solve the business problems. Their role is now becoming techno-functional.
Regarding SAP – With almost 100% of business revenues coming from the traditional business model, moving to the SaaS business model will be a herculean effort, especially since stock investors point to lower margins as compared to ORCL.