SaaS Sprawl, One-Stop Shopping and Free 8-Tracks To Boot: A Sad Day in the World of SAP

Posted on May 18, 2010


“Wookey, speaking at the SAP Sapphire conference in Orlando, said he doesn’t blame these customers for going out and getting SaaS, but he does see an opportunity to “bring cohesion to the model.” In some respects, Wookey’s plan could be a cure for SaaS sprawl . . . Customers have come to SAP and “said it would sure be nice if you could provide these things on-demand so we wouldn’t have to go to all of these other vendors,” said Wookey.”

from SAP’s SaaS strategy: On demand add ons, Business ByDesign starter packs by Larry Dignan, ZDNet

As faithful readers you already know that I pour through literally an endless flow of information from electronic publications to social network group sites to even traditional newspapers when I find myself waiting for an extended period in any given airport.

That said I have over time developed an instinct that is a cross between my grandfather’s left elbow that only hurt when there was a pending rainstorm and, a voracious appetite for learning everything about almost anything that crosses my radar.

So when I saw Larry Dignan’s article through my ZDNet feed I instantly tuned in based on the fact that I have either written about Oracle’s SaaS movement (Oracle launches sourcing software on demand: As life imitates art, so too does business imitate politics (Part 1)) and (Oracle launches sourcing software on demand: Why market adaptability may ultimately derail the transition (Part 2)), or interviewed senior executives from Ariba on the PI Window on Business Show after the company’s bold announcement on March 4th, 2009 that “Ariba is in demand claims finance chief.”

Just as a point of reference, Tim Minahan, CMO (There’s a slow, slow train comin: Epilog for the Ariba Interviews), and Ahmed Rubaie, CFO (Ariba: Calculating the Cost of Transformation) were the two executives that were on the PI Window on Business discussing Ariba’s SaaS strategy.

I even wrote a white paper about an up and coming SaaS company (who is also a sponsor of this blog) titled “Riding The Crest of a New Wave: How The original SaaS Companies Have Gained The Upper Hand.”

Suffice to say, and based on implementation challenges experienced by the City of Houston or Kings County, to name only a few from the public sector (don’t even get me started on the private sector as case history alone could take up to 20 pages or more – come to think of it I did write a white paper on SAP*. . . ), the move to a SaaS model was inevitable.

What is however disappointing and even a little sad is how the SAP senior management is entering the SaaS world as if they actually carried the same swagger they did back in the days when clients accepted the monolithic ERP-centric implementations through which the CIO served as the gatekeeper to the organization coffers.

Add in a little FUD (the old IBM sales approach of creating Fear, Uncertainty and Doubt) by way of the purported problems with “SaaS Sprawl” and you would also think that these guys have never heard of the Metaprise platform.

In short, SAP’s verbiage seems similar to what Ariba’s Tim Minahan described when he talked about Oracle trying to steal his company’s thunder through the announcement of their own entrance into the SaaS world, with what he termed as a “bipolar attempt at cloud computing.”  Minahan went on to say that if he “were an Oracle or SAP customer,” he’d be confused, and that he thinks that “that’s their intention.”  In fact the Ariba CMO went so far as to say that “Oracle’s on-demand sourcing is not really on-demand at all.”  (Note: you will find the Minahan interview interesting, especially within the context of today’s post.)

John Wookey (am I the only one getting a Star Wars flashback here), seems to acknowledge the challenges referenced by the Ariba CMO regarding the traditional SAP model when he “outlined the SAP conundrum” as follows:

  • Customer installed big ERP suite;
  • Wanted to upgrade functions (because existing functionality didn’t deliver – City of Houston $0 police pay checks);
  • But didn’t have the budget (because absence of expected functionality ate up the cash – Fox Meyer Drugs);
  • Customers got frustrated and went out and got software as a service to get that functionality (because like a Kings County realized that they purchased the equivalent of the Brooklyn Bridge).

He, being Wookey, even admitted that there is “a rub” in that “Customers that already have gone with SaaS in addition to an on-premise suite may not swap out for on-demand orchestration.”

However, and in a “if your gonna dream, might as well dream big” manic delusion, Wookey then optimistically added “Customers have come to SAP and said it would sure be nice if you could provide these things on-demand so we wouldn’t have to go to all of these other vendors?”  That’s like me, when after my beloved Toronto Maple Leafs lost yet another playoff series and in the process dashing my hopes for a Stanley Cup, saying that even the then reigning champion Montreal Canadians were tired of winning all of the time.  I was of course 10 years old when I made the statement, so at least I can claim that I was a somewhat naive kid.  Wookey, what are you saying man?!

Are you trying to suggest that the market, which is now fully attuned to the wonder of SaaS-based technology is suddenly going to say we want to close ranks and deal with the very company that took all of our cash in the first place?!

The game has changed, especially within the customer realm where the functional silos that created the isolated chambers of non-communication that worked to the large ERP vendors advantage, have already dissolved into an enterprise-wide collaborative connectivity.  So much so that a June 2007 survey of CIO’s by Information Week’s Optimize found that their “5th annual survey shows the CIO entering a period of rapid transformation,” and that they “Expect more business responsibilities and (say 32% of respondents) even a change in title.”

Even the former US Federal Government’s CIO under the Bush Administration Karen Evans, who was a member of the PI Window on Business Washington Roundtable discussion on transparency in public sector procurement in April “stressed the importance of reaching out and engaging as many suppliers as possible.”  This is especially true with “large IT acquisitions” continued Evans, “as it is virtually impossible for a buyer to know what all the technologies are in terms of what is out there (in the market).”  (Note: here is the link to the Washington Summit Event Page that will provide you with the URL to the above referenced Roundtable as well as other notable presentations such as the one by NASA’s Richard Arbuthnot on that Agency’s successful Shared Services initiative.)

With proven performers such as Evans, who oversaw a $70 billion IT budget, talking about expanding versus contracting reach, I find it hard to believe that even the behemoths of the Fortune 500 list, let alone the denizens that occupy the middle ground of corporate America would be inclined to arbitrarily confine their dealings to a single vendor.

Therein of course lies the real rub, as it illustrates that SAP and in particular Mr. Wookey is either out of touch or out of his right mind if he truly believes that they can get the snakes back in the playpen (and keep them there) now that they have already gotten out – please tell me that you are a Far Side fan.  Or to use another analogy, the Spanish Prisoner has realized that the prison door isn’t locked and now knows he is free.

* Anyone interested in a copy of the SAP White Paper simply subscribe to this blog and I will send you a complimentary copy.

PI Window on Business

Show Reminder:

Joining me on the PI Window on Business on Friday, May 21st, 2010 at 12:30 PM EST is Aviad Meiter to share with you his “Unimaginable Journey” from inexperienced beverage industry entrepreneur to becoming a captain of industry through the sale of his venture to PepsiCo’s 2nd largest bottler worldwide.

Meitar, who emerges victorious where others such as Hermitage Capital Management’s William Felix Browder or Szeged Paprika and Meat Processing Plant’s John Berling Hardy fell to “corrupt bureaucrats and their businessmen accomplices,” behind the former Iron Curtain, is a compelling and memorable protagonist.

Use the following link to access both the Live and On-Demand broadcast “An Unimaginable Journey: How Pepsi Beat The Odds In Romania” on the PI Window on Business on Blog Talk Radio.