SAP’s strategy for cloud computing? Muddled. Social media? Few friends in sight.
However, despite embarrassing missteps on strategy and execution, the software industry giant may have the last laugh in the war with Oracle. New leadership and a “beat Oracle” mentality could fuel the development of a transformed SAP over the next few years.
But first, a bit of history of how Oracle and SAP have approached the CRM industry over the past decade. Think of it like a three act play, with the third act underway now.
Act I — CRM Point Solutions
In the 1990s when Siebel was rapidly becoming the Big Dog of the CRM industry, SAP was asleep at the switch. Actually, so was Oracle. Tom Siebel exploited their complacency for a few years to become the market leader.
But SAP eventually woke up and fought back. In the first half of this decade, SAP went from nowhere to competitive by building its own CRM software.
I visited SAP HQ in Germany in 2003 and left impressed with their commitment to plug a gaping hole in their suite of business software—mainly to sell to the SAP Faithful otherwise known as their installed customer base. Meanwhile Oracle mounted an effort to build its own CRM software and compete with Siebel, with limited market success.
What about cloud computing? Don’t ask. While both Oracle and SAP were desperately trying to get into the CRM game, SaaS innovators NetSuite, RightNow and Salesforce.com took full advantage.
Act II — Integrated Business Suites
By 2005 or so, most analysts viewed as SAP as the CRM software market leader, albeit with some concerns over creative accounting of software licenses and too much “shelfware.” But let’s not quibble about the difference between revenue-izing software and customers actually using it, OK?
Oracle’s answer, of course, was to buy Siebel in late 2005. Now that’s a quick way to end a competitive rivalry! And then announced “Fusion” as the future integrated suite that would bring together a disparate set of software from Oracle, PeopleSoft and Siebel.
The next couple of years SAP worked on improving usability and Oracle on turning Fusion from slideware to software. Both fumbled the on-demand opportunity while working on bigger problems.
Act III — Social Business
During the past couple of years the big trends have been cloud computing, Web 2.0 and social media. Salesforce.com broke the $1 billion annual revenue barrier in January 2009, and has been pushing its cloud platform while adding Web 2.0 capabilities.
“Social business” vendors like Lithium, Jive and Telligent (and many more) are jockeying for position in the hot market for enterprise social software—integrated suites that include forums, blogs, wikis etc. Oracle and many other CRM vendors have announced so-called “Social CRM” capabilities to integrate CRM systems with external social networking sites (e.g. Twitter) and company-run online communities.
Once again, SAP is playing catch up not only to Oracle, but to the entire industry. Can they do it?
Possibly. I spent some time recently catching up with Jonathan Becher, SAP’s newly minted SVP of Enterprise Solution Marketing. He came to SAP in early 2007 with SAP’s acquisition of Pilot Software, a performance management vendor company he founded in 2002.
It says something about SAP’s strategy that CMO Marty Homlish appointed Becher, an entrepreneurial spirit, to tackle this Big Job. Becher aims to develop a more coherent marketing/solutions strategy that includes cloud computing and social media. He seems to relish the challenge and says there is good support from top management and within the organization. He’ll need it.
SAP definitely needs some new ideas and innovative thinking. As a hint to future Web 2.0 possibilities, Becher suggests looking at SAP Web 2.0 blog, although it’s not an officially sanctioned position of the company.
Or check out SAP BusinessObjects Explorer, a cloud-based tool for data analysis, which may give Birst something to worry about.
Vinay Iyer, SAP CRM’s VP of Solution Marketing, told me SAP has social initiatives underway (not necessarily formal products for sale) that enable social media to be used in sales, loyalty management, and customer service. SimplyBox, an interesting free service to capture and share portions of web pages, is one tool that can be used collaboratively with SAP software.
Green Shoots?
Time will tell whether these are the green shoots of innovation that will transform SAP into the Social Economy software leader. Or weeds that will be killed with a dose of not-invented-here herbicide.
Becher and Iyer admit that their strategy is a work in progress, and that they can’t afford to develop and hype a marketing vision that can’t be executed. In other words, don’t repeat the Business ByDesign debacle.
My take is that any big change starts with leadership changes. Becher’s appointment speaks volumes. When was the last time that an SAP outsider got appointed to a Senior VP position like this?
But this transformation won’t happen with slick marketing. It’s also worth noting that for the first time ever, SAP’s CEO Léo Apotheker doesn’t come from development background, which should foster a more market- and customer-oriented approach in the future. And SAP picked up a seasoned development leader when John Wookey jumped ship from Oracle last year.
With these leadership changes, SAP has a better chance of building a vision that’s in synch with today’s market, and building solutions that companies can buy and deploy before I retire.
Finally, let’s not forget what really drives SAP: Beating Oracle. With Oracle moving more aggressively into cloud computing, Web 2.0 and social CRM, SAP can’t afford to be left behind in the platform wars in large enterprises.
So, pass the popcorn and settle in as Act III unfolds. SAP could deliver an ending that will surprise us all. Or not.
Further Reading:
- CrowdService: A Clear and Present ROI for Social CRM
- Executive Changes at Jive and Telligent: Start of “SoftWar” in Enterprise Social Software?
- RightNow Embraces “Social CRM,” Upgrades Analytics
- Web 2.0: The End of the Beginning
- Now We’re (Jive) Talking! Real Social Business Applications to Engage with Customers
- Oracle’s “Social CRM” is Just Lipstick on a Pig
