Reactions to SAP Influencer Summit 2009: Conversation Meets the Bottom Line

Talk is cheap, but perception matters. It’s that essential contradiction that framed this year’s SAP Influencer Summit. I was one of 275 media members (blogger in my case) - that were “summoned” by SAP (on SAP’s dime) from December 7-9 in Boston to get a close up view of SAP’s progress on hot stove discussion items like Business By Design.

Coming into this year’s summit, SAP was dealing with several important stories that have taken on a life of their own, bouncing around the blogosphere without any context. We were badly in need of a gut check on where products currently stand and how their value is perceived by actual customers.

In this blog post, I’ll look at each of these key stories, and offer my “bottom line” on how each story was addressed at the Summit.

The stories are, in no particular order:

1. The Enterprise Support/SUGEN dialogue and the effort to get on the same page with customers on maintenance fees without disappointing investors.

2. SAP’s “no more upgrades” pledge, supported by a transition to an “Enhancement Package” strategy that is supposed to provide the benefits of functionality without the traditional complexities of a typical ERP upgrade.

3. SAP’s ability to get Business ByDesign into general release as a viable on demand ERP solution.

4. SAP’s need to develop a coherent SME strategy, rather than a confusing lineup of products with overlapping intentions.

5. A general sense of confusion over SAP’s attitude towards “the cloud” and whether it was investing in new models defensively or with a real purpose.

6. “Conversation” – was SAP truly listening to customers, or going through the motions - saying the right things about collaboration without building it into the product line in a meaningful way?

Most of these stories (except the first two) were addressed directly by SAP during the Summit keynotes.

First, let me dispense with those that were not:

1. Enterprise Support – With CEO Leo Apotheker noticeably absent from the Summit (whereas Henning would attend each year), we weren’t likely to hear much about Enterprise Support in the keynotes (some of the breakout sessions I did not attend did address this topic). Just prior to the Summit, SAP made the decision to postpone any price increases until 2010 pending further review of the KPIs with additional customer input. This smart decision wisely defused some questions regarding last minute resignations from the KPI project team by two German User Group (DSAG) members, though there is some doubt as to whether this is a big story since these members will remain involved in the project in some capacity.

Bottom line: This story is still unfolding, and while it could use more transparency on all sides, it was not critical for SAP to address at the Summit as long as it remains on the front burner in 2010. If SAP and its users can get on the same page with the value and measurement of the KPIs, this could turn from a story that has hounded SAP into one worthy of press releases.

2. SAP’s “No more upgrades” pledge – the Enhancement Package strategy has been welcomed by SAP customers, but not without some skepticism. So far, I’ve heard mixed reviews in terms of how much actual upgrade/testing effort is reduced by the Enhancement Packs. This issue was not addressed in the Summit keynotes, though there was a NetWeaver breakout track I wasn’t able to attend and it may have been addressed there.

Bottom line: Given that SAP now cites 3,500 customers running Enhancement Packs, it’s time to hear more about the successes (and challenges). I’d like to see this front and center at Sapphire 2010, a sentiment I expressed directly to Executive Board Member Jim Snabe during our blogger lunch.

3. SAP Business ByDesign – The future of Business ByDesign was a major emphasis of the Summit as well as the “On Demand Strategy” sessions I attended. I have long felt that SAP has been unfairly bashed on ByDesign for this reason: there seems to be a popular notion that because SAP has made mistakes on ByDesign that the opportunity has been missed. SAP has had plenty of misfires with ByD, but have they really missed a market opportunity? During the Summit, SAP unveiled plans for ByDesign’s next release (3.0, due out later in 2010), that addresses the toughest dealbreaker issue (multi-tenancy), while also enhancing in-memory capabilities, embedded analytics, and the extension of ByDesign to Microsoft’s development community (a step towards a Platform-as-a-Service) capability.

Bottom line: ByDesign needs a UI overhaul (something a number of reporters relayed to the product team), and sometimes the depth of functionality seems to negatively impact ease of use, but overall, this is a robust product, deeper and wider than the competition, and if it can scale properly, I expect ByD to be a market factor in 2011. Here’s two detailed posts on ByD that flesh out the details of the Summit briefings: one by Brian Sommer, one by Michael Krigsman.

4. SAP’s SME strategy – In the past, SAP’s SME strategy has been both confusing and oversimplified (trying to slot different companies into products based solely on their revenues was a previous misstep, now corrected). What I heard in the SME sessions at the SAP Summit was a much more coherent message. SAP’s SME numbers are always surprising to examine. For example, 75% of SAP's 92,000 customers are SMEs (keeping in mind, this does include 45,000 or so “BobJ” customers).

SAP seems to have clarified its SME partner strategy, and the next-generation UIs for All-in-One and Business One, based on the NetWeaver Business Client (both due out later in 2010) look terrific. Mashups pull third party tools and social networking streams into the UI interface. As I Tweeted from the Summit, “All-in-One in 2010: UI will be based on NetWeaver UI 3.0, just like B1. No SAP Portal or SAPGUI in sight.” I liked what I heard about user training as well, as in this Tweet I posted: “OraSure Technologies: user training for SAP BusinessObjects Edge not difficult. BO Explorer installed in 4 days.”

Bottom line: SAP has come a long way with its SME strategy. There are still issues to be tackled (for example the perception that SAP is far too costly for small companies), but SAP also has positive brand connotations cited by SME customers during the conference, such as trust in cloud-based data stored by SAP, and the reliability of SAP’s performance with larger enterprises, many of which are upstream partners of SMEs. One Business ByDesign user, Eric Brown, CEO of Johnson Products, cited ByD’s ability to allow him to scale quickly and “compete with the big boys.” SAP’s SME partner strategy still has much work ahead, but there’s a lot to like in the current SME approach compared to the past.

5. SAP “in the cloud.” PAC’s own Peter Russo has already posted on SAP’s large enterprise cloud strategy, so I won’t add much here. To SAP’s credit, it has largely avoided the murkiness of the “cloud” phrase in favor of specific on demand applications. SAP’s “hybrid” philosophy of on demand and on premise does make philosophical sense for them, and John Wookey’s overview of SAP’s upcoming SaaS offerings for 2010 show that SAP is not standing still.

Bottom line: It remains to be seen how effective SAP will be in developing on demand applications for large enterprises. For now, SAP seems to be reacting by developing applications in areas where there are existing SaaS competitors making hay (HCM, CRM/Sales Force Automation, Service Management). SAP has been able to avoid falling into cloud hype, but has also come off as defensive on occasion, sometimes dismissing SaaS approaches due to security or scalability concerns. I didn't hear that defensiveness at the Summit, a welcome shift into a focus on developing useful SaaS products.

6. “Conversation” – is SAP listening? When I think of SAP listening, I think mostly of SAP sitting down with its customers. Whether SAP listens to analysts like me doesn’t matter as much. Having said that, you can point to the integration of the Twitter stream into the live Summit event as another piece of evidence of SAP’s increasing openness. Other examples amongst many: the engaging style of SAP's analyst relations program, including the blogger program I am a part of, as well as the SAP Mentor Initiative.

The problem is that you can’t be half-transparent. Once expectations are raised, you have to reckon with them. I did hear from several analysts and reporters who felt the morning session was a too much of a one way channel, with SAP hitting on all its talking points, most of which felt like review to those assembled. It would have been interesting to see if SAP could have accomplished more “influencing” by actually structuring in a feedback loop with the influencers to provide input on the topics in progress. To be fair, that did happen in the afternoon of December 10, particularly in the small group sessions.

“This isn’t your grandmother’s SAP,” asserted board member John Schwarz during the keynote, and there is ample evidence of that. His own company, BusinessObjects, has had a far-reaching impact on SAP’s own products and development culture. From the recently unveiled flexible (subscription) pricing options to SAP’s Sustainability Performance Management application announced during the Influencer Summit, there are signs that SAP is changing in dramatic ways.

On the other hand, there are plenty of chances for SAP to become the irrelevant dinosaur its detractors portray it as. Most of the crucial products cited in this review have not seen the light of general release. And as I mentioned in my SAP TechEd piece for PAC, I still see too many “pockets of innovation” inside SAP that, in my view, are not yet sufficiently funded or scaled. There is still too much internal hand-wringing over “secret” projects that deserve and need more media exposure, which in turn will build momentum and executive buy-in.

At the end of the blogger session with Jim Snabe, he reviewed the discussion items he intended to follow up on. My first thought was: “Cool - he views the conversation as a two way exchange, rather than him just 'influencing' us.” My second thought was: “He just made himself accountable in a whole new way. By ASUG/Sapphire, we’re going to expect results.”

I think that’s a pretty good summary of where SAP is at as a whole. It turns out that talk isn’t so cheap, because conversation matters. But it all falls short unless you execute. And on that front, SAP’s customers will have the final say – not bloggers.

If you’re seeking more info on the Summit, I highly recommend Ray Wang's incisive review of the event, which includes links to other blogger's reviews at the bottom.

The keynote replays from the SAP Influencer Summit are also available online.