Now back from yet another SAP Teched, again well organised and highly interesting. And I must admit, Berlin is one of my favourite cities so all’s good when one is invited and costs are covered.
That was my disclosure if you find me too gushing about SAP, and my second disclosure is that I’m drifting towards becoming a head on competitor, which might be blamed if you’ll find me all too negative.
So what’s my wrap? I won’t go into all, I’d rather stick with one single issue. An issue which is long term more important than all other combined…
As always these shindigs starts out with the keynote(s) setting the big goals and general framework for their efforts and plans. As always, and obviously, innovation is a key theme. This time summed up by three focus areas – on demand, in memory (DB), and mobility.
But that’s just window dressing, behind there’s a big lurking policeman; an overall guiding principle for their innovation, and his name is: “Don’t touch the core, innovate on the fringes”.
Colour me a sceptic, but when I hear that message I immediately “read” two things:
- It being stated explicitly makes me suspect that this is exactly what they think they should do; challenge the core. But that is scary, so no, don’t.
- That the focus is on the now, the existing, the customers want no change – all sounds sensible.
But that sense reflects only the surface. Behind lurks reality; all businesses must move forward, new business models (as in the whole business) attacks the old business models every day, and with that effectiveness of the business as a whole makes the efficiency of business operations irrelevant. And the current core is stuck in one way to do business, it has no leeway for testing out other ways, its focus is on operational efficiency.
I agree that the core should not be messed with, huge numbers of users are dependent on it, and for SAP it’s a core cash flow source as well.
But it does not preclude that they should challenge it!
In fact, if they really mean not to “touch the core” it implicitly means that that they think the present core (architecture) will last forever. And that is simply illogical and cannot be.
Let some group, entity, skunkwork, be free to challenge the old core and experiment with new and very different cores and architectures. They should revisit the business situation at their customers, then proceed backwards not taking anything for given or set in stone.
It could be seen as a simple insurance premium payment. If the skunkworkers come back and say “the core will last forever”, well that’s good, like my house not burning down despite me having an insurance. Or it could lead to “oy, here’s an alternative, lets invest in exploring that further”.
Not doing this is illogical, and very dangerous in my view. Good for me as a long term competitor though as I do think their core is in for some nasty surprises.
Innovation is easy when you are a startup with no legacy and no commitments to existing customers.
SAP’s innovation problem is not any different than Microsoft’s innovation problem. How long did it take to move the DOS world to the NT codebase? Six or seven years of win32 with DOS heritage operating systems (the whole Win95-ME series). MS would probably have liked to have made that jump in one swoop in 1994 when they released NT 3.1, but it took until they released XP. They knew where they wanted to go, but they could not because the customers did not want it. They wanted DOS with better memory management; faster horses to paraphrase Henry Ford.
“They want faster horses” is a common quip within SAP.
On the flip side, analysts and bloggers are no different than customers. You speak of it all being about SaaS, in memory and on-device. Building an in memory, SaaS app that runs on an iPad may be fashionable, but is it really innovation? Fashionable != innovative, but people often conflate the two.
David,
“Fashionable != innovative, but people often conflate the two.” Exactly!
That’s why I call the current innovation happening in such places as “spray painting” (That was Vinnie who coined that excellent image!) and/or “fast fooding” – where the name of the game is to take existing product and make it easier to consume, see SaaS 🙂
Real innovation always should start at the front end, by challenging the client’s assumptions (and your own of course), not at the back end as that will always become spray painting.
I agree with David regarding SAP having to also care for a large installed based. There are two other points – first, SAP has continued to tweak the core functionality. Yes, it’s not making big breakthrough changes in the core, but it’s certainly not a complete hands-off situation either. And second – I think that by working around the fringes SAP is also responding to customers who want more value in those areas. There isn’t much value that can be squeezed out of the core, but a lot of it is there around the edges. So it’s wise for them to invest in those areas.
Steve, totally agree of course. Don’t rebuild the ship while ferrying passengers, rather build a new one on the side!
Actually I don’t even say they shall build a new one (even if I seriously suspect that could be the outcome), but not challenging the core is illogical. In practice typically this should happen on the side, out of sight so to speak. Then act according to findings if need be, even build a “new ship” while still earning money from ferrying passengers…