At the AMR conference last week, Shai Agassi of SAP jokingly referred to himself as the "Israeli assassin". So, what do I do? I engage him in an email exchange in which he goes "Vinnie, since it is your job to try and reduce my revenues...". Boy, am I in trouble!
I have no interest in lowering SAP's revenues or margins. I am very interested in reducing the TCO for my CIO clients. Those 2 statements are not contradictory. As any good supply side economist will tell you reducing taxes increases overall collections. Wal-Mart has shown you can become the world's largest company with decent pricing. Another myth in the market is lower pricing equates lower margins. Not if your costs decline faster than your revenues. The margins of well-run offshore vendors are 10 to 20% better than those of Western service providers - and they charge a third of the rates. As I have written before the TCO of packaged software today is stubbornly high - lowered pricing in many areas will actually re-balance the buy/build equilibrium and help grow revenues and potentially margins. Taking a hatchet to the high selling and marketing costs in the software industry would also help.
Actually, the rest of Shai's email was pretty genial. He eats shoots and leaves rather than eats, shoots and leaves. Now, if I worked for Oracle, it might be a different story...
