Don't stop thinking about tomorrow

Upfront a confession - my wife has long accused me of planning the next vacation instead of enjoying the one we are on.

So, I don't blame SAP co-CEOs Jim Snabe ( as he does with Dennis Howlett here) or Bill McDermott (as he does with Jim Cramer here and the Washington Post here) for constantly talking about cloud, analytical, mobile products which make up just 1, 2, 3% of SAP revenues. They cannot wait for them to become 10, 15, 30% products.

Ditto with IBM. Notice how in every commercial they talk about advanced analytics or smart cities, and their employees say "that's what I am working on". The poor souls who generate 90% of IBM revenues via DB2, Tivoli, Notes, SAP projects, data centers, deskside support, accounting BPO etc never get to make an appearance.

As Dennis says "These are the core ‘things’ that all large businesses need in order to develop an efficient organization. They represent the backbone functions upon which all businesses depend and which provide the way in which they pay and get paid for the goods and services provided."

Dennis is right. Except that between SAP, its partners, and IBM that is a $ 150 billion a year backbone burden every single year. A burden that stubbornly refuses to go down year on year. They actually come in the way of "efficient organizations". 

And the key word is backbone - little of what they provide today helps companies with smarter products or with revenue creating technology.  This is when IT is challenged to support front-facing, not backbone, support.

SAP and IBM are not the only ones with the lopsided revenue mix. Most large vendors have 60-70% revenues which is in that backbone category. But SAP and IBM stand out,  both in the percentage of that revenue, and most definitely in their noise about  the "new" stuff.

Frankly, I would be more impressed to hear from SAP and IBM how they are using Six Sigma, Agile, CMM5, better ecosystem management etc to make their "utilities" more affordable and efficient. Innovation is not just about  talking about cool new stuff, it is also about dramatic improvements to current products and processes. And they can see internally what significant efficiencies are being delivered via their new cloud and mobile technologies.

And you what, magically. as the cost of their older utilities goes down, their newer products they keep talking about will go from 1,2,3% of revenue to 5,10,15%. Their reality will catch up to their future talk.

But no - that's boring stuff you don't want to bother Bill or Ginni with or they would rather talk about.

Way more fun to sing with Fleetwood Mac.