deal architect

SAP, Apple and Microsoft

I believe every vendor should be proud of successful customers. Both Apple and Microsoft use SAP in different parts of the enterprise. With recent partnering announcements with Apple, and Microsoft CEO Satya Nadella making an appearance at SapphireNow, I have seen SAP execs and fans talk up both the relationships. There’s pride and then there is hype.

First of all, leveraging brands is common across industries. Delta serves Starbucks coffee, Audi offers Bang and Olufsen sound systems, Keebler offers cookies with M&M candy. Consumers like the reassurance of big brands collaborating.  But imagine if you had to pay a hefty premium for that collaboration or you had to jump through hoops to get that combination. You would think twice.

My question is why is SAP only now leveraging Apple’s mobile capabilities or Microsoft’s Azure data center and machine learning expertise? It has had wild swings in its own mobile strategies and has lived with primitive data centers compared to what Microsoft, Amazon, Google have. So, if the transition to whatever SAP delivers with Apple and Microsoft is smooth and affordable, good but bear in mind SAP may change its mind again soon.

Also, learn from SAP’s previous such initiatives with big tech brands

Exactly a decade ago, SAP announced its Duet initiative with Microsoft. Back then I called it “wine after its time” and asked “why Microsoft Office and SAP R/3, both a decade old at that point and dominant applications in most corporations had not (already) been tightly integrated." Duet was only marginally successful because options like SaaS solutions like Google Docs had started to blossom, and Duet was overpriced and also because Microsoft was starting to emphasize its own ERP products.

Or go back, two decades to the joint venture with Intel called Pandesic to develop “e-commerce” capabilities. Again marginally successful.

Regarding Apple as a customer. SAP will periodically, as it  did at Sapphire last week, bask in the phenomenonal success Apple has had. CEO Bill McDermott said “the whole’s most valuable company loves our software”.  Ask anyone who follows Apple closely.  They would highlight Foxconn's incredible delivery record, Tim Cook's and Fedex's supply chain sophistication, Jony Ive's design teams, their retail leadership under Ron Johnson and now Angela Ahrendts, their app ecosystem of millions of small developers, as far bigger contributors to Apple’s success.

SAP is taking way more credit for Apple than it deserves. It often forgets it is just a transaction backbone,  a back office system. And BTW I did not even mention Steve Jobs in who should take credit at Apple.

SapphireNow: Too Little, Too Late?

I was in California last week relishing NetSuite’s SuiteWorld – and its two decades of cloud maturity and growing industry functionality as I summarized here. I happened to see a 8 page color SAP insert in the Wall Street Journal and I shook my head at drivel like  “When you Run Live, you Run Simple. And when you Run Simple, you win.” Add that to all the meaningless HANA commercials and obnoxious spokesperson, “Phil” you have to roll your eyes at the marketing money SAP is wasting.

However, something remarkable was happening at SapphireNow in Orlando. As Bob Ferrari notes CEO Bill McDermott in his keynote, “openly admitted that he ditched his original keynote content 15 days before Sapphire. The reason cited was some pointed feedback received from customer CIO’s as well as from SAP Board members. Instead, the message was one of acknowledgement that SAP was not listening and responding to customer feedback. McDermott therefore declared that empathy would be the number one message delivered.”

Ferrari generously gives my book SAP Nation credit for opening SAP’s eyes. That’s very nice of him, but does beg the question what the heck have SAP executives being doing for the last several years?

McDermott gave out his email and invited customers to write directly to him. Nice gesture, but customers have been signaling to him in many more forceful ways. Thousands of customers have ring fenced and two-tiered around SAP.

John Appleby, a SAP  partner tweeted from the event : Great quote: "Every relevant software company in the world in the last 10 years was created in a gap which SAP left behind". To which I responded “translate that from customer pov. In last decade SAP has delivered little for over $150 bn in maintenance fees.” Over 200 customers have moved to third party maintenance, and from my recent Rimini Street briefing series I can tell you they are getting better returns than they were promised and are doing reference calls with tons of other SAP customers. Countless SAP customers have been moving infrastructure to the cloud, re-bidding their application management outsourcing contracts.

If the SAP field has not been reporting all this back to McDermott and the board something is dramatically wrong at SAP.  As Vijay Vijaysankar of IBM observes: The “surprise” for me honestly was that SAP leaders themselves seemed to be surprised by what they heard from the CIOs they spoke to. This frustration has been there for a while amongst customer ecosystem.”

The irony is SAP executives were expressing empathy while the partner booths at Sapphire continue to be as giant as ever. It’s a visible sign of the $ 300 billion annual burden on SAP customers.

I am afraid attendees to this year’s Sapphire will have the same reactions I had noted in SAP Nation.

But like so much else in Orlando, Sapphire Now is kitsch, a pleasant escape from reality. When they return home, attendees realize their SAP environment is not “simple” or “minimalist,” words SAP executives frequently use. They look back and wish technology works as well as it did at the event, which supports nearly 100,000 iPads, smartphones, laptops, and the walkie-talkies and pagers of the event attendees, security staff and “roadies.” They wonder why SAP cannot extend its influence on its partners beyond the event. At the event, SAP has guidelines for exhibitors concerning every little detail: signage, dress codes, professional behavior, employment solicitation and “sensitive and/or non-complementary” materials.

As they share all the freebies they picked up at the event with their kids, it strikes the event attendees that nothing in the SAP economy is really free. They chuckle about the all-too- real joke they heard in Orlando: “SAP stands for ‘send another payment.”

Many customers have gone beyond chuckling.

And depressingly I have not been to Sapphire in years. Little appears to have changed.

NetSuite and the Year of the Vertical Cloud

I wrote in January I expect this to be the year of the vertical for cloud applications. There are too many horizontal cloud apps in accounting, HR and CRM, not enough in industry specific functionality. Every event I have gone to since, I have viewed from that lens. SuiteWorld 16 last week was no different.

CEO Zach Nelson pointed out they now have customers across every one of 1540 SIC codes including exotic ones he joked about like "coin-operated amusement devices”. Almost to validate Nelson, an Alphabet (Google’s parent) exec remarked on stage they were recommending NetSuite to a wide array of divisions including Nest which makes home devices and Calico which is focused on anti-aging research.

The reality, however, is there are plenty of utilities who would love to replace SAP billing, ditto with retailers with Oracle merchandising, and health care providers with Epic electronic health records. They are not calling NetSuite. Not yet anyways as these currently fall outside of NetSuite’s areas of focus.

NetSuite’s specific industry strengths were sharply in focus on day two of the event where they had 5 parallel sessions for Software/Internet, Retail/Commerce, Wholesale Distribution and Manufacturing, Services and Nonprofit sectors. I attended the Software track and it was very well done. Product functionality and customer executives showed NetSuite’s appeal across the lifecycle from start-ups to “growth at scale” to public companies. NetSuite own executives like Founder, CTO and Chairman, Evan Goldberg and CFO Ron Gill talked with credibility about different needs and challenges in each phase and how their solution met them.

I spent time with two senior NetSuite execs in the Wholesale/Distribution sector (which is NetSuite’s most mature) and two manufacturing customer CEOs – one at EPEC, a tech design and engineering company and Urban626 which makes the URB-E light scooter.

In each of the focus sectors (other than non-profit which Jessica Twentyman of Diginomica covers here) NetSuite can showcase 000s of customers and years of product growth – definite signs of maturity. 

In a Q&A, Nelson pointed out they can see adding a couple of new industries a year going forward. Jason Maynard, EVP Strategy and Corporate Development highlighted the role of partners (NetSuite says 70% of their deals involve at least one SuiteCloud Developer Network (SDN) partner with a SuiteApp built using their platform). In a side conversation, Goldberg told me they follow the lead of customers when deciding on verticals. He said they have not seen much interest from law firms so the service sector offering will likely not evolve into e-discovery or other nuances attorneys need.

Another area of NetSuite growth is in multinational functionality with enhancements for global entity management and inter-company accounting. NetSuite has historically been competitive in 2 Tier ERP scenarios and this should further strengthen its position there as well as in single tier ERP at the enterprise level.

The recurring theme from many sessions = NetSuite has a formidable offering in the “Order to Revenue” cycle for many industries. On day one of the event, NetSuite introduced SuiteBilling, an order-to-billing-to-revenue solution and I heard several of their execs use a variant of the slogan “If you can sell it, we can bill it, and recognize the revenue”. Revenue recognition will be a strong suit for NetSuite as enterprises prepare for compliance with standards like ASC 606. 

In the past I have written about NetSuite’s retail industry strength and support for omni-channel commerce. At this event, I saw that extended to omni-business-model -  any product, any service and any subscription as-a-service. Add to that NetSuite’s multi-national strengths, SuiteCloud Platform PaaS capabilities, and partner diversity and you can see how its solutions are attractive to a wide number of industries.

While I would love for NetSuite to start developing more industry specific operational modules I am pleased to see the revenue side capabilities that many a SIC code customer can adopt. At this stage, I believe NetSuite has one of the most evolved industry strategies in the cloud application world.

What to expect at SapphireNow

At a couple of cities during the Rimini executive briefing tour I have been asked what SAP customers can expect to hear in Orlando next week. I have honestly answered - my speculation last year was totally off. After CEO Bill McDermott excitedly announced S/4HANA three months prior, I expected Sapphire to be all about the new product. I was wrong as I wrote in SAP Nation 2.0 excerpted below.

This year, I do expect a show of sympathy for McDermott after his unfortunate eye accident. I expect SAP will highlight its recent Apple partnership (though a CIO groaned last week – here we go again with yet another SAP mobile strategy). And I expect it will showcase what it can sell today – Concur, SuccessFactors, BYD, HANA sidecar etc.

What I do not expect is for SAP to come up with ideas for how current ECC and BusinessSuite customers can dramatically reduce the burden SAP Nation weighs on each of them. As I wrote here, I am seeing customers do their own bit to reduce the burden with third party maintenance, ring fence and other “coping strategies”

I hope I am wrong about what SAP will share next week, but this year I am not taking any chances. I will be nowhere near Orlando next week.

From the book about last year’s SapphireNow

However, something strange happened at the event in Orlando.

McDermott, an eloquent speaker who is recognized as one of the best software salespeople in the world, waited
20 minutes into his kickoff keynote speech to talk about S/4.He joked about the unwieldy product name, and after a few minutes punted it to Leukert to cover the details on the next
day. In fairness McDermott was handicapped by the absence of Sheryl Sandberg, COO of Facebook, who was supposed to
have presented with him. Sandberg had to cancel due to the sudden passing of her husband. Dave Goldberg. As a result,
McDermott shortened his keynote by 30 minutes. Yet if he had chosen to address the new product, there was still plenty of time to devote to S/4. In the future, this may well be called the S/4 “Sounds of Silence” speech.

Maybe we have all been spoiled by Apple product launches and in particular by Steve Jobs’ signature “one more thing” portion of the speech where he usually introduced something spectacular. McDermott’s “one more thing” came across as odd. He chose to have his staff demo the Concur (a 2014 SAP acquisition) travel expense management product. Now, travel administration is a nuisance in most companies but from the largest application vendor in the world you expect bigger initiatives. You would expect from SAP the equivalent of the Boeing Dreamlifter, such as solutions for thorny supply chain management challenges. Or he could have reached into the Plattner/Leukert book where they showcase examples of medical research insights. fraud detection, hurricane damage prediction for insurers and consumer sentiment analysis.

Three years earlier then co-CEO Jim Hagemann Snabe had told the same audience
“Give us the most complicated problem in your business that could not be solved due to lack of speed or volume of data and let’s see what we can do. You’ll be amazed at the type of problems we can solve.”

The Lost Generation?

On Mother’s Day, I was reflecting how proud we are to have raised two “digital natives”. From the day they were born, their timeline is digitized and stored on Google Drive and Facebook. My daughter had flown to over 20 countries by the age I had taken my first flight. My son used supercomputers in a summer project to analyze molecular structures. They have grown up with iTunes, Pixar, Spot GPS tracking, OpenTable. Their peers are even more savvy with digital tools. It is the generation best suited for our increasingly digital economy. Yet, as I continue my research for the next book, there is a feeling of discomfort whether we are effectively utilizing this talent. As Jordan Weissman points out in the Atlantic

"Every generation likes to believe that it came of age at an especially trying moment in history. Millennials have the Great Recession to lament. Gen X had the dotcom bust. The Boomers had Vietnam. And the Silents had the early Cold War, complete with the not-so-silly threat of nuclear war. But at least when it comes to the job market, I think we can all agree by now that today's young adults are deserving of at least a few extra pity points."

I sat in the back of the room as Mark Hurd, CEO of Oracle presented at his HCM conference. The audience seemed surprised when he shared 38% of Oracle’s employee base are Millennials and that they are hiring thousands of graduates straight out of college every year. The feeling seemed to be – this is not Google, why is a legacy software company hiring so many young? There was even more surprise when Hurd confessed he had originally bought into many "myths" about Millennials - that they feel more entitled, that they are not as loyal to employers, that they care more about flexibility than pay or career. Over time and based on plenty of data (he likes detailed metrics in every aspect of business) he presented that "all generations adopt technology at about same rate", "all are looking for respect and recognition at work" and "all care about career development".

While it is good to have sympathetic executives like Hurd, we have burdened this generation with an incredible amount of student debt.

Anthropologist David Graeber poignantly summarizes it “Student loans are destroying the imagination of youth. If there’s a way of a society committing mass suicide, what better way than to take all the youngest, most energetic, creative, joyous people in your society and saddle them with, like $50,000 of debt so they have to be slaves?"

In many ways it is a lot worse overseas - even in developed countries like Spain unemployment in youth under 25 is at a seasonally adjusted 45%. And in many cases, as in the Arab world, the young are using their digital savvy to cause social unrest and even terrorism.

How did we get here? Lots of factors I will catalog in the book – governments, politicians, corporations, parents, and yes even the young themselves have all contributed to this mess.

It’s not all negative, though. I cherish stories like the dealership in Quincy, Mass., which employs high school students as young as 14 to teach customers how to use the increasingly complex technology in their vehicles.

People are panicked about machines/automation and jobless futures. My book research leads me to not be so worried about that. I am finding adoption of automation tends to be evolutionary and humans adjust. To me, it is far more important that we keep productive and challenge this generation of young, digitally savvy workers.