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SAP Nation 3.0 Excerpts: Chapter 8 - Bystander Customers

My new book is now available to buy here in print version, and in the Kindle eBook version. As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

In chapter 8, I covered the final category in the four customer types in the book - Risk-takers, Modernizers, Diversifiers and Bystanders.

"So, it is not surprising that only a small fraction of SAP’s 400,000+ customers have migrated from ECC, Business One,BusinessObjects and other products to its more modern S/4, SuccessFactors, ByD, HANA and SCP.

In fairness, Oracle, Infor, Microsoft, IFS, Unit4 and other vendors have the same issue with their legacy customer bases. You also have to ask why after 20 years Salesforce, NetSuite and other SaaS vendors have still not converted millions of customers from the on-premise world."

I interviewed several analysts about these Bystanders

Holger Mueller of Constellation

"Now they’re in a similar situation. I think SAP pulled a fast one, saying, ’Oh, don’t worry. We copied all the code. S/4 is not a new system. S/4 is just a new implementation where we simplify things and get rid of old things.’ To some extent, it was a technical argument as you got rid of these non relevant tables. The simplification ran the system better, and you got better business intelligence because there was no need for a data warehouse.

However, for SAP, just copying the code wasn’t that easy. Technically, you had to examine the code and truly simplify it to make it work. Besides, the public cloud is not offering the dramatic TCO advantages that R/3 did relative to R/2.

Importantly, I don’t see the functional equivalency. When SAP was started, Hasso has said, he went to ICI, the launch customer, and met a person in the finance department. ‘He showed me how he worked, and I rebuilt that in software. It took us a few months, and then we had that.’

Today, you cannot go to a finance department and ask, ‘How do you use machine learning? What do you do with data science? How do you use the cloud? What are your FP&A best practices?’ These practices are still being distilled. We’re in the era of experimentation."

"To be fair to many of the European CIOs, the vendors also have not done a good job bringing data centers across the ocean. Germany is the largest European economy. Where else should your data center be? There have been so many ones opened in the UK, which makes sense for banking and financial services vendors, but Paris and Frankfurt are much bigger than London. That’s not even an argument."

Cindy Jutras of Mint Jutras

"Anecdotally, the biggest thing that stops them is the perception that they need all their previous customizations. I would argue they probably don’t, partly because new solutions today do more than they did back when they implemented. Plus, they have more ability to con- figure without invasive custom code changes. Partly, it’s because they just didn’t need those customizations. They did it because that’s the way they always did it, and they weren’t willing to bite the bullet and do something even better or different.

I was at a Unit4 conference last year, and I was in a session meant to collect information from customers to help them move to cloud. It was almost like a focus group with product management. The big resistance to moving to cloud is customization, because for so many years Unit4 had the BLINC message — an acronym for “Businesses Living IN Change.” With their SDKs, they actually encouraged code changes, but code changes that would move with upgrades. Now, in a multitenant SaaS solution, even those kinds of code changes are discouraged. But those customers are all sitting on those kinds of code changes, which is making them very resistant to moving into the cloud. I have asked Steve Miranda at Oracle a similar question. Basically, what he said was, ‘I strongly encourage customers not to inventory their customizations and to move forward.’

But I really think it is inertia. People have bad tastes in their mouths from having gone through the blood, sweat and tears of an ERP implementation years ago. I don’t think it needs to be like that today, but that’s the perception."

Frank Scavo of Strativa

"Vendors like Infor and Oracle have tried to move legacy customers to the cloud with initiatives called UpgradeX and SOAR, respectively. The reason you don’t have very many SOAR and Upgrade X customers to talk to is because there are not that many of them. Existing customers do not make that cloud conversion routinely."

"Some of these companies are running on operating systems that aren’t even supported anymore, so they’re running patched versions. They’re not getting vendor support, and they are running in emulation mode. A “last legs” kind of thing — and still, they will try not to make a conversion.

What are the kinds of events that finally force a company to go to a new ERP? There are several:

• We did an acquisition and we’re now on two ERP systems and this is just not tenable for the long term. We’ve got to standardize on one.
• We expanded our business into Asia and this ERP system is not double-byte or doesn’t support localizations.
• We went into a new line of business that has subscription billing. The [current] system doesn’t do this."

Workday: The Power of Focus

I kept thinking of Southwest Airlines while I was at the Workday Innovation Summit in CA this week. I had read this tribute to the legendary founder, Herb Kelleher on the flight over and it reminded me how revered he was - like Dave Duffield of Workday is in HCM circles.

Then, a walk down memory lane took me back a few decades. At business school, as part of the Corporate Strategy class, we had been assigned in groups of 3 to analyze a local company. We interviewed executives and then presented to top management about growth opportunities. I had drawn Southwest Airlines, then just a regional airline with under 5% of today's fleet and revenues.

I remember I got an A for the course, but I am pretty sure I flunked the presentation to the airline executives. They were brutal. One of our recommendations was that they set up a separate sub to service smaller cities and acquire commuter planes for those routes. Nope - we will not diversify from Boeing 737s, was the response. We also recommended they diversify to airports in Chicago and couple of other major cities. The response was along the lines of "No, too many union and weather issues".

They have stubbornly continued with the first principle. Since then, Southwest has become the largest and most experienced customer for successive generations of the 737 - gaining significant maintenance and training efficiencies from a homogeneous fleet. They have been more flexible about the second recommendation. Indeed, I felt vindicated when they started flying out of Chicago Midway in 1985 and have since blanketed most of the country. Southwest has become my preferred domestic airline especially since they offer me nonstop flights from my home airport to over 30 cities.

I saw the discipline again when in 2006 after a bad experience with Ryanair in Europe I sent Southwest executives a letter requesting them to expand internationally. Nope came the response - there is huge amount of growth left right here in the U.S. They have since started to fly to the Caribbean, Mexico and Central America, but the bulk of the revenues is still U.S.- centric.

What's been fascinating to watch is how Southwest's discipline has attracted relentless competitive attacks. There was the infamous Wright Amendment which hobbled Southwest for three decades from flying nonstop on longer routes from its home state.

In response to the success of Southwest and others like Jetblue, United tried a sub called  Ted, Delta tried Song and most airlines have since moved to offering "basic economy", highly restricted fares. In doing so, these major U.S. airlines have neglected vast chunks of global markets to the advantage of premium competitors like Emirates and Singapore Air.

Workday has shown similar discipline. Its "Power of One" strategy is like that of Southwest's commitment to the 737. No on-premise distractions. A slow diversification in the form of AWS support. Functionally, Workday has stayed focused on finance, planning and HCM.

And along with Salesforce it has similarly drawn inordinate attention from bigger competitors like SAP, Oracle and Infor. They have been chasing after accounting, HCM and CRM markets with their own acquisitions and organic products when they would have had much more traction in verticals or world geographies. As I write in my new book, we are seeing new competitors in the form of startups and even major (buyer) corporations developing products for "white spaces" in fintech and asset intensive industries that these vendors should have been focused on. Google, now with Kurian and Enslin, will likely emerge as another threat in some verticals and regions.

Can you be too focused? With Southwest you are seeing the potential risk of being dependent on the 737. The issues with the new MAX generation of the 737 are causing short term scheduling issues, but longer term if customer perceptions about safety persist they could hurt Southwest significantly. Its slow international expansion has allowed regional, cut- rate players like AirAsia and Easyjet to grow nicely across Asia and Europe.

Workday could have similar challenges. IDC is talking about "cloud repatriation" - a bit of backlash against the economics of public clouds. Let's face it, after 20 years of cloud apps, over a million SAP, Oracle, Microsoft, Unit4 and other on-premise customers have not migrated major chunks of their enterprise to the cloud.

During the summit this week I saw a somewhat superficial Workday focus on operational functionality and data. It talks about enterprise wide planning when it does not get invited to complex network planning, finite capacity or CPG assortment planning opportunities. I saw a narrow focus on automation when enterprises are trying out a wide array of telematics, wearables, robotics across the enterprise. Internationally, Workday has been slow to expand functionally or in local presence.  It has been lucky the competition has mostly tried to engage it in areas where it is strong, rather than "surround" it with operational and regional depth. That will not last for ever.  

The great news is like Southwest which has a distinctive, even quirky culture, Workday is building its own unique persona. It topped Fortune's Future 50 list this year while also cracking the Top 5 in the magazine's top places to work. It has been blazing a trail with a decade of analyst summits, when some competitors shrink away from them. CEO Aneel Bhusri promised even more openness and communication.

There is so much to like at Workday. I do want to see them continue to evolve and expand. Correction - their customers want to see them evolve and expand. And those million on-prem customers continue to wait for a compelling reason to migrate.

 

 

 

SAP Nation 3.0 excerpts: Chapter 7 Diversifier customers

My new book is now available to buy here in print version, and in the Kindle eBook version. As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

In this chapter, I covered the third category in the four customer types in the book - Risk-takers, Modernizers, Diversifiers and Bystanders. Diversifier customers. In the first volume of SAP Nation, we had described the early wave of Diversifiers. They were “ring-fencing” SAP with cloud solutions, trying out two-tier models, TPM and private-cloud infrastructure. This group continues to expand and experiment. The big difference we noticed this time around was in some cases they are diversifying back to SAP products.

Here are excerpts from 4 of the 12 case studies in the chapter

'In the hypercompetitive software vendor world, Unilever could be construed as giving up on SAP. Actually, like many CIOs, Moran is merely diversifying her portfolio. Moran told CIO UK, “Working with SAP, they helped us put together the internal business case to move forward with S4/HANA. We’ve found that having HANA on our databases has increased performance five to 10 times when we have HANA sidecars.”47 In that article, she also talked about her other strategic partners: Microsoft, AWS and increasingly Google. Unilever also has a Foundry that, since its launch in 2014, has facilitated 100 pilots between start-ups and Unilever brands — stimulating and facilitating experimentation across the global footprint. It’s all part of diversifying the portfolio, and SAP continues as a key component.'

Andre Blumberg at CLP Group in Asia Pacific.

'The more interesting project which is our focus now, is to look at global disruption, industry changes and technological innovation. When you look at the Apple iTunes store, the Google Play store, Amazon, Alibaba, etc. you see how the platform business model has disrupted many industries. We’ve been looking at what a platform business model could look like for our sector — so what is the “energy internet”? What is the Amazon equivalent for a utility company? We are working on that now and how we can bring ecosystem players together to provide added value for our customers. How can we establish that on a modern public cloud PaaS platform so that any third-party ecosystem player or start-up companies can join our platform and work with us? That way, we don’t limit ourselves when it comes to innovation. That’s a much more exciting discussion and we’re working primarily with proven public cloud companies, particularly Amazon Web Services. It will be interesting to see how the global public cloud providers play out in the Asia-Pacific region over the next two to three years.'

Bryan Bee at EBSCO

'We had a healthy skepticism when we started the process. It took us a while to get our head wrapped around the service provided, the risks, and interoperability issues. As we went through that journey, we became comfortable and we concluded going with Rimini was an acceptable risk. Once we did our initial due diligence, we engaged both our business stakeholders and our developers. We did multiple reference calls and each time it was like, man, this is too good to be true.'

Paul Wright at Accuride

'Functionally, there’s no doubt in my mind that with SAP, we’d be compliant anywhere we wanted to go in the world. In today’s world, that’s important. We had a choice when we were going to Russia. I had a choice. I could have said, ‘Let’s figure out how to do with this with Plex and Workday. Or, let’s do this inside SAP.’ I mean, at some point, unfortunately, the government regulations are going to drive what you can and cannot do as a business, and it was just too risky to do something else in Russia, even if we wanted to, so we stayed with SAP.'

The joys of book reviews

I saw an article aimed at authors and publishers on how to handle critical reviews. And I chuckled to myself  "I could have written that myself"

I took most heat for the first volume of SAP Nation - mostly from SAP fans and partners. It was actually a generous history of SAP as it grew from small German vendor to global powerhouse. What I drew attention to was its poor handling of partners and the massive costs and project failures in the ecosystem. Five years later, I can say with some pride that it had a significant impact. The strategies I highlighted in the book like ring fencing with cloud, two-tier ERP and third party maintenance have gone mainstream. Also, in writing volume 3.0 I saw customers have become cautious in their use of large SIs, they are minimizing change as they move to S/4 etc. That to me is gratifying. I was talking to the customer audience and many of them have benefited from the book.

I was criticized for not being alarmist enough with Silicon Collar. The book came out when prominent Oxford profs and Gartner analysts were screaming about catastrophic job losses from automation.  Mine was a tone of optimism - automation makes us safer, smarter, speedier workers. Machines typically impact repetitive tasks not complete jobs. Automation takes time to mature, it is not cheap. History has proved me right so far. Very few job losses from machines. We are pushing back dates for autonomous vehicles, for payback from machine learning. Two disappointments from the book- I had hoped SIs and outsourcers would automate their own operations - but they are mostly sticking to labor intensive models. The other was software vendors would reshape processes to reflect growing drones and telematics in logistics, sensors, 3D printing and wearables on the shop floor, robotics everywhere but it may take a wave of greenfield vendors to come along to do that.

I am starting to hear criticism I am "too nice" to SAP in the latest, volume 3.0 of SAP Nation. I am actually pretty tough on SAP in a number of chapters. What I do point out is how little its competition has evolved in the last 5 years. So many missed opportunities. Some of the criticism is coming from them for highlighting their performance. To me, again, that is background noise. The book gave me a chance to highlight 200+ pages of case studies talking about a slew of new SAP products. Hopefully, the customer audience benefits from that and sees that this is not "your Dad's SAP". And the competitors realize the clock is reset and they can show much more progress by the time I start to write volume 4.0 in the series.

I tend to be a tough critic myself. The New Polymath was one of my best reviewed books and it was gratifying to get a number of comments about people wanting to expand their own skillsets. What I had hoped in addition was it would spur Polymath organizations like the GE Global Research Center I described in the book "Conversations in the cafeteria, in the hallways, and at the 40 - room lodge attached to the center effortlessly drift from pathology to holography, from one “ aha ” to another. The Global Research ethos is “ Innovation occurs at the intersection of disciplines. ” So, put chemists, mathematicians, engineers of all stripes, and biologists in close proximity and who knows where the conversations will lead."

The New Technology Elite was about smart products (analog products made digital with software, sensors and satellite support)  and covered design, IP issues, the application of Moore's Law, a need to plan multiple releases, product documentation and training and a number of other dimensions. I see so many smart products launched in the last decade which could have used that advice. You wonder, for example, how things would have worked out if Boeing had provided better documentation and training around the MCAS software and the Angle of Attack sensor on the 737 MAX.  

I write books to stay in touch with practitioners - my case study heavy style makes me reach out to over a hundred for each book. They provide me the reality checks and validations for the themes of each book. They also provide fodder for our advisory work. The ultimate compliments and criticism also comes from them, not from social media. Nothing is more pleasant than a note from a client which says "thank you from saving us from a $50 million mistake" or "you forced us to consider couple more scenarios we had not factored"

Having said all that, I happily sign my books, and enjoy presenting on themes from my books especially to audiences on campuses. See you at an event soon. 

The bad old days of consumer tech

Not a day passes without some harsh story about Facebook and data protection. How un-innovative Apple has become. Why Amazon should be broken up. Why Google should be regulated.

And I ask do these folks not remember the days when consumer only got technology dregs? It was not that long ago. Elite government agencies got the best in satellite, computing and other support. Then came corporations. Consumers, if they were lucky, came much later in the technology lifecycle.

Today, consumer tech leads enterprise tech in capability and design. Enterprise software repeatedly turns to consumer tech for innovation. Mobility, multi-tenancy, cloud infrastructure, machine learning - the leadership has not come from IBM or SAP. It has come from Apple and Google.

I think of this every time I hear Mark Hurd, co-CEO of Oracle, present in keynotes. He particularly likes to point out that consumer spend on technology has caught up to enterprise spend — annually about $1 trillion each — and is growing faster. Even more dramatically, over 80% of enterprise tech is spent on keeping the lights on, not innovation. In contrast, the consumer is getting almost pure innovation for her dollar.

Enterprise tech vendors — especially ERP/ CRM vendors, their systems integrators and other partners — were set to dominate the technology landscape in the late 90s. They had emerged very strongly from the Y2K crisis, and the launch of the EU’s common currency promised another bonanza. Instead, their share of the market steadily declined over the ensuing two decades. They missed out on the contract manufacturing of smart products, digital advertising, cloud infrastructure and several other trillion-dollar markets. Two decades ago, not many of us had heard of Foxconn which has delivered billions of iPhones, iPads and smart products. Few of us considered Amazon or Alibaba as tech vendors. Few of us would have speculated that Apple, near dead, or Google, not born yet, would have many times Oracle or SAP’s annual revenue.

To me, that has worked out better for consumers. Enterprise vendors have delivered nowhere near the price/ performance improvements or innovation that consumer tech has seen. It should be no wonder then that the tech the consumer gets at home on Sunday night or in her car is so much better than what she finds at work on Monday morning.

So, let's ask for a vote - how many consumers would give up the advertiser funded or subscription models and sign up for enterprise licenses and audits? So, we can criticize consumer tech for data privacy issues, but honestly, it is a tradeoff consumers have been willing to make. Us smart folks making snide comments or worse forcing GDPR type regulations are not doing them many favors.

Talking about regulators, let's look at their track record with tech. They have not fixed spam email and phishing, robocalls with IRS or Microsoft scams, misleading or fraudulent TV ads. Honestly, those cause way more damage to consumers. Regulators have given immunity to telcos after they violate our privacy rights - why do we think they will do better with consumer tech? GDPR to me is "feel good" legislation like Sarbanes-Oxley was post-Enron. Lot of noise and expense but little in results.

Be careful what you clamor for. You may bring about the bad new days of consumer tech. And that is not what tens of millions of consumers, including me, want. Respect our ability to make choices.

ERP: Moving Fast and Yet So Slow

A guest post from Ton Dobbe, Chief Inspiration Officer, Value Inspiration

"Every week I interview entrepreneurs and experts from around the world to share their big idea about new forms of value creation and the potential we can unlock when technology augments the unique strengths of people to deliver remarkable impact.

I got inspired by the release of the book SAP Nation 3.0, hence I invited its author, Vinnie Mirchandani to my podcast. We explored the changes in the ERP landscape over the last 5 years, in particular amongst the big 3 – SAP, Oracle and Workday. We also explored why after 20 years of ERP in the cloud today there’s still not enough traction.

The thing that triggered me most from my interview with Vinnie : "Cloud ERP has been around for 20 years now. But after 20 years, both the customers and the vendors are just not moving quick enough. Something's not right."

Vinnie’s conclusion is so true. If you compare the transformation in the ERP industry with other enterprise software categories, it’s transforming fast, but too slow. He outlined a range of reasons for that:

1)         Lack of functional coverage: ‘If you plot functional coverage by global world region, by industry, by business process only about 20% is filled. So after +20 years, the vendor community hasn’t delivered enough.’

2)         Not enough shift in value: ‘Data is one of the biggest selling points of cloud, you know, we are gathering a lot of data. That should allow us to do some really unique things that we couldn't do before. That’s simply not happening yet’

3)        The partner community is holding things up: ‘Partners are selling mostly private cloud or on-premise solutions. Partners want to continue to do what they always did: implementations, upgrades, application management.’

4)         Buyer fear. ‘The memory of the last implementation is still holding back a large number of buyers. Many of them just customized the heck out of their old ERP system and they're worried that they will lose the customizations if the functionality in the new product isn’t rich enough.’

So, it’s a chicken and egg dilemma that’s needs a breakthrough. And the breakthrough won’t come from continuing to move traditional solutions to the cloud to continue to do their traditional thing. From my perspective, there’s a large-scale opportunity in the market for any of the vendors – established or new – to shake things up but taking a fresh perspective on ERP.

We discussed a number of opportunities to unlock the status quo, here’s a summary:

1)         ‘Don't just modernize the technology, modernize the business processes.’

2)         Verticalize – what is wrong with offering claims processing or retail merchandising, or insurance billing, or utility asset management and so on. Those industries are screaming for cloud and in memory solutions for that.

3)         Get systems integrators to apply machine learning and automation to their own business. It's amazing how many systems integrators still sell bodies, when over the last 30 years they've done millions of ERP projects and millions of CRM projects. Why aren't we training machines to do configuration. Why aren't we doing automated data conversion.

In all three examples it’s data that’s the magic ingredient to unlock a large-scale and untapped opportunity to create a shift in value. As Vinnie quoted: ‘Up to now a lot of the machine learning that is showing up in the ERP space has come from the work vendors like Amazon and Google have done with image recognition, and voice recognition and so on. To me, the big, big, big payback will come when we can take enterprise data. Our own productivity, our process productivity needs to dramatically improve. It's not about it's not about replacing humans; it's making them into super workers. ‘

Listen to our interview about the evolution of the ERP space, and the large scale opportunity this leaves to creates shifts in value in a world that’s progressing, but not quite fast enough."

Groan - yet another TLA

Every good analyst is entitled to coin a couple of TLAs in their career. It is a badge of honor. So, I certainly understand why my friend Phil Fersht and his team at HfS have coined a new one IAP - Integrated Automation Platforms to evolve today's RPA or Robotic Process Automation.

"RPA provides a terrific band-aid to fix current solutions; it helps to extend the life of legacy. But does not provide long-term answers." they say

I groan because I am sore from TLAs. In my new book, SAP has so many new product names and TLAs that my editors recommended a glossary at the front of the book. Imagine what my poor transcriptionist had to go through to interpret all those TLAs in 20+ accents of the interviewees in the book.

But back to IAP. I hope Phil and team consider a couple of things

a) putting systems integrators on top of their graph sends the wrong signal. We should be highlighting automation - not more expensive labor and "change management". Besides, it would be nice to see SIs showcase automation in their own operations.

b) automation is about way more than white collar processes. In my book Silicon Collar, I had case studies of BP using drones and autonomous vehicles in remote, harsh parts of the globe. UPS with telematics guiding its trucks, factories with wearables and sensors, hospitals with tow bots, wineries with automated irrigation, waste management with robotic arms on garbage trucks, CGI at digital agencies, Exari (which Coupa announced today it is acquiring) which helps mine complex contract data, and many other examples including RPA.

So, hope Phil and team plan to start covering a broader range of automation, especially in operational areas.

Drama in enterprise computing

Ray Lane, a top-notch tech executive and investor over decades, said this about my new book

"Don't be fooled by the title—the book is not just about SAP. It's about drama in enterprise computing."

I then used "drama" in the title of my recent ZDNet guest column.

Drama? That's what you get in Augusta in April. Isn't enterprise tech boring and glacially slow?

You be the judge.

My book catalogs the product launch machine SAP has become and the fact that its customer base has grown 50% in the last five years. It was on the ropes, the competition could have delivered a knockout punch but it has bounced back impressively. 

Of course,  SAP is also generating a lot of interest and emotion with its recent layoffs and executive moves. From an investor point of view, CEO Bill McDermott has created excitement by promising to double its market cap in four years

Marc Benioff of Salesforce told Jim Cramer of CNBC a few weeks ago " I see $30 billion right around the corner. In fact, we initiated a 4-year guidance today, Jim, of $26 [billion] to $28 billion."

How can that not make your heart beat faster?

Last week, in his coming-out party since he joined Google several months ago, Thomas Kurian made quite an impression.

Also last week, at a SAP Analytics event, mostly under NDA, I expected to hear plenty about coopetition with Google, Oracle and IBM. Instead I kept hearing about Microsoft with its Power BI, Surface, Azure ML, Office 365 and other products.

Oracle and IBM were similarly snubbed by the DoD as it shortlisted vendors for its $ 10 billion JEDI cloud contract. One contract should not mean that much but the twists and protests in that one certainly count as drama.

When a case ends up at the Supreme Court of the US, it usually makes for some some oohs and aahs. When all 9 justices vote unanimously on something, it certainly perks you up. That's what recently happened to Oracle in its long running litigation with Rimini Street.

One of the nice things about the Amazon Kindle is a feature called "Popular Highlights". Amazon combines the highlights marked by all Kindle customers and identifies the passages with the most highlights. For my book, this statement by Mark Hurd has already qualified for that honor. "In October 2018, Oracle co-CEO Hurd predicted that 80% of business applications would be in the cloud by 2025."

That para goes on to say "Today, even after two decades of cloud computing, industry and geographic coverage is spotty — by my estimate, less than 20%. For Hurd’s prediction to prove accurate, it will take massive new investments in upgrading industry functionality." Will Hurd's own products grow rapidly and get a lion share of his projected 80%? In January 2006, Oracle had confidently declared they were "Halfway to Fusion". 13 years later, Oracle still mostly talks finance, HCM and CRM. NetSuite, even after 20 years, has limited global coverage as Phil Wainewright points out here or industry coverage as I point out here.   

In the meantime, in China, Kai-Fu Lee, who has been called the “Oracle of AI” has funded nearly 150 AI start-ups. At Davos earlier this year, the theme was Globalization 4.0 which shows that Industrie 4.0/IoT concepts are spreading worldwide. Holger Mueller of Constellation opines about platforms "Why Open Source has won and will keep … winning.”

Augusta generates drama for 4 days. Enterprise tech takes a bit longer. But it has its share of comebacks and black horses. I will have a front row seat as I start planning for SAP Nation 4.0.

Or may be it will be titled Oracle Nation 1.0 or Workday Nation 1.0. That right there is plenty of drama.

SuiteWorld Redux

Oracle sent me the video of the product session at SuiteWorld which could not be webcast live when I wrote the post Unfair to NetSuite?

Of the 7 webcast keynotes I watched at Oracle MBX/MCX and at SuiteWorld this was the most relevant to me as an analyst. Gary Wiessinger,  EVP Products did a nice job covering a wide range of product topics.

Here are some thoughts after watching this session

- Oracle has a nice early testbed for its OCI and autonomous database. 3 years from now NetSuite will look unique in a market where most other application vendors are being platformed on Amazon, Microsoft, Google, Alibaba and other clouds. Time will tell whether that flavor of "unique" is something to celebrate.

- Oracle is also helping NetSuite become more global. However, I found the global metrics NetSuite shared a bit confusing. At last year's SuiteWorld they said they had users in 199 countries, this year is was up to 212 countries. Their web site still says 110 countries. Much more important is how many countries they support with functionality, languages and local presence. They said they added 21 new countries with local functionality. Their web site says they support 20 languages. All good progress but would be nice to see how many two-tier implementations they have sold with Oracle apps at HQ. How deep is the local functionality - most countries have provinces,  unique nuances.

- Where Oracle does not appear to be helping NetSuite is in verticalization. I saw a slide from SuiteWorld which showed NetSuite supporting 7 verticals - Retail, Wholesale Distribution, Manufacturing, Software, Services, Agencies and Nonpofits. At the last SuiteWorld, Paul Farrell shared with me they were moving into micro-verticals. What Gary showed this year went the other way. They would qualify as two "macro-verticals" - Products and Services. At that level of abstraction, the functionality is largely horizontal. To me, commitment to verticals means showing 2-3 unique operational systems of record in an industry - claims processing in insurance, clinical systems in healthcare etc. -  not just a couple of features.

One thing I definitely appreciated - even though it was a bit corny, the beginning of the session had a nice tribute to founder Evan Goldberg, one of the original cloud pioneers who continues to be a nice, approachable executive.

SAP Nation 3.0 excerpts: Chapter 4 A Massive Pivot

My new book is now available to buy here in print version, and in the Kindle eBook version. As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

In this chapter, I summarized a wide range of conversations I had with SAP execs and watchers from trends in developer communities, to UX to CX to SAP openness. I saw so much change that I am not that surprised with recent layoffs and executive moves. 

"Cohen’s argument about retiring customizations makes a lot of sense, but bear in mind many of those modifications were written a decade ago or even further back. Will standard SAP software reflect 2009 practices or that of 2019? In the last decade, the shop floor has seen automation in the form of robotics, wearables, 3D printers, etc. As we will see later, global companies are moving plants across borders at startling rates and need agility they did not a decade ago. In fairness to SAP, Oracle and Infor have the same challenge. Also, many customers don’t want to make big moves in ECC and then make a second transition to S/4. They would prefer a single move.

Cohen talked about a multinational customer who asked, “We love your public cloud but you have to offer us 189 countries localization out of the box.” “I told him, ‘I have only 64 today.’”

Customers don’t want to regress from functionality in ECC and other current products. And they don’t want multiple projects and change initiatives. As fast as he and SAP are moving, many of his customers want him to move faster."

"Atzberger is fighting plenty of cynicism. Reaction from a couple of customers to the C/4 announcement: “five years too late” and “CEO McDermott arrived at SAP from Siebel 15 years ago … what took him so long?” Several analysts reacted to my post, “Salesforce is Vulnerable” by adding “Yes, but not by SAP.” One snarkily wondered if SAP’s branding team had vetted the fact that C4 is a plastic explosive.

SAP is going after the CX market differently this time. It has lots of differentiated features, especially through its acquisitions of CallidusCloud, Coresystems, Gigya and hybris. The sales function is being redefined with Callidus’s revenue recognition and sales commission functionality. Meanwhile, hybris Commerce, CPQ and NBA functionalities are much more relevant for newer outcome-based business models and a world where digital and physical are merging. The Coresystems acquisition offers customers an Uber-like plat- form to find available field service technicians in real time. So a customer like Siemens can use SAP functionality on a per-user basis for its own techs and pay for a marketplace for crowdsourced techs on an occurrence basis. Leonardo IoT capabilities allow for new service models as industrial assets get smarter and allow for more predictive versus scheduled maintenance. The Gigya acquisition, with its customer identity and access management capabilities, is more relevant for a world which is moving past email blasts and overused cook- ies. SAP CEO McDermott stood shoulder to shoulder with Shantanu Narayen, CEO of Adobe, and Satya Nadella, CEO of Microsoft, to announce their Open Data Initiative. It was also a vivid display of “coopetition”: Adobe and Microsoft compete with SAP on many a CX opportunity."

" The world of designing the user experience is mind-blowingly complex — mobile trends on iOS and Android; social/ collaboration trends driven by Facebook Workplace, Slack and others; digital assistants like Alexa, Siri and SAP’s own CoPilot.

Listening to Cabahug, you see that expectations change dramatically as you move within an enterprise. Customer-facing marketers are far more UX-demanding than workers on the shop floor. As you move around the world, you have to reflect expectations of chat and emojis common in China."

” Grassl agrees:

“When I talk to my peers at developer relations in other companies, I get the same feedback. It’s a very tough market to get and keep developers interested in your products.”

He then countered with the following:

“Let’s start with who do we target. Does it make sense for us to go after a broad, less-professional developer? It doesn’t help us to get a developer who knows HTML and can create a small app for a web page. We drive programs to show them the [enterprise] career path — but it also requires work on their side, to learn and build up the skills.

At SAP, we accelerated our focus on developer relations about five years back. There are a lot more things available from SAP than in the past. Also, we use the term “developer” very broadly at SAP. It includes sys admins, technical people and business user-type developers. We have focused on three main activities."

" Matthias Steiner, Head of SCP Evangelism, explained the move to me:

“We are articulating that this is not your grandfather’s ABAP. It still uses a lot of the common technologies that have been floating around within the SAP ecosystem for a while, like HANA core data services. Of course, we recommend using UI5 and Fiori, so it’s just a stepping stone. It’s just making it a little bit easier for our one million ABAP developers as they up-skill.

We still believe that for all those hesitant customers, the best way to get started with cloud is this whole topic of user experience, because the elephant in the room is data, security and information privacy. If you leave the data where it is and just use the cloud as the catalyst to expose this data to the outside world, make it accessible to the end users, and typically this is what we do with Fiori-type applications, then you can familiarize with the technologies. For these things, pick something which is not mission-critical, so you have a little bit of time and no pressure to familiarize with cloud.”

"Klein is now using that experience to help market S/4 and SAP cloud properties to other global companies seeking similar transformations. He is on a quest to help them become what SAP calls “intelligent enterprises.”

“We are tackling the whole value chain at SAP. We are looking end to end, looking at marketing, sales, finance, service and support, cloud operations and the cloud infra- structure. That’s the first aspect of our transformation. Next, we are infusing machine learning, IoT, predictive analytics and these new technologies to bring the intelligence into play.

It’s about adapting business processes to the new digital age. It’s about fixing the data architecture. Last but not least, it’s about change management, and taking the people with you. In the end, everything that we do in the cloud impacts our 90,000 employees and our 400,000 customers.""

" Fanelli says she has the opportunity to move partners from a historic focus on reselling and implementations towards a broader role in helping customers become Intelligent Enterprises. Partner performance will be measured on customer lifetime value and their success.

SAP has a long history of building similar apps ecosystems around Fiori apps, HANA apps, mobile apps, etc. This time around, the customer access is much more digital. SCP leverages a lot more open source, and the barriers to partner participation appear lower.

At this point, it is a fledgling in terms of revenues for both the ISVs and for SAP (Fanelli says focus is adoption prior to monetization), but there is significant promise.

This time, she has new platforms to benchmark against. In the last decade, Apple has generated tens of billions of dollars in revenues for its partners and for itself from its iOS store. Amazon with its fulfillment engine has done the same. She can help SAP dream much bigger in this round."

" A few months earlier, I had seen him next to Jon Bon Jovi at another event. The hugely popular musician opened up about going through a very dark, personal phase. He was openly vulnerable. McDermott, in contrast, was positive as ever, quoting from Teddy Kennedy’s “the Dream shall never die” speech. There was no mention of his own personal tragedy.

It’s not just this accident; the man has also navigated being a cross-border CEO."

" I am only describing the tip of the spear — these executives are just a small handful of the 95,000 worldwide SAP employees. The pivot at SAP in the last five years has truly been massive. And the pivot will accelerate, as SAP announced in January

2019 a restructuring where it “will reassign some employees and offer early retirement to others, but still expects its overall head count to exceed 100,000 by the end of 2019.”