SAP: Cloud makes Oracle strategy obsoleteDecember 10, 2010
Speaking to press and analysts gathered for SAP’s Influencer Summit via satellite from Dresden, German, SAP co-CEO Jim Hagermann-Snabe said cloud computing isn’t good news for Oracle, or for its own the stack mantra.
Snabe said there are two choices in the industry — consolidators who buy companies to own the stack, and innovators. Putting SAP in the latter category, Snabe said SAP believes the stack — Oracle’s approach — is falling apart.
"With cloud computing, the hardware will move into the cloud and become commoditised. The front-end will become a mobile device of any form factor, and that’s what we’re innovating for," said Snabe. "That will change the value-proposition and the stack gets lost in the shuffle, so we don’t need to acquire all the pieces in the stack when we can change it through innovation."
While he sees validity in Snabe’s hypothesis, Michael Pearson believes the everything in the cloud model is a long ways off yet, and will never truly be realised. Pearson, president of Canadian SAP partner Contax Inc., said moving to the cloud will be an evolutionary process.
"We won’t see customers moving in mass from on-premise to cloud," said Pearson. Rather, he sees it happening on an application or appliance basis, as it makes business sense to move a specific process or function to the cloud.
"It’s not going to go to 100 per cent," said Pearson. "There are some customers where the cloud doesn’t work for them. Health care, patient records, it will be a long time before that information can be stored in the cloud. It will never be a replacement for on-premise; they will co-exist."
And the stack will still be relevant in the cloud context said Joel Martin, research director with Info-Tech Research Group. The stack doesn’t go away just because the application is delivered and consumed in a different way.
"The need for technology across the OSI level to run the applications isn’t going away (with the cloud)," said Martin. "SAP talks about being a platform company, and that’s what they are. They partner with people to complete the stack."
What SAP is trying to do though, said Martin, is to articulate a value proposition around the application platform, rather than the homogeneity of a stack, shifting the discussion to one it sees as more relevant to the line of business decision maker: what the applications deliver in productivity, process improvements, efficiency, and other measurables. Talking about the stack is more of an IT department discussion.
And it’s not as if SAP is about to turn its back on on-premise anyway. Snabe emphasised that on-premise remains the core of SAP’s business and a key development priority. The vendor’s strategy is to offer the customer choice of delivery method, be it on-premise, on-demand or on-device.
A mobile future
It’s the latter that will be getting a lot of attention from SAP going forward though, particularly as it integrates its Sybase acquisition. On that front, Raj Nathan, executive vice-president and CMO of Sybase, which is being operated as a company within SAP, committed to releasing a software developer kit (SDK) for a next generation, co-developed SAP/Sybase mobile platform by SAP’s Sapphire user conference in mid-2011. That’s also the timeline for releasing applications running on that platform in three key areas: sales, services and analytics.
Snabe said SAP is focused on how it can leverage the consumer-centric mobility experience we have today to chat with our friends and share music and port it into a business context.
"We see that as the big opportunity; to take the business knowledge and experience we have in 25 industries and start leveraging some of these modern mobility technologies to drive productivity gains," said Snabe. It will mean solving issues around security, reliability, and ensuring consistent, flawless dataflow for mission critical applications.
"This is how we’ve been successful so far, and this is how we plan to be successful in the future," said Snabe.
Info-Tech’s Martin said he’s not sure if SAP’s mid-market resellers are ready for the level of mobile experience SAP is planning with Sybase. And their mid-market customers may not be gunning for that level of experience either.
"SAP/Sybase is looking more at large enterprise players, In the mid-market, people will be looking more at the mobilisation of existing assets," said Martin, although the functionality will scale down in time.
Contax’s Pearson said the demand isn’t there from customers yet, but he believes it will be and is developing the technical capacity in-house to be ready to service that demand from his customer base when it comes.
"It’s not just another interface. This is going to be a big shift in the industry and we need to make sure we’re positioned to take advantage," said Pearson. "We’re playing a bit of wait and see. We’re not on the inside of the (SAP/Sybase) product development. But we will certainly be paying close attention to the opportunities it presents."