On Wednesday, December 9, I had the opportunity to attend the much-debated "Sapience 2009: Alternatives for Leveraging Your Investment in SAP" conference in Boston. I say "much-debated" because there was a good deal of talk both prior to the conference and afterwards in terms of whether the Sapience show was "anti-SAP" or not. In this blog post, I’ll weigh in on that topic and more. And yes, this entry is not exactly on time. To be honest, it took me a long time to sort through what I might be able to add to this discussion. At any rate, the challenges SAP faces have not gone away since this event took place.
The Sapience show almost completely overlapped with SAP’s annual "SAP Influencers Summit" taking place in Boston at the same time. I was not able to get to the bottom of whether this was an intentional scheduling conflict or not, but I spoke with a number of analysts who were interested in Sapience but not able to attend. This lent an aura of mystery to the show and also led to misperceptions after the fact. As for me, I was only able to get there for the final afternoon, which limited my ability to make a broad assessment of the conference, but I was able to take in the grand finale, the NetSuite versus Business by Design "shoot out."
I’m not sure whether it’s worth my time to debate whether or not the Sapience event was "anti-SAP" or not (see Vinnie Mirchandani’s blog for more on this "debate" - Vinnie was also one of three "jury panelists" in the shoot out). It’s certainly not the most important question we should be asking. I will say this: I definitely ran into some people at the conference, including presenters, who did not necessarily have SAP’s best interests at heart. There is a huge difference between developing a nifty add on to SAP, as the Simplement team demonstrated to me in the analytics space during an impromptu demo, versus putting forth a complete SaaS-based ERP solution, in the case of NetSuite, that in some cases would actually replace SAP.
I see NetSuite’s "rip and replace" opportunity in SAP as currently limited to companies running older versions of SAP R/3 (like 4.6) who perhaps bought a package too complex in functionality for what they needed in the first place, but that could change over time. In fact, only a couple of days after the conference, news came out that The New Release, a DVD kiosk operator, was going to take out its R/3 system in favor of NetSuite. Spinning Sapience as an innocuous event where SAP customers could learn how to get more value out of SAP doesn’t jibe with NetSuite’s significant presence there (including a conference sponsorship). I saw some of that spin after the show and it didn’t strike me as truthful.
Having said that, I come from the vantage point that the ERP market has suffered from a lack of significant competition in recent years. The real victim has been the customer. Oracle has been largely responsible for this trend, due to its acquisition of independent ERP players like PeopleSoft and JD Edwards. These moves were probably smart for Oracle shareholders, but they weren’t good for the ERP market as a whole. Lack of competition leads to lazy thinking and tone-deaf attitudes towards "captive audience" customers. But just like anti-trust actions failed to bring down Microsoft until game-changing competitors like Google came along, the "SaaS uprising" is providing the same kind of market correction to the on-premise ERP vendors. I believe such disruption is healthy.
As such, the opportunity to spend time with a range of solution providers at Sapience, from cloud-based "SAP help desk" solutions such as cumulusIQ, to Rimini Street’s SAP maintenance alternatives, to my client Panaya’s SaaS-based SAP upgrade and support pack solutions, can only be useful for SAP customers. You could argue that all such "alternatives" present some degree of threat to SAP, but in the long view, SAP benefits from a robust ecosystem. While some of these competitive lessons are painful, SAP’s responsiveness to its own customers is clearly increasing as a result.
That’s good news for everyone. SAP should assess the kinds of vendors who presented as Sapience, determine which ones are worthy of a long term partnership, and which ones point to weaknesses in SAP’s own product line or pricing that need to be corrected. I have always felt that how the dominant player in a community responds to dissent tells us a lot about who they are. Crushing dissent in the political space leads to fascism. In business, the attempt to eliminate dissent usually leads to commercial failure, whereas reckoning with that dissent in a constructive manner leads to reinvention.
As for the NetSuite and Business by Design "shootout", I read some Twitter buzz that implied it was a "rigged" event. (NetSuite did win the shootout according to the jury panel). As an attendee, I was concerned that the faceoff would be presented as completely one-sided. But that was not the case. I thought the Business by Design presenter made a concerted effort to emphasize the strengths of the product. Yes, not having SAP representatives in the room did impact the Q and A which took place after the face off, but the head-to-head was far more objective than I expected. I suspect that was due in large part to Vinnie Mirchandani and Ray Wang, who may be critics of SAP but who are not fans of a rush to judgment.
Update: Dennis Howlett, who also attended the event and who I view as a fair judge of SAP’s pros and cons, did feel that the "shootout" was slanted in NetSuite’s favor. After reading his post, I found myself agreeing with his points (such as NetSuite’s sponsorship of the conference and the fact that the ByD system on display was a public test system being accessed by thousands). I suppose part of my reaction was based on the fact that I was expecting something a lot more biased towards NetSuite than what I saw. Also, I trusted Wang and Mirchandani, two of the shootout "jury members," to provide a fair analysis, which I believe they largely did during the "verdict" segment Dennis posted on video.
As for my own take on how the two products stacked up, while NetSuite’s OneWorld seemed better in terms of overall ease of use, functional capabilities and UI presentation, ByD came off pretty effectively as well. NetSuite won the competition in my eyes, but it was far from a devastating victory, even less so taking into account some of the impressive previews of upcoming ByD functionality I had just seen at the Influencer Summit. In some cases, the aspects of ByD that made it look clunky (such as extra workflow approval steps) might play to ByD’s advantage for some customers where additional approval steps and/or workflow complexity is part of what they are looking to address.
Having said that, the press release issued by Strategy Partners (the conference organizers) after the event reads like a press release for NetSuite. The tone of this press release was unfortunate because it left the reader with the impression that the unanimous verdict for NetSuite doomed SAP as a "legacy" on-premise vendor. It also implied an event where ByD got resoundingly beaten by NetSuite, and that’s not what I observed. Reading the Strategy Partners press release, you don’t get the impression that ByD is going to be a factor in the SaaS ERP space, whereas I believe it will be, though I’d mark 2011 as the year we see that impact. I wish I could say "you read it here first," but many other analysts see ByD as making its presence felt soon, including Michael Krigsman and Dennis Howlett, who knows far more about the SaaS space than I do. SAP’s pending success in ByD is not going to solve all its problems, but making it to market first (in NetSuite’s case) does not ensure dominance.
There’s another issue raised by the press release Strategy Partners put out. Going forward, I believe they have some marketing decisions to make, at least in the United States, in terms of the tone they are setting to attract SAP customers to future events. In Europe, the SAP user groups have much more of an activist mentality than ASUG, which was made vividly clear during the initial Enterprise Support push back.
I just don’t see SAP customers in the states flocking to an SAP event that has the presence of vendors who would love to see SAP go down, via "rip and replace" or what have you. There’s a huge difference in conference positioning (and tone) between "we help you get the most out of your SAP investment" and "we help you determine the alternatives to SAP." While the latter might attract more blogger controversy and buzz, I don’t believe most SAP customers in the U.S. are in a "rip and replace" mentality right now.
Of course, if SAP doesn’t increase its attention to those in the 4.6 install base who have put off their upgrades, then the receptiveness to such a strong "time to reconsider SAP" message could change. I know that internally SAP is well aware of this dynamic; I’m one of many who have expressed it directly to SAP executives myself.
In my view, the conference organizers attempted to straddle these two messages this time around. For the future, I’d advise to either focus on a more SAP-friendly "get the most out of your SAP investment" show, which will draw much bigger numbers but have less "blogger sex appeal," or focus more intently on "helping customers move on from SAP/create an exit plan," which might not make for a highly attended trade show, but could certainly lead to a viable consulting business serving those customers who are truly disaffected. Attempts to juggle these two messages will foster confusion over the purpose of the conference, and in my opinion, put a damper on attendance, at least in the U.S. Whatever the organizers choose to do going forward, their presence is a healthy one. Those attendees I spoke with all felt it was well worth their time.
How SAP responds to the challenges posed by a conference like Sapience will in large part determine its fate in the decade to come. I trust the serious players inside of SAP are spending less time obsessing about the presence of such a conference and more time responding to the customer sentiment that helped to spawn it.
Oh, and I’d be remiss if I didn’t mention that the conference organizers who gave me free access to this event, in particular Helmuth Gumbel, were extremely gracious to me and refreshing in their candor. Helmuth gets extra regard in my eyes for being aware of the SAP Mentor Initiative and welcoming an SAP Mentor presence at his show (two counting Dennis!). The unofficial SAP Mentor motto is "open thinking," and to me, that meant driving from the Influencer Summit to the Sapience 2009 wrap.