Sapphire 2008 in Review: Opinions and Observations

Sapphire 2008 Retrospective by Jon Reed

It's become a tradition: each time I return from a major SAP show, I post my own analysis. Typically, I post a range of pieces for other sites and publications, as well as some blog entries and podcasts on my own site. But then there's one special piece, the "retrospective." The retrospective stands out because it is usually exceptionally long, and it is always the most outspoken of the pieces I write. This is my chance to sound off on various topics from the conference, without worrying about being concise or staying on topic.

The time, what I'm going to do is to divide this article into sections, each with their own heading. I'll start with some high and low points, which I will call conference "successes" and "beefs." Then, I'll go through the remaining news items, and we'll see where we end up. In the cases where I have published a longer article or blog on a particular topic, I will link to that topic from this article. Oh, and for the first time ever, I'm not going to capitalize SAPPHIRE for the rest of this article. Consider it innovation without disruption.

The other difference between this year's article and the previous? This time, I'm not going to wait and post the whole thing at once. I'm going to post it in installments as I write it. Feel free to contact me with your feedback on what you've seen so far.


No News is Good News

With all due respect to the flurry of press releases issued by SAP during and after Sapphire, there really wasn't any major news to announce. The downside? Not as much conference buzz as we sometimes get. The upside? No news generally means "business as usual," which in SAP's case means: increased penetration of the midmarket, continued project wins over Oracle, and overall success with its strategy of tapping into new markets while selling upgrades and product extensions to existing customers. Despite a few macro-economic storm clouds, the SAP marketplace seems healthy.

If I had to pick the stories that most closely resembled genuine news items, they would not necessarily match up with the press releases that were issued. The "SAP on a BlackBerry" thing is pretty cool, but I don't count it as a blazing headline. Here's what I do count:

- The major delay in the release of Business By Design (BBD).
- The unresolved lawsuit between SAP and Oracle (not a major item of discussion at the conference).
- The battle for the midmarket customer (and the positioning of SAP as an affordable solution for companies of any size).
- The so-called "SAP Skills Shortage" and the dynamics behind the supply and demand of SAP talent.
- The global expansion of the SAP market in regions such as Asia and Latin America.
- The confusion over the Business Objects acquisition, and SAP's explanation for why this acquisition was worth moving away from their "buy and build" strategy.
- The release of NetWeaver Business Process Management (BPM) - a development that is significant less in terms of immediate news and more in terms of the next-generation eSOA-based tools on the horizon.

Let's start by dispensing with a few news items that I don't have a lot to say about at the moment. I may be wrong, but I have never taken the lawsuit between SAP and Oracle as much more than a big-time publicity stunt on Oracle's part. It does look like there is some minor culpability on SAP's side here, but I'd be shocked if this lawsuit ends with any other scenario than an out-of-court settlement. In terms of SAP's expansion into new global markets, that's not an area I have a lot of expertise in, so we'll have to look to other news sources on that one.

The battle for the midmarket customer is not something that I picked up much new information on at this year's conference, except for SAP's growing confidence that its suite of products can serve the midmarket in a cost-effective manner, even with the delay of the BBD market release. Armed with a streamlined implementation methodology, SAP's midmarket strategy looks poised to succeed - though "success" will not be defined by the same level of market dominance SAP has already achieved in the Fortune 100.

Before I go into more detail on the other news items, let's look at a few conference successes and conference "beefs."


Conference Successes (things that impressed or had good buzz)

Eric Clapton - I was told by more than a few discerning listeners that the lived up to the hype, not always something the featured performer can pull off.

ASUG Co-location - Old news at this point, but the ASUG co-location works...though companies have to be smart about where to deploy their people to get the most out of it.

SAP for the BlackBerry - No, I didn't consider it a "game changer," as at least one SAP board member called it, and no, it's not a breathtaking news story, but I can't deny the demos looked pretty cool. Assuming, of course, that you really want your SAP system to follow you around wherever you go.

The "Foosball Booth" - I had the best time playing foosball at the "Foosball Booth." Unfortunately, the fact that I can't remember the name of the service provider that featured the foosball raises the question of how valuable such gimmicks are. I don't even think this service provider swiped my badge, but I had a great time. I feel strong goodwill towards them and would consider taking their phone call, but I just can't remember their name and they don't have my number.

Oracle's Sapphire Booth - Oracle has figured out a pretty clever booth strategy for the last few SAP conferences. They hand out these bags that are the perfect size to carry around the rest of the bling that other booths hand out, like stuffed animals and magic eight balls. So, you see a disproportionate amount of Oracle branding throughout the convention floor. It's diabolically subtle, and it's effective enough that I actually warned SAP's own marketing people about it after this year's conference.

SAP Versus Oracle - Oracle might win a decent lawsuit settlement and their bags might be a clever exhibition hall move, but the inside word on head-to-head sales against Oracle is that SAP couldn't be doing much better. I talked to a couple of SAP pre-sales guys at one of those consulting partner events where the beer starts flowing and people speak freely. I can't verify these numbers, but these SAP pre-sales guys told me that their team was winning upwards of 90 percent of their head-to-head sales battles with Oracle. And most of the sales they were losing involved what I would call desperate sales tactics by Oracle, which I don't feel comfortable elaborating here. For those who want to take a guess at these tactics, I would just say, what would you do if you were trying to sell both software and post-service consulting and were trying to get your foot in the door? What if you could take a hit on the initial sale and make it up later? That's all I'm going to say about that, but internally, SAP is quietly very confident about selling against Oracle. You could see a bit of this confidence come out in some conference situations, such as the SME panel, where victories over Oracle were discussed (you can see the panel replay on the bottom right of this page).

Business One Consulting - I heard from a reliable source that Business One consulting has become a hot area. For those, like me, who were skeptical that a B1 consulting market would emerge, this was interesting news. To be clear, my skepticism was not that B1 would not succeed, but I figured that it would be more "out of the box" than any other solution. I had a hard time imagining B1 generating much consulting demand. I suppose it's possible that the issue is less the amount of demand and more the amount of consultants who are skilled in B1 and willing to work on B1 projects. I'll try to do more research on B1 consulting for an upcoming JonERP.com feature.

Tom Brokaw Keynote - I was going to put Brokaw in the "beefs" section because not only did his talk have little to do with SAP (expected), he didn't really frame a picture of the macro-economy the way his talk was billed and the way you would expect a keynote like him to do. In terms of practical usefulness, TechEd 07's Tim O'Reilly was a much better fit, but Brokaw is a heck of a storyteller. He said some things that took me beyond SAP into a bigger world of global conflicts and human courage. Whether that was the purpose of Sapphire, I don't know, but it resonated.

SAP Midmarket Sales - SAP has had more success in the midmarket than many of us expected. I thought SAP would do well but would face tougher challenges from competitors. As of Sapphire 2008, SAP had more than 11,000 All-in-One customers, with 20,000 as the projected number by the end of 2008. SAP seems to have improved its midmarket push in the United States by honing its channel partner sales strategy and empowering its partners to make sales. SAP is also selling well head-to-head against Oracle in the midmarket.

Corporate Social Responsibility - I remain personally skeptical about how far the "social responsibility movement" in business can go, but there were some excellent events at Sapphire on this topic. SAP is doing a good job of furthering this important discussion. Certainly, there are many areas where "sustainability" is simply a good business practice, and that's where the low-hanging fruit in CSR is. I wonder, though, about the not-so-low-hanging fruit: sometimes doing the right thing is more expensive, and consumers are not of one mind on this issue. They want responsible business practice, but they also want low prices. I see some limits on the potential of CSR, but it's a very worthy discussion. One of the CSR events, a panel discussion, is available online for replay (see the link at the bottom right of this page). On that panel, the connections between CSR and Web 2.0 are explored. One interesting aspect of this panel was the acknowledgement that not all companies are culturally prepared for openness and transparency. There was one example cited of a company using an interactive wiki that was having trouble getting managers to participate. Regardless of my skepticisms about CSR, it's an important topic that got some good coverage at Sapphire - perhaps not as visibly as some people would have liked, but that's another story.

"Dysfunctions of a Team" - Best Keynote? - I usually keep these kinds of generic team-building speeches at arm's length, and so this was the one keynote I totally missed at the conference. But listening to it on web replay later, I found myself thinking this keynote, with all due respect to Henning, Leo, and Hasso, might have been the best of the bunch. I don't know if speaker Patrick Lencioni's contention that optimizing teamwork is the key to competitive advantage for ERP customers is correct, but at least from a leadership training perspective, this one was a keeper. Some of the lessons, such as "if people don't weigh in, they won't buy in," probably seem trite and simplistic. But this talk on building trust through admission of vulnerability, the healthiness of conflict around ideas (not personalities), and the importance of accountability around behavior and results, was surprisingly sharp. I'll grant you the tie-in to SAP around teams and profitability may be a little tenuous, but in terms of furthering your career by sharpening your interpersonal strategy, this one delivered.


Conference Beefs (things that didn't impress or lacked buzz)

The Post-keynote Press Conference - was pretty flat and uninteresting. SAP has a bad habit of spending half the press conference spinning the keynotes we just heard, leaving little time for the questions.

Analysts Who Attend with Grim Determination - Maybe I just had bad luck, but I had lunch with more than a couple of analysts on cruise control who need to take a break from the road shows and restoke their imaginations. If analysts and reporters don't bring a sharp game, they contribute to the blandness of the press conference and the subsequent coverage. Fortunately there were some notable exceptions, like David Foote of Foote Partners, who publicly pressed SAP on its plan to meet SAP skills demand.

SAP's e-Learning Course Offerings - SAP may be doing a great job with e-learning, I don't know, but I talked to a reporter who went by the SAP education booth for more information on the new e-learning course offerings, and the SAP representative couldn't find the courses on the SAP web site. The SAP rep tried to find the e-learning courses by searching the SAP.com site using Google, and that didn't work either. Either SAP is playing down these course offerings, or the education portion of the web site needs some revamping.

Lack of Family-owned Restaurants in Orlando - I guess I'm the only one in Orlando that enjoys a family-cooked meal? I'm sure there are some hidden treasures in Orlando if you have some time to poke around, but this is an Olive Garden and T.G.I. Fridays kind of town. I lucked out by getting lost and finding a great Ethiopian restaurant, Nile, when I was trying to turn around. Check it out next time you're down there, it's excellent.

Business By Design Delay Spin - I don't have a problem with the Business by Design product release delays. This is an ambitious project, and SAP needs to get it right and make it affordable. SAP's stated reason for the delay - that they wanted to get the functionality right and keep the Total Cost of Ownership (TCO) low, all made sense to me. But I don't understand why SAP executives didn't share in their public briefings another major reason for the BBD delay: compatibility with NetWeaver 7.1. Currently, BBD is not in sync with NetWeaver 7.1, and it needs to be in order to provide a smooth upgrade path for BBD customers. CEO Henning Kagermann acknowledged the NetWeaver 7.1 compatibility issue in a meeting with a group of bloggers on Monday, May 5th called the "Enterprise Irregulars." News of this acknowledgement was posted on the web the same day, but SAP didn't seem open about this in any of its public pronouncements at the conference. This seemed a strange approach, where folks outside of Sapphire reading blogs knew more about the real reasons for the BBD delay than those who paid the freight to get to Orlando. In an era where we talk about openness and transparency, this seemed an odd approach by SAP.

Keynotes Lack Transparency - With all the emphasis on transparency in the SAP software itself, and with the fine job SAP is doing creating dynamic online communities where an honest back-and-forth between customers and SAP employees is commonplace, it's surprising that SAP's own keynote addresses are so full of bombast and lacking honest recognition of customer concerns. Whether it's Business Objects or the latest modeling tool demo, I don't think we get a real honest view of what SAP customers are actually dealing with. If I didn't know better from Henning's keynote, I would think you could just hop onto NetWeaver BPM and create some process model that was instantly executable without any help from the folks in IT. As per usual, SAP's vision is right where it needs to be and the technology to deliver on it may even be ahead of schedule, but it doesn't hurt to acknowledge the reality of the customer experience as well. At this point, customers don't want a light show as much as they want to be heard. SAP has made good strides in this area, but the keynotes still seem to miss some kind of interactive accountability that SAP has fostered very effectively elsewhere.


The Verdict is Still Out (I had to add one more category for the Business Objects acquisition)

Business Objects Acquisition (and speeches about it) - I thought Business Objects CEO John Schwarz did a good job on his keynote, and from all the events I attended, it seemed like SAP's shift from its "build from within" strategy was well-justified in the case of Business Objects (the Business Objects panel on the bottom right of this press page was very good also). Business Objects and SAP seem to fit pretty neatly together, with BO filling in key aspects of the functionality SAP is missing, and vice versa. The only noticeable overlap seems to be in the area of the BEx (Business Explorer), and from everything we've heard, the presentation and reporting environment offered by Business Objects would be a welcome improvement for every SAP customer now using BEx.

But here's the problem: none of the keynotes or presentations I heard acknowledge that there are any setbacks for SAP customers at all. This kind of reminded me of a local grocery store around here that is renovating and expanding. They have a shiny map showing off the great new store that we're going to get, but they don't bother to mention that there will be minor inconveniences while they are ripping up the existing parking lot. I don't know about you, but I'm more partial to being upfront about the challenges and not just emphasizing the shiny new store.

For example, more than a few SAP customers have had to either rework or pause their NetWeaver BI strategy until they learn more about the implications of the Business Objects acquisition. In the end, they should benefit, but I think it's better to speak frankly to customers in speeches than to airbrush them - especially when they can head out to a blog like this one and speak their mind either way. And, just like this entry, they are more likely to be critical if they feel "overmarketing" coming on. But, if the Business Objects purchase can live up to its obvious appeal, then all excessive hype will be forgiven.

- to be continued -