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SAP AG chief executive Henning Kagermann used his Tuesday morning keynote at his company's annual Sapphire user conference in Atlanta to convey a "delivering on results, stay the course" message.
Compared with competitors such as Oracle, which has pursued an aggressive growth through acquisition strategy in recent years, German enterprise software developer SAP has preferred to grow and develop new technologies organically.
SAP’s strategy is one of co-innovation, Kagermann told the around 15,000 conference attendees.
He said SAP is working with customers and partners to develop on its NetWeaver platform, and outlined new social networking initiatives the company is launching to help foster communities of interest.
He contrasted this with the strategy being adopted by SAP's biggest competitor – Oracle. "SAP is co-innovating the future, while our competitors are consolidating the past," said Kagermann. "We’re not following the consolidation trend for good reasons; because it’s not a good strategy for our users." Noting that SAP has delivered on its promise of a service-enabled suite by establishing enterprise SOA across the SAP product suite this year, Kagermann said the eSOA platform is needed to support business network transformation.
He said businesses increasingly feel the need to look outside their own organizations and more effectively collaborate with business partners and customers, and that takes enterprise SOA.
"Business network transformation has become the primary source of competitive differentiation," said Kagermann. "It's about business connectivity, it's about speed, and it's about people productivity."
A Canadian analyst said while SAP is doing some exciting things around Web 2.0, with its social networking initiatives, he was struck by the stay the course theme of Kagermann’s address.
"There’s not a lot of fancy new things going on here," said Joel Martin, vice-president of enterprise software with IDC Canada.
He said SAP's "message to its key customers – the multi-billion dollar companies – is 'we’re not throwing you any curveballs. We’re here to support your business processes and help you execute.'"
The strategy is not without its downside though, said Martin. With Oracle moving to consolidate the market through acquisition, he said Oracle becomes a more attractive upgrade option for companies that are already using many products Oracle has acquired.
"It makes it harder for SAP to go in there and compete if more and more of their platform is being consolidated with Oracle," said Martin. SAP used Sapphire to lay out a new roadmap for its Duet offering with Microsoft, and launch a Duet appliance with HP and Microsoft that promises to shorten implementation times.
Duet, jointly developed by SAP and Microsoft, allows SAP users to use the Microsoft Office platform as an interface into their SAP systems.
Later this year, the companies will release Duet 1.5, followed by Duet 2.0 toward the end of 2008. In the future, users will be able to access SAP's CRM data from Office as well as information held in mySAP applications.
Customization capabilities are also planned so users and partners can tailor existing scenarios to their own needs and come up with new ones.
"An increasing number of our customers are depending on Duet, and with this roadmap [they] can plan their future around these two great platforms, SAP and Office," said Léo Apotheker, SAP’s president of customer solutions and operations and deputy CEO in a news conference. But while the two companies are collaborating on Duet, their competition is heating-up elsewhere. SAP is increasingly wooing the mid-market, an area where Microsoft has strength with its Dynamics platform. And Microsoft used its recent Dynamics user conference to launch its play for the enterprise space, traditional SAP territory. "Every once and a while good friends will compete, and I think we compete hard but fairly," said Kagermann. "I think having such strong competitors makes our products better." IDC Canada’s Martin said the Duet partnership makes a lot of sense for both companies. SAP gets a more feature-rich, user-friendly interface into its backend, and Microsoft further entrenches Microsoft Office’s dominance on the enterprise desktop. And while the companies may compete as well, Martin said both companies have a long ways to go before they’ll really start to butt heads.
"Microsoft has a long way to go before they reach the levels of complexity that SAP can offer," said Martin. "In Canada we don’t expect to see a lot of competition between the two. Oracle is a lot closer to the level Microsoft is playing at." Apotheker defended SAP’s current pricing models, which some have described as high.
He said SAP’s pricing models are competitive, and reflect the value of products and innovations SAP is bringing to market. However, he added that SAP would need to be more creative and explore new software pricing models.
"I don’t think competitive pricing is going to hurt SAP," said Apotheker. "We deal with very intelligent customers that understand the value SAP brings, and understand value sometimes means price." Also on Tuesday at Sapphire, SAP announced it will be expanding its incremental upgrade through enhancement packages strategy to the entire SAP platform by 2008, and also released a new roadmap for NetWeaver.
Beginning later this year, new capabilities and enhancements will be available, focusing around improved user access and productivity, accelerated application and business process composition, streamlined access to relevant and reliable information across the enterprise and automated governance of eSOA.