SAP has invested significant resources in expanding from its core of ERP applications. The latest investments are in cloud computing and in human capital management with the costly acquisition of SuccessFactors. Its earlier acquisition of Sybase is now showing progress in mobile technology, and the company is progressing also in in-memory computing with SAP HANA. All of these are important areas for its current market position and future directions. The company also promises to help customers move forward smoothly and to make its applications more accessible and easier to use. If it is able to balance a sharper customer focus with technological advances, SAP could put itself in a strong position in the enterprise software market in 2012 and after. We advise both current and prospective customers to scrutinize SAP’s strategy going forward and the execution of it as it bears on their own requirements.
SAP says it aims to help customers advance technologically without disrupting their existing deployments of its systems, applications and tools. It is trying to achieve this by adapting HANA to run under its current analytic and transactional systems; if that effort succeeds, it could displace disk-based databases (particularly Oracle’s) with memory-based ones. In addition SAP is integrating other technologies such as cloud and mobile with existing software deployments. The company has significant deployments of a variety of applications in the cloud today, so the time has come to focus on perfecting a cloud platform that can support any type of application. SAP also must address the customer challenges of integrating processes, applications and data that must interoperate whether they are in cloud computing environments from any provider or in SAP’s own on-premises applications.
Simplicity and accessibility of its applications critical issues for SAP as well, and the company seems to be tackling both. On the simplicity side, SAP has been working to improve the usability of its applications, for example with new user interfaces for its upcoming releases; we believe the company will have to invest in marketing to prove this point. Regarding accessibility, SAP is making more applications available for trial and purchase through its online stores. SAP realizes that application buyers now have a business orientation and responsibility for investing in technology, but it will require more marketing to persuade them that this vendor does not require more IT resources than others – hence the importance of the cloud and mobility.
In mobility SAP has to make sure it invests sufficiently in the unique design requirements of mobile applications, such as collaboration and visualization. A question mark is SAP’s emphasis on HTML5, for which it has been developing an application container in its Sybase Unwired Platform (SUP). It is risky to believe that developing to a lowest common denominator like HTML5 will help popularize applications across mobile platforms like Apple, Android, RIM and even Microsoft, each of which have unique design aspects in their native operating environments. So far SAP’s mobile applications are oriented more to tasks than to people’s roles. The company has not articulated a vision of how elements like voice interaction, already available on the Apple iPhone 4s and through Google’s voice technologies, can advance mobility.
SAP is committed to cloud computing, but it remains to be seen whether it can fend off major competitors, especially Salesforce.com and even Oracle, as well as the many smaller vendors that use the cloud to deliver applications to specific lines of business (LOB). Over the years SAP successfully handled the challenges of application and data integration inside the enterprise with its SAP EIM and SAP NetWeaver; now it needs to do likewise with its cloud computing efforts. To do this may require acquiring a software vendor or licensing software from providers such as Dell Boomi, IBM, Informatica, iWay Software, Pervasive or SnapLogic. SAP is leading the market in the number of new applications that operate on smartphones and tablets; IBM, Infor, Oracle and others are not as far along. However, SAP will have to deal with smaller competitors providing specific LOB applications such Peoplefluent in HCM or Roambi and MicroStrategy in business intelligence, which are advancing the mobile user experience and interactivity.
SAP has shifted its priorities to the cloud and mobility at the right time to attract more customer commitment and market acceptance while still being an innovator in enterprise software. While the technology is advancing quickly, SAP’s communications are lagging in explaining why it provides the best user experience for lines of business and how they can collaborate better; that is at least as important as investing in the cloud and mobile infrastructures. We advise organizations to require SAP representatives to demonstrate that their applications are suited to the customer’s own business needs and ways of operating.