SAP Decides to Go to the Prom


by Tony Kontzer

When I was a senior in high school, I was not a member of the "in" crowd. In fact, my friends and I mocked the "in" crowd for being superficial and trendy, and we knew (hoped?) that most of the "in" people would never duplicate their teenage glory, and ultimately would be forgotten.

When it came time to make plans for the senior prom, we were happy to skip this rite of passage. Or so we thought, right up until a week or two before, when someone talked some sense into us, convincing us it was something we'd regret missing.

I tell you this because it's occurred to me that my circle's dismissal of the "in" crowd, and our change of heart on attending the prom, wasn't all that different from how SAP's on-demand strategy has unfolded. As the Salesforce.coms and NetSuites of the world defined a new market (now more commonly known as "software-as-a-service"), and then Oracle and, to a lesser degree, Microsoft established wide-reaching on-demand initiatives, SAP sat on the sidelines, characterizing the on-demand evolution as a mere trend, a trifle that would prove to be a footnote in the history of computing. (Four years ago, I spoofed SAP's on-demand strategy (or lack thereof) in this video commentary about the software industry.)

Of course, SAPs inaction proved to be an epic blunder, as the SaaS market--with its flexibility and small up-front investments--has proven to be one of tech's great hopes during this seemingly endless recession. To be fair, SAP gave it a go, announcing an on-demand initiative called "Business By Design" back in September 2007, targeting small and medium-sized businesses, but that effort hit roadblocks out of the gate.

The effort so lacks momentum that nearly two years later, customers are still building integrations from SAP's Business Suite to third-party on-demand providers. Mind you, SAP does have a variety of on-demand apps for larger enterprises; it just has no clear and easy way for existing customers to transition to them, and zero presence in the SaaS market.

Then came the news this week from the OnDemand Europe conference in Amsterdam that SAP is focused on bringing on-demand to its stable of huge customers in a meaningful way. Not surprisingly, it took a former Oracle exec -- John Wookey, a 12-year Oracle veteran who ran Larry Ellison's applications business until his abrupt departure in 2007 -- to make this happen.

Wookey joined SAP as an executive VP last fall and was given the reins of the company's enterprise on-demand business, and after months of not being allowed to talk to the media, it was he who made the announcement about the new strategy. The idea is that SAP will offer an architecture that will enable instant on-demand deployments, since the on-demand apps will be an extension of SAP's Business Suite offerings.

To which SAP customers are no doubt saying, "It's about time." Normally, this is where I'd express cynicism due to SAP's persistent and stubborn reliance on the old packaged software paradigm, and predict that SAP would be reluctant to do anything that might jeopardize its license revenue. The presence of Wookey changes my perceptions. He's a well respected leader who brings a lot of passion and experience--and, of course, a healthy dose of insight about Oracle's strategy.

But unlike his years at Oracle working in the shadow of the charismatic Ellison, Wookey is now the public face of SAP's on-demand business. Let's see what he's got up his sleeve; If he can't help SAP establish a foothold in the SaaS market, then I'd venture to say no one can.