SuccessFactors Leading SAP Cloud Away From Business ByDesign

SuccessFactors founder and CEO Lars Dalgaard is the man charged with making SAP survive its midlife crisis and emerge reinvigorated as a cloud software vendor.

As SAP co-CEO Jim Hagemann Snabe put it in a keynote address at the Sapphire conference in Orlando, a man is in his 40s is likely to go out and buy himself a symbol of youth and rebellion from one of SAP's customers, Harley Davidson. Founded in 1972, SAP is getting to just that age. "So we bought SuccessFactors," Snabe said. "Now we feel like we're 20 again."

In his own hyperkinetic keynote address, Dalgaard boasted of now commanding "5,000 people in the cloud" between those SuccessFactors brings to the marriage and the people SAP already had working on cloud initiatives. SAP adds a measure of respectability that ought to give customers the confidence to choose cloud solutions, he said. "We can take care of you. We can guarantee that stability your customers come to you for every day."

[ Where does SAP go from here? Read SAP Faces Uphill Battle On Database, Mobile, Cloud.]

The cloud applications SAP offers will be "loosely coupled, but of course they're also super-integrated," Dalgaard said. What this means is that more of SAP's cloud offerings will address discrete functions that organizations can purchase a la carte. The new strategy also emphasizes the ability to mix and match cloud and on-premises solutions, so that a business unit might manage some functions in the cloud but still be able to reconcile its records with an SAP instance in the corporate data center.

"Customers want to innovate without disrupting the consistent core they've been using over many years," said SAP's other co-CEO, Bill McDermott. "The idea that everything has to change because of some new platform in the cloud is just not consistent with what we see from our customers."

In other words, cloud software may be more of a supplement to software in the data center than a replacement for it.

Now a member of SAP's executive board, Dalgaard has been put in charge of cloud strategy for all of SAP, including preexisting products such as SAP Business ByDesign, which was originally offered as a cloud-based ERP suite for middle-market customers. While elements of the technology are strong, ByDesign "just hasn't been marketed right or positioned right--there isn't much about it that has gone right in terms of go-to-market," he said in a briefing for press and analysts.

New and enhanced cloud products SAP announced include:

-- Financials OnDemand, which Dalgaard said was created by SAP personnel with expertise in the traditional R/3 on-premises environment, but with a design specific to the cloud.

-- A planned new version of Travel OnDemand with additional integration and mobile capabilities, including the ability to capture and process expenses directly from a mobile device.

-- An updated Sales OnDemand, with additional marketing and social selling capabilities, enhanced configuration options, and integration with on premises SAP applications including SAP CRM.

-- Social Customer Engagement On Demand, used to respond to customers on Facebook and Twitter and featuring integration with NetBase social analytics.

-- Sourcing OnDemand for strategic sourcing, supplier, and contract lifecycle management, to be delivered in the cloud but with integration with on premises SAP both on premises and in its business-to-business networking solutions, such as SAP Information Interchange OnDemand.

According to Dalgaard, the four broad functional areas SAP and SuccessFactors together will address in the cloud are managing people, money, customers, and suppliers. "It doesn't have to be any more complicated than that," he said. When someone asked him later why he didn't include manufacturing on the list, he said it might be a possibility later but it didn't stand out as one of the most promising opportunities in the cloud.

While he brushed aside questions about whether Business ByDesign would continue to exist as a brand, Dalgaard said it would be a mistake to expect cloud customers to buy into a broad suite of business applications. Cloud software buyers want the applications they buy to work well together, but they often get started by addressing a specific need, he said.