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3/30/2010
08:36 PM
Bob Evans
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Global CIO: Larry Ellison's Nightmare: 10 Ways SAP Can Beat Oracle

Ellison bluntly predicted Oracle will blow past SAP in enterprise apps, but here are 10 steps SAP should take to reassert its preeminence.

(Welcome to Part 3 of Oracle Week, in which we examine the good, the bad, and the ugly approaches Oracle is taking in its attempt to fulfill Ellison's audacious desire to become the world's dominant enterprise software provider as well as leading systems supplier.)

In outlining his company's strategy and intentions for unseating SAP as the #1 provider of enterprise applications, Oracle CEO Larry Ellison unloaded on arch-rival SAP late last week by saying its technology is ancient, its strategy is a loser, its prospects are bleak, and its feet are too big.

Larry Ellison can be a very persuasive individual, and the story line he laid out for how he intends to topple SAP all sounds good in a hypothetical sense until you realize it's all predicated on one essential proposition: that SAP will just sit back and let Oracle hammer it into submission. And that's a proposition I'm not buying.

I asked SAP for its input into how it intends to ward off Oracle's assault and ultimately extend its lead, but an SAP spokesman wasn't willing to comment. But I am so here are 10 ideas for what SAP needs to do to reclaim its perceived and real stature as one of the world's foremost business-technology companies and, in so doing, lock Oracle in place as the #1 talker but the #2 achiever in enterprise software.

(And for much more analysis and insight into SAP and Oracle, please be sure to check out our "Recommended Reading" list at the end of this column.)

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The situation has a couple of parallels to Ellison's oft-stated claim that he will make Oracle into the world's leading systems company by supplanting IBM atop the industry it created 50 years ago. Where the stories align is that in each case, Ellison admitted very plainly late last week that Oracle is #2 behind IBM in high-end servers, and #2 behind SAP in enterprise apps. A further parallel is that Ellison then laid out his plans, in equally plain terms, for how he intends to drive Oracle into the #1 spot in both markets. (You can read all about that in Monday's column, Global CIO: Oracle CEO Larry Ellison Declares War On IBM And SAP.)

Where the stories diverge is in the current status of IBM and SAP. IBM is and has been an exceptionally well managed company, with high achievements in market share and financial performance and innovation that are the results of a decade of steady and consistent and forward-looking leadership from CEO Sam Palmisano.

SAP, conversely, has recently churned through a series of CEOs, has failed to sustain the financial standards it established at its peak, and in the very recent words of its own co-founder and chairman has lost the trust of its customers and employees.

So while Ellison's challenge with IBM is vastly greater than the one with SAP—and while Ellison's plan for ousting SAP is, in a vacuum, persuasive—SAP is still the leader in enterprise apps, it is still an indispensable strategic partner to many of the world's largest corporations, it still has a phenomenal set of engineers and developers, and it still has an unlimited set of options from which to choose that will allow SAP to not only fend off Oracle's assault but also extend the lead SAP currently enjoys.

Here are 10 such options, broken out into three categories: Internal, Acquisitions, and Partnerships.

INTERNAL

1) Business ByDesign. Ellison said it's late, it doesn't run on the same technology as SAP's other products, and is aimed at an audience that can't afford to pay enough to make the product profitable. But that's just conjecture—it's SAP's product, so SAP can control the discussion if it chooses to do so. Is it late? Sure it is—but so is Oracle's Fusion and Ellison simply admitted as much: he said he'd rather be late with a great product than on-time with a crappy one. So Business ByDesign is late—big deal. The far, far bigger issue for SAP is to articulate clearly and passionately why Business ByDesign is important for customers, why it's a game-changer for businesses, why it will extend and enhance SAP's leadership position. In a business-technology world where ill-defined products die rapid deaths, SAP needs to explain, more clearly and more persuasively than it has ever done with any other product, why its customers will be better off by investing in Business ByDesign. And then SAP can begin telling the world about its vertical-market capabilities, which Ellison said are sorely lacking severely:

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