SAP's Success And Looming Challenges - InformationWeek
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Josh Greenbaum
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SAP's Success And Looming Challenges

The vendor must get ready to grow its developer community, harness the sensor data revolution, and bring together the consumer and enterprise worlds.

Nothing succeeds like success, the old saw goes, but there's a dark side to the kind of success that SAP has been enjoying for the past year. Success of that magnitude is hard to achieve and harder to maintain. As I look at SAP's recent financials and growing market clout--not to mention the strategic stumbling of archrival Oracle--it's obvious that co-CEOs Jim Hagemann Snabe and Bill McDermott have an even more daunting task: keeping the new penny called SAP bright and shiny.

The problem with success is that people get used to it, and then require ever more success. The congratulatory glad-handing and back-thumping is quickly replaced by questions about "what have you done for me lately," and absent the right answers, those lead inexorably to a reversal of fortune and the ignominious exit of the leadership that just moments before seemed infallible.

At the risk of mixing metaphors, the best one to describe what's happening to SAP comes from mountaineering: Experienced climbers know that having enough energy and supplies to get you to the summit is only half the battle, and sometimes it's the easiest half. They must save enough energy and resources to get back safely to base camp. For lots of reasons--fatigue being only one of them--getting down off the mountain can be much more treacherous than going up.

Getting back to base camp is what it's all about, because if you're a real climber you're not going to be satisfied with conquering just one peak. You must get down off the summit you're on in order to prepare to climb the next one.

[ Read more from Josh Greenbaum on SAP. See SAP's Software-Only Innovation Challenge. ]

SAP is facing its own mountaineering challenge, and it promises to be as big as any the company has faced. This climbing-down-the-mountain-to-climb-back-up problem is totally self-inflicted: Simply put, the problem stems from the fact that SAP is standing on the summit today. Pretty much any way you measure success, SAP has it. Great revenue; growing customer base; some amazing innovations; two recent, very strategic, big acquisitions; good people; and, if you subscribe to the zero sum theory of enterprise success, a ton of affirmation in the apparent flaws in Oracle's business and technology model.

SAP needs to just get off this particular mountain successfully. It also must get started identifying and climbing the next peak. Here's my take on these two imperatives:

Back To Base Camp

SAP's biggest challenge is to consolidate a long list of initiatives, products, and technologies--not to mention acquisitions--into a coherent whole. Or as coherent as possible. It's not just that the company has too many individual products in more than a few categories: five HRMS systems, three CRM systems, four databases, a wide-ranging collection of mobile apps, and an even wider range of development environments. It's also that SAP must find a single voice and a single message to surround its ever-growing portfolio, however broad and overlapping it might be. This is essential not just for the immediate go-to-market effect of having internal and external consistency, it's also a requirement for SAP to scale its next set of big peaks.

Along with coming up with a coherent message, SAP also must present coherent leadership. The dynamic tension in a company with two boards and two CEOs can be a major source of strength: I'm convinced that this large and complex structure has served as the forge for SAP's current market leadership and success.

So, while I don't think for minute that SAP should move to a more centralized and autocratic model (which it couldn't if it wanted to), I do think that as SAP climbs down the mountain, it must be seen inside and out as working from one plan. And that involves not just ensuring that messaging and positioning are synchronized, but also that the company's famous consensus culture is valued as an asset and not used as an excuse for disharmony.

This is essential as SAP tries to harmonize its products and messages under a single banner. There are a hundred battle lines that could be drawn in the push to build a more singular vision and product set: The worst thing SAP could do is to let those lines be drawn in the first place.

SAP must make sure it's functioning more as a team and less as a set of competing factions. For better or worse, the company's competing in a market where the autocratic model predominates, which gives SAP's rivals a maneuverability that an SAP at war with itself will eventually lose to.

Finally, SAP has to take a more visible position on the world stage as a global player. The fact that no one from SAP was at the table when President Obama visited Silicon Valley last year is emblematic of this. I'm not talking about politics as much as perception, especially in the consumerization of the IT mountain that SAP wants to climb.

Obama's dinner companions included Yahoo, Google, Apple, and Twitter, at least in part because they're identified across the consumer and business domains. They're seen as leading edge companies driving innovation and growth, not to mention jobs. And, to top it off, Oracle's Larry Ellison was at the table too.

Bottom line, SAP needs to be counted as a member of this club. What good is having an American co-CEO if he can't get a dinner with the President?

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