SAP's Software-Only Innovation Challenge

The software strategy is making a lot of sense as an innovative wedge into the enterprise. But the real challenge lies ahead in delivering long-term value.
His other main point was in evidence at TechEd: The strategy of innovating largely around what SAP likes to call a "stable" core is one that is making tremendous sense for its customers. It was clear in every customer conversation I had that the notion of adding new functionality like HANA and new mobile and analytics apps on top of the Business Suite is making huge sense for these customers. This was the dual nature of every customer's raison-d'etre at TechEd: Keep an eye on what's going to make the core easier and more efficient to run, while looking for the cool new apps that will make the business more competitive.

So the Rubicon has been crossed, what of the battle for the empire? The question boils down to what the SAP board is willing to do about its innovation opportunity. The problem with SAP and innovation is twofold. The first is that the company has so much innovation going on in so many quarters that it risks drowning in the river instead of crossing it.

This challenge is, of course, a messaging problem for newly crowned CMO Jonathan Becher, who has the unenviable task of making sure SAP is consistently on message in the 24 industries and dozen or so major markets in which it wants to wear the innovator's crown. This means places where SAP has been traditionally weak--like CRM and HRMS, both of which have really nice new mobile apps--as well as places SAP has been traditionally strong, like manufacturing and supply chain. It means taking the rest of SAP into the new markets, like mobility and financial services that Sybase brings to the table. And it means distilling one of the more comprehensive and complex innovation messages in the market into the SAP equivalent of IBM's Smarter Planet or Oracle's Engineered for Innovation.

The second problem for the SAP board involves Oracle and to a lesser extent IBM: How willing is the board, because in the end it's their decision, to take on Oracle in aggressive fight for the growing pool of IT dollars that McDermott now sees as shifting towards innovation. That fight requires SAP to shift from its usual preference to play defense against Oracle to playing offense. Whether SAP has the stomach for this fight is the real question.

HANA and in-memory are the perfect examples. It's clear that Oracle will make a major move against HANA at OpenWorld. It threw down the gauntlet even before TechEd was over. If SAP and Oracle play their usual hands, then Oracle will successfully steal the in-memory ball and start running for the goal line, red and yellow cards be damned. SAP will put on a sincerely good chase.

Rinse and repeat for mobile--it's hard to imagine Oracle will let another OpenWorld go by without making some commitment to the mobility market. The only real question is what's SAP prepared to do about it.

SAP has the opportunity to fight Oracle on its home turf--SAP is, after all, now a database company, too--as well as take the fight to new markets. This opportunity would involve blending a strong innovation message with a strong total cost of ownership message, and it would involve direct engagement with an aggressive and highly successful opponent. To do so might not guarantee success, but failing to do so would guarantee mediocrity, and further threaten SAP's ability to make the case to its investors that the last standing enterprise software giant deserves to continue standing.

I have to close this TechEd rant with a note on gamification, which was one of the themes of TechEd and was the subject of an Innojam--a 30-hour coding quest that resulted in a contest for the best gamified app (of which I had the honor to be one of the judges). SAP's focus on gamification in the enterprise is another example of some fearless thinking with respect to innovation, but the results from the Innojam proved to me that any fear of gamification is completely unfounded.

First off, the 13 teams that made it into the final round were exemplified by an incredible energy and creativity--and excitement--that itself was innovative. The sparks in the room were palatable, and the different approaches to gamifying SAP were impressive. My own favorite was the "Do I Know You App" mentioned in the link above, which is an app that lets meeting attendees put names to faces and otherwise learn about the people with whom they're about to meet. It didn't win but exemplified a winning gamified "SAP" app in three ways:

The user experience was hip, mobile, entertaining, and in very sharp contrast to the traditional SAP look and feel, and even the Business Suite at its most modern.

The app was engaging and intrinsically as well as explicitly rewarding, and the explicit rewards of gamification enhanced the intrinsic reward of being able to have a more engaging meeting, even with people you've never met before.

The app enhanced an important component of the kinds of people-centric business processes that SAP has to capture in order to reach its billion-user goal.

It's easy to say that gamification is really way out there and is something that SAP is doing just to look cool, even as it pulls on its suit and tie and heads off to that staid and boring enterprise software world of yesteryear. Innojam proved that if SAP wants to unleash gamification as one of its next waves of innovation, it will have yet another army to march across the Rubicon. Gamification may prove to be as strong an innovation play as SAP has ever made, and that's saying a lot.

Josh Greenbaum is principal of Enterprise Applications Consulting, a Berkeley, Calif., firm that consults with end-user companies and enterprise software vendors large and small. Clients have included Microsoft, Oracle, SAP and other firms that are sometimes analyzed in his columns. Write him at [email protected].

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