Global CIO: SAP: The Top 10 Reasons We'll Beat Oracle In Applications - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Government // Enterprise Architecture
10:15 AM
Bob Evans
Bob Evans

Global CIO: SAP: The Top 10 Reasons We'll Beat Oracle In Applications

SAP says its strength in on-demand applications, mobility, and business analytics, plus a huge difference in philosophy, will keep it ahead of Oracle in enterprise apps.

9) Sybase is China's #1 database. McDermott and Hagemann Snabe frequently touched on the significance of SAP's ability to work with a wide range of partners as a strategic advantage, and in a parallel context described how their acquisition of Sybase earlier this year would open up significant new markets and growth opportunities for SAP.

"And the new [market opportunities] will be the extension of our ecosystem as we build new partners and new routes to market in new channels and new geographies all over the world," McDermott said. "Business ByDesign gives us a tremendous opportunity to do that. Jim talked about China—if you think about Sybase and the fact that they're the #1 database in China, there's an example. So every angle on partners is something SAP looks at from a force-multiplication point of view."

Like every IT vendor, SAP looks at China's enormous economy as a massive opportunity—and while SAP acquired Sybase primarily for its mobile strength, SAP is no doubt very eager to see if it can exploit Sybase's strong presence in the Chinese database market as way to cut into Oracle's huge database business.

8) New products and strategies have doubled the size of SAP's addressable market. Accelerating its diversification away from being solely a supplier of large and complex ERP applications to large global corporations, SAP believes its aggressive moves into SaaS products, mobility, and in-memory computing give it huge new growth opportunities with both existing and new customers.

"We have, with our product strategy, basically doubled the addressable market of SAP, and that gives us the strong opinion that we can sustain growth in double-digits in the time to come," said Hagemann Snabe. "We have opened up new markets like the on-demand market, we have opened up new markets like the mobile market, and we have opened up the fascinating new market around in-memory computing, and all of these will be elements of our growth strategy.

"We still believe there's a lot of growth in the on-premise world, as well—we seek key industries like banking and retail and utilities investing heavily in standardization of software. We also see geographies like China and the BRIC countries that want to become global players and standardize on a global infrastructure, and SAP has proven to be able to do that. So it's a combination of on-premise extending the leadership, and then adding these new businesses of on-demand, mobility, and in-memory computing to really show leadership from an innovation point of view."

7) Broad distribution channels. That larger addressable market described by Hagemann Snabe won't do SAP any good unless the company is willing to forcefully change the way it offers its products to market. In response to a question about reaching customers of various sizes, McDermott said, "We have a direct-sales force model that works quite beautifully. In terms of value for customers and business outcome for customers, we think we're pretty world-class in that area," said McDermott. "Where you'll see us focus a lot more is on the indirect, and we consistently tell you how our SME business volume is improving, with things like inside sales and indirect channels and we're expanding the footprint of SAP."

Earlier, in his prepared remarks, McDermott offered this perspective: "In the U.S., we saw good balance in the mix of deal sizes. Our multi-channel go-to-market approach and well-balanced coverage model allows us to capture demand by line of business, our indirect channels, or via our traditional direct-sales model. Also, there was a nice increase in volume."

6) Innovation versus Consolidation. I think SAP's got this one half-right: its own organic innovation is an essential ingredient for its continued success and, if carried out properly, might indeed give it some key advantages over Oracle. Where I think SAP's overplaying this card, however, is in its presentation of innovation and consolidation as mutually exclusive—theoretically, we can all understand the distinctions, but in the world of the customer, there is no reason why thoughtful and high-impact acquisitions can't offer customers valuable innovation as well.

Look at SAP itself: two of the areas that it says are most-essential to its customers and to its own future growth are business analytics and mobility. SAP's products in those areas both come from acquisitions, and relatively recent ones at that: Business Objects and Sybase. Of course, SAP would argue that those deals were "strategic" whereas Oracle is merely hoovering up generic companies in order to eliminate competition, but I think that doesn't add much to SAP's argument and, in fact, weakens it: the proof is in Oracle's steady and impressive growth rates in revenue and earnings.

Again, it's not hard to understand why SAP wants to make this argument—my point is that it should focus more on what it is doing so well (innovation) and spend less energy on a premise that is much less tangible. Here's an example from Hagemann Snabe: "Let's look at the quarter from a strategic point of view. Product innovation, contrary to consolidation from some of our competitors, is a key reason that we continue to report strong growth. We continue to open up new growth opportunities for SAP and our customers through accelerated innovation in our solutions for on-premise, on-demand, and on-device.

"As Bill said, customer focus and innovation is key to differentiate SAP from its competitors, many of which insist on just piecing together legacy hardware and software solutions," Hagemann Snabe said. Is that really an accurate picture of what Oracle does: it "just" goes around, "piecing together" old stuff that nobody wants? Oracle's financial results tell a very different story, and customers know this.

5) Delivering the real-time enterprise. This has been a significant part of SAP's messaging since the co-CEOs took over in February, but while McDermott mentioned it right at the beginning of his comments in last week's earnings call, it didn't come up again throughout the discussion. Said McDermott: "The markets are moving in a positive direction, enterprises are becoming more confident in strategic buying decisions, and our strategy is validated as companies want the real-time, unwired enterprise, and want to partner with a company that has an open ecosystem, one that does not lock customers into a stack, but gives them choice." We'll get to that open versus lock-in comment in a moment, but I was surprised SAP didn't pound home the real-time message more aggressively during the call because it is certainly one of the most-vital objectives its customers around the globe are pursuing.

In today's market, if you're not operating in real time, then what are you operating in: phony time? I'm kidding (a little), but the point is clear: there's real time, and then there's everything else. And not too far in the future, companies that are in the "everything else" category won't be able to compete. This is a huge point that SAP needs to drive home aggressively, and it's not one that Oracle has been making—so, it's a nice opportunity for SAP.

Next, SAP says it's growing 50% faster than Oracle in business analytics:

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
2 of 3
Comment  | 
Print  | 
More Insights
The State of Chatbots: Pandemic Edition
Jessica Davis, Senior Editor, Enterprise Apps,  9/10/2020
Deloitte on Cloud, the Edge, and Enterprise Expectations
Joao-Pierre S. Ruth, Senior Writer,  9/14/2020
Data Science: How the Pandemic Has Affected 10 Popular Jobs
Cynthia Harvey, Freelance Journalist, InformationWeek,  9/9/2020
White Papers
Register for InformationWeek Newsletters
Current Issue
IT Automation Transforms Network Management
In this special report we will examine the layers of automation and orchestration in IT operations, and how they can provide high availability and greater scale for modern applications and business demands.
Flash Poll