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Commentary

SAP Shakeup Puts Focus Where It Belongs

SAP just set its priorities straight. Here's why Vishal Sikka's departure shouldn't worry SAP customers.

Some SAP watchers are wringing their hands, worried that Vishal Sikka's surprise resignation, announced Sunday, spells trouble. I'm not one of them. Quite to the contrary, I think it signals a return to realism and appropriate priorities. Here's why.

For more than a few years now there has been tension within the ranks of SAP. The tension has been between chairman Hasso Plattner, his protégé, Vishal Sikka, and their loyalists, and those who had a broader focus and, in my view, a clearer sense of market realities. You'd hear snippets about this tension from employees and even from customers close to the company, and you'd see more detailed comments in response to articles.

As industry insider and analyst R "Ray" Wang of Constellation Research put it in Monday's report on Sikka's departure, the Plattner/Sikka camp favored "build versus buy" and "great platforms that would lead to great apps," and the other camp leaned toward "apps over platform and execution over innovation." It's a bit of an oversimplification, but think of one group as the Hana camp and the other as the apps and cloud camp.

[ SAP's co-CEO disagreed with this assessment. Read SAP Shakeup: Bill McDermott Speaks Out.]

No matter how much innovative work SAP might whip up as part of its platform, SAP is, fundamentally, an applications company. In that world, cloud computing has become the dynamic that all players must address. Hana might help that cause to a certain extent but, somewhere along the way these past four years, the promises and expectations heaped on Hana started getting out of hand.

Hana started out as an analytics accelerator and then became a full-fledged in-memory database management system (DBMS). Soon, transaction processing was added to the list of promises, and "radical simplification without disruption" became the rallying cry. Next, Hana evolved from being a DBMS into a platform, packing analytics, application server, and data-management components. As pressure mounted to respond to the cloud threat, Hana became the platform for all SAP software-as-a-service and managed services offerings.

Meanwhile, the rest of the technology world has been catching up with SAP's in-memory promises. Microsoft has released SQL Server 2014 with In-Memory OLTP and Oracle is promising its Oracle 12c In-Memory Option later this year. SAP still has points of differentiation, like the promise of radical simplification. But as we detailed in our March cover story, "In-Memory Databases: Do You Need The Speed?," we've seen scant evidence that companies have actually been able to eliminate separate layers of infrastructure for transaction processing and analytics. In fact, we haven't talked to any large companies -- save SAP itself -- that can point to large-scale Business Suite deployments on Hana.

Hana is great technology that has its place, leading with analytical uses. And it's not being abandoned by SAP by any stretch. But this week's shakeup represents a return to reason. Sikka's departure might be a bit of a shock, but the renewed emphasis on applications and the cloud was apparent back in February at an SAP investor conference in New York. That's where soon-to-be sole CEO Bill McDermott declared "cloud is where we are taking the company" and where Sikka was noticeably subdued.

"Vishal built [the Hana] plane and he actually got it airborne, and now he hands it off the pilots who will take it to the next step in the journey." That's the interpretation SAP spokesperson Jim Dever shared with me after Sunday's announcement. Not to diminish Sikka's contributions, but SAP can still draw on the formidable technical depth of chairman Plattner, who truly deserves credit as the mastermind behind Hana.

The challenge ahead for SAP will be stepping up its cloud game. Hana is there in the background as the "powered by Hana" platform on which SaaS apps and managed deployments will run. But techno babble about platforms is not why decision makers choose cloud providers. They choose them for their depth and breadth of capabilities and the degree to which they integrate with and complement on-premises applications that, at most large companies, aren't going anywhere any time soon.

The biggest danger for SAP in the short term is a story and momentum vacuum now that it (presumably) won't be going on and on about Hana at every turn. But that's easily fixed by the next strategic cloud acquisition or overdue next steps on more organic strides toward cloud delivery.

SAP has to respond more forcefully to the digital marketing imperative, for example (as have Salesforce.com and Oracle), if its CRM apps are to remain relevant. These and other initiatives weren't going to happen if SAP kept treating every problem like a nail and Hana as the universal hammer.

Can the trendy tech strategy of DevOps really bring peace between developers and IT operations -- and deliver faster, more reliable app creation and delivery? Also in the DevOps Challenge issue of InformationWeek: Execs charting digital business strategies can't afford to take Internet connectivity for granted.