McDermott is a big advocate for mobile apps. (Which I like, because it's my personal tech cause celebre; see Is The Smartphone Your Next Computer?.)
"We think mobility is huge," he says. "If you look at the business user today, they are mobile. I'm mobile, and every other business user I know travels a lot, and prefers to have their applications on their hip, as opposed to being tethered on a line and having to lock in at a hotel. So the more we can move SAP business applications to mobile devices, the more successful they'll be."
I explored that with the SAP folks back in March, when they linked up with Sybase in a deal to make it easier for SAP apps to run on mobile devices, including the iPhone, Windows Mobile Devices, and Blackberry. (SAP also has a separate partnership with Blackberry maker RIM.) You can listen to that podcast; see Sybase, SAP Talk Smartphone Apps.
McDermott says more such partnerships may be in the offing, as SAP looks to expand the range of apps and mobile platforms available for customers.
Let's just admit that Software-as-a-Service, as popularized by the links of Salesforce.com, isn't something that was welcomed with open arms by long-time enterprise software players. It up-ended their business model, and prodded them to expand their pallet of offerings. Interestingly, though, where we are now is that the polarity between SaaS providers on the one hand and traditional "we license it, you host it" players on the other may end up being replaced by a model where the survivors are mixed-modality vendors. (Well, Salesforce.com will still probably stake out that left SaaS wing.)
SAP is clearly evolving toward a "Burger King" approach to the question of self-host software of SaaS. Namely, as McDermott says, customers can "have it their way."
Moving forward he sees the two approaches coexisting in a way that's not necessarily in conflict. "I think both models are viable" McDermott says. "There are mission-critical, end-to-end business processes that large companies run to keep their company going. They have large transaction rates and they require visibility on an end-to-end basis and very tight integration. Those processes will continue to be run on-premise. There will also be loosely coupled applications that don't need to be tightly coupled to the core process in the enterprise. Those will be easily provisioned in an on-demand model."
He continues: "Ultimately, the best of both worlds is to have full integration in the enterprise where you have to have it for risk management, compliance, and execution, and still be able to integrate the on-demand model into the enterprise. That's the hybrid model that SAP sees. That's the model we think gives the customer the most value."
Fireworks flew in our interview when McDermott offered up some tough words for competitor Oracle: "I think theirs is much more of a paper strategy," he said. "Our strategy is much more innovation, ecosystem, and customer-centric. I think that's where we divide the two."
McDermott drew a pointed comparision. "Others -- now that you mention Oracle -- have chosen to impart themselves on what I would call a twentieth century company strategy," he said. "Because innovation has been difficult for them, they've chosen to acquire as many companies as they can, to create a business model out of it. When they ran out of software companies to buy, they've now moved into the realm of hardware in the Sun acquisition. So I think theirs is much more of a paper strategy, to satisfy the capital markets."
A discussion about multitenancy is something only a true SaaS geek could love. Nevertheless, it's an important issue that's of huge concern to users. Dumbing it down as best as I can, the issue is as follows: In serving multiple customers who've all bought access to the same app, in the simplest case a SaaS vendor would have to run a new instance of the app for each of those customers. However, at some point (an early point) the hosting hardware would grind to a halt under the strain.
A quick way around this problem is out-of-the-box virtualization, which can vastly reduce the number of instances you have to get going. However, this doesn't address security issues.
So what SaaS vendors have to do is re-architecture their apps to support true multitenant operation. This means that they can run many instances on a single box, thus reducing server costs (not a big deal) and IT management/support expenses (a bigger deal). The key deal in this "rearchitecturization" for multitenancy is to get the partitioning right so that each customer's data is sandboxed in their own virtual instance, over which they and only they have control. Whew!
OK, so the deal is that getting all this stuff right takes time. In SAP's case, that's played out in some previous push-back to the rollout date of its Business ByDesign offering. In our chat, McDermott addressed the issue:
"What we want to do is make sure the features of the product as well as the performance of the product is up to SAP's standards," he said. "We think SAP Business ByDesign is a killer applicaton that can move major markets. So what we're doing is getting the provisioning of that service to the customer at a margin rate that can satisfy SAP shareholders. We'll get that product to market when it's ready. We'd rather be a little bit behind in delivery, and perfectly right when it hits the customer."
On Business Intelligence
We got to the BI news almost as an afterthought, when I asked McDermott a closing question I hoped would elicit a non-SAP related answer. I asked him what he personally gets excited about, and he used it to segue into a soliloquy on the wonders of BI.
Here's what he said: "We are introducing a technology to the market soon that we're calling Explorer. It's the combination of Business Warehouse Accelerator, where we can get data, process that data -- millions of records at sub-second speed -- and provide that to the user in a highly pleasing manner. And it gives you the chance to make real-time decisions, based on the things that you really care about in your enterprise."
What I know previously about SAP's BI efforts are that its software revolves around the SAP NetWeaver BI platform. On a second front, SAP acquired Business Objects in 2007 and has integrated the latter's software into SAP proper under the umbrella of SAP BusinessObjects Portfolio.
As to what McDermott mentioned, Business Warehouse Accelerator (BWA) is a product which already exists. It's officially called SAP Netweaver Business Warehouse Accelerator, and it's a plug-in which (I think I'm simplifying it correctly here) boosts the performance of NetWeaver Business Warehouse so that you can use it as a real-time product. (I.e., you install NetWeaver BW and then also install the out-of-box accelerator on, say, your Xeon-based server, and, presto, you can support real-time queries.)
However, it's likely that Bill was talking about a new product launch, combining SAP Business Objects BI software with BWA in-memory analysis capabilities. In which case, stay tuned (the news should be out this week). (BTW, if you want to get the scoop from BI experts, go read my buddy Doug Henschen and the other great writers over at our sister site Intelligent Enterprise.)
[Editor's Note: This post was updated Monday, May 11, to clarify the BI section immediately above.]
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