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SAP - Recent News

     $1 Billion Damages? Moving into Commercial Banking? What Else?

Reuters reported that Oracle (ORCL) will seek approximately $1 billion USD in damages against SAP AG. This estimate is related to the TomorrowNow litigation that ORCL has brought against SAP. This sound bite from the article is particularly interesting:

"Oracle speculates wildly about the amount of its damages 'claim' in this discovery report, even though more than a year after this case was filed, Oracle still refuses to identify with any precision the nature or amount of its alleged harm or even to provide the theory on which its damage claim is based."

Damage claims must be proved for a court to award them. ORCL will need to show how it was harmed by the transfer of its intellectual property to TomorrowNow. To that end, I'm a little skeptical of claims in the hundreds of millions of dollars or more. Granted, ORCL may ask for punitive damages in addition to actual damages and that could cause the total to really escalate. But, from what I've seen (and that is very limited so far), a large claim could be tough to defend.

In a different matter, Bank Technology News reported that SAP is readying its products for a major push on North American banks. In this story, a major Canadian bank company is dropping a cool $100 million to have SAP replace its core banking applications. This has been a vertical SAP has had success with globally with the very noticeable exception being North America. This will be interesting to watch as US banks have different reporting and regulatory environments/needs than banks in other countries. We should also watch a significant number of competing vertical solutions that may include (and my memory is probably a bit dated here): Fiserv, Hogan, i-Bank, Systematics, Metavante and others. Plus, Indian outsourcers, IBM and EDS have big stakes in this area and I doubt they will just cede it to SAP without a fight.

Predictive Analytics

               BOBJ, SPSS, SAP - Predicting Customer Behaviors?

There was a small piece written up in the 6/16/2008 issue of InformationWeek. It stated that SAP's Business Objects (BOBJ) group is now offering a BI solution called Predictive Workbench. Interestingly, the technology originates from Chicago-based SPSS and allows users to predict customer behaviors and business performance.

SPSS, for those who didn't know, is a company name abbreviation for Statistical Package for the Social Sciences. The company makes software steeped in understanding how people act, think and behave and providing measurements of same. The focus of the firm has always been to provide users with data to better predict how people will act. The fact that BOBJ is using SPSS technology is not all that surprising except that BI and reporting firms like BOBJ have generally tried to develop their own capabilities in these areas instead of partnering with firms like SAS or SPSS.

This new capability of SAP's is a welcome addition to their product line. Firms have captured loads of transaction data and can report it. However, most reporting tool users lack the statistical or analytical knowledge to determine what future acts or predictions can be reasonably drawn from these data points. The best example of this occurs when customers call order entry personnel. Most systems do not calculate or suggest replenishment orders or appropriate add-on or up-sell items to callers because the software cannot make sense of prior order history. Even fewer systems are smart enough to group like minded customers into specific categories so that add-on sales suggestions can be made more relevant.

Businesses need this technology to identify product lifecycles, sales seasonality and other trends to more accurately predict sales, competitor price changes, etc.

Bottom line: This move by SAP is a good one albeit late to the market. Let's hope a number of their vast customers take advantage of this new technology.

SAP Business ByDesign Report

                       Big, Report on a Big Investment/Product Suite

At Sapphire 2008, fellow Enterprise Irregular, Dennis Howlett, suggested that the two of us team up and write a single, definitive report on SAP's Business ByDesign product suite. Because I've always wanted to see the EIs do more collaborative, refined products, I said "Absolutely". While both of us have blogged on this product line (and I've even prepared a couple of short research reports on it as well), we both believe that something this big and expansive deserved a more nuanced, deliberate review.

As a backdrop, I knew Dennis would also be attending Sapphire Berlin last month. I gave him a checklist of items I felt would help us get a more comprehensive review of the product line. He got these points answered and we're now a lot clearer on the product, its strengths and future needs.

The report has been written and is awaiting a final fact-check from SAP. We are also awaiting a couple of graphic files to insert into the document.

Dennis has already pre-announced its availability (see link above) but here's some the teaser copy relating to the report:

__________________________________________________________

                  The Comprehensive SAP Business ByDesign Report

It takes a comprehensive report to cover a comprehensive product suite like SAP’s Business ByDesign. This is a product suite that involved the efforts of thousands of developers and took approximately five years to bring to market. While much has been written about Business ByDesign, this report succinctly summarizes it all in a compact 20-page analysis. We examine subjects such as:

· The Target Buyer for Business ByDesign – Do you have what it takes to be a Business ByDesign user?

· Process Design vs. Functional Silos – This may be the single most important choice you make in buying a SMB software solution

· Product Review – A walkthrough of the 8 major functional components of Business ByDesign along with our requests for needed improvements in each area

· Vertical Assessment – How well does Business ByDesign serve your industry?

· Product Enhancements – Where should/will SAP expend its future efforts? What role will channel partners play?

· Technical Enhancements – Is the software delivering the performance that both you and SAP demand now?

· Competitive Assessment – How does this solution stack up against Workday, NetSuite and other on-demand ERP offerings?

· Author Summaries – See what our two report authors think. These are two of the software industries most visible and long-lived pundits.

The report is out for fact checking and will come out under Brian's Vital Analysis brand. We’re hoping it will be available for delivery by the end of next week. Yes, it is a paid for item because a combined 65+ years’ experience applied to this kind of thing doesn’t come free, especially when you’ve put in a lot of time into understanding the product, its position and value to the market.

For professionals looking to extend their consulting practices, we believe ByDesign is a superb opportunity to get deep into what your clients’ businesses really do, how they’re shaped and the problems they meet. I’m encouraging practitioners to consider this as a way of massively improving the value they offer. It requires the kind of mindset that professionals need to be both methodical and have that all important eye for detail. Learning the solution is not the issue for new people. Understanding process most certainly is.

____________________________________________________________________________________

Ordering and other information will be out shortly. Stay tuned.

Clapton and SAP - What a Combo....

              'Slowhand' Eric Clapton and SAP

As a very long-time Eric Clapton fan, I was overjoyed to see him last night as the Deloitte sponsored entertainment at the Sapphire conference. He and his band performed about 20 numbers over the course of two hours. And, thankfully, they played the full-on, electric guitar version of Layla.

Clapton earned the nickname 'Slowhand' because of the way he'd make audiences wait for him to replace broken guitar strings on stage. Frustrated audience members would sit there and slowly clap as a means of getting him to move faster (see this Wikipedia entry for more info: http://en.wikipedia.org/wiki/Eric_Clapton). While he may have been a slow, perfectionist with his guitar equipment (i.e., his tools of the trade), he could flat play a guitar and he could be really fast with it too. I was always struck at his versatility - going from blues to rock to a love song to something altogether different.

SAP this week showed that they share some of those same characteristics of Slowhand. In their Business ByDesign product line, the company is taking a more measured approach to ramping up sales for their newest creation. Analysts, Wall Street, customers, etc. can sit there and clap all they want but SAP, like Ernst & Julio Gallo wines, won't release a product before its time. Business ByDesign is going to get more functionality in its vertical application capabilities and the operational cost will be reduced before the company gets really aggressive with its marketing.

But, Slowhand SAP will likely deliver a screaming hot, fast solution when it's ready to let the market play with Business ByDesign in a big way. Sure, companies in six countries can buy it now but the real fun will be in watching 1000s of customers pounding on this in 12-18 months.

The Business By design product is already quite strong now. Some of the Enterprise Irregulars and I wondered if this conservative approach to marketing Business ByDesign is really the right strategy for SAP. In 12-18 months, competitors will have better solutions as well. Should SAP strike now while it has already has considerable market advantages?

How strong is Business ByDesign? Here are some interesting points to ponder:

• as shipped, the product comes with 400 reports and 1000 infocubes
• the product has one of the most functionally complete SaaS solutions on the market although top SAP executives report that prospects want more. My kid never gets a big enough allowance but sometimes we have to be selective in what we hear and what we act upon.
• the product has already seen TCO and performance improvements. Where the product only supported 25 concurrent users/blade, that number has doubled and doubled again
• the User Interface has been upgraded significantly. It still has a spartan look but this is to allow for faster screen refreshes (see previous post).

SAP - You Should've Caught Hasso's Keynote

                 SAP, SaaS and Memory Resident Databases

Some time ago, several of the Enterprise Irregulars got an A1S briefing from Dr. Hasso Plattner, board member and founder of SAP. A1S was the project name for an all-new solution SAP was developing for the SMB marketplace. That product was introduced last Fall as SAP Business ByDesign.   

 

In my conversations with Dr. Plattner back then, we discussed whether they would utilize a memory-resident database as part of the Business ByDesign product. I was told then that they would and we had a spirited discussion about the value of such an approach. Back then, I should have been clearer and asked when this technology would be brought to bear. Now we know – it’s now. 

 

 

Memory-resident databases are immensely valuable as they reduce search times by several form factors. There is no delay/latency waiting for a disk drive to re-position its read/write head or waiting for the drive to rotate to the correct spot. Memory resident databases don’t suffer the performance hits that conventional media do when data is fragmented across numerous parts of a drive. 

 

To see how effective a memory-resident database works, SAP executives showed how quickly a 1.3 billion record database of Point-of-Sale data is searched. In a live demonstration this morning at SAPPHIRE, sub-second results were consistently achieved. 

 

 

Workday has been using in-core or memory-resident database architecture for some time now. 

 

SAP has been both experimenting with it and now, with the Business Objects acquisition, is ready to really exploit it for both Business ByDesign product users and beyond. Several times today, Dr. Plattner remarked how the product could be used by Wal-Mart to parse billions of customer transactions.

 

The new architecture works as follows (see photo):

• A user initiates a transaction
• The system wants to add/delete/update a record
• The software updates the memory-resident database, the MaxDB rdbms and BI data stores
• When the user wants to review, search, report, etc. this data, the actions are performed in-memory at a form factor faster time

Latency in high-technology is rarely desirable or valued. In a SaaS (software as a service) environment, latency is a real problem as users could be anywhere, connecting via the Internet on spotty connections accessing faraway servers. SAP developers are being ordered to produce rendered screen pages in 300 milliseconds or less. Given all of the ways that page loading can be slowed down (e.g., graphics-intensive images, inefficient searches, etc.), anything that helps make SaaS fast is a godsend. 

 

SAP intends to bring this technology to its other product lines beyond Business ByDesign. The initial catalyst will be Business Objects and the T-Rex architecture. Last year, prior to the Business Objects acquisition, SAP was able to search through 36 million accounting transactions/second using memory-resident database technology. Now, the company can easily search over 1 billion records/second.

As we’ve written previously re: Workday’s approach, the use of an in-core database obviates the need for subledgers and other redundant data stores. Dr. Plattner indicated that the degree of ‘compression’ is 10-20X.   

 

Dr. Plattner also indicated that graduate students at the University of Potsdam  are working aggressively in this area with SAP.

 

The implications of this technology decision are:

-          RDBMS technology will get relegated to a backup media or light-duty technology

-          Users will be able to perform previously unimaginable searches, reports, analyses, etc.

-          Older application software products will need re-working. To stay RDBMS-only focused will become competitively untenable.

-          Universities, technical schools, etc. need to develop more skills in the areas that memory-resident technologies open up (e.g., analytics, competitive intelligence)

-          That we all need to buy more stock in solid-state memory makers like Spansion.