Recently I spent a day in Sydney attending an Analyst day that was held alongside Successfactor’s SuccessConnect user conference [disclosure – Successfactors covered my travel and accommodation to attend the briefing]. Other than a few email and twitter conversations, it was the first deep conversation I’d had with folks from either SAP or SuccessFactors since the acquisition occurred. If truth be known I’ve always found SAP a difficult vendor to engage with – while other vendors have a very democratic approach towards engaging influencers and analysts (and I have to commend Salesforce for doing this better than any others in my experience), my experience with SAP has been very erratic at best.
I was interested then to see the cues SAP has taken from Lars Dalgaard, CEO of SuccessFactors and now Tzar of all things cloud at SAP. I was not disappointed – at the event I had deep conversations from US-based executives from both companies – there was a general admission that indeed SAP is standing on a “burning platform” and that in order to prosper longer term they need to adopt a culture which sees them innovate, engage and execute. Anyway – it was a refreshing change and I’m hoping one which marks a new page in my relationship with SAP.
it was also fascinating given that the conversations happened the same week that SAP’s acquisition of Ariba was announced, and the same weak that a leaked internal memo surfaced in which Dalgaard outlined his analysis of, and his vision for the on-demand side of the SAP house. Here are some thoughts after the conversations I had with both SAP and SuccessFactors execs;
The cultural questions
There’s no doubt that Dalgaard has managed to get board-level buy in for his vision of the new SAP> The fact that he was appointed to the board only a couple of months after the SuccessFactors deal is testimony to the seriousness with which SAP regards this part of their business. I’m not worried about c-suite buy-in. What does worry me however is the middle management and on-the-ground issues the new strategy might create. It’s fair to say that, aside from a few exceptions within SAP, middle management doesn’t really “get” the cloud, or at least not the pressing imperative that SAP has to create a compelling message around cloud. Add to this the fact that sales staff are used to a particular style of compensation, and you have a recipe for some pretty stark cultural issues.
SAP realizes this and is putting things in place (double comp-ing sales staff for example) to minimize the issues. They’re also adopting a structure that sees two independent sales organizations being created. I’m not sure how this model will work for customers, there is much potential there for confusion it seems to me. I believe that over time we’ll see one sales organization, but some policies put in place that see sales compensation gates so that sales staff need to both meet quotas AND sell a minimum quantity of cloud product alongside their on-prem sales. It’s painful, but its necessary to really execute the vision across the organization.
HANA is Technology, SAP Should focus on Outcomes
At SuccessConnect there was some discussion about SAP’s in-memory HANA product. I made the comment over dinner to some SAP execs that HANA is a technology and, while it’s exciting from a geeks perspective, the company needs to move quickly to talking about the outcomes that HANA can deliver. Interestingly at Sapphire, Dalgaard stated that SAP “has too many PhDs”, the extension of which is that SAP is too eager to talk about technological prowess rather than customer outcomes.
In his new role Dalgaard has the ability to change this. It was refreshing to hear from SuccessFactors staff who really drilled into how their product is helping customers. We even had a session at the end of the analyst day that had Successfactor’s own HR people detailing how their own product is making their HR work much easier. I’d love to see SAP similarly start talking outcomes of technology rather than technology per se.
Social as a Fabric
I spent time talking to people about where social sits for SAP. SuccessFactors talked at length about how Jam, their social stream tool, is getting excellent adoption alongside the SuccessFactors learning management system – the suggestion being that at this point in the adoption of social, there needs to be a compelling use case and entry point to drive social adoption within an organization. Learning is one such entry point. The key thing here however is for SAP/SuccessFactors to consider the more medium term prognosis for social and design ahead of the curve for when social is across all parts of the organization. I’m confident that SAP gets this – their hiring of colleague and friend Sameer Patel, one of the most compelling visionaries about social business, is an indication that SAP realizes it needs to start articulating a compelling vision for social to its customers.
The Cloud Suite
Until now there was no clearly defined and externally communicated product strategy within SAP for on-premise and cloud. The recent acquisitions of SuccessFactors and Ariba, the suggestion that ByDesign will be modified in some way to create a financial hub upon which sits a plethora of functional products, the creation, over time, of a compelling cloud suite of products and the threads that will tie all that together (social and mobile) make me more positive than I have been previously that SAP will continue to be an enterprise software powerhouse and, more interestingly (for me at least) that SAP will grow to become a force to be reckoned with in the cloud. Until now it’s been easy for SAP’s cloud competitors (most notable Salesforce and NetSuite) to take cheap shots at them – those days are rapidly drawing to a close and SAP is starting to look more compelling.
(Cross-posted @ The Diversity Blog – SaaS, Cloud & Business Strategy)