December 10, 2010
This week has been an intense one for me in the Bay area. After a vibrant few days at DreamForce, the extravaganza that is the annual salesforce.com conference, I joined a select group of bloggers and analysts for a more reflective influencers briefing day yesterday in Santa Clara. I wanted to post on some thoughts I had hearing the relative strategies of both salesforce and SAP. While some of what we heard from SAP was under NDA, the tone of the messaging is what I want to concentrate on.
Dennis Howlett has already written his thoughts on the two companies. Readers of this blog (and followers of either of us on Twitter) will realize that there is very little love lost between Dennis and I, notwithstanding that however he is undisputedly an influencer and strong voice in this area and the general thrust of his post I agree with. I wanted to reflect on parts of it and give my impression through my own lens. In his post, reflecting on some comments made to us by SAP board member and former CTO Vishal SIkka, Howlett writes that;
the real differences between the two companies comes when the applications rubber hits the road in the large enterprise. During our informal lunch with Vishal Sikka… we heard about how companies internally move at different speeds… It’s a good way to represent an IT landscape where some applications – typically those at the back end like accounting – evolve slowly, while others like Heroku’s situational applications move at a much faster pace.
While the specifics of his comment are a little off the mark (Heroku is, after all, simply an application development platform that leverages the in-vogue Ruby on Rails framework) the thrust of his comments are that core apps move slowly, while edge applications, many of which are created using agile platforms such as Heroku, move much more rapidly. During one of our briefings with SAP, someone described the situation as two wheels, spinning at different speeds and remarked that software companies need to be mindful of the middle layer that allows for rapid development on one end, and more conservative approaches towards progress on the other.
While it’s attractive to put this speed differential down to innate differences in need (or for that matter appetite) for change, I discern something subtly different is going on. It seems to me that the conservatism represented by the slow moving wheel is related more to the dearth of robust tools to facilitate change, more than any innate reluctance to change. This contention was borne out somewhat during a FinancialForce briefing I attended earlier in the week. In the briefing we heard from DenMat a dental products company that has recently shifted to FinancialForce from a prehistoric AS400 system. It seems to me that the reason that DenMat took so long to change was the lack of robust and sufficiently flexible alternatives. This would seem to be borne out by the fact that post change, DenMat have gone on to use even more of the flexibility and customization that the force.com platform allows. It’s this reason that the salesforce acquisition of Heroku (see my coverage here) makes sense – I’ve already written about one development company that I’m aware of that has undertaken some cutting edge projects for large enterprise customers. I believe that many more of these projects would happen if enterprise had a robust framework, a connected platform and a trusted provider (albeit that I hate to use that term) all ready to enable this change to occur.
On another front, Howlett reflected on the common view that, as he put it;
Many people like to think that SAP represents the old, legacy way of the world. Salesforce is often portrayed as the face of the new world: brash, confident, fun loving.
While the parties and the buzz certainly justify this second point, and while SAP will always look a little pedestrian in comparison, I was staggered by some of the messaging that was coming from SAP at the briefings. In particular David Meyer, VP of SAP’s OnDemand division was a refreshing part of proceedings (someone should give that man a payrise). Meyer is the sort of guy who wouldn’t be out of place at Google or, for that matter, any bright young startup in the Valley. He gave a brief demo of some great integrations between StreamWork (StreamWork being to SAP what Chatter is to salesforce), Google Apps and core SAP products. It was a presentation that, if I hadn’t known the presenter and the core products were from SAP, I would have expected to have come from Google, NetSuite or salesforce themselves.
It’s this last point that really raises the biggest question – will this be an all-in-the-cloud or a hybrid world going forwards? As Howlett remarks;
We all know where Salesforce sits: everything is going to the cloud. SAP is far more pragmatic: it rightly sees a hybrid world where its customer may – and I stress may – move everything to the cloud. Unlikely in my lifetime. As both Dr Sikka and Mr Wookey said, there are still instances of SAP R/2 happily running some global companies.
The world is a big place and clearly there are sufficient customers in both camps to buoy both SAP and salesforce revenues for years to come. However I’m yet to hear any credible rationale why a hybrid approach is any more than a stop gap. Yes, CIO’s today are demanding that data remain in house. But, to borrow a metaphor, Blacksmiths were no doubt lobbying Henry Ford to provide some hybrid solution that saw horses towing cars behind them – for no other reason than that it allayed their short and medium term fears about survival. If a hybrid approach has some actual, rather than perceived benefits then so be it. I fear however that hybrid, at a conceptual level, is little more than the methadone intended to break enterprises on-demand habit. if that’s the case… perhaps cold turkey is a better approach.