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Saturday, May 21, 2005

SAP: Key Directions For The Future

One of my favourites in covering the enteprise software space
Bruce Richardson, Chief Research Officer,AMRResearch, in interview with Businessweek’s tech editor shares his insights. Excerps with edits and comments:

- 1991 - SAP embraced client/server computing & by 1996, SAP had grown into a $1 billion company. Today, it's pushing $10 billion in annual sales and ranks as the world's third-largest independent software maker, behind Microsoft and Oracle.
- It was widely expected that they would announce their Salesforce.com killer in the May 17 SAP meet at Boston instead SAP just focused on the enterprise services architecture. SAP is talking about HP building some sort of appliance to do unbelievably fast analytics and about partnership with Cisco to build networking equipment optimized to work with SAP. SAP ‘s enterprise services strategy seems to be on track.

- ESA means rather than going out and buying additional software and upgrading, without waiting ,enterprises can add new components to what you already have. This is technology talk - little of the functionality really exists yet at SAP or other companies. There's some talk about the new Apple operating system and how it has the ability to link to third-party components – this comes with potential security concerns for enterprises.
- Bruce expects SAP to roll out full blown ESA only after 2010, right now, this is all about "mind share" and keeping Oracle on the defensive.
- On SAP’s Competition, Threat & Aspirations : The possible threat in the next 5 to 10 years may be some large Indian IT services firm that learns to build composite applications and can mimic or replicate the functionality that SAP has and do it all in new code, and not worry about being backward-compatible with the 27,000 customers SAP already has. ( My Take: There are several promising such companies coming up, though could be focusing on specific areas as against covering the entire spectrum like what SAP does – one such example is readiminds, with most of engineering done in India. ReadiMinds is primarily used by OEM companies to coordinate processes across customers and suppliers. Out of the box, ReadiMinds arrives with a complex Collaborative Forecasting application, which is designed to manage demand-side forecasting requests made by OEM companies to customers. SAP would meet copetition of this type as it begins to address SMB markets. Having written that, I do definitely notice that SAP is making huge inroads in capturing the SMB market of late.)

- For getting to be a $10 billion business, to double in size by 2010, they need to have a customer base has to get to 100,000 customers and need to target small and midsize companies – in the process they want to be as ubiquitous as Microsoft.Excellent analysis and certainly we shall see more and more of SAP - But somewhere I feel SAP would see some inroads beginning to be made by composite applications - it defies natural laws to hold on to huge marketshares for a loing time in a dyanmically changing business and tech world.

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