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June 10, 2009

SAP finally bows to the inevitable

The race is now on in earnest... SAP EVP John Wookey has admitted that the future of SAP's market space is in on demand - not in the old "SAP"-style architecture. 

While I am extremely happy to see they have noted the elephant in the room, beyond their Business-by-Design experiment - but it may well be too late for that John....sorry.

The downturn in corporate activity has left SAP smarting while SaaS companies such as are reporting quarter on quarter growth. And as SAP can attest - unseating the leader is an extremely difficult game to be in. 

The lure of the extraordinary revenues from the ERP boom days was far too great for them to move on this any sooner, much to their detriment. 

Now that they have chosen to become what they fear, surrendering to the inevitable tide of Y-Gen market entrants and rapidly advancing technology, they are faced with some almighty stumbling blocks unfortunately.

1) Commercial competition is not won on functionality as they can attest. 

Facebook is more functional than LinkedIn, yet the latter holds the core of the web-surfing business community firmly to its core. Why? Functionality doesn't sell, brand sells.!

This worked for them when the required brand was for a big, reliable colossus who could change the world in its stride. Their brand in on demand applications is, so far, near zero.

2) They are big. SAP BIG! On Demand doesn't hold the type of profit margins that they are going to require to keep the colossus rolling forward. Wait for layoffs in the SAP ERP camp within the next 12 - 18 months.

3) Some dirt poor programmer in Pakistan, the Mid West or Asia is currently working on the next wave of business delivery products and technologies... things that will make On Demand seem as antiquated as ERP style systems now are.

Change doesn't respect brands, and while they were busy resisting today, someone has already been thinking of tomorrow.

Sad to see but totally predictable, just like the death of software consulting was. 

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