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Today I got an email from a friend regarding an interview with VC Superman Don Valentine where he says things like:      SAP is the noisiest non-participant in the business   What? But then I read Jeff Nolan’s excellent fisking of the interview and the world is in order again.

For the ones that don’t read Weblogs that frequently:

 

     Fisking [blogosphere; very common] A point-by-point refutation of a blog entry or (especially) news story. A really stylish fisking is witty, logical, sarcastic and ruthlessly factual; flaming or handwaving is considered poor form. Named after Robert Fisk, a British journalist who was a frequent (and deserving) early target of such treatment. [also Wikipedia entry].

Here is what Jeff has to say:

 

It’s actually a compliment that after 30 years in business, the company is functioning prosperously and aggressively without the day-to-day involvement of the founders. A public company like SAP should never be about one person.

 

The comments about SAP really get under my skin because they don’t reflect anything other than a headline level understanding of the company, and are no doubt fueled by the difficulties and failures that his own investments have had in trying to compete against SAP (e.g. Oracle).

I would like to add, that it often astounds me the level of ignorance people in the valley have regarding SAP. “I always thought SAP does financials, the boring backend stuff”. Well, all the billboards you see at airports with North Face, Porsche, Nike, Nestle, … running SAP, they actually do run our software. Running as in production, purchasing, sales, human resources, financials, controlling and all of that integrated. An estimated 50% of the worlds GDP is running through SAP software. So much to noisiest non-participant in the business. Just goes to show that VCs are human too.

This is the perfect opportunity to work on my blogging backlog. Shai Agassi did one of the keynotes at AC2004 [slides] he repeated some of his SAP TechEd observations. Evelyn Rodriguez did a great job blogging Shai’s speech while it was happening and we hope to soon have the video available too.

The focus for the rest of this post  shall be on this new slide that has not been shown at any of the SAP TechEds.  Shai  took a page from Wired magazine to illustrate the long term trends in the software industry:

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  1. Once the service platform is available you will not be interested anymore what the underlying database is
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  3. Away from churning through transactions toward events
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  5. With devices it is meant that more and more Tags like RFID or sensors will give be the initiators of events
  6.  

  7. Instead of MRP runs or transactions, more and more the focus will go to the exceptions to the automated processes
  8.  

  9. The battery life is still a problem, but the desktop will because less and less important
  10.  

  11. In the future more and more applications will be created via modeling without the need of additional coding. SAP is working on a Composite Application Framework to enable just that.  That modeling can only be done close to the business, therefore off-shoring will not be possible for that kind of job.
  12.  

  13. When you have well defined standard interfaces for your enterprise services the language you use is not that important and will be domain specific.
  14.  

  15. This is something we are seeing already, that SAP customers farm out their peak load out to the grid and save a lot of money by not having to have their server farm build out to the max. That trend will continue.
  16.  

  17. On the desktop Office is king

People in the audience really loved that comparison, Alex Lightman sitting next to me said the slide should be a book and every line one chapter and he even offered to co-write it. John Mauldin of Bull’s Eye Investing fame, who’s investment newsletter is read by  over 1.5 million subscribers tabs me on the shoulder and says: “Can I have an eight page summary of that speech? I would like to send that out to my readers, this is really important and they never hear things like that.” I checked with our investor relations and was told that unfortunately we cannot  do that because of stock market regulations. They are missing out.

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5 Comments

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    1. Benny Schaich-Lebek
      Hi Craig,

      I think that “do it my way” is not related to the general way how SAP handles customers but to a specia experience with software itself: If you ever had the pleasure of implementing R/3 for a company, then you clearly would know. A software always follows a special process and so does ours. In most cases this means that companies implementing do have to change many processes according to how things are done with the software.
      You can change that by implementing parts of the software to reflect your processes with the effect of losing contact with the original – in other words you would have to risk reimplementation after every upgrade.
      We know that and don’t feel well about this inflexibility – otherwise we wouldn’t be on the way to make this world more flexible with ESA, because this is exactly the problem we are targeting in the next years.

      Regards,
      Benny

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      1. Craig Cmehil
        Hi Benny,

        I’ve implemented quite a few systems in the last 2 years from 4.6C to 6.40 and I have to say that although the SAPINST is a real bugger sometimes I don’t see how SAP is being inflexible.  I’ve dealt with lots of different software and system packages and each one has it’s inflexiabilites and for the most part everyone accepts those.

        “do it my way” was a general term and I did not read anything about “implementation” I read about business processes and since most of us dealing with programming are dealing with that I believe I was on target, OK a bit single focused on the development aspect. But the point was on track with what you just said about ESA – we too are dealing with these issues but yet because SAP is so open and innovating in terms of developement e.g. SDN we’ve been able to be extremely flexible!

        Craig

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  1. Jeff,

    I read the article, it got under my skin as well but for a totally different reason. I believe Don is one of the smartest men in the VC industry. I believe consistent results talk volume, and he has delivered on all his funds. I met him once, recently, and I believe he says what he believes. so why did it get under my skin…
    I believe we did a terrible job over the years in putting SAP into the right light in the Valley. SAP supplies prepackaged processes that support what Geoff Moore calls Context (read his upcoming book…) or undifferentiated processes for our customers. We support too many companies to count, and we do it in the best mission critical fashion. So why is it that we can’t get people to get excited about us?
    For a couple of reasons, one it is never exciting to support the “undifferentiating” part of business; “differentiation” (smart analytics, fancy algorithms, etc.) is always exciting. Our claim to fame is mission critical, well…you only hear about us when it is not working. We have three or four of these cases (well within six sigma boundaries) but all have been highly publicized.
    The other reason, is we did not do a good job in “platforming” ourselves, and attracting a solid supported eco-system. We are changing that. Hopefully at that point we will learn how to tell our story in an exciting way. We should take Don on his word and see what his opinion of SAP is in a few years.
    So it got under my skin because I believe SAP is today at the best position to innovate this market, and architect it for renewed growth. It got under my skin because there will be many opportunities around SAP, and we must change the attitude towards SAP because companies that will find way to add value to our customers will enjoy a great market, and a great partner in SAP. It got under my skin because I believe we are participating in the most strategic of ways, we just haven’t figured out whether (and for that matter how) to make noise about our participation. We shouldn’t take it out on Don, we should fix our perception in the Valley.

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