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While listening to Geoffrey Moore’s presentation on SDN TV, The Platform Game, I kept on wondering about how SAP has shifted its perspective on NetWeaver from an Application and Integration Platform two years ago, to a Composition platform now. I’ll try to give my perspective on how Geoffrey’s model applies on SAP’s offerings, and its impact on the SAP ecosystem (Partners, Customers, Developers).

Some definition/points according to Geoffrey:
1. CORE: Any process that contributes directly to sustainable differentiation that drives purchase preference
2. CONTEXT: All other processes required to fulfill commitments to one or more stakeholders
3. Commercial software focuses on context

According to Accenture, for an organization to sustain leadership, it must reduce its non-discretionary expenses like IT infrastructre support, and invest in discretionary expenses like R&D. The reason being commodotization. SAP started developing Business Software 33 years ago. Today, it competes with Oracle in large accounts, and numerous others in the SMB market. To differentiate itself and to drive purchase preference, SAP required an offering that helps it stand out of the crowd. An open Application and Integration Platform could only help, but not differentiate. According to Geoffrey, such a platform will help an organization Centralize, Standardize, Modularize, Optimize, and probably Outsource its CONTEXT. But it does not address the CORE. Forrester Research ranks Oracle and Microsoft as Leaders in the Application Server Platforms market. Gartner ranks IBM, BEA, Oracle, Microsoft and JBoss as Leaders, and SAP as Challenger. But notably, this market segment of Enterprise App Servers has not been SAP’s CORE, its been the CONTEXT. But it seems that will change in times to come. With SAP trying to commodotize its Application Platform, the competition will get more stiff.

Historically, the CORE for SAP has been its tightly integrated business apps. But according to Geoffrey’s point 3 above, commercial software focuses on context and not the core. Hence what has been CORE for SAP, used to be CONTEXT for its customers. So to differentiate itself, SAP came up with the idea of a Composition platform. Only such an ESA-enabled platform would allow its customers to differentiate themselves by focusing on their CORE, in addition to CONTEXT – assembling and disassembling business processes as and when required to attain and sustain leadership position. Since such a platform could only result from the synergy between Business and IT, both the Business Applications as well as the Composition Platform have now become CORE for SAP.

How does this affect the ecosystem? During this process of coming up with a composition platform that addresses all three layers of User, Information, and Process Integration, this platform now competes with a lot of SAP’s previous Software Partners. Take the case of Business Connector. It was based on WebMethods Integration Server. Now in XI, SAP has an integration platform for itself, thus competing now with a Software Partner. Such a partner can certainly keep on coming up with integration content for SAP, but when it comes to evaluating an Integration Platform Vendor, SAP is a now competitor. There can be numerous other examples.

For customers, unless single vendor lock-in is an issue, they have an end-to-end product line offering from SAP, that enables them to focus on the CORE as well as the CONTEXT. For developers, a whole stack of technical applications is now available to play with.
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