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It is like mantra-gone-bad that Wall Street and its analysts are constantly repeating: The lack of innovation at SAP.

Global economy had dramatically anticipated that Wall Street’s vision and primate of maximizing money every quarter does not reflect the true value of local economies and enterprises – its sustainability, its credibility and ultimately, the profitability as a result of both.

Compared to sports, what would be an Olympic Athletic Game with only a 100m Short Track race? Of course, a crown discipline, but is marathon not another ultimate goal of equal value?                     

 What is Innovation? 

If you look at the academic definition of innovation, I like the outline of Schumpeter (1934) most:

„Economy and society are changing, when production factors are combined in a new, unique way”

Or, as WIKI said: “Contributors to the scholarly literature on innovation typically distinguish between invention, an idea made manifest, and innovation, ideas applied successfully in practice. While innovation typically adds value, innovation may also have a negative or destructive effect as new developments clear away or change old organizational forms and practices “

According to Wall Street analysts and Nicolas Carr, IT-Guru at MIT, SAP and everything around IT is for plumbers in the machine room, like me – Commodities that are replaceable, first subject to cost-savings.

But I think they all misunderstood the evolution, the eco-system and the history SAP came from.

SAP’s constant growth

I’ve seen the SAP world growing, from a time SAP was a couple of 100 people in the sunflower fields in Walldorf, R/2 Assembler on a mainframe, growing into three-tier Unix architecture. With R/3, SAP was conquering the World with the first integrated ERP-solution. After the Internet bubble burst, SAP grew into new technologies under the Netweaver aegide of Shai Agassi and is now growing into a socially integrated, worldwide node in a world of cloud enterprises architecture.

Innovation, the visible evolution of the world and the more invisible constant innovation in enterprises is always people.  Innovation is how Customers, Partners and Enterprises adapt the offered technologies. SAP, like all other ERP-vendors, is offering tools. The Innovation will come from the application and use of these tools.

Innovation needs sustainability 

If you ask the largest SAP customers if they are missing innovations, the clear answer would be “No.” If you running some 100.00 users, it is most likely, that your IT change management horizon is measured more in years than in quarter periods.  After investing 100 million in your IT, you don’t want your vendor coming up with another product and throwing the old one out of the window. I can imagine the look of the multi-national board room, when the CIO would say: “You know what, guys, we need innovation, and we kick out of the old stuff and make it all brand new”.

While Management Guru ( and big idol of mine) Tom Peters is recommending that in his book “Re-Imagine!”, (“Make ctrl-alt-del on your company regularly”)  I doubt that this would be anticipated on that scale.

Innovation is inside the companies, is the ongoing projects that thrive to do things better, faster and more effective. The service provider, the tool provider can create an environment, that will foster these kind of customer excellence, not vendor excellence. Both are creating more value out of this situation.

Success of SAPPHIRE 2010 

 I see SAPPHIRE and the enthusiastic reaction as a validation of this thesis, since most of customers, partners and SAP-employees obviously came back with a lot momentum into their respective companies. This is the torch and the flame, that enterprises on the brink of clouds, social media web and connected economies need.

And as for Wall Street?  In the turbulences of subprime disasters, questionable ratings and irrational hedge trades, the world (usual except Wall Street) will redefine economic valuation of strategies in business in favor for the long run. Every trader likes the quick win of minute trades, but for serious companies, the inner and outer sustainability is the conservative goal that will excel at the end.

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4 Comments

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  1. Mark Chalfen
    SAP needs to grow and change to antipicate its customers future requirements.

    Standing still is not always the best option. A business can change direction, and they need a supplier that can meet these requirements.

    The key success of SAP is the integration of the various products reducing the need for other software suppliers and thus taking a bigger piece of the cake.

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    1. Holger Stumm Post author
      H Mark,
      thanks for your very interesting comment. You are right, that the vendor ( in this case) needs to deliver the software, that enables customer to constant changes and improvement, even if business takes (sometimes steep) turns.
      It is a question of how well SAP listen, senses and react – this is the innovation challenge.
      thx hs
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    2. Nathan Genez
      It’s funny, but I think that integration…  being the one word that best explains SAP’s historical growth and superiority…  is now losing focus.  After all of the acquisitions SAP has made and brief attempt at trying to push everything onto a Portal, I find integration to be lacking amongst it’s suite of applications.

      -nathan

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      1. Holger Stumm Post author
        Hi Nathan,
        thanks for the reply. Most of my projects, as you said, are integration. And again, it really depends on how innovative the customer is and adapt to a architecture that supports that. With SOA and PI, you can come very far. But I think also, that the requirements of a company has greatly widen since R/3 “basic silo” days. I guess we all need to embrace diversity on one side and create a maintainable landscape for it.
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