SAP Makes a Bigger Line-of-Business Bet

With line-of-business executives exercising more influence over the acquisition of applications than ever, there is a clear need to alter the way many vendors take their products to market. With a heavy focus on the way IT professionals think about applications, many app vendors and their solution provider partners are finding it challenging to market their offerings in a way the average line-of-business executive can comprehend.

To address that issue Bill McDermott, who will become the sole CEO of SAP in 2014, said that in the months ahead, SAP will put more emphasis on prefabricated offerings aimed at specific business processes.

“We need to be able to deliver solutions that are relevant to both IT and the line-of-business executive,” McDermott said. “We’re going to begin looking across the 25 industries we serve to come up with ready-to-run prefabricated business solutions.”

Case in point, said McDermott, would be a turnkey solution for talent management from SAP that included the tools needed to also manage payroll.

While McDermott doesn’t see the need to restructure the way SAP goes to market to enable that to occur, he does see the cloud as a way to accelerate bringing those solutions to market. For example, SAP recently announced a deal with China Telecom under which the latter will build a public cloud through which SAP will offer its software as a service. In North America, SAP is pursuing similar alternative routes to market.

SAP’s greater emphasis on business processes comes at a time when the line is blurring between applications and underlying software infrastructure. In the case of the SAP HANA in-memory computing platform, the line between what constitutes an application and a database is getting increasingly difficult to distinguish. In addition, the SAP HANA platform eliminates the historic divide between transaction processing applications and traditional data warehouses.

“A lot of customers sense that now is a time for database change,” McDermott said. “HANA is the most disruptive database standard. It’s our intention to unleash its will on the marketplace.”

Of the 450 implementations of SAP enterprise software on HANA that have been sold thus far, 40 percent of those deals involved non-SAP accounts, McDermott said.

Vishal Sikka, a member of the SAP executive board that also oversees technology and innovation for SAP, said HANA presents the company with an opportunity to extend its reach into many new application areas, some of which will be driven by SAP while others will be enabled by the more than 1,000 startup companies that are building new applications on top of HANA.

“Most of these companies can only afford to bet on one platform,” said Sikka. “That shows how much venture capitalists believe in the potential of HANA.”

That level of disruption, however, can cut both ways across the channel. Many solution providers have dedicated application and database practices that if SAP has its way are going to converge in the months and years ahead. At the same time, the rise of RESTful application programming interfaces (APIs) is starting to make it difficult to determine where one application picks up and another ends.

The end result is likely to be a new era in the channel that will see the rise of a new generation of digital-savvy business process experts that will drive the next evolution of software innovation across the enterprise.

Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.

Michael Vizard
Michael Vizard is a seasoned IT journalist, with nearly 30 years of experience writing and editing about enterprise IT issues. He is a contributor to publications including Programmableweb, IT Business Edge, CIOinsight, Channel Insider and UBM Tech. He formerly was editorial director for Ziff-Davis Enterprise, where he launched the company’s custom content division, and has also served as editor in chief for CRN and InfoWorld. He also has held editorial positions at PC Week, Computerworld and Digital Review.


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