Ray Wang on SAP's cloud strategy, SaaS options

Ray Wang on SAP's cloud strategy, SaaS options

Ray Wang on SAP's cloud strategy, SaaS options

Date: Dec 14, 2009

At its recent Influencer's Summit, SAP outlined its plans for on-demand software. It includes a major rollout of Business ByDesign, its midmarket ERP suite and modular enterprise applications geared toward the SAP install base.

In this video, Ray Wang, partner at Altimeter Group, gives his take on SAP's cloud plans and offers some advice for prospective buyers.


Read the full transcript from this video below:  

Ray Wang on SAP's cloud strategy, SaaS options

Barney Beal:   Hello. I am Barney Beal, News Director with SearchSAP.com. I attended a couple SAP events this week, the SAP Influence’s Summit in Boston, and the Sapiens Competitive Show, across the river in Cambridge. At the Influencer’s Summit, SAP gave a few more details on their Cloud strategy moving forward. We caught up with Ray Wang, partner at the Altimiter Group, and a speaker at the Sapiens’ show as well, to talk a little bit about he thought of their plans.

Ray, thank you for joining us. I think we got a few more details on SAP’s Cloud strategy at the Influencer’s Event yesterday. Maybe you could give us a quick recap of that and your thoughts of where they are going and where they are headed.

Ray Wang:      There are three types of Cloud strategies that are in play. The first one is looking at Business by Design. Feature Pack 2.5 is coming out. What that means is that they have looked at the performance issues; they are focused on getting multi-tendency out of the door. One of the key things that they want to do is hopefully roll out to a test bed of 1,000 customers and then some more. The real question is: Did they get the business model right? Will they be able to get some of the business options features into the system? I think that is where you are going to see some of the value from the analytics, some of the Microsoft Outlook integrations that they are building in there.

On the other hand, when you look at the large enterprise on demand, the sutff John Wookie is working on, what they are doing is what I would consider a defensive SAS strategy. People in the base that are looking at incentive compensation, CRM and potentially telemanagement, those types of products are being built by their team. Basically, they are doing that as an internal play, and hopefully, at some point, they will be able to roll out things that are more, not offensive, but more aggressive, or going into other people’s market share.

The third piece is there are hosting solutions, so there are ways that people can take advantage of on-demand services at the infrastructure level, but not necessarily as a traditional software-as-a-service, or traditional multi-instance on-demand product.

Barney Beal:   In your keynote today, you were talking a little bit about how users can leverage the Cloud and software-as-a-service if they need to innovate quickly or get applications up and running quickly. Can you share a little bit on how people can balance that with their own existing infrastructure, SAP products?

Ray Wang:      Yes. You are probably not going to throw out your financials and your HR unless you got a really old version, and you are due for more than an upgrade. Typically, what happens is, if your upgrade is becoming a replacement project, then you are going to look at software-as-a-service. If your upgrade is, if you put something in or you upgraded in the last 3 or 4 years, what you want to do is fine-tune and build around it. You might not have talent management in place or incentive compensation, so those are the areas that you are going to work around and integrate back in.

Maybe you bought CRM, and it may cost you more to implement CRM, even though you own the seeds, than it does to go out and buy Microsoft CRM, NetSuite CRM, or if you are using, for example, SalesForce. Those are things that may pop up. It is important to figure out where you are in the cycle -- it does not mean go out and buy SAS, but if you are in the middle of a replacement, it makes sense to look as SAS as one of the different deployment options.

Barney Beal:   How do organizations avoid the best-of-breed situations that we have been in, in the past? Is there a danger of over-subscription and over-licenses, even with software-as-a-service?

Ray Wang:      You cannot over-license, but what you are going to end up with is a lot of best-of-breed applications. We may go back to a situation, and part of the reason it is right is because SAS applications are easy to deploy and they are easy to write, in the sense that people can come up with an idea and get it out to market. When that happens, what you actually will have is a lot of point-to-point integrations, and at some point you are going to want to bring them together, or you may start thinking about suites or common platforms. For example, if you have a series of applications that are build in Azure or Apps Exchange, or you buy NetSuite, what you have is a situation where that is your core SAS platform, then you are extending across it through partners, but there might be applications that will not fit those buckets, and there is where you have a lot of integration things that will come up.

Barney Beal:   Great. Thank you.

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