SAP has hired Oracle's former head of Fusion Applications development to lead a newly created position to develop on-demand applications for large companies.
Creating the position -- and tapping John Wookey to fill it -- shows that SAP is serious about delivering its applications on-demand, and it is a sign that customers must be serious about buying them that way, analysts said.
"They clearly have to believe that this is going to be a significant trend over the next few years in terms of how people want to buy and how they want applications delivered -- and you don't want to be playing catch-up," AMR Research senior vice president Jim Shepherd said of the appointment. "They've probably determined that there are a significant number of customers who are interested in this."
Ovum Research analyst Warren Wilson agreed, saying, "It certainly shows that SAP is taking on-demand very, very seriously."
Wookey, who on Monday assumed the role of executive vice president of Large Enterprise On Demand, will help organize SAP's on-demand product roadmap under a single strategy for enterprise customers, according to an SAP spokesman. He will work on SAP's CRM on-demand product -- an application that has garnered little attention since it was first rolled out more than two years ago -- and develop more on-demand offerings for enterprises.
Wookey wasn't available for comment yesterday.
Wookey spent 12 years at Oracle and was senior vice president of applications development before his somewhat surprising departure in 2007.
"I think he was probably looking around for an interesting opportunity," Shepherd said of Wookey's decision to take the SAP job. "John's a software engineer. SAP is one of the world's finest software engineering companies. And being able to dig into a really interesting development in the software business -- that's the kind of intellectual challenge he would like."
Just what SAP means by "on-demand," though, remains to be seen.
"What do they mean by on-demand versus SaaS?" Wilson asked. "We should not assume that Wookey's heading up of a large on-demand (initiative) will look like the solutions we're familiar with from Salesforce.com."
SAP understands that it's serving an ERP market, he said, and that's different from a CRM market.
SAP has already differentiated itself from Salesforce.com and other SaaS vendors like NetSuite, which offers both ERP and CRM and has recently launched a promotion aimed at SAP customers. While NetSuite and Salesforce.com offer their applications in a multi-tenant environment, putting multiple customers on the same server, SAP rolled out its CRM On Demand applications in what it calls isolated tenancy, putting each customer on its own server.
Wookey's background is in CRM, Shepherd said, and he suspects that's where Wookey will start his work. He was responsible for Oracle's CRM development prior to the Siebel acquisition, and CRM is one of the applications seeing the most momentum with Software as a Service.
The appointment could also mean a foray into the cloud. Shepherd said he suspects that SAP has seen enough interest from customers in cloud computing that what they're really talking about is preparing the products and packing and pricing them to be delivered in the cloud, provided perhaps by Amazon, IBM or HP.
It's unlikely that SAP would have hired Wookey simply to figure out how to host applications, Shepherd said. SAP offers hosting right now via partners.
"It's going to create quite a stir among customers and prospects and competitors while we wait to find out what [on-demand] really means in SAP's case," Shepherd said.
But analysts agree that SAP's focus on on-demand for the enterprise doesn't mean there will be any less focus on SAP's on-demand ERP for the midmarket, Business ByDesign. SAP debuted the SaaS ERP and has since delayed its release because it can't figure out how to scale it.
"I think they're very committed to it -- it's a very popular option in the midmarket," Wilson said. "I would not expect to see Business ByDesign roll out in volume until there's recovery in the economy."