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Shai Agassi sizes up the competition

In part two of our interview with SAP executive board member Shai Agassi, he sounds off on the competition, from IBM to Siebel.

Are there ROI numbers available for the complete stack -- and not just the components? We've now built five case...

studies with IDC. We've taken people that have adopted most pieces of the NetWeaver stack, and IDC verified that the numbers are there for both ROI and TCO. So that's TCO reduction and ROI -- as well as projected ROI; so ROI for the first few years and then ROI for five years out. And these are not fuzzy numbers. This is not, 'We saved 10 minutes of your day.' This is, 'We took away X number of servers. We took away X number of people. We took away people building connectors and adapters, and now that comes in a box. We took away people in support for the end users because it's simpler to interact with the data.' We've actually measured hard-core dollars reduction. Tell us what you want people to take away from the NetWeaver 2004 announcement. The biggest story, I believe, by far, is that it's a product -- not a project. Where we shipped components in the past, we're shipping a product today. And the benefit is all that pieces come together, they fit together, and they rely on one another.

We know they are all going to be in your installation. So we can build scenarios that rely on all the pieces, just like our customers, our early adopters, built them. But now we can ship those scenarios out of the box. You don't have to figure out how to do them yourself.

Then why is the cost of licensing the technology as a partner, as one of our readers put it, so prohibitive?
It's not. We have a great 'Powered by NetWeaver' program. If they sign up for the program, we have a lot of help for these guys. Sometimes what we get is unsolicited comments from people who just didn't call up and say, 'Hey, I'd like to be a partner.'

And it's funny, there are some people who, in their minds, think they are competitors of ours. We have some players who can compete in some parts of the stack. So they call us up and say, 'We'd like to build on NetWeaver.' We say 'Great. We can help you.' They say 'You sure?' We tell them, 'Sure, we'll do whatever we can.' We see this as an ecosystem, and we have to help whomever wants to come into the ecosystem -- even if they theoretically could cannibalize a piece of the stack.

There is a very big question mark about whether Siebel can ever build composites when they know only one object model.
Shai Agassi
Executive board memberSAP

We are not a piece of the stack story anymore. That's why, when you ask me about acquisitions, buying more pieces is not going to get anyone closer to a complete solution. It's actually getting them further from a complete solution. Whomever wants to buy more and more and more pieces is just getting further and further away from where NetWeaver is tomorrow.

So SAP is encouraging the use of NetWeaver independent of mySAP?
Definitely. If a customer is already running IBM WebSphere or BEA, what's the incentive to buy NetWeaver?
I think it's going be a decision that every company will make on their own. I think some people will come in and buy just an upgrade to mySAP ERP -- from their R/3 environment -- and then they will use NetWeaver.

Now, they may use other stacks. As a matter of fact, we are trying to stay as open as possible on the integration platform -- and as neutral as possible. The NetWeaver group is incentivized by how many customers will use NetWeaver for SAP and non-SAP applications. So they don't get any credit if it's just used under SAP applications. Their goal is to be [as] open and neutral as possible to entice more and more customers.

The application guys are measured by how much of NetWeaver scenarios they leverage. They really need to show that they have leveraged those new scenarios to create innovation.

Most of our competitors are trying to paint this as if NetWeaver is biased toward SAP. It's exactly the other way around.

And IBM's recent Trigo acquisition from a couple of weeks ago?
God bless them. Isn't part of the NetWeaver strategy to prevent IBM from coming into SAP shops and saying 'Why don't you run WebSphere?'
This is not a defensive strategy. This whole strategy is basically in favor of the customer. I don't care if they buy WebSphere, and run it right next to NetWeaver, then God bless them. If they find a reason to do it, then they probably know better than I do.

Most of our competitors are trying to paint this as if NetWeaver is biased toward SAP. It's exactly the other way around.
Shai Agassi
Executive board memberSAP

At the end of the day, my fear is that I am looking at the cost of integration in projects right now. And those integration projects are starting to become 70%, 80%, 110% of the IT budget. If you look at the value, the proper business value that comes out of integration, it's not a lot. The same money that was allocated to innovation three, four, five years ago is now going into integration. My goal is to reduce that cost of integration and give them the money back.

By talking about an open platform, aren't you invalidating the argument for using SAP CRM? If Siebel offers similar or better functionality right now, why not just use Siebel on the front end and SAP on the back end?
You have to look at the overall picture -- where we are going to go. You are going to get components. You are going to get the integration platform. And you've got composite applications.


Where we really see the value of innovation in the stack, going forward, is at the composite level. And at that level, there is a very big question mark about whether Siebel can ever build composites when they know only one object model.

They only know the customer object model. There are six object models in the core business. They know customers. They don't know employees. They don't know product, and they don't know suppliers, and they don't know manufacturing, or financials. So how can you create a composite if you don't understand the other five or six aspects of the business? Now that's the differentiating SAP has -- it's not CRM. It's SAP.

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