The past two years have not been the easiest for SAP. The company was among the many technology vendors hit by the slowdown in spending during the recent global recession. It made itself unpopular with its customers by forcing them to replace existing support plans with a costlier plan few actually wanted. And it faces the prospect of having to pay hundreds of millions of dollars to Oracle for copyright infringing actions taken by a now defunct subsidiary.
In an interview, Robert Courteau , SAP 's new president for North America, offered a look ahead at the trends driving the ERP market, trends he says SAP is fully prepared to handle.
What are you hearing from your customers? There's a real focus on being competitive in the market. What's happened in the last two years is people have improved their balance sheets coming from the credit crisis and they are now starting to make bets on how they are going to compete. The overarching theme around competitive advantage is one of globalization, where people are looking for new sources of supply or new markets to serve. And that's good for SAP.
How are SAP's customers planning on building out their existing investments in your technology? What we are telling customers is that they need to absolutely continue to drive ROI out of the core investments in SAP -- new departments, new business processes, new ways of doing business that are benchmarked on how the leaders in their industry use SAP. So that's number one. The second thing that we are telling customers is they've got to release this information. So you've got this infrastructure that you put in place called SAP Business Applications. You need to release the information out to what I call 'big data,' 'little data' and 'live data.'
What are some of the trends driving this market? Flat out one of the biggest trends is information overload. If you want to actually start targeting your data onto those critical periods where you can make profits or avoid costs, the ability to use business intelligence to do that, and be precise about it, is really important.
We are trying to build products that take advantage of the core, but speeds up time to market, speeds up decision-making, deals with information overload and allows you to use new innovations around mobility.
How are these trends shaping your product strategy? We came out with a product in Q4 of last year called HANA , which is a big data engine that combines in-memory analytics with high-performance processing. It is optimized for SAP environments now, but we are going to evolve that product to work in SAP and non-SAP environments. It allows you to really pour through terabytes of data in seconds so you can drive the analytics around things like managing your global inventory and supply chain.
We also have introduced things like an event management capability that allows you to take real-time events and use that to actually act on them in a store, in a supply chain, with your partners and anywhere an event can have an impact on your decision-making. From a live data perspective, we are working with companies that are going to start tracking things like products or assets or shipments so they can actually have real-time access. These are all new capabilities that we are co-mingling to allow people to accelerate their businesses to near real-time type of management.
How is the trend towards cloud computing playing into this? We are committed to making our products available in the cloud. We are doing that directly with products like our category of products for sustainability, we are doing that with our Business ByDesign products and we will absolutely continue to give customers more choice. Many of our ecosystem partners are starting to build private clouds using some of our functionality. The one example that has been around for a while is ADP, which now delivers a global HR offering for large customers around the world using the SAP HR functionality in a cloud-based environment.
What is SAPs Line-of-Business OnDemand strategy about? It's really taking each of our strategic assets such as CRM, HCM and procurement and making those capabilities available for customers through our partners. They can either get the whole functionality managed by a third party; they can just consume it on an as-needed basis in a private cloud arrangement; or SAP would deliver it in the cloud. So we are doing more of those kinds of arrangements and we expect that trend to accelerate.
What's driving it? A couple of things are driving the trend. It is a legitimate alternative in the market place. People have had experience with it now. It's a technology that is being accepted more. At one point, cloud was something that people were anxious about because of the security aspects. But that's less the case now. People like the idea that you can actually implement these systems for single-process types of applications without the overhead of a long project.
Constellation Research says that more companies have begun adopting two-tier ERP where they use legacy ERP systems for HR and finance ,while using a second ERP system for more innovative applications. Why is that happening? I don't think you can say it is a trend yet. I just read an abstract of the report and I think it has some merit as a future trend. I believe that what you are going to see is people having both on-premise and on-demand applications, where they actually mix those depending on how important, how core, how complex [their applications are].
Most often, when ERP projects do fail, what's the primary problem? The best companies use these technologies to change. It's whether they want to go after a new market, a new way of sourcing, a new way of managing their business -- whether they want to be competitive, whether they want to do acquisitions. When there are problems, the usual issue is that they want to actually get what they did before without changing what they do now. They don't go after new processes that are best-in-class to adapt to the new realties of the market they compete in. They just flat out want to pave the cowpath. That's not the way to use this technology.