I recently wrote about the prospect of a mood change among enterprise IT customers, in particular less willingness to accept the ways IT vendors interact with them. While I can claim no responsibility it was interesting this week to hear the comments of R ‘Ray’ Wang (should the ‘R’ actually stand for ‘revolutionary?’) at the SAP UK User Group Conference (Sugen).
Thankfully it created more thought provoking headlines than one might expect of a User Conference and Ray Wang was fairly explicit in his warning to the SAP customer base:
“…The traditional models of how we do business have gone away… We’re left with enterprise applications that do a really good job of catching data and automating processes but which are lacking in flexibility and innovation. Our antiquated technology has an impact on the way we handle change management…People need solutions right away, they can’t wait for IT to deliver.” (mycustomer)
Wang went on to criticise SAP’s ability to bring its innovations to market, encouraging Sugen members to demand more of the vendor. Given that the company spent $1.6bn on R&D in 2008 Wang felt that the enterprise resource planning (ERP) vendor had failed to communicate some of its innovations, such as ESME, which was launched a year before Salesforce announced Chatter.
“End users need to work through the user group to push SAP to unlock the innovation, to find one what is available, and to get clarity on the SAP product map so they can plan for change…” (Computer Weekly)
To put it mildly this is not the early Christmas present SAP’s management want. Elsewhere it’s been revealed the company made a New Year’s resolution to put up maintenance fees for some customers to nearer 20%, which has already led to revolt among some customers.
So what’s the answer?
It isn’t all bad news for SAP, because underlying Wang’s comment is the message that the innovation exists, which is positive for its customers. It is also not alone in facing such criticism from influential industry figures. Figures such as Vinnie Mirchandani raised serious concerns about Oracle’s ability to innovate earlier in the year, which provoked a strong response from the company. (disclaimer: I’m an ex-Oracle employee)
Therefore is this simply a return – as Ray Wang suggests – to the 1990s argument about best-of-breed vs. suite solutions, with the best-of-breed being Software-as-a-Service? (SaaS)
Certainly, Marc Benioff has done a superb job of marketing his company, as underlined by the buzz created by Chatter last week. And yet, Dennis Howlett is also right to question whether Salesforce has the genuine capability, experience etc, to embed this new model of innovation across complex enterprise IT infrastructures.
Next week will see the Oracle UK User Group and it will be interesting to see what comes out of that event, particularly as subjects such as the much-heralded and long-awaited Fusion Applications are a subject of discussion.
It is always easy for the media to concentrate on the negatives in such scenarios and it is very easy to pick on licensing and pricing as a key issue. That said it will be interesting to hear whether next week’s conference reflects the deeper issues that Wang highlights.
If it does, does that suggest initial grumblings are gaining momentum and spreading across the industry? I would trust Dennis Howlett’s assessment of the mood in the SAP camp, which suggests things are positive, but as things stands today there appears to be increasing unrest among a variety of customers.
Perhaps the reason is understandable. We are coming out of recession (supposedly) and customers want to be inspired by the companies that provide their IT systems. If that is the case then Marc Benioff is already ahead in the perception stakes.
The answer for vendors could be as simple as being more daring when communicating with their customers. As Peckham’s most famous entrepreneur said many times, “He who dares, Rodders, he who dares…”
Interesting development to add to the suggestion of dissatisfaction among SAP customers. Two key members of Sugen, who led the User Group’s involvement in discussions around the maintenance fee issue, have resigned. It would be wrong to jump to conclusions, but it doesn’t paint a positive picture at such a crucial time.