SAP chief: Big software isn't going away

While Marc Benioff may rail against the status quo in the enterprise software business, not all software buyers will join in the chorus, according to one of Benioff's chief competitors.

Web-based business software sold by companies such as Benioff's Salesforce.com will likely augment, not replace, large, complex enterprise systems, SAP Chief Executive Henning Kagermann told The Wall Street Journal on Tuesday.

Kagermann said that while some of the main selling points for Salesforce and other Web-based services make sense--namely, better usability and productivity--corporate buyers are a notoriously conservative bunch.

Kagermann: Big software is here to stay.

(Credit: SAP)

A slicker user interface and easier access to corporate applications answer only some of the needs of big business. Security, a uniform data model and corporate-wide compliance with regulatory rules are more pressing for C-level executives, he argues.

Clearly, Henning's argument is biased toward his company's product line. But he may have a point: it's more difficult to manage Web-based systems implemented piecemeal at the departmental level. Regulatory compliance is becoming a corporate nightmare, and companies need all of the help they can get.

Still, much of the real innovation is taking place at companies like Salesforce and Google, as well as at many smaller firms hard at work defining the next wave of cloud-based business software. (Microsoft is making strides here, too).

SAP, for its part, is still struggling with its on-demand strategy.

As Rishi Chandra, product manager for Google Enterprise, said earlier this month, technology innovation is being spurred by the consumer market, which will, in turn, drive demand for better business systems.

Some things never change. For decades, CIOs have been a conservative lot. And for decades, end users have demanded more.

[rcrusoe]

Sounds like the same argument that might have once been said about the T-Rex.

[Alamodave]

He is just not getting it. I've been in the enterprise software business for over 20 years. I used to have similar beliefs "big companies will never go for SaaS. Not enough security....etc."

He's flat out wrong. He's fortunate that his software is so entrenched today. But that will erode as SaaS alternatives become more functional and easier to deploy and maintain. We're only seeing the initial wave of SaaS solutions as companies like SuccessFactors, Salesforce.com, Webex, are being deployed in large enterprises that just don't want to mess with all that goes into installing and maintaining an enterprise application. We will see old school CIO's retire, replaced by those who are more open to Web 2.0 and all it can mean to large companies.

So, long winded way of saying i agree with the prior post "Sounds like the same argument that might have once been said about the T-Rex."

[noaloha]

While Benioff is putting on a great show attacking SAP and Microsoft, most people overlook the fact that neither SAP, Salesforce.com or Microsoft have great user adoption ratings. Salesforce.com has not changed their user interface in the past five years. Salesforce is doing well as a company, not because their product is great, but because SAP and Microsoft don't know how to pitch as well as Benioff. What nobody talks about is that US sales organizations are merely tolerating their CRM "solutions". When you compare the elegance and ease of use of the iPhone to the clunky and stodgy interface of Salesforce, it's like comparing a Porsche to a soapbox car. With Facebook and Linkedin you can upload pictures of your friends, while none of the CRM packages allow you to upload pictures. With the i-phone you can import an address with a few taps, with any CRM solution you force salespeople to be typists. While Salesforce pitches cloud computing, and SAP pitches security and Microsoft pitches Outlook integration, the voice of their customer (the enduser) gets lost. The sad truth is that CRM has not evolved over the past 10 years and user adoption remains below 50%. Salesforce.com claims to have 1 million customers worldwide. How come that their website gets only 600,000 unique visitors per month? That should give IT people and beancounters enough ammunition to change the payment model from a monthly fee to a "pay-what-you-actually-use" model. This would be a swift kick in the rear of these companies to wake up and deliver what their customers really want.

[humanssssss]

TCO - total cost of ownership. I would disagree with SAP because I've been in the consulting field for over 10 years and most of my big clients are moving toward SaaS because it is cheaper than hiring a bunch of people maintaining SAP and Oracle. As the cost of SaaS becomes apparent to the bottom of the company, the shift will lean more and more toward lower cost while gaining all the benefits and features one used to have.

Most of my big clients are looking to cut cost and asked me where in IT can they cut cost. I recommend them to cut the SAP and Oracle guys because there are SaaS alternatives out there that can shave millions of dollars off from their bottom line.