Software giant is looking more to partnerships and interoperability, writes Karlin Lillington.
A $125 million (€92 million) investment fund, new software, more partners, including many of the tech heavyweights, new software solutions centres and a polite restraint when it comes to dissing the competition - those were the components of German software giant Systems Applications Products' (SAP) roadshow last week in Paris, as it continues a herculean effort to almost entirely remake itself.
At the same time, the company's top executives gently dismissed rumours of mergers and takeovers.
Speculation about such possibilities increased after SAP co- founder and supervisory board member Hasso Plattner noted at the US SAPphire event in May that only three companies were capable of buying SAP: Google, Microsoft or IBM.
Partnership roles with Microsoft - with which SAP has co- developed an application called Duet - and IBM were stressed. Chief executive Henning Kagermann quipped to journalists: "I'm always keen to have [IBM] as a partner but not inside [SAP]."
Though the company has made some minor acquisitions, SAP executives were also careful to emphasise they have no interest in going on a buying spree, as rival Oracle has done with its numerous large and small ticket acquisitions in recent years.
Kagermann said SAP had always acknowledged "gaps" in its product and capability line-up.
"But we aren't talking about those gaps because it causes speculation. We've also always said there are certain industries where we'd like to increase our capabilities. So any acquisitions are likely to be industry-specific add-ons."
The fact that the markets are intently interested in what SAP does and whether it might either acquire or be acquired is testimony to the survival skills of what was once viewed as a rather lumbering teutonic software company focused on a narrow band of the enterprise market.
SAP is now the number one business applications software company and the only European software company to achieve gorilla status in the global software market.
Its turnaround began in the lead up to 2000 when many companies needing to sort out Y2K worries opted to dump their old, disconnected software systems and replace them with SAP's offering of big software that could run everything.
But that big software was also very rigid software, a growing anomaly after the economic downturn in 2001, as organisations wanted new software and hardware to work with old systems and hardware from multiple vendors.
That was the point at which SAP management realised the company had to change strategy or become irrelevant.
Hence, SAP spent most of its annual European SAPphire user conference last week using words such as agile, flexible, transparent, and talking about interoperability and partnerships.
It talked about new software, such as Duet, its SAP/Microsoft Office hybrid product with Microsoft that enables users to move back and forth between the applications they use most in Office and SAP.
It highlighted Muse, its new simple interface for interacting with SAP's complexities, which can create pie charts and bar graphs on the fly as it produces all the statistics and data analysis an administrator could wish for.
It hyped its $125 million Global SAP NetWeaver Fund - designed, said Kagermann, to supply funding to start-ups with good ideas and, ultimately, broaden the ecosystem for SAP's centrepiece NetWeaver applications.
"We felt this is a good additional way to signal to the market that there are ideas that need to be more mainstream," he explained.
And like its arch-rival Oracle, SAP continued to rev the engines for its increasingly strong push into the small to medium enterprise (SME) sector, the market segment many of former enterprise-level only software companies now find alluring.
But the main focus of the four-day event was SAP's drive to move customers to its services oriented architecture (SOA) product aimed at enterprises, which SAP interchangably (and rather confusingly) refers to as ESOA (enterprise SOA) and ESA (enterprise services architecture).
Board member and product and technology group president Shai Agassi, a dynamic young Israeli and ace keynote speaker who many assume is being prepped to take over Kagermann's role, managed to boil down the whole alphabet soup into something that is more digestible.
SOA "is a technical set of standards that enable systems to communicate, either system to system or a system to itself". ESOA or ESA is the business language and terminology created by SAP that lets businesses talk to customers, suppliers and so on through the software, he said. The various software applications - a core backbone product, mySAP ERP 2005, and various modules that can be added on to deal with either specific parts of a business or a specific industry - target six processes ranging from ensuring compliance, managing performance, managing relationships or enabling new growth.
"We're trying to make things simple for everybody," said Agassi during his keynote. He was also the only SAP executive who took even mild potshots at rival Oracle, never named but acknowledged as "a data warehousing company that thinks it's an applications company" - in direct contrast to Oracle's in-your-face strategy of regularly making barbed comments about SAP and other rivals.
Agassi's comment that over the past year or two, SAP "didn't acquire companies. We didn't do all kinds of crazy things. We executed", was as rough as it got.
It did actually make some smallish acquisitions, but the overall result has been 14 straight quarters of growth, with SAP leading even in what it politely terms "our main rivals' home territory" of the US.
Off the record, some SAP executives will acknowledge they have tried to capitalise on what they hope is market uncertainty about Oracle's acquisition strategy.
Oracle has highlighted its "Fusion" strategy, but some analysts feel the company has yet to show how it will bring together and service ex-PeopleSoft, Siebel, JD Edwards and existing Oracle customers. On the other hand, analysts also note that SAP faces a major challenge to keep convincing customers it has indeed become the bendy, flexible and agile software and services group that it claims to be.
