We have all heard the buzz over the past year around mobility and enterprise software which holds an enormous potential for SAP and their customers. Mobility is already becoming a major battleground between the software vendors and an area over the past year that I have spent more time trying to understand. SAP has recently shared a lot of impressive information on their mobility solutions as well as released 23 new mobile applications many of which will be well received by their customers. In a recent interview Matthew Schwartz, Vice-President of Enterprise Mobility at SAP was asked.
What are key components of a solid enterprise mobility strategy?
According to Matt, each app needs a very specific business case that hits 1 of 4 pillars
- Employee efficiency – what resources can be transitioned to other roles or eliminated by the mobile app
- IT efficiency – what processes/applications/ databases can be eliminated by the mobile app
- Day 1 cost takeaway – what are the immediate cost savings gained by moving to a mobile app
- Improved margin/revenue growth – what will be the impact to margin and revenue by deploying the mobile app
As you can see at the core of a solid mobile application strategy was cost but what was not discussed was the underlying SAP technologies needed to be able to use these applications. It is my understanding that most of the SAP provided applications are “free” and the 3rd Party applications are “free” once you buy or license their underlying product. So you may ask yourself how does SAP make any money with this model and one of my favorite sayings is “The devil is in the details”. Trying to get SAP to talk about the licensing model can be challenging but many of new apps, including all the HCM ones, have a prerequisite of the Sybase Unwired Platform (SUP 2.1) and Gateway 2.0 which are additional licensed SAP products. In talking with customers the cost of these platforms can be substantial though I have also heard that SAP is still considering an alternative pricing model and my fingers are crossed.
Can you imagine after purchasing your new iPhone or iPad that you had been told that for only $999 year you could buy another piece of software that allow you to be able to download all the free and 3rd party apps and oh by the way we have less than 50 apps available but promise to have many more in the future. No one doubts that the Sybase Unwired Platform comes with a slew of benefits and functionality but I think SAP should consider using the razor and blade business model in which they provide the underlying mobility technology/platform for a small incremental cost and get their money/benefits from the following:
Applications– Given the size of the SAP install base why wouldn’t SAP consider using a consumer model with an enterprise twist. It has the potential to be very lucrative if useful value added applications are built and Dennis Howlett does a good job of providing some details around an Alternative Pricing Model that I very much agree with. This involves a new way of thinking for SAP but I have no doubt customers WILL pay for value added, cost saving mobile applications especially without a sizeable up-front platform investment. If it is good enough and working for Apple I would think SAP would want to consider it.
Software Licenses - Something that never gets mentioned enough is that mobile applications help open up more employees to be users of SAP software which would allow SAP to increase their overall user licenses. The Avon case study from Sapphire was a great example of this as they moved from paper based catalogues and order forms to iPad catalogues and order management using SAP mobile technology as the underlying infrastructure.
Partners – SAP’s stated goal is to have 3rd party developers and partners deliver 80% of the mobile applications. If more customers have the underlying SAP platform in place it will provide a larger market and opportunity which will then increase the quality and amount of applications built. We have all seen how successful the Apple and Android platforms have been by capturing the attention of best and brightest as they gravitate towards where the most money is to be made.
Customer Retention - SAP can use its mobile technology to help protect its large install base as it is important to note that most of the large SaaS competitors like Workday are offering their mobile technology with no additional cost as part of their base subscription. It is important that SAP stay competitive from both a pricing and functionality standpoint in the mobility space. It has a lot of exposure with enterprise software buyers as per Forrester, 75% of business decision makers believe that mobility is key for long-term success.
User Interface – Bill McDermott, Co-CEO of SAP recently said that “Mobile is the new desktop” and in the coming years there will be a dramatic shift in which a majority of users will access the system via a mobile or tablet based device and it will become the default customer platform. It is a golden opportunity for SAP to build mobile applications with a great UI that uses the underlying back-end functionality SAP is known for. The next generation of users will get a totally different opinion on SAP, its look and feel, and usability as they will ONLY access it via a mobile or tablet device.
Bill McDermott has repeatedly said that “Mobile computing will lead the way for business” which is pretty easy to agree with. The Sybase acquisition in 2010 brought a lot of mobile expertise to SAP which I think puts them in a strong position if they have a customer friendly mobility strategy. I have seen many cases where SAP has built strong products but the licensing model has scared customers away and I think mobility is to important of an area to have this occur.