3 Posts
Jeff Stiles

A platform by design

Posted by Jeff Stiles Nov 12, 2010

A lot of people ask me about where the market is headed and about SAP’s plans and progress towards building an ecosystem and multi-route go to market model around our on demand solutions.  These are strategic topics (I don't use that term lightly), and they are both pivotal to the future of cloud computing and software as a service -- and fundamental to vendor business and partnering strategies.   

A big part of this game is attracting a vibrant community of developers within both customers and partners who build on and extend on demand solutions to expand and address market opportunity, fill 'last mile' gaps and customer needs, and deliver value-added solutions and services.  By the way, this extends well beyond classic ISV partner types - I've spoken with many systems integrators as well as business influencers like tax, audit and advisory firms who see an opportunity to package their intellectual property in order to deliver more value to their constituents/customers, to expand reach and volume, and to deal with rapidly changing customer expectations in terms of cost and time to value. 

There are a number of platform as a service alternatives in the market today (some more interesting than others), but my belief is that we will see a great deal of change and maturation in this area.  First, and probably foremost… the developers and partners I talk to are interested in building on top of a business process platform that extends beyond a single department or function.  Don’t get me wrong, there are opportunities for partners to build targeted solutions, or even capabilities that extend beyond domains such as customer relationship management.  That said, the broader the business process breadth in the underlying platform, the more inherent opportunity there is for customers and partners to build vertical or micro-vertical functionality as well as useful add-ons or extensions delivering incremental value.   

SAP Business ByDesign is an on demand suite that is quite well suited to the current and future needs of growing midsize companies. But it’s really much more than that.  From the start, we knew we needed to build a business process platform that we, our customers, and our partners could build upon… and we’re now beginning to execute on that part of our strategy.  Business ByDesign is that business process platform, and we’re also providing capabilities for developers to build, deploy and manage solutions focused on process extensions and industry variants as well as new collaboration scenarios.  In fact, we’re leveraging Business ByDesign to develop and deploy new Line of Business on demand solutions that extend existing on-premise systems in areas such as sales, finance and human resources in order to equip groups of people work better together to achieve specific business outcomes.    

At the recent TechEd event in Las Vegas, I had the chance to work with an early version of Business ByDesign Studio, a new development environment based on Microsoft Visual Studio.  My session also was attended by several SAP Mentors including Dennis Howlett, Jon Reed and Leonardo De Araujo.  Dennis posted this review on his Accmanpro blog SAP Business ByDesign: a developer take, and Jon posted this Video Blog: ByD SDK "Deep Dive" Reactions with SAP Mentor Leonardo De Araujo.  My own experience was positive – while it is new and there are areas where it needs to mature along with the public solution model, I found ByDesign Studio intuitive, stable, and easy to use.  Developers familiar with Microsoft Visual Studio should be able to quickly master this development environment, and I’m pretty sure that the depth and breadth of the underlying business process platform will be a compelling draw.   

On demand offers the best opportunity yet to deliver a real business process platform to the market and we are well on track to do so.  Think this is easy?  No way.  On demand suites are still at an early stage, and getting a platform with the right balance of sufficient standard cross-industry functionality and international capabilities while at the same time providing easy customization is EXTREMELY hard to do.  That said, once again, we are well on track.  I predict that we will see partners of all types gravitate to the leading platforms over the coming months and years.  SAP intends to play a key role in equipping these partners and customers to build, deploy and manage compelling on demand solutions and services and we’re laying the foundation with a compelling platform for the future.  I may be biased, but I like our chances in helping to make this market – and to make our partners and customers quite successful in the process.   Interesting times ahead and I look forward to the journey – hope you’re along for the ride! 

I've had the chance to talk to scores of customers, partners and vendors regarding the current state and future of software as a service and on demand solutions and services.  Here's what I hear - and what I think about where things stand and where they are going. 

First, I haven't met any. "on demand buyers".  Customers are still -- and always will be -- looking for solutions to business issues and needs.  Today's successful on demand vendors have borrowed liberally from the proven approach of previous generations of successful software vendors.  Many / most have started with a particular department or line of business, and they have either found innovative ways of solving pressing business challenges, or they have found ways to fundamentally alter the economics of purchase and deployment of these solutions. It's a successful formula for vendors and customers, but there are fundamental challenges for customers as they look to integrate these individual solutions together - especially as they grow and their overall IT landscape gets more complex. 

I see a number of key trends emerging around on demand solutions:   

  • Expanding scope across discrete domains / focus areas  
  • Expanding the number and types of users and groups that are served, and  
  • Radically expanding opportunities for partners of all types to build, deploy and manage these solutions  

Let's briefly take a look at each, and I'll go deeper in future blogs. 

Functional expansion is one of those immutable laws in the software industry. I've been in this industry long enough to have seen solutions expand from 'best of breed' (typically focused on a particular department or a narrow set of business problems) to integrated suites that address requirements across areas of the business and even across businesses. I see the same thing happening again, especially with smaller customers who don't have the IT resources, competency or interest to manage a myriad of individual solutions and how they work together. The common theme I hear is that these organizations are only interested in managing their businesses, not their business software. This is a real sweet spot for SAP Business ByDesign, and I'll share more on that soon. 

Social networking and collaboration tools and capabilities are all the rage with consumers and increasingly with businesses. Unmanaged - these can represent real productivity killers, but employed properly, they hold great promise in improving how people do their jobs and how groups of people work together. The key is to leverage these capabilities in the context of how people do their individual work and how groups of people can better collaborate to achieve business outcomes. This is exactly what we are focused on with personal productivity solutions like SAP Streamwork and BI On Demand, and in how social networking capabilities and media are incorporated into Line of Business on demand solutions like Sales, Travel, and Career management. 

Finally, and perhaps most importantly, I am convinced we are on the cusp of the largest shift this industry has ever seen. Years ago, I registered the domain ''. Why? Because I believed that the ultimate impact of the Internet, standards, and shifts in computing infrastructure and elasticity would lead to business processes and practices being taken apart and recombined in completely new ways - and that new intermediaries and participants would emerge. It's definitely happening, and I am convinced that Platform as a Service and new types of commercial infrastructure to help prospective customers discover, purchase, deploy and manage will radically accelerate this phenomenon. The promise for partners is unparalleled (admittedly, I'm looking at this from a vendor's point of view). More importantly, customers will benefit from solutions and services that are designed to interoperate, and I predict that many more companies will derive lasting value - and that they will realize this value more quickly and more cost-effectively than ever before.  

It's probably not surprising to folks familiar with what SAP is doing that these current realities and future trends represent key pillars of our on demand strategy. That said, I share these not because I'm responsible for helping bring these solutions to market, but because I'm absolutely convinced that these are the directions the market is headed. I let the domain lapse some years back (not exactly a memorable URL), but maybe I'll look back into it. Observing everything that is going on, I'm pretty sure I was on the right track.

(I've had the chance to meet with quite a few customers, partners and industry pundits over the past several months, and this is the first in an ongoing series where I'll share some of what I've learned -- along with a few of my own observations.)


Fact: cloud computing and on demand solutions are here to stay and will only grow in importance.  There is no disputing the growing relevance and value customers are deriving today and will realize tomorrow. 

  • 25+% compound growth -- and growing according to IDC, Gartner and other analyst firms
  • The ability to leverage commercial cloud infrastructure to significantly reduce operating costs by virtualizing on-premise systems
  • Solutions that are easier to buy, deploy and use - a fundamental and welcome shift for the software and IT services industries
  • The ability to help people work much more effectively together to drive specific business outcomes

As importantly, the onus is on vendors to manage the customer and solution lifecycle.  It's about time that we're on the hook to monitor, manage and administer these systems.  This time, we're responsible for lifecycle management, and this is driving a great deal of innovation that ultimately reduce the cost of provisioning and managing these systems.  That's good for everyone... including customers who will inevitably continue to deploy and manage or have a service partner host their own packaged applications.


But is this a panacea?  Is software really dead?  Most of the customers I talk to don't think so.


One thing I have learned from working with hundreds of small and midsize companies is that one size or approach doesn't fit all.  This is even more evident when I talk to CIO's of larger firms.  There are real and fundamental reasons why companies continue to purchase, deploy, and even customize packaged software on-premise or via hosting partners, including uniqueness in their value chains, specific requirements in their industry, or a myriad of complex regulations across multiple countries.


Will on demand and cloud computing represent the only means for customers to consume software and services?  I'm convinced the answer is an emphatic no.  That said, this is a fundamental shift in the market and a key part of the future of this industry and how we deliver value to all types of organizations and the people who run them.  I'm betting my career on it.   


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