picture courtesy of Elunne in Perth
I spent most of last week with SAP in Boston, at the company’s 2007 Influencer Summit. As regular readers will know, SAP is a client, and in recent months I have spent a fair amount of time at events gaining a deeper understanding of the company, its communities, cultures and portfolio.
By the way – I promise you hotness by the end of this blog. Open Social began as a pun for this piece, but I will later explain how SAP is already planning to potentially use it in anger.
Scene-setting: The Innovation Debate
When you think of business process automation and software you think SAP. But for all the positive implications of the company’s awesome firepower in business process automation, there are also drawbacks, which are well documented such as cost and lack of flexibility. One of the questions exercising the minds of other bloggers at the summit – people such as Vinnie Mirchandani, Brian Sommer, and Sigurd Rinde – was whether SAP software be used to help its customers be truly innovative. Vinnie and Brian- both curmudgeons, think not. Sig is generally dismissive of much of enterprise software’s core approaches.
The debate exercises the wider tech culture. Nicholas Carr of Does IT Matter fame believes traditional packaged software can’t be used to create or sustain competitive advantage. Everything is commodity.
Andrew McAfee of Harvard Business School has his own take on the value of IT to business, articulated as Dog Eat Dog. His conclusion is that IT is a crucial weapon – driving brutal and severe competition in the industries that invest most heavily in it-shown by agressive mergers and acquisition activities in those sectors, which are therefore more concentrated in terms of market share. Could it be that Mcafee’s thesis, often used as a pushback against Carr, actually supports it? Why do those companies in sectors that have invested most heavily in technology need to make so many acquisitions if their organic R&D investments have been successful? Where are the organically led breakthrough innovations? Companies that innovate with IT should surely suffer less, not more churn?
[As it turns out the debate really exploded over the weekend, thanks to a classic Scoble post, Why enterprise software isn't Sexy. Any time Techmeme is covering matters enterprisey you know Scoble is involved. Michael Krigsman at ZDNet took the bait, and we were off. Nicholas Carr jumped in next, defending Scoble against Krigsman's assertion Scoble doesn't get it.
Are we really to believe that making software engaging is somehow incompatible with making it reliable and secure? That's just baloney.
I am not sure of the power of the "that's just baloney" argument, but I take Nick's point. Next up came up a post from Ross Mayfield, Enterprise Social Software doesn't get you laid, it gets you promoted. Is it just me or is the headline deeply deeply ironic coming from a guy that recently "demoted" himself to accelerate his company's push into the enterprise, bringing in a CEO? Ross is right though - we did all misread Scoble's original post, or at least the point he was channeling from Bill Gates (why doesn't the blogosphere get a hard-on for enterprise software the way it does anything from Apple or Google?). I can see see Bill now chuckling to himself - "I just knew Scoble could get some attention for enterprise software this week..."]
But enterprise companies have no monopoly on the unsexy. Look at how darned ugly the Amazon Kindle is, no matter how cool the idea behind it. Back to 1976 anyone? This looks to have been designed by the Apple. Before Jonathan Ives was born.]
I would argue one of the reasons for a lack of innovation across all business sectors has been the focus on IT automation as a means to cut jobs. If the reason for being is job cutting, an activity which is very well rewarded by the sophisticates of Wall Street (job cuts announced, share price boosted, night follows day), then innovation will almost certainly suffer. Only people can innovate. IT can harvest what people do, but only people can make breakthrough innovations – just ask Toyota. Machines can’t think up a more effective business process, let alone an entirely new business model, which can of course be accidental. When a couple of Stanford University grad students started linking servers together using bailing wire and chewing gum they weren’t setting out to create the fastest, most-powerful computer ever designed, nor were they planning to utterly change the dynamics of multie-hundred billion dollar advertising business. Check out John Battelle’s wonderful The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture. In the early days at least Sergey and Brin seemed to think advertising was something dirty, to be avoided at all costs. Today, Microsoft CEO Steve Ballmer is trying to gain even reflected glory from Goog’s advertising mojo halo. Mark Zuckerburg surely didn’t set out to follow a similar but even more explosive path – he just wanted to link Ivy League students, and probably make a buck or two. If Facebook had a grand plan they wouldn’t have made such a hash out of Beacon 1.0. Robert X. Cringely didn’t call them Silicon Valley Accidental Empires for nothing.
Another neat example of “accidental” people-based innovation, somewhat closer to home, is evinced by Microsoft buying a wine in quantity called Stormhoek Blue Monster Reserve edition. Hugh and the good folks at Stormhoek actually did want to play the wine industry game differently, but the B2B angle came later. What made a new business model possible was turning wine into a social object.
We used to talk about two steps forward and three steps back, and so on, but today it’s more like 50 steps sideways and 2000 steps forward. Networked, social-based opportunities are so explosive today than when we pursue them we’re flung forward at pace.
Discontinous productivity is what you can unleash with the right tools. But that is scary. Mostly because corporations don’t care for people- because people are overheads, and as such, are an asset to control and manage rather than enable. Cote often refers to the shackles of success.
The idea of “the shackles of success” is largely one about protecting and continuing existing revenue, though partly one about keeping your community happy. Ideally, those two concerns intersect, but in practice, there’s plenty of room in the disjoint parts of those sets to fool around in. Making money, of course, usually wins over keeping the community happy, esp. if you’re a public company.
When something works, and works well, its a natural reaction to do it over and over and over again. With a great example of serendity (or should that be bursty productivity?) I saw a tweet from Nigel James this morning, when I (“should have been working on this paper”) citing a quite brilliant Sig reference. According to Sig, ERP actually stands for Easily Repeatable Process. Brilliant – so now we’re getting to the nub of it. Enterprise Resource Planning is about what can be easily repeated:
Processes that handles resources, from human (hiring, firing, payroll and more) to parts and products through supply chains, distribution and production. The IT systems go under catchy names like ERP, SCM, PLM, SRM, CRM and the biggest players are as we know SAP and Oracle plus a long roster of smaller firms.
Known to be rigid, but handles events and transactions with precision and in volume. Systems delivers value through extensive reports and full control over resources.
Resource oriented, transactional, event driven systems. Delivered by system vendors with roots in accounting using up to 25 year old technological solutions.
But Sigurde is far more interested in The Barely Repeatable Process (BRP):
Typically exceptions to the ERPs, anything that involves people in non-rigid flows through education, health, support, government, consulting or the daily unplanned issues that happens in every organisation. The activities that employees spend most of their time on every day. Processes that often starts with an e-mail or a call. A process volume, measured by time and resource spent at organisations, probably larger than for the Easily Repeatable Processes.
These are mostly handled and organised – frameworked – by systems like paper based rules and policies, e-mail, meetings, calls and now in more modern organisations by wikis and other collaboration systems and methods.
Exceptions are often where innovation happens.
Getting Specific: SAP and Only People
Given that Sigurde’s post absolutely nails so many important aspects of the innovations meets automation argument, I am a little disappointed Sig seems to have missed the hotness at last week’s SAP event. [Boy has this blog taken a freaking long time to get to the point. Ed]. Sig asks:
Why does not SAP spend almost all of it’s R&D funding in the BRP space? It would make utterly, completely, undisputed sense. Now folks, this situation puzzles me so much that I need some help; is there a glitch in my logic? Good folks at SAP, prove me wrong or right
The psychology of some of my fellow Enterprise Irregulars confuses me. Put them in a room with SAP CEO Henning Kagermann and they will tell him flat out he can’t innovate, and neither can his customers. Henning takes it like a gentleman, and that’s why the Irregulars all think he is a class act. When someone from a different background starts dissing Enterprise they turn and defend it to the hilt. [I like Vinnie's tack - which is to say sexy is in the eye of the beholder. I think that's about right- do some men and plenty of women really fancy that fuzz-chinned pipsqueak they call Justin Timberlake? Some evidently do. But others will go for someone with more authority and experience.]
But back to Sig and the semi-to-unstructured opportunity for SAP. I certainly wouldn’t recommend SAP spend all its R&D dollars on enabling barely repeatable processes. In my opinion the quickest route to losing customers for SAP would be to say all the money was going on the new stuff, and everything else was henceforth in maintenance mode. Never a good look. If buying competitors to milk their maintenance streams, an accusation often laid at Oracle’s door, is unacceptable, then abandoning existing streams is no better.
SAP and Business User Applications
So what did Sig miss? The exciting moments for me came in three sessions- at the very end of three hours of death by PowerPoint on the first day, when we were introduced to the concept of SAP Business User Applications, during the Business User Application session later that day, and during the SAP Netweaver track the next morning. That was clearly where the action was. The key to understanding SAP’s ambitions, or at least first footsteps into what Sig calls BRP, came here. The release of SAP Collaboration Server in a couple of months (with a major feature bump about six months later) will make things a lot clearer. SAP is moving beyond top down well defined business processes into a more lightweight ad-hoc view of process. After all, a lot of what businesses do is implicit – its simply not documented. Enabling implicit processes, which are often workarounds, is a long long way from SAP’s roots.
The market needs to understand that SAP’s acquisition of Business Objects is intended to be transformational. It is not a tuck-in. SAP has never sold to power users building situational analytics and reports before. This is a new customer set. But SAPs’ ambitions are not just in the analysis space-the software it plans to build will be tasked with helping Business Users build ad-hoc, or situational applications. Some of the Business User apps will be throwaway, and intended to be so.
For those that didn’t know IBM’s biggest competitor in portals in Europe is not Microsoft or Oracle or BEA – its SAP. What next? 2.0: the Collaboration Server will include the ability to create self-organised workspaces, forums, and wikis. It will also allow the tagging of all artifacts. Sharepoint integration will be included out of the box. I am not quite sure why Atlassian isn’t being OEM’d – but apparently its not. Users will be able to create notes, but also tasks for other users.
What had me rocking on my heels was just how much the task manager reminded me of 37Signals Highrise (a tool RedMonk uses internally). 37Signals is “sexy” – one of its founders is the Scandinavian rockstar behind Ruby on Rails, David Heinemeier Hansson. On the tech industry sexometer, 37Signals is like Spinal Tap- they have a special cool amplifier that goes up to 11. Now the UI was different but the ad-hoc case management really smacked of Highrise. So much so good. What surprised me even more (I was practically doing the limbo I was so far back on my heels) was that when I asked Doug Merritt, the guy responsible for this new business line at SAPstraight-out confirmed that his team had indeed looked at Highrise in building the app.
Doug’s title is SAP Executive Vice President, Business User Development. He is a visionary and I believe represents exactly the kind of BRP upside Sig would like to see from SAP. He said things like:
“Business process – not everyone thinks in those terms. Enterprise software is stuck in a design paradigm which is 15 years old. The idea human productivity is linear…I don’t worry about ibm and oracle. I worry about Google, Amazon, and Facebook…”
WTF? Where did he say he worked again?
RedMonk struggles to get IBM Software Group to admit or aknowledge Google is a formidable competitor so hearing it from SAP was definitely a surprise. Doug’s position is that we’re at one of those truly fundamental transition points, like the client/server wave, which is going to kill a lot of successful players, and introduce other into the mix. When an SAP executive Veep says “The industry is moving away from a heavy transaction model.” you have to sit up and listen.I am with Doug. But what I really liked was what came next in his argument: that the “consumer” companies haven’t fully realised the change that’s upon us yet.
Which brings me back to the task builder, and what was so… sexy about the approach. The user interface was… “meh“. Unlike Highrise, which is case management, unintegrated with anything else you might use to run your business, here the links were more than tangible. Go to the search bar and type in a purchase order, and the details pop up – not just the details- it *was* the purchase order. Now create a task around it. Missing a part because the normal supplier went bust? Lets create a task for the team to find an alternative supplier. In under five minutes using wizards. At the front end everything totally integrated with Outlook (I actually saw that as a drawback but 9/10s of enterprise buyers won’t). At the back end everything integrated with core business data.
I sat back and had one thought – I. Want. That.
Its easy for 37Signals to say that enterprise software sucks. 37Signals is a high priesthood where the developer designers know best. And they are… GREAT. But their whole schtick is say no to 99.9% of user requests. You just can’t do that to Proctor and Gamble or Daimler. Saying no is sexy. The girl you really fall for is likely the one that says no the first few times you meet her. We tend to want what we can’t have. You can’t have open access to the iPhone – oh I want it. Its reverse psychology and works a charm. When I am using Highrise, while there are things I love, the limitations are pretty significant. The “dashboard” makes it pretty hard to work out what’s going on if you didn’t enter the case yourself. Probably user error on RedMonk’s part…
My delicious post in reply to the enterprise sucks was:
“Sure. But some even vaguely readable management information, and integration of any kind with invoicing and purchase orders would be really nice in Highrise. Highrise makes it easy to enter data, not so easy to use it. or maybe its the users’ fault.”
We turn it back on ourselves.
But in my mind SAP delivering 37Signals ad-hoc collaboration with real enterprise process data and objects is sexy.
“Wow. We only just hooked up – and you’re going to let me see your… purchase order…”
Poke! SAP for the Facebook generation. Actually Facebook is for old fuddy duddies like me, but you see what I mean.
Hear That Great Big Sucking Sound: Its Orkut and Facebook data in M&A scenarios
Ok folks we’re in the home straight now. I promised you Open Social, and it would be unfair to drag you through this piece without a decent money shot. The Business User session was a double act between Doug and a guy called Jonathan Becher, recently acquired when SAP bought Pilot Software. At the time I said:
One major asset will be Pilot’s CEO Jonathan Becher, assuming he sticks around for a while. Why? Because Jonathan is actually a 2.0 thinker, rather than a collect, measure and analyse everything guy. Becher is a social thinker, and doesn’t believe in process for its own sake. Far from it, the Pilot approach is designed to slough off process if its not helping the business. This approach should help SAP customers, preventing them from becoming hide-bound. Pilot could be about SAP process optimisation, as much as business process optimisation, and provide real benefits to customers. We can also see see Pilot as a potential acorn for an SAP IT Performance and Portfolio management play.
Then in a flight of fancy I argued some potential scenarios:
It will be interesting to see what approach SAP takes to integrating Pilot Software dashboards with its existing Business Information Warehouse platform. One interesting opportunity will be pointing SAP’s scripting language, widget and rich UI communities at the business information enabled through Pilot. Why not extend Pilot’s UI through SAP ERP data using PHP, or position the SAP widget foundation as a primary consumer of Pilot info? There could be some interesting partnering opportunities with Adobe and Microsoft. Another internal opportunity for SAP will be integration of Pilot with its Governance, Risk and Compliance portfolio, and particularly the business controls functionality it acquired with Virsa.
Whoa. SAP is doing just these kinds of things. Anyone would think I was paying attention. Or they are. The new interfaces are all based on Adobe AIR (bing. sexomatic!). And SAP is indeed integrating its corporate performance management and Governance Risk and Compliance functions in the shape of its Office of the CFO push. No IT portfolio stuff yet, but there will be if Michael Krigsman has anything to do with it (his day job is to build software that identifies factors that show a software project is on a death march. His blog is called IT Project Failures. His business is preventing them).
So Doug and Jonathan come on stage and show off a iPhone app (sexomatic!) Its just a browser app. But its on an Apple (Dyno-mite!). Actually I missed that bit but I know Apple is sexy. Wait – what about Open Social?
OK- one of the scenarios Doug and Jonathan’s group is working on is M&A. What could be a more ad-hoc “process” than M&A? What do you compare – product portfolios, associated revenue and people.
So first you diff the product lines to see what the overlaps are. Deal with the revenue. So far, so Business Objects. But wait a second. What about the people? Who are going to manage the teams? Who should we place where? First merge the enterprise directories. What does that tell us? Not much. Next… lets index our corporate email systems and wikis to see who is collaborating and contributing, on what. Huh? SAP is mining the social graph? For now its just a scenario, but I wouldn’t bet against it being in product within a year. The next step was the coup de grace though.
Doug and Jonathan, playing out the scenario, said we’re still not sure whether to put this guy in charge of the new group. OK – let’s import information from Orkut and Facebook to help with the final decision. Blammo, as Cote might say! SAP is already considering how to make use of the OpenSocial API in a real business application.
I am looking forward to pushing/pulling/cajoling SAP further into the BRP space. Its going to be an interesting ride. Merritt may have his eye on Google, but because he does IBM and Microsoft need to look out. These two vendors have made all the running in the collaboration, email (Exchange) and situational apps (Lotus) space for the last ten years. But it looks like SAP is going right to the heart of the people-ready business. Its about people. Its about exceptions. Its about collaboration. Users will benefit from the competition. That’s innovation. Is that sexy? I think we know the answer to that.
Sexy looks like this I guess, courtesy of Nikkiboom: