I know, its an oxymoron. Key part of that word being moron. The titbits of news that has gotten me to this post is the latest about SAP SaaS (and here) offering A1S. (although they won’t call it SaaS)
The key bit of this news is that SAP think they can launch a mid market play using A1S, service about 100 000 customers, while not cannibalising their existing revenue streams. Cool, looks solid, some leading edge consultants will be nodding their heads sagely saying SAP have indeed found a niche… they’ve missed a critical point tho. Its complete nonsense.
Disruption is just that, a radical break with the current. Incumbents don’t like disruption because its almost certainly an extraneous force impacting on how they do business. Would MS or SAP with their fantastic margins on software licensing deliberately disrupt themselves? Hell no!!!, they’ve been dragged into this kicking and screaming. (as an aside David Berlind does a great job of explaining how these companies keep their revenue streams intact but misses the point).
That is to say that they’re reactive, that things outside their control are impacting them. If they don’t have control, how are they going to manage this disruption? No chance. Its like saying we can control this wildfire. This break with reality isn’t just limited to Software companies, Telco’s are big into this at the moment as well with VoIP, media companies with content. You get the idea
The intricacies of the SAP offering seem to be quite vague. But there are already a couple of things that scream out to me that they haven’t quite got it right.
Firstly, the name A1S. What the hell? The worlds moved on, product codes aren’t marketable anymore.
Secondly according to AccMan “SAP is very coy about A1S which has now been in development for some 3 years”. That just screams uh oh to me. If you can’t build it fast is it what you are good at? Can you meet the fast charging continually in beta competitors? No chance
Thirdly and again from Accman “SAP will have to put considerable resource into a business model with which it isn’t wholly familiar. It has already set aside $3-400 million for this effort.” That’s a tonne of money. Given that they don’t have anything in the market yet wouldn’t that get some alarm bells ringing. Any start-ups out there, what could you do with $400mill?
So lets zoom back up. Those three examples, combined with the ‘we won’t cannibalise’ statements point glaringly to a complete misunderstanding about what it takes to compete in SaaS, to put it bluntly SaaS isn’t in SAP’s DNA.