It should come as no surprise that I am a bit confused on SAP's SaaS / on demand / cloud (pick your buzz word) strategy (here's one post that talks about this recently). Two independent (and seemingly unrelated) data points came out this week that could possibly shed some light on the subject. The first data point comes from the announcement that SAP had acquired the IP and hired the engineering team of failing platform as a service (PaaS) vendor Coghead (which was a SAP Ventures backed start up). SAP did not acquire the customers and does not plan on continuing the PaaS offering in its current form past April 2009. There's already been quite a bit of blogging on the announcement so I won't belabor the point by detailing a deep analysis of SAP's actions (check Dennis Howlett's post out for a good overview, although possibly a bit colored in SAP's favor and a different take here from TechCrunch, which also is a bit slanted but towards salesforce.com).
The second data point came from a colleague in our IDC German office and is an article that appeared in Handelsblatt, a German business daily and discussed here (sorry, it's in German). The article basically says that SAP has put a sales freeze on Business by Design (BbyD), it's SaaS mid-market offering. I should mention that SAP has denied the action. Now it's possible that this is just a reference to SAP's actions of roughly a year ago when they stated that they were not broadly marketing BbyD because there were some quality issues that they wanted to address. Since that announcement SAP has been very silent on its SaaS strategy (the exception to this would be the SaaS offering from acquired Business Objects, which has continued to be sold and is now rolling out to the SAP field sales organization). In the absence of any clear information there have been many rumors of failed implementations and customer issues, mostly around problems with BbyD's multitenant architecture. I personally think that there were issues with the new modular development methodology that SAP was trying to implement, but that's only a guess.
Taken separately the two events might not create much of a stir, I mean, SAP buys technology fairly often and certainly one newspaper could mis-report the facts. But taken together in one week it does make you wonder if more is going on than meets the eye. Add in the hiring of ex-Oracle applications executive John Wookey to run SAP's enterprise on demand / SaaS efforts last Fall and the increasing interest in SaaS created by the current recession and at least it deems some closer examination.
So I've mulled this over for the past couple of days and with a few assumptions and a bunch of conjecture there is a reasonable "story" that could be wrapped around the two events. SAP, like all of the major SW vendors, is feeling the crunch around the recession, that's a fact. If the management team has realized that SaaS is holding up in this economy, which all the major analyst firms are reporting, including IDC and I've mentioned on this blog repeatedly (try 1, or 2) then maybe they are making a move to sort out their strategy. If they have major problems with BbyD, and if they realize they need to move more quickly, and if it would be easier to start over than fix BbyD (a lot of if's, I know) then an acquisition of a PaaS solution might just give then the jumpstart they need and would indeed be a reasonable strategy by Wookey (remember he's ex-Oracle, he does know acquisition strategies can provide a quick path to market) and the SAP management team. Maybe this was opportunistic, or maybe it was carefully planned, who knows, but the fact is that SAP now owns a fairly respected PaaS solution.
One more observation that's a bit self serving, in my IDC group's 2009 top ten predictions we predicted that major SW vendors would look to building / acquiring a PaaS solution this year (IDC Doc #216214, Dec 2008). While it remains to be seen what, if anything, SAP will do with the Coghead PaaS offering, it does make us start to look on target with that one (one down, nine to go).
