Cloud And Mobility Market In India – See It To Believe It !

As I am finishing up my visit to India, I cannot help but wonder why I chose to make a living in USA, and not here. As I stepped out the air conditioned room I was sitting in at my parents’ apartment to drive to a restaurant with my dad for lunch today afternoon – the answer became clear. It is the heat and  humidity, the pollution, lack of effective governance, inability of people to stand in a line, the terrible traffic and the lack of large number of dog shows.  It definitely is not about money any more – wherever I turn, I can see an opportunity to make a successful for-profit business.

Since I had some time on my hand, I walked around trying to gather some primary intelligence on what the potential opportunities are in India.

Any one who has been to India knows that Indians have a craze for mobile phones. I always thought that bandwidth is a big problem here.Guess I was wrong. I did not have a single dropped call here. I am typing this on a tablet using Wifi at my parents’ house in Trivandrum, while also streaming CNN on my PC . Speed is not the same as what I get in USA, but not bad at all.

My dad, who can use a computer – but usually stays away from it, has two. My mom has one. The guy who sells vegetables in the local market has three, the butcher has a belt around his waist that holds 4, plus the one he has connected to his ear via a blue tooth, the 9 year old daughter of our neighbor here has an iPhone and so on.  I am also (proudly?) convinced that my dad and his uncle can out-SMS most kids I know in USA.  All business is done on mobile – usually via SMS. My mom can book a table for dinner, call a cab, ask for home delivery, get a prescription refill –  all by SMS – and apparently so can everyone else I have met here in these last couple of weeks.

So I decided to ask a few of these vendors on how they manage this traffic of incoming calls and text messages. Apparently they are at their wit’s end on managing this. Most small vendors have paid assistants who answer the calls and text messages, and keep a tab on a piece of paper or an old diary and send back confirmation. The more advanced ones use a excel sheet.

In a given day, they lose about 20% of their orders (some as high as 50% on high volume days) due to clerical errors.  I know many of these people from the time I was a toddler, since I grew up here. And they know I do some work with computers.  Several of them asked me if I can write them something on a computer to help them do their business better. They did not press this issue since they all had a line of customers waiting behind me in most cases to do actual business. The only mobility scenario I found here that has a good degree of sophistication is mobile banking, and it is widely used.

This led me to the issue of how pervasive are computers and internet connections in this segment.  Although everyone in this “Very Small Business” category had one or more mobile phones – usually a smart phone, none of them had a computer at work.  Most of them said they have one at home that their kids use, and that they pay for broadband access. Sure enough they have no idea what their kids do with their PCs. So whatever solution these folks need – has to be done via a mobile device.

I would have died of shock if I found an Apple Store in Trivandrum – and I did not. However, I had a near shock experience when I found that there is a Samsung showroom exclusively for smartphones and tablets. I swung by the store, and it is pretty big and nice and carries everything that one would expect in similar stores in other countries.

Next up in my agenda was to move up the chain and talk to people who run bigger businesses – like builders, architects, automobile workshops, car dealerships , law firms etc. Again, most of them are folks I know from before, and/or known to my parents.

Their big problem is managing their financials, payroll and compliance without extreme trouble. On the high end, they have software – either commercially purchased, or built in-house.  They have in-house IT staff and an army of accountants to keep the business running and compliant. In the lower end – they have all bought a computer or two, and some accounting software, and an internet connection. But no one seems to use it well. Many of the smaller shops have not switched on the computer in years.

There is no POS integration to begin with, even in some of the bigger shops. And even in shops that say they use computers well – I could see the industrial strength printer working non-stop generating the big multi-column reports. None of the business owners knew with any accuracy on their working capital, or gross profit. Apparently they need to talk to their auditor’s staff periodically to see how the business is doing financially.  There is zero workflow that is automated. Workflow essentially is a bunch of people running around with print outs of emails, or shouting over cubicles.

There is apparently an e-governance initiative under way in the government. They are now keeping electronic copies of everything – but of course, they also print everything in triplicate and file the hardcopies just in case a disaster happens. It does not help that the laws have not kept up with computer advances – so some of this hard copy fascination is just a response to legal requirements.  Traffic tickets etc are still dispensed by hand, and I have not seen any officer on the street using a smart phone or something for work. Everyone has a personal phone – usually very advanced ones. May be government can save some money by encouraging BYOD here.

I had to renew my passport here, and walked into the local office. Before I left USA, I had uploaded all the required documents into their site.  The passport services is at least partially outsourced here. The lady from TCS who handled my case at first window took one look at her screen and said – ” Your file is no good. You have left many of the mandatory fields empty” . I honestly did not know what to say. I decided against asking her why her system saved my application if it had missing mandatory fields . Next up, she said “I see you have uploaded all the documents. Unfortunately, I cannot download any of them in our system. So you can just give me photocopies”. I felt smug that I had already anticipated this will happen. Eventually she handed me off from Window A to Window B. I physically took some paper work from A to B. Person at B told me I also needed to include my marriage certificate. I had it handy, but he would not take it – I have to restart at A . Ok, so I did that. Eventually I was handed over to B and then C . At C, the lady double checked everything that B did, and that was it – in 3 hrs, I was out of there.  I would love to meet the person or team that designed the process and the wonderful software, and get a copy of my paperwork autographed.

The last area I tried to understand was how sales force of these companies use IT, if at all. Field sales for these medium size companies have company issued phones, and in some cases smart phones. Some of them also have laptops. They file field reports either on paper, or in a word document that is emailed. Some one in back office then files it in appropriate folders etc. For things like price and availability , they use the company phone to check with their friends or with back office. T&E is all done with paper, and needs manual signatures for approvals.

In each of the above cases, there are existing solutions – usually in cloud as SaaS, and most of them have a mobile interface of some sort. Yet, I saw very little awareness – instead the smart people who run these businesses have just adapted their business model to overcome the lack of technical advances. I asked them if this was due to a limitation on their part to spend money. The answer was eye opening. Every one including the butcher with the belt full of mobile phones to the builder of big high rises is willing to spend money on getting a solution that will help their business. They are only too aware of what they are losing out.

I asked them if the local IT companies have ever approached them offering solutions. Overwhelmingly, the answer has been an emphatic NO.  Additionally, the perception I got was that the local companies – even smaller ones –  only care about winning work from abroad and executing in India, as opposed to winning work locally. I don’t know if this is because of their cost structures or for some other reason.

At least with these people I spoke with – there is some awareness of social media  but near zero awareness for social business. Some of them use Facebook to keep in touch with their children who live abroad. Only one person knew what twitter was. On the bright side, I showed some of them what to do with FB and twitter and some of these folks seemed to like it.

Finally, I did a gut check with some colleagues in Bangalore, and some old classmates from Trivandrum – apparently the IT companies in India do play heavily in domestic market, but focus almost solely on large enterprises in India.  From a couple of weeks of asking around, I am firmly convinced that cloud and mobility are both potentially big plays in India for the very small to medium sized firms.  At a minimum, I would urge my friends at software vendors all over the world to check out the market first hand . Seeing is believing.

Slightly off topic – I had to spend some time at a hospital here in Trivandrum this week, where my aunt was admitted. Absolutely the best doctors were in charge of the treatment for sure – and the staff followed absolutely the worst process ever engineered. Plenty of administrative “paper based” mistakes were made in the few hours I was there, and I almost had to pinch myself to check if I was in 2012 or 1712. This does not really need mobility or cloud to solve – just good old client server will do. Or even a better paper based approach – I just cannot imagine life and death issues being handled through the current pathetic process.


And Appleby says , It’s Cloudy out there…

For the first time ever on my blog, I have a guest post by my dear friend, John Appleby – fellow SAP mentor, blogger and an executive at Bluefin, in London, UK.  So without further ado – Ladies and Gentlemen,  I present to you, John Appleby 🙂


When you go to a major conference, tributes to the blogging gods must be paid. Not because we have to, but because the creative energy that surrounds such an event makes you think. And in this case I’d like to thank my good friend Vijay for hosting my thoughts.

And it was so that a senior executive in SAP came over to me whilst I was stuffing my face at lunch and said “John, if I understand you correctly, you believe it is still Cloudy?”. He was referring to their cloud strategy but I realised that actually, I have no clue what an Enterprise Cloud Strategy looks like.

It is true that there are two broad cloud business models that indisputably work.

Small and Medium Enterprises – the suite

I know that if I were starting a new business, I wouldn’t invest in IT assets. I would let each employee expense a laptop and provide then access to some cloud services. And it is so that Netsuite has grown to a $236m revenue over 12000 customers which means an average of $1600 per customer per month. Margins are low but customers are buying.

So as a small business, organisations may buy from a single vendor or from a collection – depending on what suits the needs best. Either way there is no desire to have expensive IT assets in an office somewhere.

Large Enterprises – innovation in LoB

Large Enterprise ERPs are inflexible and as a result, organisations like Salesforce, Workday and so on have poached customers from the large ERP vendors like SAP or Oracle. There are a small number of such potential solutions that are horizontal (i.e. apply to all industry verticals) and a very large number that are industry-specific.

Salesforce Automation, Procurement, Cash Management, Credit Management, Talent Management – all of these and more are relevant such areas.

Is there a demand for a Large Enterprise Cloud Suite?

I’ve spent several late nights discussing this with all manner of people, including good friend Dennis Howlett who claims “the suite always wins”. He might be right but I think that it is in conflict with the current cloud market dynamic.

The reason for this is because right now, it is a number of niche players that have thrown together an app, integration and have created massive demand. But the operating margins are very slim. For Salesforce it is 6%. For Success Factors, there is a small loss. The same for Ariba.

Most of those companies survive as far as they have by trying to grab land as fast as possible and by creating platforms that move quickly but are not carefully architected. So suppose you want some of this market – would you rather try and build something, or acquire?

The problem in building a platform

The challenge is simple: those organisations throwing together a platform can barely make the economics work. But if you build a full cloud platform then you lose agility and add cost. This makes no sense at all economically, and nor could you compete with the niche LoB players like Salesforce, that are normally bought directly by the business.

How do you convince Sales and HR that they should buy a common platform? What is the benefit of that? What’s more there is very limited benefit in doing Financials at all – it’s just a means for posting.

Is land grab the only strategy?

This leads us to what SAP have been doing so far. They acquired Successfactors for $3.3B and Ariba for $4.3B. Given that Salesforce and Workday are not for sale, there are not many horizontal vendors left. The major area is that of areas of Finance – cash management and credit management. Are there others? Other than that there are a bunch of LoB apps focussed on Industry Verticals.

But in the end, I suspect that grabbing users and apps is the only relevant strategy right now. What happens next is the interesting part. Common sense dictates that Dennis is right and the suite will win in time, and therefore the only sensible strategy has to be to build out a suite to underpin land grab.

Final Thoughts

One thing is for sure – I wouldn’t want to have Lars Dalgaard’s job. Getting this part right is near impossible. It’s cloudy out there.

Identity Crisis – A liberalized India with close to 10% growth, and still socialist?

Fair warning – this has nothing to do with SAP or Enterprise Software !

I very well remember learning in the civics and political science class in the 80s that the Preamble to Indian constitution reads “WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC” . Little did I know then that the word SOCIALIST was added only in 1976, during the emergency rule under Indira Gandhi. I was taught to believe that it is a good thing that government will watch out actively to make sure there is no discrimination based on social  status, and that government will make sure wealth is redistributed amongst the people so every one is an equal. Although not stated explicitly by my teacher, somehow I also got the impression – along with many other friends of similar age – that capitalism is evil.

Indian economy got liberalized in early 90s when I was in college. We used to have endless debates in college to prove it is a terrible idea. And we were mostly wrong, as I know today – barring a few exceptions.

But why did India have such an affinity towards socialism? and then more narrowly on Marxism? I believe that had to happen due to the country being ruled by the British, and the rulers of the princely states who treated the people as slaves for the most part, and depriving them of social and economic opportunities to advance.  And then there was the brutal caste system – where based on the caste you were born, you were tagged for life to certain social and economic status.

Entire generations grew up with that thirst of equality – with many a leader laying down their life for the cause , and so it is not a surprise that all political parties had to pick up on that line of  ideology to establish themselves.  Some of these parties accuse each other of being right winged. It was only after moving to the US, I started realizing that what is called as right wing is still pretty left leaning according to US politics.

India got its independence in 1947. But 65 years later, we are still a socialist state according to the constitution. The supreme court disallowed a petition recently which requested the word socialist to be stricken from the constitution.  I find that even more interesting . Why would India call itself socialist today, with its liberalized economy and close to 10% growth?  The answer I think has more to do with politics than economics or sociology.

A vast portion of the population in India still live under poverty. But they vote ! And the ruling parties cannot afford to do anything that affects that vote bank. Commitment to the betterment poor is mandatory for any political manifesto.  Not sure how many people know this – but you can’t even register a political party in India, unless it explicitly states its allegiance to being “socialist”.

I actually think that is an excellent thing to do as well – the poor in India needs a way to get out of their misery. However, the implementation of policy is where I am not sure if there is any effectiveness to achieve that goal.

One such idea was the system of reservations based on caste that independent India started to have. The wise men who crafted this put a time boundary on it. Little did they know that it will get extended for ever. I have heard from my grand father, the Late Prof. R Easwara Pillai, about horror stories on how caste system was practiced in India. I think that reservation system was created for a good reason.  It was created at a time where there was serious correlation between caste and economic situation of a person. That is not true in 2012. There are plenty of people who are economically leading a splendid life, but still reaping the benefits of reservation by government due to their caste. They effectively decrease the chances of the reservation system helping the less economically privileged people from their own caste, and other castes.  The erstwhile “upper classes” in general seem to be not doing so well on economic front any more.  It might be poetic justice for what people did or did not do several decades ago – but will it ever bring social equality that it was meant to create?

Good and effective governance cannot happen in India without a clear stance on political ideology. In the pre-90s time, it was the government who decided who got a license to do what business. And the incumbent industry leaders did everything they could to make sure government will not let in a new competitor. It changed for the better after the 90s, and now I am not sure which direction it is headed any more.

A good example is the retroactive tax issue with Vodafone in India. If government and its agencies can act in such an arbitrary  manner, what is the incentive for any company to invest in India? And we have an ex-telecom minister and other officials who went to jail (some out on bail too) accused of massive fraud in allocating spectrum.  I will resist my urge to express my

Where else in the world would a minister in ruling coalition have to be sacked for raising rail fares which have not been raised in a decade? It happened only because of the populist ambitions of the leader of his party.  Railways make a lot of revenue, but not profitability. Trains are allocated solely based on political agenda, and with no respect to the availability of funding or infrastructure. Something has to take a hit – and I am afraid it is maintenance and safety that takes a hit.  But government will not privatize railways or even increase fares meaningfully to compensate for rising infrastructure and maintenance and safety costs.

The pilots of Air India are on strike here – the ones that fly international routes. To begin with, Air India is a loss making airline that is long overdue for restructuring. Every time I get into a flight – and I try every way to avoid it when I can – I keep praying that it lands without any loss of life and limb. I flew them yesterday, and it was horrible. Delayed for an hour, then wrong gates informed to passengers, then boarding without any sequence which further delayed take off, and the most bumpy landing I have had in 2012. I spent some time talking to a few pilots of AI in Bangalore, at a cafeteria in the airport. Their biggest fear seems to competition to their career advancement. They do not want other pilots trained in the new fleet, so that they can protect their jobs. I was polite to them – after all I was getting into an AI flight in few minutes – but left wondering that there is still a section in the world that can get away with that. I don’t have that luxury in my career, and I don’t know any one else who does personally. If I am not at the top of my game – someone else will take my place.

There is a flip side to this story. When my dad did his engineering degree in 60s- there were 3 colleges in the state. Everyone got a job right after school. When I went to my engineering degree in 90s, there were about 10 colleges in the state, but most of us got a job quickly. It was the liberal arts and pure science majors who did not always get a job at my time in school. I was talking to my cousin yesterday, who teaches at an Engineering College. She was lamenting the drop of quality in the students she gets. And the reason for that is that government opened up the higher education arena, and several colleges sprang up without sufficient quality. There is hardly any competition, and vast numbers of students fail to get a degree. Ironically,  only the most passionate students go for liberal arts and pure science degrees now, and consequently they do well in life.  This makes me wonder if opening up “everything” to private sector is all that bright an idea any more.

Another example is the increase in number of high rises that have spring up in my hometown. I grew up in a neighborhood called Belhaven Gardens, near Kaudiar in Trivandrum. It was a nice, quiet place with reasonably sized lots and houses, and every one knew each other. I drove by that house yesterday and could hardly recognize the area – it has so many high rises now in between the old houses, and hardly any privacy. God forbid if one of the high rises catches fire, I could not figure out how a fire engine can even reach it given there is no space left there between the walls and the buildings.  I swear I even saw a high rise that juts into the main road.  It must be an in-between phase between socialism and capitalism that my country is going through.

In short, there is an identity crisis – at least for me, an Indian who lives and works outside India.  Hopefully I will understand the nuances of how India operates more over time. I am fairly certain that I am not the only confused person on this topic, and I am also sure that there are serious flaws in how I view this situation due to my mixed views of spending parts of my life in different countries.

SAP buys Ariba for $4.3B – rather pricey, but still a good deal

As I was fighting jet lag and lying wide awake on my hotel bed in Bangalore yesterday night, I saw the news on twitter that SAP is going to buy Ariba for $4.3B. When IBM bought Emptoris earlier, there was always a question of who will buy Ariba – and my bet was on Oracle. And I am happy that it is SAP who finally did it. I am not sure why SAP did not announce this at SAPPHIRE last week, but I guess it doesn’t matter really.

Jim Snabe told us at Orlando last week that he envisions SAP to be a big player in business networks. At that point, several acquisition scenarios flashed through my mind, but Ariba was not on that list. As a matter of fact, Ariba hadn’t even crossed my mind for a few years now. They make less than a $500M in revenue,so my first thought was $4.3B was too much of a premium. Now, looking at the market cap – it looks like SAP is paying about 20% above closing price. Given the high multiples companies like SAP are paying for buying cloud companies, I wonder when they will generate real profits.

Ariba’s Calderoni will be a terrific addition to SAP’s board. I absolutely loved his decision to hive off services wing of the company to Accenture some time ago, so that Ariba can focus on what it does best. He was a CFO before he got the big job, and he is on the board of directors of Juniper Networks and KLA-Tencor. SAP could definitely use his experience well.Of course Ariba was not always a cloud company. So there is a learning opportunity for SAP here on how they can transform their big on-premises model into a more cloud enabled organization, by using Ariba’s experience. The one thing I do not understand at the moment is how Lars will lead the whole cloud business unit, and Ariba remains independent. Hopefully some one can provide clarity on this.

It is a bold move from SAP’s side for sure. They just paid more than $3B for SFSF few months ago, and now shelling out another $4.3B for Ariba shows a firm commitment to cloud. And it is consistent with their stated strategy of focusing on customers, vendors, money and people.

As I think more about this – the contrast with SFSF is quite apparent. SFSF is a solution that addresses more people since it is for employees. However, it is only used occasionally during the year due to the nature of the problem it solves. Ariba on the other hand targets much fewer users – but the usage is pretty high since it keeps track of purchases globally. So, SAP now has expertise in both models of cloud solutions.

I have a feeling that my buddy Sameer Patel is excited at the prospects of this acquisition. Ariba, at the heart of what it does – is all about enterprise level collaboration for purchasing/trading, which is close to Sameer’s heart. It makes even more sense now that SAP wisely hired Sameer.

Unifying all these cloud solutions – some acquired, some home grown into one consistent architecture and UX, is a complex task. But who better than Vishal Sikka to take that on? I think Ariba will have tremendous use of HANA compared to SFSF. SAP also can derive some synergy with BW and BOBJ in the context of what Ariba does for enterprises.

SAP has its strength in some of the atomic processes in Source to Pay, and Ariba has in some. And there is plenty of overlap between SAP and Ariba for now – and I am sure that will get rationalized over time. With the combined force of SAP and Ariba, Source to Pay could see some real innovation (Source to Pay is one of the most frequently outsourced business process, mostly due to manual steps) in business process. Combined with HANA – I am sure we will see a lot of change in SAP’s and Ariba’s user base.

In general, but for the heavy premium they paid, I am a big fan of this acquisition by SAP. And If I am wrong – I will blame it on jetlag 🙂

Some random thoughts on SAP’s cloud strategy

As I am flying to Bangalore, I have been thinking of SAP’s cloud strategy – or at least what I understood as their strategy – a fair bit. In general, they did not blow me away. However, I do think they have a lot of things done right. So here are some random thoughts for what it is worth.

SAP is targetting 4 groups – Customers, Employees/People, Money and Vendors. I like that – that covers a lot of the enterprise.But if being everything to everyone was a successful strategy, Business By Design would have scaled greater heights by now, which obviously has not happened. So somethings need to be prioritized over others. The big players in cloud – like SFDC, targeted specific segments and did not try to be everything to everyone. And in general – including SFSF – they have attracted more customers and users than SAP ever did.

I have often raised the opinion that SAP should run cloud as a separate business so that they are not burdened financially or bureaucratically by the larger legacy organization. So I was thrilled to see that SAP allowed Lars to operate cloud as an independent business. And he brings tremendous energy and passion to the table, which is also something SAP could do well with. So organizationally – I think SAP is well set.  If there is one question in my mind on this front – it is whether there will be consistency of engineering across SAP anymore if cloud is a separate organization. But given Lars and Vishal seem to be best buddies, I guess it will work out just fine.

SAP will also  offer parts of BByD as loosely coupled apps – like finance for example. This might work out ok – except, I think Finance in itself is more of a necessary evil, than a true innovation. Without financial postings – the rest of SAP won’t work very well . I am not sure how many will buy the finance solution just to run their GL. A few will for sure – but I don’t see it as a growth engine yet.

SAP derives most of its money from the on-premises world. This poses two challenges. One – if SAP takes a suite approach on cloud, they will have to cannibalize some parts of on-premises solutions. And two – they have to integrate cloud with on-premises world. Neither is an easy challenge to overcome.

First about trying to reinvent the business suite on the cloud. Don’t get me wrong – I do think eventually suite needs to run on cloud. What I am not convinced is the need to do it now, since that is not a path of least resistance within or outside SAP. I think SAP would find it much easier to create apps that solve specific problems that on-prem cannot solve easily. For example – on-prem does Accounts Receivables very well, but not Collections and Disputes management because those users typically are not on-premises. So, instead of moving AR to cloud – why not just move collections and disputes management to cloud? And once that is successful – there will be very little reasons for resistance to move rest of AR, and eventually all of GL to cloud, even for big companies.

And about the loosely coupled thing – I am not exactly buying into the idea of “out of the box” integration of cloud to on-premises systems. One – SAP is not considered a leader when it comes to integration technology. And two – on premises world is heavily customized, so nothing really works out of the box there. I made a living as a programmer primarily because nothing integrates in standard. For SAP to have a credible integration story – they should probably buy TIBCO or something ( ok, sorry to my friends who have heard me say this a million times). But given the high valuation, it might not be feasible.

On the social aspects of cloud, I like what they are doing. Combining Jam and Streamwork makes total sense for customers. And I applaud SAP for their stance that “Business” is the better part of “Social business”.

HANA is a perfect DB/platform for cloud. It will be a safe bet for customers and SAP since HANA can evolve and mature much faster in an environment that SAP has full control over.

One last thought before I have to shut my PC off. What is SAP’s data center story? Cloud needs significant data center efficiency. I think I heard SFSF has its own data centers. If SAP is serious about cloud in a big way – I think it is in their best interests to tell the world more about their strategy on data centers. And to extend that thought – they might even have to buy a hardware company at some point.

I am out of here before the flight attendant of this AI flight will shut my laptop down for me herself. Let me know what you think.

SAPPHIRENOW 2012 Orlando, day 3 – HANA, Developers, Partnership – and one more thing !

Day 3 has been my favorite ever since Vishal and Hasso started keynoting on the last day of SAPPHIRE. So I was up bright and early, and got to the keynote area much before it started.

Unlike last year, this time it was Hasso who started the Keynote. The first part of his session was all over the place, and did not do justice to his tremendous showmanship and technical brilliance. My feeling is that Hasso should be allowed to do it freeform without the constraints of the teleprompter and powerpoints. I would go to the extent of saying, he should also be given a whiteboard that can be projected on the screen so that he can explain his concepts more clearly. He took plenty of shots at oracle, with roaring approval from his fans in the audience.

The highlight of the keynote for me was Vishal announcing that developer licenses for HANA and Neo are now free. That is awesome news – and gratifing to all of us who have made the case with SAP in the past.

Vishal also announced the GA of Visual Intelligence, previously codenamed Hilo. It is a great product – but not the most mature. It hardly had a ramp, which is probably ok since it is a desktop tool. It fills a void in SAP’s portfolio today, and I hope it can match its established competitors some day soon. The only surprise for me was that it did not support Universes in first release. I asked that question to Adam Binnie and Mani Srinivasan – and they assured me that it will get new releases very quickly.  Having seen Mani in action over time, I think SAP has a rock star product manager on their staff. His passion for his product is of the highest order of magnitude.

Hasso downplayed ERP on HANA – which I think is the right thing for SAP to do. He also explained how OLAP and OLTP loads are different in nature.  ERP on HANA is not the best use of SAP’s time – I think they just aim to do this to gain credibility for SAP to tout HANA as a full fledged database.  ERP on HANA makes a lot more sense for SAP if it becomes simpler, and hence cater to an eventual convergence of on-premises and cloud versions. But just for speed – it is limited to long running batch jobs like payment runs, clearing of documents, dunning etc.  but considering SAP has to rewrite a lot of code in existing system, I doubt if it is a worthwhile investment.

A big problem for folks going into HANA on Business Suite is the quality of SQL knowledge they need.  what we knew of as SQL as ABAPers won’t cut it. Actually the development paradigm of going to database for the minimum, and using more of ABAP is inefficient totally. Even for a SQL developer – he/she should know how to make use of set operations, since cursor based SQL is kind of like doing it in old ABAP. This skillset issue is something SAP and ecosystem should address head on. Product development on HANA should take education along with it. In this regard – I should thank Margaret Anderson and her CSA team for their stellar efforts in keeping us partners educated on HANA all the time, even as things change quickly.

Jeff Word’s HANA book, which some of us contributed to – was heavily pushed at the event. I got a copy signed by Hasso, Bill, Jim and Vishal. I need to get Jeff’s autograph too some day before I use it for the reason I got it all signed. Here is a picture.

It was a gratifying experience for me personally, since IBM got a lot of coverage in the keynote. The 100 TB system for HANA is IBM X series scale out machines, and we saw the subsecond response time on it. I had mentioned to many people at SAP including Vishal, Sethu , Aiaz and Steve Lucas that they should pull the plug on a HANA box during the keynote. And they did exactly that – and it worked like a charm. We saw the fail over of the nodes on the big screen. I hope SAP will provide additional details of the data stored in those nodes, time taken and so on later. HA is a big part of the buying decision for HANA – and I think this exercise will boost customer confidence a lot. The other side of the coin obviously is disaster recovery across sites, to make sure  HANA can be put in data centers without too much trouble and manual intervention. But that is harder to show in a key note. But in near future, I expect SAP to publish more details on HA, DR, log shipping, work load management etc. That will single handedly speed up the HANA sales and delivery for SAP.

Vishal also gave my team a shout out for the working capital management solution we built. Late last week, I got pinged by Vishal and team while I was in the Bay Area. It was a simple request – can I come quickly to Palo Alto to meet them, or should they drive out to meet me? I drove to SAP’s offices and showed the app to Vishal and team and they loved it. And they loved it and put it on key note. Thanks folks – much appreciated. Also a big shout out to Dennis Howlett who was the first to tell me this is exactly the type of solution HANA should power. Thanks Dennis. And last but not least – a HUGE shout out to my dear colleagues and their leader Gagan Reen who worked tirlessly to build out 8 end to end usecases to show case business applications of HANA. You guys ROCK, and I could not be more proud of you.

I also got to short interviews on video with the two leaders who manage IBM’s global SAP consulting business, and North American SAP consulting business – Jay Bellissimo and John Leffler. A colleague shot the video of both, and I am waiting to get the download from her. If it came out half decent – I will post it here. These guys have both seen SAP evolve, and I think it will be useful to others in SAP ecosystem to hear their perspective. I am not a skilled interviewer – so I am not holding my breath on this coming out with high quality, but lets see.

And oh – just one more thing. While at SAPPHIRE, I got announced officially by IBM’s Managing Partner for SAP Practice as “Head of Global and North America SAP Forward Engineering team”.  Thanks John and Jay and the leadership team.

It is quite a mouthful – and what the title means is that I will lead the efforts in IBM’s consulting organization for the innovation agenda in our SAP partnership – including HANA, Mobility and Cloud. My charter is to build the capabilities in engineering to put SAP’s amazing technology innovations in the context of business applications to add value to our customers. It is a tall order, and I am humbled at being given this opportunity.

I knew of this for a few months now, and till the official announcement came – I have already been working on many of the things this job entails. One thing I know for sure is that I cannot do this alone – so I am looking forward to collaborating even more with customers,  the SAP community, SAP itself and within the larger IBM organization to collectively surface the best solutions.  I already have solicited input from many people and they have all been generous with their time and ideas – and I want you to know I greatly appreciate it. I am not trying to lead a charge here – I am more looking forward to being an enabler of innovation with the teams and leaders in place today.

There are way too many people to thank – but I will resist the urge to name them all. You all know who you are ! But I have to make two exceptions – without SAP’s Marilyn Pratt’s and Mark Finnern’s efforts, I would have NEVER gone down the path I eventually did with SAP community, and that is what made the difference when I look back.  I cannot thank them enough.  I know all of us SAP Mentors and community members will join me in saying a big thanks to both of these wonderful people for all they do ! they are the BEST !!!

SAPPHIRENOW 2012 Orlando – Day 2 – Cloud, HANA and Mobility

My initial idea was to write an update for each day after the session – but after the first day, that plan did not work out. So here I am finishing this post in India., while fighting jetlag. Day 2 of SAPPHIRENOW was a lot more chaotic for me than Day 1 for sure. The day started with Jim Snabe’s key note, including Lars Dalgaard’s presentation on cloud at the end.

Right off the bat – Lars brings a kind of energy to SAP that is usually only seen with Bill McDermott on stage. Lars came across as confident, positive and strong in my opinion. I was also mighty pleased to hear that SAP and SuccesFactors implemented all of each others cloud solutions internally in few months. I had a chance to meet Lars with my blogger buddies. He is an amazing guy with a laser like focus on details. Jon Reed did an outstanding job in that meeting, and came in well prepared with a comprehensive list of questions for Lars.

Here are some highlights of what we learned
1. Lars had a chance to kill Business By Design if he wanted to. But since he thinks the only missing part for the product to be succesful is a good go to market strategy, he decided to not kill it.
2. There is an opportunty for SI partners in cloud space, and he is looking forward to working with them.
3. He thinks HANA is the best thing that could have happened to cloud portfolio, and he will be using HANA extensively in his products.
4. Engineers from SAP and SFSF are being integrated now

As expected, Jim did a solid job on his keynote.It started with a video on SAP history. Funny part for me was Josh Greenbaum saying R/3 was an open platform or something such, and the guy sitting next to me watching the keynote choked on his coffee. So things started on a light note for me.

While BByD will continue to exist as a suite, parts of it will also be offered as smaller point solutions – like for Finance. I am on the fence on this strategy. SAP is a late entrant to the cloud market, and needs a strong differentiating message for its cloud portfolio. I think they could do one of two things – or even both.
1. Create horizontal solutions which cover large number of customers – for example, Collections and disputes management in cloud, with integration to BByD or On-premises FI-AR.
2. Vertical solutions for SAP’s industry solutions that cover the business partner network – like say dealers for automotive, or insurance agents for insurance companies.
I am looking forward to see how SAP differntiates in cloud going forward.

Jim also envisions the world will move in a few years to putting all the data in main memory. I beg to differ on this as well – I seriously doubt disk will get replaced soon. Later,I was happy to see Hasso’s vision is that of hot storage on main memory, and cold storage on disk . Of course, Jim could be totally right – and I am looking forward to seeing how this will unfold in the market with customers. I did a gut check with a few that were in the convention center – and none of them seemed to think all data will ever sit in main memory.

After the keynote, in a private blogger meeting – Jim discussed the future of HANA. BW on HANA is the next big thing on his mind to get traction in the market. I readily agree – since it is low risk and high reward for customers. Also – most BW systems are small, and SAP already has proven that HANA works with 100 TB, when the largest BW instance in the world is only 80 TB.

However, there is a big issue in making this work – and that is the sales enablement. BW has 17000 or so installations worldwide. If SAP has to hit 10% of the market in 2012 that Jim thinks they can hit – they need to close more than 10 deals every working day for the rest of the year. As I have mentioned many times before, the partner ecosystem has been largely shut out of HANA so far for many reasons. It is getting better now, but not to the extent that between SAP and Partners, 10 deals will be closed every day.

However, when we met with Bill McDermott – he did not define the challenge as 10% of existing market. His minimum goal is to double the revenue they got last year out of HANA and Mobility. That I think is an achievable target, and will not need 10% of the BW instal base to be converted. Bill did clearly mention that it is a bare minimum goal, and that he fully expects to beat that target.

Another difficulty with expediting the HANA sales process, according to SAP executives like Lucas, Enslin and Snabe, is the availability of hardware in quick time to do POCs. If SAP can put HANA on the cloud and ensure data security, this is a problem that will go away quickly. Customers can migrate HANA from cloud to a physical box, as HW gets delivered. Hacking the installer to put it on cloud is very easy – so hopefully this stops being an issue.

Jim did mention something that picked my interest a lot. His vision is an 8 day migration of a BW HANA system. Apparently SAP is working with some SI partners on migration factories where a customer can ship BW systems to be upgraded and sent back. I am not convinced this is workable in the field.

1. Most customers run a 3 system landscape for BW, and each will need to be upgraded.
2. Shipping them to India is not going to be easy due to security concerns on data
3. Very few of the 17000 are on 7.3 version which is needed for BW on HANA. It is not realistic to have an 8 day upgrade to both 7.3 and HANA.
4. Migration directly depends on quantity and quality of data in the system. If the system has huge data, and customer only has a short weekend window to migrate the data in production- it will be a challenge. Either they will have to archive a lot of old data, or they will stop migrating and just stand up a new system with just high value reporting.

But Jim’s vision is the right one to have despite all of this. If HANA is to become a volume play for SAP, they need to find a way to accelerate sales and implementations tremendously.

Another interesting couple of tid bits while we are on the topic of BW on HANA

1. John Appleby found out from one of his meetings that 3.x objects do not need to be converted for BW on HANA. They will work ok, but will not have the ability to take advantage of HANA. I did not know this till John told me on Tuesday. SAP could do better with communications.

2. How will BW (and eventually Business Suite) enhancements work in HANA? The enhancements are today done in ABAP server, and typically uses a row by row processing technique to process data, as opposed to set processing. So essentially they cannot make use of HANA’s power, and will become a bottleneck in performance. I asked this question to Hasso and Vishal on Wednesday afternoon, and they did not have a clear answer. Rewriting them manually into some kind of stored procedure is not easily accomplished due to volume of enhancements in a typical ABAP system. I am waiting for SAP to give us an answer to that.

We also spent considerable time with Sanjay Poonen, who heads D&T, Mobility and Apps. Sanjay is big on mobility ever since he took over that portfolio, and is very optimistic about SAP’s chances. He took our feedback to heart last time and was instrumental in getting developer access sorted out to a great extent. Afaria on cloud is a tremendous value proposition for SAP if the price point is really low. On Apps side, they do need to woo many more developers to make it work. But with open technology partnerships announced for Sencha etc – SAP has a shot at making money on mobility.

In my mind – for SAP to succeed in cloud and mobility, they have to immediately address one thing. That one thing – often ignored – is APIs. SAP needs to be good at APIs if it has to attract non-SAP developers to work on mobile and cloud solutions. And it is an easy target for the existing couple of millions of developers in SAP ecosystem. It is low hanging fruit in my opinion, and ripe for plucking. If I might go on a limb and make a suggestion to SAP – that would be to let Craig Cmehill form a team and evangelize that with the developer community. He is already a rock star with a big fan following, and will be readily able to hit the ground running.  Of course, some one at SAP needs to check with Craig first to see what he thinks of this 🙂

Day 2 was also a big party night – starting with Global Comms reception. After spending a few hours there, and catching up with several mentor buddies , I skipped over to the IBM party a few doors away. I was amazed to see how many customers were interested in Mobility and HANA and wanted to start projects on it. And then we walked back to Hilton at the convention center late at night, led by Mike Prosceno. There is an unconfirmed rumor that we passed the peabody hotel twice in the process !