And then 2011 ran out. When I came back from vacation, I was amazed with the demand for big ERP projects. And right on its heels, came demand for HANA projects.  Not isolated demands – many customers, some of them VERY big names – are now sufficiently intrigued to start pilots for HANA. To say the least, it has taken me by surprise – the pleasant kind.

There is a huge amount of misinformation on HANA that has been spread knowingly or unknowingly in 2011.  I think the first half of 2012 will be spent setting expectations straight.

A very common scenario I am running into these days is customers that have custom built data warehouses in Oracle or SQL Server. These have thousands of Stored procedures etc.  They want to find out how to migrate this over to HANA.  Or more specifically – they want to know if there is a way to semi-automate the conversion of SQL of existing solutions to HANA’s SQL. If they cannot do that – the cost of re-inventing the solution in HANA from scratch is not something they seem to have an appetite for.  I have pinged SAP to ask what they think about this. If you know the answer – please post a comment.

Another common question – “so we buy HANA as a datamart, then put HANA under BW as DB, and then under ECC – will this all sit in one appliance? do we need to buy more and more licenses and hardware?”.  So far I have not had to explicitly answer this question. Funny enough – they look at the expression on my face and deduce the right answer magically

Basis experts invariably ask me “hey can we virtualize HANA?  Can you put it on a cloud and offer us as a service?  When will SAP support non-intel processors and other OS? ” .  My answer usually is to point them to existing documentation. If they persist, I show them the installation files and how it can be hacked.  That is the best way to deal with techies , right?

Landscape Sizing, HA and DR are all high on CIO agenda – they just want assurances that they can safely deploy this in production. This is a lot more easier now to answer than even a few months ago, since  there are more options available, and we have more experience with sizing. This is also where people start getting an idea of the real cost in putting up a HANA system – and there is always an aha moment.

The other half of the aha moment comes from clients understanding there is no one HANA consultant who makes the system stand up and work.  SAP started off by saying “HANA is an appliance” – and that is partly to blame for this. An appliance is like a fridge or a wireless router – you buy from a store, bring it home and it starts working after it is powered on with very few instructions.  HANA is not a true appliance  in that sense- and once customers get that, they realize it is like every other project. HANA needs multiple skills to pull off  successfully – data modelling, BOBJ, Admin/security,  ETL etc.

BW on HANA has captured the attention of several customers.  SAP is doing a good job pushing it in the field. I met several field sales people at FKOM, and was amazed to see how pumped up they are to sell HANA.  But more than BW itself – a lot of customers are waiting for BPC to work on HANA.  I was not very pleased with the BOBJ integration with HANA initially, but it has improved and I know more improvements are planned. It is best for SAP to nail it before customers start several projects in parallel and stress out SAP support.

Many of my customers – and me too – are  waiting eagerly to see how many companies will SAP parade at SAPPHIRE as live on HANA , especially for the BW case.  If SAP shows a large number of customers on the key note stage, then we should have a great HANA year in 2012. Towards middle of the year, I think many more HANA projects will start – and not just small pilots. And If  SAP does come out with ECC on HANA by end of the year, it will be an excellent shot in the arm.  2012 could well ramp into a terrific 2013 for HANA.

So Apple outsourced a LOT of manufacturing to China. You should read this excellent NYT article http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&hpRT , and feeling depressed after reading it should be expected.

Does that make them evil – probably not. They are a profit seeking entity, and they sell all over the world. They can do whatever works for them. Did China win that work because of cheap labor? yeah – they probably did. But the manufacturing did not flourish there solely because of cheap labor. It flourished because China has plenty of engineers, built an ecosystem around Apple’s manufacturing needs and then started offering that service to other companies. And then other innovative companies started investing in China to build manufacturing. The story repeats in concentric circles – and it seems to fuel itself.

Did America lose out big because Apple outsourced manufacturing? yeah – I guess it did. But Apple was not the first to do so. And neither is manufacturing the only thing that got outsourced. But did America get anything in return? yes of course. We can now walk into mega marts and buy things a lot more cheaper. We can walk to an Apple store and buy an Apple product much cheaper than if it was manufactured locally.And so on and so on.

So is this a fair trade off? hardly, in my opinion – if what is happening to farmers in Kerala is an indication.

Kerala, my home state in the southern tip of India, literally means “land of coconut palms”. And Kerala is a place where people eat rice in some form 2 or 3 times a day. When I was young – the state had a large number of vast rice fields and coconut plantations. Around the time I was in high school, this was not the case any more. Many farmers moved from growing rice and coconut to growing rubber. Rubber was a “cash crop” which fetched handsome prices from tire manufacturers etc. Fast forward to today. Keralites still eat rice and coconut based food 3 times a day, but they have to buy these (and most vegetables) from neighboring states for a huge price. And rubber values fluctuate so much that not many farmers got rich that way. As agriculture declined, the problem was compounded by lack of supply chain efficiencies in buying and storing food grains and vegetables. End result – farmer suicides started happening in an accelerated manner. Many of them lost their land and fortune and their loved ones. And prices still go up significantly most years.

While Keralites are extremely enterprising and capitalistic when they live and work outside their state, they are mostly left leaning when they live in Kerala. Manufacturing has steadily declined in the state, and it has become a consumer economy for the most part. The state has 100% literacy, and has extremely high standards for health, higher education etc compared to many other Indian states. But despite all of this – manufacturing won’t flourish there. Both parties (well, alliances of convenience is a better phrase) that typically rule Kerala are left leaning to various degrees, and both have strong trade unions which actively discourage manufacturing. Except for IT, I think everything else in Kerala that generates money has a union presence that threatens its existence. This environment is the prime reason why lots of Keralites get out of the state after their education, and live and work outside. I am one such guy too – who finished college and could not wait to get out of there. Due to many people leaving the state, there is a positive side too – these people send a lot of money back to their families that live in Kerala. So the consumer economy generally has always been excellent.

When I read the article on Apple’s outsourcing to China, the situation of Kerala is what rushed to my mind immediately. The long term implications are stark – once you let go of something you do well, you have to be prepared to pay the price. And you should be able to invest in something else to compensate for the long term repercussions. It is the price to pay when economy takes a global flavor. You cannot pick up your toys and go home arbitrarily when you don’t like the game after some time – you need to stay in the game and invest wisely for future. Globalization is not exactly a bed of roses – it is a mixed bag.

IT outsourcing is something I am very familiar with. If a company outsources some IT functions and uses the savings to invest elsewhere, it works great. If it just eats up the savings, and don’t invest elsewhere – it just won’t survive in the long term. Outsourcing might create other kinds of jobs too – like Apple being responsible for increased demand for AT&T etc and creating jobs there. Or the outsourcing companies in India creating jobs in the US when they want to get into high end consulting etc. Apple has a large consumer base in China – and makes money in that market. One day when tax laws make it attractive to bring that money to US, Apple might do that – and it will help US economy. It is pretty hard to judge – at least for me – on how much these indirect benefits will offset the long term costs. But at a minimum, it does offer some relief.

Outsourcing of manufacturing and IT and other things won’t go away – although in an election year, many might say it will. The question is how will we compensate for the long term impact ? There is no one magic bullet – it needs a lot of things to fall in to place – on both public and private sector. And sadly, it might not get much traction in US till the presidential elections are over.

This does not mean no one cares about HANA, Mobility etc. All these customers have plans for all the innovative stuff as part of their projects, but they are not front and center in projects unlike in the keynotes we see from SAP leadership at SAPPHIRE and Teched.  HANA and Mobility experience will probably be an additional differentiation for SIs trying to win the implementation work.  Along with ECC, some of the other business suite systems like CRM and SRM are also showing up prominently in these projects. I expected some of these companies to consider cloud solutions for ERP – SAP or otherwise. But big customers did not seem to have that kind of faith in cloud ERP as I thought. Maybe it needs a few more years to catch on.

There are probably a bunch of reasons for this surge – investment money kept away in last 2-3 years is now being spent,  increase in M&A and divestiture activities , economy is slowly recovering and so on. There are a bunch of interesting challenges that go with this too.

1. Experience of leading and working in huge global projects

Not many PMs and team leads  in today’s SAP world have the big implementation experience. People who did those in nineties have generally gone to senior leadership positions in SIs and clients, and new generation will need some mentoring.  Unless you have done it yourself before – it is not easy to plan and execute a blueprinting session when you have 120 countries in scope. and blueprinting is only the start. So far, I have not seen anyone asking for a global agile SAP implementation, but I am betting that I will hear that one day soon.

2. Quality and quantity of Business Suite experts

If what I am seeing is the beginning of a big trend that will last 2-3 years atleast, then it remains to be seen if SIs and customers can keep up with the demand for project resources – both on quality and on quantity. Education needs will surge, and I wonder if education needs can be met effectively in large scale

3. Architecture challenges

Unlike the 90s where BDC and ALE ruled, the world has changed quite a bit on technical front. ABAP has moved by leaps and bounds, and a modern day architect has many options, and many challenges. Question is – do we have enough people who can design and create big complex systems from scratch that use modern SAP technology in grand scale?  And will modern SAP technology withstand this test of scale?

SAP is pretty serious about getting number 2 position in DB market by 2015. If these big projects can be convinced to switch from ORACLE, MS and DB2 systems – that will be a great start to make this goal. Somehow, I don’t feel like holding my breath on this quite yet. But I am going to keep a close eye on this, and will start asking customers from now on whether they feel good about switching their DB .

4. Does SAP still have enough people with deep core business suite knowledge ?

When a large number of big business suite projects start, there is always a tax on SAP – the number of trouble tickets will increase. I would think SAP’s developers are now mostly focussed on HANA and other new stuff. Will SAP have enough people who can take care of a flood of messages? Even though SAP Business Suite software is way more mature than in 90s – big projects will always have big problems that need deep experience from SAP to solve.

5. What about all the innovation agenda items?

My friends from technical side will appreciate this for sure – what will happen to all the cool innovations when a large number of configuration experts (referred to by names like  SPRO jockeys ) take over a project, and push tech stuff to the wall? Will HANA and Mobility and Cloud stand a chance? or will they all become a phase 2 item? The only one where I see some light is on BI. Over time, a lot of functional folks have realized that it is probably better to give some attention to their BI colleagues.

There is a silver lining here. It gives SAP enough breathing space to make the innovative new products more robust by the time the big projects are ready for them to be used in prime time. There would not be a risk of licensing revenue loss since SAP license sales usually happen as a market basket, and not a la carte.  So HANA sales, mobility sales etc can still show a healthy upswing while projects focus on business suite.

6. Do customers still have sufficient inhouse expertise to run the big gigs ?

Best SAP projects happen when customers pair consulting firms with strong internal resources. But over time, most of these experts move into management, or move to other companies, or their jobs get outsourced etc.  So I would imagine a lot of hiring will happen in 2012 for staffing internal roles. And that typically means some solid staff from consulting companies will switch employment soon, and then these firms will have to do some firefighting.

That is just the few that rushed to my mind – and there must be a hundred more to talk about. Feel free to post your thoughts in comments. It is going to be very exciting to live through a series of big projects again.

It is kind of funny that every one of them said BI is top priority, and that they won’t do it anymore unless it worked well on iPads ( I hope they meant tablets in general, but literally they all said iPad) .  One executive mentioned he does not care for iPad and that he needs his information on iPhone.  Ease of development and deployment are pretty high on the agenda. I pointed everyone to Steve Lucas’ blogs right after I read it. I have not checked back for reactions yet.

Since I know the future of Xcelsius is a hot topic for my friends on twitter, I probed a little on that topic. Surprisingly – no one seemed to care a lot about Xcelsius itself working on iPad. They know the flash issue, and they all think SAP will do something to get them mobile BI. No one seemed to think SAP will just kill Xcelsius in a hurry either – they all firmly believed that if it were to go away, it will be a while later, and that they can migrate over. One CIO said – “I couldn’t care less about any given tool – all I need is good clean up to the minute information to show up for my users on their mobile devices. How a vendor makes it work is their problem, not mine”.

For a change, I did not have to tell any one about HANA – instead, customers have now started picking my brains on HANA.  Today, after the SAP news on 160 million euros coming from HANA came out – I had 3 calls back to back from customers who wanted to do HANA. These are all people who shied away last year – and now they think it should have matured enough to give it a try. 2012 should see some significant traction on HANA – especially with BW .  So far no one has told me they want to do a production BW on HANA, but they are willing to do POCs. That is not abnormal – most of my customers are significantly risk averse.

I was not surprised to hear the interest in BPC on HANA. I first hand know of customers who did not do BPC due to performance reasons. And now these folks are all happy to do POCs on BPC running on HANA the earliest they can.

But none of it is exactly new – more or less these just confirmed trends that I (and probably everyone else) knew and predicted. What was new – practically the first time customers actually brought it up seriously with me – is collaboration on BI.  Many of them went through budget cycles recently – and complained bitterly that despite having had BI and planning solutions for ever, they still needed a lot of excel spreadsheets and manual intervention to make it work.  And if I understood correctly – what they disliked most was the inefficient collaboration within the organization when it came to adhoc activities in planning.  As one exasperated friend told me last week at the airport  “if it is this hard to collaborate with people you see and talk to daily, is it any wonder that our vendors and customers find it painful to deal with us?”.

One BI manager and one controller  brought up “actionable” BI. The point was fair “SAP and SIs have all told me for years about actionable BI. But till date I have hardly seen any actions that directly originate from BI” .  Closed loop BI needs to get out of white papers and blogs and into customer sites – it is about time.

So I guess 2012 is starting on an optimistic note on SAP Business Analytics front – but we just need to make sure all the stuff works on iPad

We do great in one day matches usually, but the real deal is Test Cricket – and there we do horribly. And it is about time to act on it with a long term vision.  We did it once and rose to the top of test rankings, but could not stay there. When West Indies and Australia ruled test cricket – there was no doubt they were going to be there for a while. With India, even a die hard fan like me did not get such a comfort feel.

I am just a fan – and a below par player even for club level cricket.  I have no experience in cricket administration either. But it does not take a genius to see what plagues Indian cricket. But if I were king for a day in Indian cricket administration – these will be the problems I will tackle upfront.

1. No investment in fast bowlers

For as long as I can remember, no team has won test cricket without multiple fast bowlers.  I grew up watching India struggle against the fast bowlers from West Indies (except a few like Gavaskar).  And we could not return the favor when India bowled – Haynes ,Greenidge , Lloyd, Richards etc feasted on our bowling. When we had fast bowlers, for the most part we had just one who was genuinely fast in any given team.  Every few years some new sensation would show up – and thanks to mismanagement and over exertion over too many games, they either disappeared – or they dropped 5 yards of pace.  After West Indies, Australia took over world cricket. And they had terrific fast bowlers.  What was the difference between Australia compared to India and Srilanka?  All of them had worldclass spinners in Warne, Kumble and Murali. They also had quality batsmen in all three teams. But India and Srilanka only had one or two fast bowlers at any point, where as Australia had several to choose from.  And with those fast bowlers – Aussies could bowl out the opposition twice in a test in any surface. And India and Srilanka needed a spin friendly track to bowl out anyone twice.

Fast bowlers need to be nurtured from school cricket. Question is – will BCCI make an investment to find talent impartially, and then nurture them for a decade ?

2. Too much cricket, with very little planning and preparation

Ever since Mark Mascarenhas won the TV rights for 1996 worldcup, cricket has not been the same. There are way too many matches played, with hardly any time spent for preparation. Most series starts with poor preparation matches. And since Modi did the T20 thing, it has gone from bad to worse.  More players are now unfit than ever before, and in a country where cricketers are worshiped on a pedestal – selectors will not dare to drop any one on basis of  fitness. With the type of money involved, no cricketer will follow the “volunteer to take rest if you feel you need it” dictum of the board. BCCI should space games, and plan series better. Remember all those empty seats for matches in home series in 2011? That is a good indication that viewership will also decrease if this does not change.

3. No career management and replenishment system for national team

Australia showed us how to manage the career of cricketers. England proved now that they can adapt that. But not India. No one ever gets shown the door in India for a drop in performance.  If Steve Waugh played for India, he would still be playing.  Look at the ageing stars like Sachin, Dravid and Laxman in Indian team. Collectively they have more runs than most other teams in the world. Yet they cannot win us series consistently abroad by themselves. And it is painfully obvious in Australia that they won’t last much longer.  After Sachin finishes his 100th 100 – what else will he aim for? He is good to go for couple more years since he has stayed away from several matches to conserve energy. The other two will probably have a year or less. But who will replace them? When will the replacements get chances? Will India play Dravid and Sachin and Laxman down the order to give newbies an opportunity to try batting higher?

4. Poor infrastructure to nurture the next generation of national players

Can we begin to compare domestic cricket in India to that in Australia or England? If we cannot match it, at least will BCCI proactively get stints for promising young players to play in England or Australia for few seasons?

Domestic cricket is in a horrible state in India – and it has been that way for ever. We have pathetic pitches, and terrible outfields for most of domestic cricket. A player that comes up through that system cannot be expected to know what to do when balls come at them at 140 KMPH chest high.  The good thing is they learn how to tackle spin very well – and Indian batsmen have outplayed Warne and Murali many times in past. Our young quickies will not learn how to bowl in fast wickets either. All around – we lack good infrastructure for the next generation to get relevant experience.  For a board with such hefty bank balances – why is this a problem. If not to invest in cricket, why does BCCI make money?  And with what confidence will selectors decide to pick some one based on performances in such pitches?

National Cricket Academy was a brilliant idea – but poorly executed. It has just become a rehab center for injured cricketers. That is an important function, but that is just one of the many factors.

There are several more things, but I just needed to get this off my chest. It has been painful watching Indian team suffer through the last several tours they made outside India.  But despite all of that, I am and will be a loyal fan

I am a sucker for numbers ( Pls don’t hold it against me – I do BI work for a living) and I started by analyzing the stats in wordpress. I started this blog in 2009 December (I think I started an SDN blog a year or two before) , and a whole 104 people read it that month.  In December 2010, I had 3423  hits and in December 2011 I had 2740  hits.  I chose December to compare because it is the slowest month with a lot of people spending a few hours each day away from their computers and mobile devices when they are awake.  I wrote about 50 posts in 2011 – which correlates nicely to the number of weeks I had to fly (I write most posts during the plane rides). The numbers satisfied me ( apparently, I am not very hard to please) on quantitative front, so I thought I should check the quality too. And I did not come away happy this time ( ok so maybe I am a wee little hard to please).

As I read through what I wrote over the last year, it became pretty clear that at least 20% of the blogs were lousy. That is time I will never see again, and neither will the folks who read those rants.  Another 20% does not look balanced to me any more. And in the remaining 60%, I felt comfortable that I offered something useful.

At this point, all kinds of “consultant like” thoughts started forming in my mind. I narrowed down from a fairly large list to the following causes

1. English is not my first language.  Although I had to learn English at school in India, and have been living outside India for a dozen years – I constantly feel it is very difficult for people to understand what I am trying to say.

2. I don’t have enough experience blogging. I started late compared to most people, and probably have not developed a style that works yet.

3. I don’t think through all aspects of an issue before expressing my opinion on my blog.  I do this because I am not very patient, and also because I fear my blog will look like a white paper if I over think it. Forget readers, I will just have to kick myself if I read such a blog.

4.  I don’t have enough breadth of knowledge. My primary topic has been Enterprise Software, with a specific focus on SAP. I have done a little bit of other things too but not as much as I have done SAP. So there is a good chance that I am not making valid points in several cases where I express my opinion.

5. I am making opinions based on experience with large enterprises alone. For some reason, in all my jobs so far – I have had to deal with really big companies.  While that is useful, I do not have a good grasp of the smaller companies directly. What I know about the smaller companies is second hand information I have gathered while doing project reviews, few sales proposals etc. I have not “lived” the life in the SME space.  So when I make generic statements, essentially I am not generalizing enough due to my large enterprise bias.

So my plan for 2012 is to do the following

1. Try to avoid blogging on impulse whenever I can. I got some valuable input from Jon Reed on this – so I am not going to totally avoid the impulses, but will give my posts a little more thought than I have so far. ( Err..Excluding this one post I am writing – allow me to slack this one time)

2. Spend some more time reading and commenting on other blogs. I did read a lot last year, but probably did not comment as much and contribute to the conversation

3. Try other media to express my opinions other than the long form blog posts

4. Gain some exposure on parts of Enterprise Software that I am not familiar with . And I will try hard to hide my lack of interest in gamification and social blah blah till it works at some customer I know of.

5.  Gain some exposure to customer segments I have not focused on so far, and continue to “live” with customers.

6. Learn from eminent analysts and bloggers and develop my style as much as I can.

I know me better than you know me (I think) ! So I am fairly sure I will not succeed all of these   So lets see how it works out for me.

Happy New Year ! and Happy Blogging !

I do agree with Josh in that the Apple analogy is not exactly applicable to keep HW and SW integrated for SAP. Jobs had to do it on the front end and hence that was a good option. SAP’s work is in the data center, and not facing the customer. So the customer experience like Apple is not applicable.

Hardware agnostic software was a great option when hardware was pricey, many years ago. Hardware does not command such a huge premium anymore. And consequently, software companies need to re-evaluate their strategy on what they will and will not do in their architecture. Being agnostic worked for last 30 years for SAP, but I seriously doubt if it will be the same even for the next 10.  If pushed hard, I might go on a limb and predict that SAP will do something about HW in 3 years or so.

SAP was agnostic to databases and operating systems too – and now that they bought Sybase and have invented HANA – is it reasonable to expect them to be agnostic to Databases going forward?  HANA works only on SUSE Linux, and not AIX or Windows or anything else. And Steve Lucas already pronounced that he will get SAP to number 2 position in database world by revenue by 2015 – which is 3 years away. Will that happen by SAP being DB agnostic? no – SAP will go against Oracle, IBM and MS at every opportunity. It is the smart thing to do.

Ok back to hardware – if you look at HANA, it is the hardware advances that made HANA possible today, more than software. I have seen jibes thrown along the lines of “throwing hardware at the issue”  as if HW is a bad solution. HW innovations, as I mentioned before, usually keep SW innovations trying to keep up.  If RAM did not become cheaper, and multicore processing did not happen – would HANA have happened?

Currently SAP supports multiple vendors for HANA hardware.  For a 1.0 product , it is probably ok to do this since nothing do-or-die will run on HANA today. But as HANA matures, SAP will need to make HANA work extremely efficiently for OLTP loads, and maybe even “real” big data (the petabytes and upwards size). At this point – will SAP try to optimize HANA for seven different vendors? or will it choose one or two? or will it just introduce its own hardware that is more optimized than every one else’s ? I am betting on the latter. SAP might never completely get rid of partnerships with other HW vendors for other reasons – but if HANA is where SAP is betting the farm, then I see no way SAP is going to remain HW agnostic in mid to long term.

Also, SAP now wants to be a cloud player – maybe even a leader as time progresses.  Will they buy a lot of HW from IBM and HP for that? or will they do their own HW?  Since all cloud apps are eventually planned to run on HANA – this is an even stronger case for SAP to stop being HW agnostic.

I think Oracle is VERY smart in keeping HW and SW integrated. Just because SAP competes with ORCL is not a good reason to say stacks are bad. Oracle is a very good and successful company too.  Going forward, I do expect to see a lot more similarity between ORCL and SAP in how they create solutions.  To retain leadership, these companies will need to lead with both HW and SW.

I am not entirely convinced that Rapid Deployments will bring terrific benefits, but will be watching it closely in 2012.  At the moment , I have apprehensions.

1.  If faster implementation is such a big agenda item for Enterprise Software vendors, why do this half way approach of Rapid Implementation? Why not go all the way and offer it as SaaS ? Is the idea to milk perpetual licenses for on-premises software for a bit longer, just by repackaging it?

2.  Fixed price is a good thing – but hardly unique. Most ERP projects now are following a fixed price contracting structure. I know no one likes change orders – but change orders happen mostly because of scope definition inaccuracies. Projects are progressive in nature – especially ERP projects. So even in Rapid Deployment, at some point – customers will find out they will need something else on top. Will the software vendors provide such changes for free without a change order? If not – will customers feel happy just by paying a software vendor instead of doing it inhouse or paying consultants to do the work?

3. Consumerization of IT – making IT “sexy” and “easy” – is a good thing for the business users. However Rapid depolyments only solve a part of this problem, which is the installation part.  While it is a good start – will customers see enough value with just one part of the puzzle solved?

4. Rise of CFO’s office is definitely not a 2012 thing. CFOs have always taken active role in IT (and other) investment decisions.  CIOs very rarely report to CEOs, they either report to CFO or to Chief Procurement Officer.

5. Who supports Rapid implementation solutions after the vendor walks out of the door? Will there be enough skills in the market for outsourcing companies to provide such support?

6. What about integration costs? Stand alone systems always cost more in the long term. Once the rapid implementation goes through enhancements and integration with existing systems – will it offer any benefits beyond other on-premises solutions from the same vendors? And if you enhance a prepackaged solution – will a vendor still provide standard support ?

Happy New Year !

From the consumer side of the world – most mobility apps have typically been built by independent developers, and not by big IT houses.  For Enterprise side – especially for SAP – we need to think through if that is the model that will work exactly that way.  I am a big fan of SAP opening up platforms to developers – as long as developers can do cost effective development, protect their IP and make some decent money out of it.  And along with a bunch of similar minded people – I have been trying to push this message for some time at the highest levels at SAP.

But is there something here for SIs ? I think there is plenty of the mobility pie to go around. Here, I will ignore  the obvious stuff that SIs will do – the mobility strategy, device management , security and so on.  Those are important, but  don’t need added color.

For building and reselling apps – it is hard for SIs to compete on cost with independent developers if the platform is inexpensive.  BUT – Platform access is not inexpensive now – so SIs have an upper hand temporarily till SAP gets its act together. But I can’t imagine SAP not changing this in 2012.

But for the cost to work in SIs favor – they will need to find a killer app that can be resold many times over.  This usually needs the SI to create a few with the idea that some will click, and some will not. This is not consistent with existing SI business models. SIs have a big opportunity cost to consider – every hour spent developing such an asset is an hour they are not doing billable work. So it remains to be seen how many will jump in with both feet.  The bigger SIs probably will do ok – since they have significant abilities to invest, and can wait for longer pay back periods. But in general – I don’t see large number of SIs playing seriously on building such apps.  In everyone’s best interest – this is best done by independent developers, in my opinion.

For SAP systems – a big problem for building generic horizontal applications is that most backend systems are heavily customized.  A consistent abstraction to the outside world for non-SAP developers to use is not always possible.  So, even if a developer creates a generic enough mobile app – in most cases,  there will be a need to do some back end plumbing to get it all working in a useful fashion. This is the model I see evolving in the market from maybe 2013 onwards. Independent developers building the front end apps, may be even contracted by SIs to do so – and existing SIs doing the integration to backend.

Where I see big and small SIs both having a great advantage is building end-to-end mobility solutions for a specific client, especially where the SI has long standing experience.  Ideally – these should be vertical for an industry, and can be leveraged across many projects. This needs a large set of skills to come together – deep industry and sub-industry knowledge,  business process design, UX design, development in multiple technologies, basis, security, industrial strength testing and so on.  This is totally a sweet spot for SIs – and I would expect them to be all over this. And the beauty of this is that there is a production support opportunity right after the implementation, which is again a sweet spot for many SIs. The trick here is that this can and should be done for specific only very high value usecases – something where customer realizes significant value.

Now – for all this goodness to happen, there are a few things SAP need to play well too.

1. Make it easy for regular developers to use SAP platforms to build apps – not just the development, but the whole lifecycle of IP protection,  testing, certification, monetizing, maintenance, support and all that good stuff

2. Keep SAP Education on the front, and not the back of innovation. Unless the ecosystem comes up to speed on the latest greatest technology – it does not matter how cool the innovation is in the labs. Maybe even throw in some inexpensive education for select ecosystem partners. Basically – do what it takes to get partners/developers to trust SUP is the way to go, and get them away from everything else they are using today. This includes ironing out any wrinkles from existing software, and educating developers on roadmap for future.

3. Actively partner with SIs – and I expect this to be totally opportunistic depending on lay of the land – to push mobility solutions at the thousands of clients world over.  For significant mobility sales – the attitude of “Business gets it, IT doesn’t ” should be left checked at the door. IT gets it alright – and usually have valid concerns on security, scalability etc. Work with IT to address their concerns and gain their confidence.

4. By SAPPHIRE Orlando in 2012, have several customers come up and talk about their mobility solutions to the world.

5. Make sure licensing for customer is scalable and not a total rip off.

6. Try not to drown the mobility message with HANA and others

BofA / Merrill Lynch analyst Chandramouli Sriraman downgraded the stock from Buy to Neutral.  And when I checked the stock for SAP AG, it seemed to be trading about 2.6% down.

And few minutes ago, my buddy John Appleby defended SAP in his blog . http://peopleprocesstech.com/2011/12/17/sap-2011-results-analysis-the-awful-economy-is-really-going-to-hurt-financial-analysts/

Just a few days ago, I was in Boston,MA attending SAP Influencer summit. If anything, SAP executives were more bullish than usual – not less. And they have good reasons to be that way. SAP outperformed the industry, and had a great Q3.  SAP also has made significant investments into the future – in-memory, mobile, cloud etc.

SAP has some of the best sales leaders on the planet, and it shows in their results. The first year of its existence, they aimed to sell 100M of HANA . And they probably will. And remember, this is the 1.0 version of HANA – something that just supports datamarts, the simplest of usecases.  What I am trying to say is – it can only become better from here.  Now BW works on HANA, and they are building other stuff on HANA – and eventually they will make a strong enough case for HANA that it will pull in enough money to be a material contribution to topline.

Steve Lucas told us in a public forum at the influencer summit that we should mark his words that SAP will be number 2 database vendor in 2015 by revenue.  That is a pretty bold statement to make given the leadership Oracle, IBM and Microsoft has in that market.  Short of SAP saying their products will not work on anything else other than SAP’s own databases – I find it hard to believe SAP will become number 2 in database market. But Steve is an amazing leader – he is on target to sell 100M of HANA this year, which is no mean feat.  So he might pull it off. Seeing is believing, and I will be watching this space closely going forward.

Mobility has a good story too. SAP has not come out of the starting block quite as fast as they usually do for cloud. So they are in catchup mode for now. But with Success Factors acquisition, they should be able to catchup quickly and hopefully lead.

But the bulk of SAP’s warchest is filled from perpetual license revenue from on-premises software sale and maintenance. 22% maintenance is a gift that will keep giving for next several years. But what about new sales? I always thought this will have to die down. However, that is not what I am seeing at the moment. Several customers are still spending on big Business Suite, CRM and analytics  projects – mostly due to two factors. One – these companies had a spending freeze, and are now opening up their purses. And two – there is a lot of M&A and Divestitures happening due to macro economic factors, and these  need ERP spending.  So while it might not look like mid 1990s – I do not expect SAP to suffer really bad. And by the time Business Suite does slow down – Analytics, Cloud and Mobility should have become mainstream. It is SAP’s game to lose – and seeing the people in charge, I don’t think they will drop the ball.

There is a bit SAP can do too to help its own cause – which is in easing off the pressure on the marketing gas pedal a bit, and focus more on execution. If you look at the blogs and speeches that came out in 2011, you would think SAP is now making billions off HANA, not that 100M they were actually targeting .

All said, the Merrill analyst is entitled to his opinion, just as SAP, Appleby and me are entitled to ours.  But any one analyst does not make or break a company’s performance in the market. What I am watching now is if any of the other big name analysts will post their advisory on SAP in line with the Merrill guy, or whether they will remain bullish.  I also wish these analysts substantiated their opinions with more research so that investors can make informed decisions.