Complex Times Demand Simpler Solutions
SAP's executive shake-up shines a spotlight on the challenges faced by traditional ISVs to simplify their products for a SaaS- and cloud-driven market.
By Jeffrey M. Kaplan, THINKstrategies
Feb. 16, 2010
The resignation of Leo Apotheker as CEO of SAP is the latest example of the escalating pressures facing legacy software executives as the industry undergoes fundamental and traumatic changes driven by rapidly changing customer preferences and intensifying competition.
In short, customers are demanding that software vendors "Keep it simple, stupid!"
Those ISVs who can clear away the complexities, and create simpler solutions and go-to-market strategies will be in the best position to survive and thrive in the coming decade.
SaaS Challenged
In a conference call with analysts and press, SAP's Co-Founder and Chairman of its Supervisory Board, Hasso Plattner, said Apotheker's resignation was driven by growing dissatisfaction among customers in response to SAP's failure to bring new products to market and decision to increase its maintenance fees, as well as a recent employee survey which also found growing discontentment among its own staff.
Plattner summed things up by saying that SAP isn't a "happy company" at this point.
This isn't a surprising development given the cascading challenges facing SAP. Although the downturn in the global economic climate can be blamed to some extent, the real culprit behind SAP's decline has been the accelerated growth of the Software-as-a-Service (SaaS) market driven by growing customer dissatisfaction with the costs and complexities associated with traditional, on-premise applications.
SAP has been in denial regarding the significance of the SaaS movement and the seriousness of customer disenchantment. It hoped that this trend would subside, or that its customers would eventually return to the 'comforts' of conventional software. SAP is finally recognizing the market realities - SaaS works and organizations of all sizes want more of it.
Plattner is now acknowledging that SaaS and the broader cloud computing model are a valid alternative to traditional software and data center systems. He also admitted that these 'on-demand' alternatives pose a significant challenge for SAP. However, he and the rest of the company's leaders may still be misreading the messages they are getting from the market when it comes to the right path to SaaS success.
For example, during his conference call with press and analysts to explain Apotheker's resignation, Plattner boasted that the company is making progress bolstering its BusinessByDesign SaaS offering by developing a new in-memory database. While this technological innovation may differentiate how SAP's SaaS solution operates, SAP isn't likely to convince many customers to adopt BusinessByDesign because of the nature of its database unless it can translate the value of this new technology into business benefits, such as quicker time-to-value.
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In short, customers are demanding that software vendors "Keep it simple, stupid!"
Those ISVs who can clear away the complexities, and create simpler solutions and go-to-market strategies will be in the best position to survive and thrive in the coming decade.
SaaS Challenged
In a conference call with analysts and press, SAP's Co-Founder and Chairman of its Supervisory Board, Hasso Plattner, said Apotheker's resignation was driven by growing dissatisfaction among customers in response to SAP's failure to bring new products to market and decision to increase its maintenance fees, as well as a recent employee survey which also found growing discontentment among its own staff.
Plattner summed things up by saying that SAP isn't a "happy company" at this point.
This isn't a surprising development given the cascading challenges facing SAP. Although the downturn in the global economic climate can be blamed to some extent, the real culprit behind SAP's decline has been the accelerated growth of the Software-as-a-Service (SaaS) market driven by growing customer dissatisfaction with the costs and complexities associated with traditional, on-premise applications.
SAP has been in denial regarding the significance of the SaaS movement and the seriousness of customer disenchantment. It hoped that this trend would subside, or that its customers would eventually return to the 'comforts' of conventional software. SAP is finally recognizing the market realities - SaaS works and organizations of all sizes want more of it.
Plattner is now acknowledging that SaaS and the broader cloud computing model are a valid alternative to traditional software and data center systems. He also admitted that these 'on-demand' alternatives pose a significant challenge for SAP. However, he and the rest of the company's leaders may still be misreading the messages they are getting from the market when it comes to the right path to SaaS success.
For example, during his conference call with press and analysts to explain Apotheker's resignation, Plattner boasted that the company is making progress bolstering its BusinessByDesign SaaS offering by developing a new in-memory database. While this technological innovation may differentiate how SAP's SaaS solution operates, SAP isn't likely to convince many customers to adopt BusinessByDesign because of the nature of its database unless it can translate the value of this new technology into business benefits, such as quicker time-to-value.
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