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SAP has had a big year.
Early on in 2007 the company announced that it completed its Enterprise Services Architecture roadmap, which began in 2003 with the development of its NetWeaver integration platform and the service enablement of its applications. Then in September 2007 SAP announced Business ByDesign, a multi-year development effort that culminated in an on demand suite for the mid-market.
Developed from the ground up by Peter Zencke and SAPs research and breakthrough technology development group, Business ByDesign has brought some new concepts in software development and deployment to SAP and its customer base. And it is clearly the development direction SAP plans to go in the future, should the suite prove successful.
Zencke, based in SAPs Walldorf, Germany headquarters, sat down recently with Senior Writer Renee Boucher Ferguson at SAPs TechEd developers conference in October to talk about ESA and Business ByDesign—and the eventual convergence of both worlds.
Q: What is SAPs message for developers?
A: We started this [path] in 2003 with the announcement of our ESA [Enterprise Services Architecture] roadmap. One element of that is our investment, our building of NetWeaver, which did not exist at the time, as well as the NetWeaver-enabling of applications and doing the service enablement of applications, which finally defines the platform.
In principal, the first message is that the roadmap we started four years ago, we completed. The outcome now is two platforms. One platform is the Enterprise SOA by evolution platform—the rich platform, the [ERP 2006] suite. The second one was our launch of Business ByDesign which was a totally different thing for the lower and mid-market. It offers a Software-as-a-Service environment and is “enterprise SOA” by design. It offers a clean approach, which is only possible because of our wide open [slate]. If you have to serve the installed base, you have to do so in some ways that are not doable; the disruption you could do to your installed base, you have to make the right decision—how much innovation versus how much disruption is acceptable?
If you go to a new white space you have a totally different approach. What we have educated our installed base for quite a while is that we are going to this kind of double strategy and, based on that, the main message for today—for the future—is that nevertheless these two streams are coming together. Two different products, but the learnings, the technology, the architecture—because they are all based on NetWeaver—will be available in principal to the suite solution as well
My part, and more specifically Shais part [Shai Agassi is the former president of SAPs product and technology group], we were showing some of the new things which were coming through NetWeaver—what is enterprise SOA, the enterprise services repository. That is much more than enterprises services; it is an end-to-end business process repository, including services definitions that come on top of the composition environment that you see. Its a modern-based approach to composites—new applications consuming services, but adding objects on top. And last but not least, the outlook of 2008: is the first modern business process modeling and management [suite] on top of our platform, so you can extend your own business process—user-focused processes, workflow processes—with your own thing, and coming back with mega transformations.
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Q: You seem pretty far ahead in terms of service enabling your applications. Are there enough vendors out there who have also service enabled their applications that SOA works outside of the SAP environment?
A: We are pretty much in isolation so far. By the way, its for sure that we need others as well. Networking only works with others, by definition. Nevertheless we do have one strategic advantage, which really is that business process networking is [implemented] by the big ones [enterprise customers]. They have business process networking and the smaller ones can [draft off that]. The good thing is that those are all being developed on our Enterprise Services Architecture and process platform—they do have the same services. And the Business ByDesign solution, everyone has the same services as well. So the full offer—Business One we will do something similar in the next year—so the full offer on the Business ByDesign side, on the collaboration aspect, is talking the same language, which is not solving the universe but its a much bigger footprint than only 12 months ago. Its a good selling point as well for smaller customers. By definition you can say who are your biggest customers, what systems are they running, what are they using? There is a high probably that we will fit.
Q: Is Business ByDesign multitenant? Is it hybrid? Or should tenancy not be part of the discussion with Software as a Service?
A: Maybe we have misstated. What we said is Business ByDesign is mega-tenant, which is beyond multitenant. That was our first statement and it is a true statement. What mega tenant is—what SAP has done over 30 years—is use one database schema for many tenants. That means the control of our tenants is on the application layer. That means that one field in the beginning of each table works with that tenant. All our structures are the same. The database doesnt recognize that at all—[data] is really managed through the applications. We have done this for over 30 years. I know the limitations of that concept. Therefore this time Hasso [Plattner, SAPs chairman and co-founder] said lets be a little more forward, that means the [segmentation] is in the database and not the applications
I feel this is in the right direction because ownership and separation of concern with a clean database approach has a big advantage—we can take this one tenant data immediately out of human control. The ultimate goal for on demand is flexibility. That means the customer at any point in time should be able to make a change from one hosting provider to another hosting provider or to go to an appliance mode. This is only possible if one customer, one tenant, can make the decision independently of all the others—to take its [software] out, with just a normal database, and not change the application. That is a strategy. We have a great advantage over the others—we do own that database. Thats MaxDB.
Then comes the next question. If people talk about multitenancy they talk about systems. They talk about something—can I share a system infrastructure across multiple tenants, or do I need one system per tenant. Actually this is a different discussion, it has nothing to do with database separation. It could still be one database management site, which runs multiple tenants in one environment, on that one server. So that is totally independent and MaxDB gives us the capability to run that kind of heavyweight database. We have that technology and it is independent of whether we run the technology on one server.
The last one, which comes to systems, we made a decision that we would scale along a quite inexpensive blade infrastructure, then to do the tenants and service. That is a debate, which is the best we think that for the future; the low cost option is better for scaling out. If you think about what is the cost of a blade today, it is dimensions cheaper than what a customer still has to invest on the PC side, because the blade is more or less like a laptop. For the sake of security we are going with one blade for one customer, because we can take it out and put it someplace else. So part of the answer is we have more than multitenant, but not less. Its not an easy answer.
Q: Can you suss out the roadmap a little bit for bringing Business ByDesign and NetWeaver together?
A: Its more and more kind of indicating the direction. We will follow up with a roadmap next year at Sapphire. But lets say there is one clear statement. It is not using the business performance from BBD for the substitute. This is not our intent. The intent is to use the more, in the end, the more productive development paradigm, and use Enterprise Services Architecture for design in new application areas.
Q: For example…
A: Believe me we have a full portfolio of things we would like to do, but we have to go with some of our advisors—we have to figure out which make maximum sense
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Q: Right. It seems from talking to customers that keeping ERP 2006s core stable is a good approach. Did you stretch the timing of a stable platform until 2010?
A: There is an, I dont want to say infinite, but there is a long, long lifecycle of this edition because it is not the traditional—there is one release in two years, four years and then another one. In principal we are getting rid of these releases, instead we are having that stable core, with a sequence of enhancement packages over the next years
Q: Ive heard that there are concerns that Business ByDesign would somehow cannibalize ERP.
A: There are no indications of that whatsoever. The first place we would see it is in the upper end of the mid-market, not in the high end. There are many reasons why All-in-One is a good solution. Business ByDesign is more generic and in that sense pretty complete.
Q: Do you see a scenario where partners come in and verticalize Business ByDesign, and would you take the same approach to Salesforce in terms of building out a marketplace for partners?
A: Its still a niche product. It is not mission critical. Its an early data model, not at all mission critical. Whether its sustainable for future business, I dont know.
Q: What happened to SAPs CRM on Demand?
A: There has not been that much scaling as we would have liked. Probably this is because if there are SAP customers and they talk about CRM, they talk about integration and processes, therefore we cannot just copy the Salesforce model. If it were just the Salesforce model then you could just stay with that. But SAP customers have a different expectation—a closed loop from lead to execution. If that works it has to work in the hybrid model. So Salesforce lucky enough doesnt have that problem. We have that problem
Q: What are the issues outstanding with hybrid that you want to tackle?
A: it is just a different model than the whole state of tenant; it is not stand alone. It is an integration. It is just not accomplished.
Q: The more that I understand about the technology that SAP and Oracle are developing—Business ByDesign versus Fusion Applications, for example—it seems like you are maybe not competing head-to-head on a technical level. Is that at all accurate?
A: From the field competition this is really false. From the field perspective Oracle is really tough competition, very tough competition. From the technology side, I dont know whether we should play a more aggressive role, and how we should market that. Maybe more, but our customers dont like that as much. They want to see work. A lot of the feedback today is a representation of where we are …we have always to think about our customers as well, and not always about the customers to win
Q: So you see Oracle being your major competitor for years to come?
A: They have invested their billions into applications to buy and this is a model where at least they can compete. They have sold it to the marketplace that this is how we can accelerate and differentiation from SAP. But they have to prove something It is hard. That is the thing I know. It is hard to acquire different products that were not designed to cooperate, and then just hope that you can weave them together. This is not easy
Q: Do you see any other big competitors emerging. I would think Microsoft with Dynamics. Any others?
A: Microsoft is for sure a partner and a competitor we take very seriously. And they go deep in mid-market, thats for sure. Do they have the money, the people, the intelligence to try to compete, yes, for sure they have that, no? But they start with something that was Project Green—and they got a little side tracked on that.
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