Key Themes from SAP TechEd 2011–How Do They Relate to SMBs?

As the name implies, SAP TechEd offers technical education, such as hands-on workshops, deep-dive lectures and sessions with SAP technical experts about all things SAP. That said, TechEd isn’t for everyone, and it’s no wonder that most of the 6,500+ attendees at SAP TechEd 2011, held the week of September 12 in Las Vegas, were SAP partners and technology specialists from the vendor’s large enterprise accounts.

However, despite the technical focus of the event, there were several key themes that have important implications for non-techies and small and medium businesses (or as SAP calls them–small and medium enterprises or SMEs). This makes sense, as SAP’s SME ambitions are core to the company’s growth strategy. Many of the partners I spoke to at the event provide sales, service and third-party development for SAP’s portfolio of SMB-centered applications, including Business One, Business by Design, Business All-in-One and Business Objects Edge. Undoubtedley not by accident, as SMB customers rely on these partners to translate the technology and solution innovations below into practical business results.

  • HANA everywhere. As noted in fellow analyst Cindy Jutras’ post, HANA was by far the lead theme at TechEd–just take a look at the tweet stream at #sapteched. HANA is SAP’s innovative column-based, in-memory database, which enables applications to zip through calculations for millions of records in just fractions of a second. While this is relevant for large companies, why should SMBs care? According to SAP, HANA will be part of every solution that SAP offers. SAP applications, from Business One through the Business Suite, will be “powered by HANA,” providing these applications with a big performance boost. The good news here for SMBs is that while SAP Business Suite customers will pay extra for high-test HANA performance, customers using SAP’s SMB-centric solutions will get at least some of this added horsepower as part of the normal upgrade cycle, at no additional charge. However, at this stage, it’s still fuzzy as to exactly how SAP will embed and deliver HANA in its SMB portfolio, what will be included, and what will be priced separately.
  • SAP Business by Design (ByD) as a platform. ByD will continue to fill the role of a cloud-based ERP suite, but ByD is evolving to become a cloud platform as well. SAP is providing partners and customers with an integrated SDK to build applications on top of the ByD platform, and plans to debut a ByD app store ala Salesforce.com AppExchange, where customers can buy, download and deploy both SAP and partner ByD apps. The ByD cloud platform should make it easier for partners to build their own applications and IP on top of ByD and expand their market opportunity. Partner-developed ByD services will be layered on the ByD foundation to deliver the common elements of ByD.  Providing and enhancing the partner opportunity is essential for SAP to groe its SMB footprint in the cloud space, especially as it plays catch up against early birds such as NetSuite and Salesforce.com. Partner applications and services will be essential to provide the diverse SMB market with the choice and richness in solutions they require.
  • Mobile as the design center for solution development and delivery. Aided and abetted by its Sybase acquisition, SAP is putting the mobile experience front and center for application design and development. This means that SAP’s design point for new applications starts with the mobile device experience. Existing apps will get a mobile makeover–providing users with the mobile interfaces they are increasingly clamoring for and turning to over traditional desktop devices. For instance, SAP Business One presented Version 1.3.1 of it mobile app, which enables users to use Business One on an iPhone or iPad. The app provides things such as alerts and approvals, reports and interactive dashboards, and inventory management, and looks very easy to use and streamlined for the mobile experience that more and more SMBs are using in addition to or as a replacement for traditional desktop interfaces.
  • Making business applications more engaging. Mary Poppins told us long ago that “For every job that must be done there is an element of fun, find the fun and snap, the job’s a game.” Jane McGonigal, SAP TechEd’s guest keynote speaker, presented the modern-day version of this with her talk on “gamification.” In a nutshell, gamification is making a non-game application more engaging by making it game-like. While I talked to several skeptics (or Puritans?) who don’t get the connection between work and games, I’ve always bought into the Mary Poppins philosophy. To me, it’s intuitive that people doing more fun and interesting work are naturally more engaged and productive. SAP put this theory into action at TechEd with Knowledge Quest, which attendees could play and earn points by answering questions, completing interactive challenges, acquiring codes, and taking on head-to-head challenges with other players. Players with the most points were awarded prizes such as iPads, Nintendo 3DS, and headphones. I don’t know how many people played, but the Knowledge Quest booth was pretty packed whenever I went by. Now this is a very big if, but if SAP successfully tackles the gamification challenge (maybe with a game?!) it can gain a big advantage. SMBs using SAP solutions will also come out ahead–via a more productive and engaged workforce–especially as more businesses are started and run by younger entrepreneurs and employees that have been raised in a video-gaming culture.

The bottom line is that while TechEd isn’t for everyone, SAP’s key themes are as relevant to business decision-makers as they are to technology decision-makers and solution builders.

However, SAP is competing against some great marketers–most notably Marc Benioff of Salesforce.com–who bring their own appetite for and vision of business software innovation to the market. In contrast, SAP, for all of its technical strengths, has not been a marketing powerhouse. While SAP has committed to making its technology innovations digestible for SMB customers, can it do the same with it’s marketing and messaging? Creating clear, crisp and compelling marketing for its diverse portfolio of solutions and its new technology directions may prove to be SAP’s toughest innovation challenge.

Reflections on Dreamforce 2011: Now the Cloud Can Ride the Waves

This year, Salesforce.com’s Dreamforce event–with a record-setting 45,000 attendees–got me thinking about the early days before the cloud was the cloud, how far its come, and how perfectly poised it is to ride the waves now driving technology adoption–mobile and social solutions.

Traveling in the Way Back Machine

In a galaxy long ago and far away, I was an analyst at the former Summit Strategies when the first cloud seeds were being planted in 1997. NetLedger (now NetSuite) and Employease (now part of ADP) were among the first to visit and brief us in Boston, followed soon after, of course, by Marc Benioff and Salesforce.com.

These vendors were among the early pioneers of what was first called the internet business service provider (IBSP) model. They built their solutions as multi-tenant software-as-a-service solutions, designing them  business from the ground up to be delivered as a single instance, to thousands of customers, in a subscription-based pricing model.

In the early going, these pioneers survived the confusion wreaked by the traditional software vendors, who put their traditional packaged apps–never designed for a services model–up on servers in the application service provider (ASP) hosting model. Then, they persevered through the onslaught of the software establishment at the time–from Siebel to Microsoft to SAP–who insisted SaaS was just a passing fad. They forged on even as multitudes of IBSP wannabes–from Agillion to Red Gorilla to vJungle–crashed and burned when the Internet bubble burst. They even survived the problems they created for themselves as they kept renaming themselves, from IBSP, online services vendor, software-as-a-service (SaaS) and then to the “cloud” label that would finally stick.

Evolutionary Vs. Revolutionary

From the start, analysts such as myself and counterparts, such as the luminary Phil Wainwright, thought that IBSP/SaaS/cloud was a great alternative to the packaged software model–and that it would catch on much more quickly than it has. But, though cloud computing has grown over the last 13 years or so, it’s growth has been more evolutionary than revolutionary. In the beginning, many of the technologies necessary to enable widespread cloud adoption, such as ubiquitous high-speed Internet access, just weren’t there. As important, IT people were often reluctant to go to the model because they were afraid it might put them out of a job, and decision-makers in some companies didn’t feel a compelling need to change the status quo.

In contrast, adoption of mobile and social technologies has been truly revolutionary. Not only were the right technologies were in the right place, at the right time, but individuals–not IT people or business decision-makers–called the shots. Employees are also consumers, and are spending their own money to BYOD (bring your own device) instead of using a company-issued brick. They started questioning why it was easier to keep track of friends on Facebook than keep track of contacts in CRM.  Armed with iPhones, iPads, Facebook and Twitter, as Benioff so rightly pointed out, individuals are now empowered not only bring about the “Arab spring” that has toppled dictators, but also stir up a “corporate spring” for companies that don’t listen to customers and employees.

Now the Cloud Can Ride the Waves

As a result, the pecking order of the IT universe is being radically altered. Apple is worth more than HP, Google is more powerful than Microsoft, and Facebook has changed the world–and what we expect from software–forever.

Though cloud computing has been on a slower trajectory than social and mobile technologies, cloud is increasingly the critical enabler for both mobile and social solutions. It provides the economies of scale and skill that developers and companies need to create, reiterate, and reinvent. It provides the customer feedback loop and data aggregation necessary to see where the puck is going and get there first. It provides the collaborative environment required to accelerate new ideas and new ways of solving problems. But it is very complicated for individual companies to piece together all the components that they need on their own.

As this perfect storm of social and mobile rapidly forms, how much time do the software vendors such as Microsoft, Oracle, Sage and SAP, have to straddle the fence and ride out the storm? You can bet that I and a lot of other storm chasers will be watching closely as the waves build.

We Liked it So Much, We Made it Into a Slideshow: 2011 Top SMB Tech Trends

Presented by Laurie McCabe on January 18, 2011 WITI (Women in Information Technology) webinar.

SMB Mobile Spending Trends from SMB Group’s 2010 Mobile Solutions Study

As part of the recently completed SMB Group study “2010 Small and Medium Business Mobile Solutions Study,”
we performed a detailed analysis of U.S. small and medium business (SMB) spending on mobile devices, applications, and services. As explained in this study, SMBs (1-999 employees) spent approximately $26.1B on mobile solutions and services in 2010—an amount forecast to increase annual at a rate of 17 percent for the next few years, with some segments growing much faster than the others.

As indicated on Figure 1, voice and data services gobble up the biggest part of SMBs’ mobile budgets (69%), followed by mobile application (12%) spending, mobile devices (11%), and mobile device/application management (8%). In the U.S., mobile service providers typically subsidize mobile device costs as part of their two-year mobile service contract subscriptions, resulting in the lower spending for mobile devices–which would cost two to three times more if they weren’t subsidized.

Figure 1 – 2010 SMB Mobile Solutions Spending

Other important takeaways from the survey and our analysis include:

  • While SMBs currently spend more on devices than on mobile management, growth in spending for the latter is outpacing spending on the former by roughly 13%. This reflects the reality that as mobile adoption and business dependence on mobile solutions grows, SMBs will need to invest in solutions to more efficiently manage mobile services and solutions.
  • Although SMBs currently spend more on voice and data services than mobile applications, survey results indicate that spending for mobile applications grow about 30% faster than for voice and data services.
  • Very small businesses have the highest average spending per employee for mobile services, solutions and devices. Average mobile spending per employee decreases as company size increases. As companies grow, they have more formal mobile policies that encourage mobile plan sharing, and can take advantage of volume discounts to help cut spending. For example:
    • Very small businesses with 1-19 employees spend about $150 per year per employee on mobile devices, compared to $101 per employee for companies with 50-99 employees.
    • Expenditures for annual mobile voice and data service plans per employee rage from $1,056 for companies with 1-19 employees to $511 for small businesses with 50-99 employees.
    • Annual mobile application spending ranges from $416 per employee for companies with 1-19 employees to $292 per employee for companies with 50-99 employees.
  • The role of the user-management, sales, office manager, information worker, etc.–and the industry are key factors in determining what types of devices are selected. For example, Information workers in industries like health care, legal, real estate are adopting smartphones and tablets more rapidly than other types of users in other industries.

Mobile spending now accounts for almost 10% of all technology spending for U.S. small and medium businesses and is forecast to grow at a rapid pace for the foreseeable future. This presents very significant opportunities for vendors on several fronts, including:

  • Mobile device companies that develop new devices that tailored to specific user roles and industries.
  • Mobile web and mobile application providers to create innovative new applications that help SMBs perform business functions more easily and flexibly.
  • Service providers that go beyond voice and data service plans to offer higher value solution bundles.

However, the high cost of mobile service plans threatens to stall SMB adoption of smartphones and other devices that enable employees to take advantage of mobile business solutions. This is particularly true in very small businesses (1-19 employees), where 40% cite high voice and data costs as a top barrier to mobile solution adoption. Even when we look at the total small business group (1-99 employees), 37% say these costs are their top obstacle. As a result, 43% of small businesses currently provide voice-text only phones and plans to employees.

Of late, service providers are offering more limited choices for voice-text only phones, which will push some small businesses to invest in data service plans, smartphones and the applications they enable. But, small businesses will need more flexible and affordable data plans to take advantage of the mobile applications that can help their businesses grow. We’ll be watching closely to see what types and which vendors will try to shake up the status quo with new pricing schemes, bundles and incentives to help small businesses take better advantage of the mobile opportunity.

For more information and a Table of Contents is available for this study click here: 2010 Small and Medium Business Mobile Solutions Study.

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