The Hindu Business Line : `SAP has a clear roadmap'

`We have always believed that what Oracle has been doing is in reaction. They have claimed that they will outperform SAP. They have said it several times but failed.'

Peter Zencke

THE global business applications market has seen a lot of action in the last few quarters. Database major Oracle went on an acquisition spree to aggressively expand its market share and catch up with market leader SAP.

eWorld met SAP's Executive Board Member, Peter Zencke, recently, at the SAP TechEd forum to know what SAP is doing to protect and grow its market share. Excerpts from the chat.

Oracle is on a buying spree, having acquired close to a dozen companies in the last one year. How does SAP plan to respond to this?

We have always believed that what Oracle has been doing is in reaction. They have always claimed that they will outperform SAP. They have said it several times but failed. We are not only the clear market leaders but are also growing. And, we are growing at the expense of our competitors.

The idea of Oracle was to buy market instead of developing it. That is a clear difference between them and us, as SAP is going for organic growth.

But how does SAP respond to Oracle's strategy of going in for acquisitions to increase market share?

Whether this is a good strategy, I do not know. It is their strategy and not ours.

But clearly what you see is that the simple arithmetic is not working — that is, if we buy these companies and their customers, we buy the aggregated revenue. This just does not work.

The sum of the addition has been weaker than what different parts have been. That is something the financial people will confirm. Now they have, say, five products in the CRM space itself and the customers of every single one are now Oracle's responsibility. Customers will buy maintenance only if they see improvement. So they have to go through incremental development in different product lines in parallel. It costs a lot of money and it is not easy. Let us see how this all works out.

We always had a very clear strategy and we have implemented it. We feel that whatever they have done is in reaction to SAP.

What is SAP's response to Oracle's Fusion?

Fusion is a response to SAP. We will clearly be the market leaders in the process platform. We were already miles ahead of Oracle. Then they made their announcement of Fusion. (With that) they created confusion.

And now they come back and say they will go for services enabling of the current products, which is not Fusion. So there is complete disorientation on what Fusion is.

If Fusion comes, it will be disruptive and it is not clear how they can come from different angles and converge on Fusion. It's a very, very, complex problem and they have not yet figured it out.

Is that to say that SAP has it all figured out?

On our part, we have figured out the problem, we have a clear roadmap. This had started from NetWeaver 2001 and the NetWeaver-SAP integration programme, opening up beyond SAP, which was the right step.

Today, we are in the middle of it. Now NetWeaver is the composition platform, which means it's the underlying platform for all SAP products.

For example, mySAP 2005 is running on Netweaver and can leverage on the composition capabilities of the technology to add value to all existing SAP products.

We have been working with a host of our partners to come up with many composite applications. There are already 500 of such composite applications that are certified today.

The next step is a business process platform, which is the final evolution of NetWeaver. People name it the applistructure, which is a services repository.

It is servicing these services out of an underlying business process platform, which has the capability to be adapted, to be changed, to be re-organised and reconfigured to support marginally different processes.

Two years ago, there might have been a discussion whether this is a marketing gimmick. But now we have clear proof. Why do we have 2,500 people (attending the company's annual Tech Ed event in Bangalore) here? Because they feel and know there is market demand as well.

Do you plan to pursue any inorganic growth?

We will execute what we have said. We will not change our strategy but might accelerate in certain areas. However, we feel that our overall strategy is the best.

But any strategic gaps that SAP may like to fill in?

There was one, which was communicated. The deal with Retek, for instance, which Oracle finally went ahead and acquired. We felt the price was too high and was not paying off with just 300 customers.

We feel comfortable that we can go ahead and extend our retail solutions. There are partners who support us and we will get a bigger footprint with our existing retail solutions.

Do you see further consolidation in the business applications space?

There is not that much left for consolidation.

What will be your key focus areas over the next 12 months?

Strengthening the composition capabilities of the NetWeaver platform and to see that composite applications are developed.

Do you expect NetWeaver to emerge as the infrastructure for running third-party applications?

Absolutely. One of the aspects is to see that NetWeaver becomes a platform and multiple business applications from independent software vendors can run on it.

There is talk that Netweaver has not clearly attracted market share as such. What's your take on that?

We are not a technology company only. We have always said that we will be investing heavily into NetWeaver because we want a strong technology empowering our applications.

That's why we will go in for Netweaver as a combined stack of open architecture and platform. It's not technology only.

But if we do the technology work for the needs of the applications, then our applications portfolio will be stronger than anybody else and then the same strengths can be used by the partners to add to the solutions. So, that's the solutions strategy.

Broadly speaking, what will be your strategy to retain and grow your market share?

NetWeaver is now with the mySAP 2005 underlying the SAP business suite. Wherever there is SAP, wherever customers migrate to mySAP 05, NetWeaver is in.

It's not the only place where NetWeaver is working, it can work with the older releases of our suite and integrate them into others but the mainline willbe mySAP. On the mySAP evolution starting with 2005, we have that composition on top. This will grow rapidly.

But we will still invest in other verticals and go into smaller and mid-size verticals as well.

In all these aspects, it is about the same services using the same platform. We are leveraging the investments into the platform to go for different solutions as well.

How do you see the market emerging going forward? Any new trends in the offing?

There might have been some uncertainty over the market conditions over a few years ago. That works out nicely and we are the leader in the overall market place. There are some trends, which I see are not mature today. For example: A flexible, adaptable services composition for business to business (B2B). Whether, for multiple partners, you can orchestrate collaboration between them on the fly, using Web services, is not there today. So there are areas of investment.

I think we are prepared for that because of the integration inside the SAP solutions.

vishwa@thehindu.co.in

Picture by G.R.N. Somashekar

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