SAP realizes they are out in the cold
SAP has all but asked to be taken over, by, as they list, Google, MSFT or IBM. Sounds like they are limiting their thoughts to companies with billions in cash on hand. Well they need to be taken over, they know it, and here is why.
They don't have a stack, their own platform. Right now there are arguably 4 stacks out there, MSFT, SUNs, Oracle, and LAMP. Oracle's has kinks - parts are excellent, parts you prefer tomcat and mixing stuff. Or you can go "best of breed" and pay consultants to pick BEOS and other things, and deal with the high costs of all those elements versioning or revving at differnt and incompatible times.
MSFT, SUN, LAMP are complete stacks, MSFT and SUNS rev in concert - a big advantage over the open source field. Thier whole stacks rev together.
So why is this so important?
Enterprise software, global platforms. When you sell a massive enterprise application, what is your operating system, app server, database, web server cost? (Or when you buy?). MSFT has entered the enterprise software business with dynamics. and they will get this massive application correct, eventually, its thier forte (massive applications). So they compete with SAP, or soon will. And they can leverage thier office and windows brand to gain entry into every IT shop in the world to sell it.
So when the 3 bigs (that magic rule of 3 major companies usually shake out in a commodity business - see sodas, airlines, etc) all offer enterprise enabling suites of applications - who has a distinct price advantage? The ones that have thier own stack and can bid 0 on the operating system, database, app server, web server. And MSFT can. And SAP can't - they use SQL server and MSFT technologies. They even tout sharepoint portal. (WOW)
I was surprised they didn't see MSFT coming, but now they do - they cannot survive another ten years, even as massive as they are, with this price disadvantage in every single deal. And lets not even add in the innovation advantage as one side of MSFT knows whats coming and when in the stack ahead of SAP, and the possibility of tricks to make sure MSFT stuff runs better. But the former reason is the biggest.
MSFT has a 20% price advantage on every deal. SAP has figured that out.
Which is why, the industry gorilla, knows they need to partner up with someone with a stack.
Or migrate to an open stack without lock in technologies - LAMP or SUN. But the time and cost to do that might be larger than just being bought.
Enterprise software is a very interesting game, with its own rules. Its wierd to see an industry leader scrambling for a date to the prom, but in this case, SAP has done thier homework and they are smart to get moving now before all the handsome princes are taken.
Watch for Oracle, who also sells enterprise software (people soft, sielbel, Oracle financials) to start courting someone with a stack as well. Or maybe they already have.
They don't have a stack, their own platform. Right now there are arguably 4 stacks out there, MSFT, SUNs, Oracle, and LAMP. Oracle's has kinks - parts are excellent, parts you prefer tomcat and mixing stuff. Or you can go "best of breed" and pay consultants to pick BEOS and other things, and deal with the high costs of all those elements versioning or revving at differnt and incompatible times.
MSFT, SUN, LAMP are complete stacks, MSFT and SUNS rev in concert - a big advantage over the open source field. Thier whole stacks rev together.
So why is this so important?
Enterprise software, global platforms. When you sell a massive enterprise application, what is your operating system, app server, database, web server cost? (Or when you buy?). MSFT has entered the enterprise software business with dynamics. and they will get this massive application correct, eventually, its thier forte (massive applications). So they compete with SAP, or soon will. And they can leverage thier office and windows brand to gain entry into every IT shop in the world to sell it.
So when the 3 bigs (that magic rule of 3 major companies usually shake out in a commodity business - see sodas, airlines, etc) all offer enterprise enabling suites of applications - who has a distinct price advantage? The ones that have thier own stack and can bid 0 on the operating system, database, app server, web server. And MSFT can. And SAP can't - they use SQL server and MSFT technologies. They even tout sharepoint portal. (WOW)
I was surprised they didn't see MSFT coming, but now they do - they cannot survive another ten years, even as massive as they are, with this price disadvantage in every single deal. And lets not even add in the innovation advantage as one side of MSFT knows whats coming and when in the stack ahead of SAP, and the possibility of tricks to make sure MSFT stuff runs better. But the former reason is the biggest.
MSFT has a 20% price advantage on every deal. SAP has figured that out.
Which is why, the industry gorilla, knows they need to partner up with someone with a stack.
Or migrate to an open stack without lock in technologies - LAMP or SUN. But the time and cost to do that might be larger than just being bought.
Enterprise software is a very interesting game, with its own rules. Its wierd to see an industry leader scrambling for a date to the prom, but in this case, SAP has done thier homework and they are smart to get moving now before all the handsome princes are taken.
Watch for Oracle, who also sells enterprise software (people soft, sielbel, Oracle financials) to start courting someone with a stack as well. Or maybe they already have.
The blogosphere's acronym for the Sun "stack" is apparently MARS: mySQL, Apache, Rails, Solaris. Like LAMP, but with 2 new letters. See, for example, http://www.tbray.org/ongoing/When/200x/2006/05/03/MARS-T-Shirt.
Oracle needs an OS, probably Novell or as a longshot Sun.
I think Oracle needs an OS to complete their stack. Conventional wisdom is that they acquire Novell. A very long shot says it could be sunw
If Oracle wants an OS, they will buy Red Hat, not Novell, too much litigation going around with Novell. Knowing Oracle, They would rather buy out than develop, if history is any indicator.
SAP needs a stack to survive independently. Successful application-only vendors are prime acquisition bait, even massive ones.
SAP claims to have a stack - NetWeaver. No one takes it seriously. The app server is a joke, XI (middleware) doesn't work, the portal is an add-on purchased from another company, the database is hacked MySQL, and the other components (identity management, OS) are either non-existant or not worth mentioning. Internally, they can't decide what platform to promote. The engineers want ABAP, marketing wants Java, the execs want .NET, and the customers want it to stay just the way it is. It's a mess. They've wrapped the whole thing under the meaningless term "ESA" to make it seem like there's a strategy.
Microsoft probably would have been the best option, and almost happened. That's over. Oracle would never happen due to anti-trust issues. Google - a "Web 2.0" company merging with a stodgy company whose technology is - at best - client/server? Doubtful.
The answer is - yup, you guessed it - IBM. It's a good fit. These guys are already tight partners. IBM has almost no application business on par with SAP, and SAP has nothing on par with IBM's infrastructure and eCommerce stack. It would give IBM a chance to sell boatloads of hardware to SAP's existing customer base - especially the companies running Sun and HP systems. It would give DB2 that needed shove to move it past Oracle. Consultant revenue would sky-rocket.
If SAP can't get customers to move to MySAP and the Netweaver stack - which they can't so far - the stock price will sag and IBM will grab them.
I think your analysis is correct, SAP knows they are in a losing position when it comes to a full software stack. But it will never ahppen, at least not by an American software company. Why? Because SAP AG is a German company. It's the largest software company in Europe, and European pride wouldn't allow it.
Would Mercedes or Airbus *ever* sell to an American corporation, whatever their situation?
Maybe Fujitsu-Siemens could acquire it -- Japan would like to make a comeback in computing, or some branch of the German goverment (DHL or T-Mobile?) with enough money, but there isn't a private European competitor with a big enough capitalization to do it.