Is SAP Making a Deal With "the Devil"?
Unlike some other commentators, we're not big fans here at RCPU of referring
to Microsoft as "evil" or "the devil," so let's put the
headline of this entry into context. SAP -- the big, German, still mostly dominant
enterprise resource planning vendor -- has been
snuggling
up to Microsoft lately, promising better integration between its ERP applications
and Redmond's SQL Server 2005 database.
SAP's motivation for doing this appears to be to keep database giant Oracle
and its line of enterprise apps, which compete with those of SAP, at bay. SAP
also has a nice product with Microsoft called Duet that ties the familiar Office
front-end to SAP's considerable back-end. So, by being buddy-buddy with Microsoft,
SAP covers two of its main weaknesses -- database integration and front-end
accessibility. All of that sounds pragmatic enough, right?
Well, here's where the context part comes into play. Anybody who has been paying
even the faintest attention to the ERP market knows that Microsoft
has major ambitions in it along with a complicated -- and increasingly
competitive and contentious -- relationship with SAP. All of this, then,
leaves us wondering whether SAP has made a deal with its own personal little
devil in Redmond (as opposed to a more universal devil, which we don't consider
Microsoft to be) in the name of driving a stake into Oracle's heart.
After all, Microsoft plans to attack the ERP market the way it has attacked
many of the other markets it now owns -- by preaching native integration of
its own applications. Just to spell things out, that means that Microsoft is
ready to send its partners to customers with the message that Dynamics, its
ERP offering, is simpler (in a good way), cheaper and better (and certainly
better integrated) top to bottom than what SAP or Oracle can offer.
And what better way for Microsoft to boost the two quantities it lacks in ERP
-- credibility and experience -- than by working closely with the longtime market
leader? The pitch almost sells itself: "If you like SAP's enterprise wares
with our database and front-end, just imagine how much you'll like cheaper,
simpler, easier-to-maintain and more tightly integrated Dynamics playing nicely
with your all-Microsoft implementation. Let's get you started switching over
now..."
Now, your editor has had considerable experience writing about SAP over the
last 10 years or so. We're quite sure that the folks in Walldorf (Germany, where
SAP's headquarters are located) know that they're playing with fire. So how
do the folks at SAP propose to not get burned?
And here are some other things to ponder. Does Walldorf see any threat to their
gigantic market share from Microsoft on the horizon? Do they not believe that
Redmond can execute on its ambitious, but still largely nascent, ERP strategy?
Does Oracle -- a bigger threat to SAP right now than Microsoft -- just look
like the most important dragon to slay?
We suspect that, in part, the answer to those last three questions is "Yes."
However, if that's the case, SAP had better know what it's doing. Dynamics is
no Windows Live Search or Zune. It's a serious set of business applications
from a company that has a hefty presence of its own in the enterprise. The folks
in Walldorf have a pretty impressive ERP empire going, but the road is littered
with such deals. It's why, we suspect, "the devil" term is used in
the first place.
What do you think of SAP's cooperation with Microsoft? How soon do you see
Dynamics seriously competing with SAP and Oracle? Let me know at [email protected].
Posted by Lee Pender on May 17, 2007