On SAP’s Q3 2010.

Cross posted on my Gartner blog.

 

Here are some quick thoughts on SAP’s Q3 performance. It was was okay. It wasn’t awesome, but it wasn’t grim either. Have a look here for what the FT says.

The headline number of 20% revenue growth seems impressive but strip out the Sybase numbers and it is very similar to Q2. You can read what John Rizzuto and I blogged about Q2 here.

As Per Q2, for the deeper financial analysis I’ll defer to John.  

Core software product revenue again saw double digit increases, which signals that end-market demand remains relatively robust and SAP is benefiting from the increase in spending.  With double digit growth year to date thus far, it is safe to say that SAP has gained market share or growing ahead of the market.  However, was is troubling is SAP’s difficulties in expanding operating margin or meeting targets it has set.  While not troubling, i.e., it is still very fiscally fit, it does speak to the challenges the company is having in managing its business to create incremental leverage – although it is self evident from Wall Street’s perspective why we want comparable margins, it also matter from a competitive standpoint as well.  Specifically, it begs the question from any industry watcher, what is it that enables the other megavendors (i.e., MSFT, IBM, ORCL, even HP and Cisco) to run their business at operating margins, on average, 10%-15% higher? 

Gartner Clients might want to look at some of his other SAP related research.

Personally, I’m less concerned with the margin question, and more interested in the areas of customer satisfaction and new product innovation, as that is what I spend a good part of my day dealing with. 

Snabe and McDermott both continue to paint a more positive and upbeat picture than their recent predecessors did. Both Sapphire and Teched were more energized than my in-memory can remember, as indeed are the last couple of  earnings calls. The infectious exuberance in SAP-Land continues. 

The anti-Oracle posturing has its place on earning calls, and trading taunts makes for good headlines. Nevertheless, it is not nearly as relevant for SAP customers as many observers think. 

The challenge over the next 2 quarters is to show how the investment in newer technologies and applications is having a meaningful impact on the numbers. The market is the arbiter of innovation, not the vendor. 

At the same time, the existing customer base needs to be brought along to the party. This means clear communication is at a premium. This is improving, but as the UK and German user groups note, there is still work to do. 

SAP has a plan. Now it all comes down to execution. 

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Seattle, Stuttgart and the Parlotones.

A couple of weeks ago I was in Seattle for a series of work meetings, and by happy coincidence, a South African band, the Parlotones were in town.  They fill stadiums in SA, so seeing them in a smaller venue was an opportunity not to be missed.  Here they are at the World Cup opening ceremony.

I pinged my mate Mark, and we headed out to the Showbox SoDo.  Not only was this a smaller venue, but they were warm up band for Blue October.

If a South African band plays anywhere, the Diaspora emerges. Seattle was no different. There was a small but raucous SA crowd mingled in with the Seattlean, who were keen for Blue October (who are indeed good too).

The Parlotones played a short set, mainly from the current album, but by the end they had converted the Seattle audience into fans.  They rocked.  I predict that they will have a number one on the US charts before very long. 

The band is now a firm favourite of mine. Their music is very tight, tinges  of OMD and The Killers,  REM,  Radiohead, maybe a faint whiff  of  The Cure too,  but somehow their own.  The lyrics are often clever, and  some of them quite dark.  Welcome to the Weekend, in particular,  strikes home, but this line from “Should We Fight back?” is well and truly stuck in my head.

Sip it slowly sweetness sometimes tempts us into the silly
Choked by cherry chocolate charm in a chariot of phony

I’m going to be seeing them again, this time in Stuttgart, this Saturday. As they are main act, I’m hoping they will have a longer set, and will dip into their older albums too.  As per Seattle, there will be Diaspora contingent.  We will be loud, louder than bombs.

SAP Teched Berlin coming up

I’m off to Berlin tomorrow evening, to spend two days at SAP Teched.

photo via cc of Svenwerk. Thanks.

Earlier this year, SAP did a good job at Sapphire in laying out more compelling vision. I expect Teched to be about adding some details to that vision, and I’m looking of evidence of execution: These are the things I’ll be scrutinizing.

1. By Design progress, both in terms of customer adoption and as a platform for SAP to build new on-demand applications.

2. What is “orchestration” exactly?

3. River and the other on-demand efforts. What’s really flowing?

4. Mobile strategy. Apps, ecoystem, costs.  Beyond the hype.

5. SAP and databases.  newDB, Sybase, in-memory etc. Timings.

6. BW and in-memory impact.

7. Gateway, UI, UX and future of SAP portal.

8. NetWeaver 7.3 details

9. MDM, BPM impact on existing customers

10. Impact of “cloud” on Business Suite.

11. Running SAP cheaper. SAP and ecosystem tools that reduce the day to day running costs of SAP.

From a partner perspective, I’m looking for alternative UI work, or UI enhancements, such as RIA, iPad etc.  Making SAP easier to consume is a research theme for me and several colleagues over the next quarter. Also anything that makes SAP cheaper to run.  I’m also very  interested in chatting to users to gauge how they see SAP’s plans and execution. 

If you want to catch up at Teched, drop me an email, or tweet me at @vendorprisey

Gartner clients may wish to read our note on the state of NetWeaver. SAP NetWeaver: The past, present and future.

Many organizations are unsure what NetWeaver is, or what it will become. What SAP has delivered differs significantly from the original vision. Rather than the enterprisewide middleware platform SAP envisioned, it’s best-suited to deploy SAP applications and integrate SAP applications and processes.

Get your HR VP an iPad.

 

I’ve just read Stephen’s note on the iPad in the enterprise. (Gartner subscription required) here is the summary.

CEO Advisory: Seize the iPad Opportunity Now

The Apple iPad and associated ecosystem are likely to disrupt existing technology usage profiles and business models. CEOs should take a moment to ensure that the potential opportunity is being seriously evaluated inside their enterprises.

It got some press coverage here.

If I was working in an HR IT department, I’d buy one myself and give it to the HR VP. I’d make sure that it had a simple dashboard (check out roambi as an example)  with half a dozen HR and business relevant measures on, some relevant alerts and their email, key presentations, some budget stuff and the Dilbert widget.

Then let him/her loose on a meeting with other executives.

I reckon you’d get a really good ROI on that iPad investment come bonus time. You might also get a whole lot more budget for a proper HR analytics project.

I’ve rambled on about the iPad and UI a couple of times.

I’m on the look out for innovative UI work in the HCM technology space. Both Kronos and Cybershift recently impressed me with their UX work for time & attendance management on the iPhone. Vendors, if you have done something innovative on the iPad, do let me know. Users, if you are actually using the IPad in an HR context I’d really like to know more.

The blog of a kind and wise man.

I’m very pleased to see that Les Hayman has a blog, and that he is rattling off posts with vim, vigour and consistency. If you are interested in HR, career and life advice from someone who has been there, done that, then Les is a must read.  Les was on the the extended board at SAP,  he ran sales in Asia and Europe and then he ran HR.

A number of people have asked me to write of my experiences running a company internal HR department after 40 years in business roles. When I was first asked whether I would do this, rather than retiring, I felt that it was a bit like asking Attila the Hun to look after the Vestal Virgins. I have to admit that it was probably the hardest job that I ever had, the two years being both challenging and frustrating, and it changed and molded many of the views that I have about people and about management

On the state of management

One of the disappointments in my move to Europe in 2001 was that I have seen little evidence that European companies have created a culture of management as a profession. Management skill appears to be more of an add-on to vocational brilliance, rather than being viewed as an art, a science and an asset in its own right. The idea is that management skill is a “nice to have” rather than a mandatory part of an executive’s role.

On business card titles, CEO tenure, and my favourite, the Pesto Effect and buzzwords.

Ten years ago no-one had heard of pesto, and then suddenly it was everywhere. You could go to any restaurant anywhere in the world and the odds were that pesto would be somewhere on the menu.
I even saw a hot dog seller in New York who had a sign saying “Mustard, Ketchup, Pesto”.

Oh, and he lots to say about living in France.

Branding innovation at a conference

I have been to many, many software conferences, but I’m especially fond of the HR tech conference in Chicago. It has a good mix of vendors and practitioners, and is well worth a visit.

Over the years at conferences around the world, I’ve strolled the vendor booths, and seen all sorts. Some, just a desk and a couple of chairs, others vast multi-story gaudy edifices. They are all a bit of a blur. 

This week, at the HR tech conference I saw the best booth ever.

It was designed to

• draw attention
• bring delegates into an area where they couldn’t escape easily.
• be eco-friendly
• be participative (you could write on it)
• relate to the company culture and marketing message
• be 100x times cheaper than a typical stand

I give you the sonar6 minimalist box.

 

There is a software metaphor here too.  There is goodness in a common practice done uncommonly well.  At the event I saw evidence of some vendors starting to build simple applications that bring a consumer simplicity to existing, rather bloated, HR processes.