Cloud computing will render the BI stack irrelevant: SAP

SANTA CLARA, CALI. — While Oracle Corp. (NASDAQ: ORCL) may be a late convert to cloud computing, rival SAP AG (NYSE: SAP) said Tuesday that the cloud will render Oracle’s differentiator of owning the entire business intelligence hardware and software stack irrelevant, as it will all exist up in the cloud.

Speaking to press and analysts gathered for SAP’s Influencer Summit via satellite from Dresden, Germany, SAP co-CEO Jim Hagemann-Snabe said cloud computing isn’t good news for Oracle, or for its own the stack mantra. Snabe said there are two choices in the industry – consolidators who buy companies to own the stack, and innovators. Putting SAP in the latter category, Snabe said SAP believes the stack – Oracle’s approach – is falling apart.

“With cloud computing, the hardware will move into the cloud and become commoditized. The front-end will become a mobile device of any form factor, and that’s what we’re innovating for,” said Snabe. “That will change the value-proposition and the stack gets lost in the shuffle, so we don’t need to acquire all the pieces in the stack when we can change it through innovation.”

While he sees validity in Snabe’s hypothesis, Michael Pearson believes the everything in the cloud model is a long ways off yet, and will never truly be realized. Pearson, president of Toronto-based SAP partner Contax Inc., said moving to the cloud will be an evolutionary process.

“We won’t see customers moving in mass from on-premise to cloud,” said Pearson. Rather, he sees it happening on an application or appliance basis, as it makes business sense to move a specific process or function to the cloud.

“It’s not going to go to 100 per cent,” said Pearson. “There are some customers where the cloud doesn’t work for them. Health care, patient records, it will be a long time before that information can be stored in the cloud. It will never be a replacement for on-premise; they will co-exist.”

And the stack will still be relevant in the cloud context said Joel Martin, research director with London, Ont.-based Info-Tech Research Group. The stack doesn’t go away just because the application is delivered and consumed in a different way.

“The need for technology across the OSI level to run the applications isn’t going away (with the cloud),” said Martin. “SAP talks about being a platform company, and that’s what they are. They partner with people to complete the stack.”

What SAP is trying to do though, said Martin, is to articulate a value proposition around the application platform, rather than the homogeneity of a stack, shifting the discussion to one it sees as more relevant to the line of business decision maker: what the applications deliver in productivity, process improvements, efficiency, and other measurables. Talking about the stack is more of an IT department discussion.

And it’s not as if SAP is about to turn its back on on-premise anyway. Snabe emphasized that on-premise remains the core of SAP’s business and a key development priority. The vendor’s strategy is to offer the customer choice of delivery method, be it on-premise, on-demand or on-device.

A mobile future

It’s the latter that will be getting a lot of attention from SAP going forward though, particularly as it integrates its Sybase acquisition. On that front, Raj Nathan, executive vice-president and CMO of Sybase, which is being operated as a company within SAP, committed to releasing a software developer kit (SDK) for a next generation, co-developed SAP/Sybase mobile platform by SAP’s Sapphire user conference in mid-2011. That’s also the timeline for releasing applications running on that platform in three key areas: sales, services and analytics.

Snabe said SAP is focused on how it can leverage the consumer-centric mobility experience we have today to chat with our friends and share music and port it into a business context.

“We see that as the big opportunity; to take the business knowledge and experience we have in 25 industries and start leveraging some of these modern mobility technologies to drive productivity gains,” said Snabe. It will mean solving issues around security, reliability, and ensuring consistent, flawless dataflow for mission critical applications.

“This is how we’ve been successful so far, and this is how we plan to be successful in the future,” said Snabe.

From a channel perspective, Info-Tech’s Martin said he’s not sure if SAP’s mid-market VARs today are ready for the level of mobile experience SAP is planning with Sybase. And their mid-market customers may not be gunning for that level of experience either.

“SAP/Sybase is looking more at large enterprise players, in the mid-market, people will be looking more at the mobilization of existing assets,” said Martin, although the functionality will scale down in time.

Contax’s Pearson said the demand isn’t there from customers yet, but he believes it will be and is developing the technical capacity in-house to be ready to service that demand from his customer base when it comes.

“It’s not just another interface. This is going to be a big shift in the industry and we need to make sure we’re positioned to take advantage,” said Pearson. “We’re playing a bit of wait and see. We’re not on the inside of the (SAP/Sybase) product development. But we will certainly be paying close attention to the opportunities it presents.”

Follow Jeff Jedras on Twitter: @JeffJedrasCDN.

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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