SAP Suffers Yet More Cloud Pain – Cloud Software Head Quits
For years the best known Software as a Service (SaaS) vendors have enjoyed pouring ridicule on the legacy enterprise software vendors – hardly a week goes by without either Salesforce CEO Marc Benioff or NetSuite CEO Zach Nelson scornfully commenting on the lack of real “cloudiness” from the incumbents. Despite the obvious incestuous relationship that exists among all the players (Oracle ORCL -0.19% CEO Larry Ellison is, after all, the biggest NetSuite shareholder and has a love/hate relationship with Benioff) it’s often SAP and Oracle ORCL -0.19% who bear the brunt of this. Of course sometimes the incumbents make it hard to resist the temptation to be critical – SAP’s on-again, off-again cloud product ByDesign has been something of a train wreck of massive investments with little gain. Oracle hasn’t had a stellar run either, who can forget Ellison’s diatribe about cloud computing only a few short years ago (embedded below for posterity’s sake).
For its part, SAP has had some good moves over time – from the high-profile acquisition of SuccessFactors in 2011 for a price of $3.5B to quietly snapping up a who’s who of the thought-leaders of the new look of enterprise technology. But with those positive developments there have been some pain as well.
When SAP acquired SuccessFactors, it made the CEO, Lars Dalgaard, the new head of the entire SAP cloud portfolio – a smart move given the respect that the industry holds for Dalgaard and what he achieved. Only two years later however Dalgaard moved on to take a position as a partner at Venture Capital firm Andreeson Horowitz. While the public commentary around his leaving was polite, there was something of an undercurrent suggesting that Dalgaard was frustrated at how long and how hard organizational change was within the company.
The concern would appear to be justified since Dalgaard’s replacement, Robert Calderoni, has also just resigned after only eight months in the job – clearly this is a very short tenure for such a pivotal role, especially one within a company like SAP that is trying to remain relevant in a rapidly changing technology market. Calderoni was head of Ariba, yet another SaaS vendor acquired by SAP, this time for $4.3B back in 2012. Calderoni’s replacement is Shawn Price, currently president of SuccessFactors and before that president of Zuora the SaaS billing and subscription vendor.
SAP Focusing On Technology Not Solutions
It is important to look at these departures within the broader context of SAP. The glory project within the company is undoubtedly HANA, its in-memory analytics platform. It is the project that gets the lion’s share of the attention within the company. Unfortunately this focus on what is essentially a raw technology platform seems to result in a dearth of investment and attention for SAP’s higher level SaaS offerings. The reduction in investment for ByDesign is a good example of this shift of focus and the fact that almost every SAP announcement talks about HANA
While HANA is certainly an amazing technology platform, I’d suggest that the company is making a big mistake focusing so heavily on HANA, especially at the same time as its competitors (both new look cloud vendors and traditional technology vendors) focus less on technologies and much more on end-user solutions. A good example is Salesforce.com CRM -1.14% who recently announced the new Salesforce1 platform. While Salesforce1 is certainly a technology platform, all the messaging around it is about the solutions that it will enable. Less about raw tech and more about outcomes.
This talent drain from SAP should really ring alarm bells within the company. I’d like to think SAP will ease off on the HANA rhetoric and more strongly talk about the solutions it offers – otherwise there’s going to be more demoralized executives departing in the near future.
Article courtesy of Forbes Technology, Online Edition. Contributors: Ben Kepes