Ed. Note: This is a transcription of comments by Rainer Zinow in an interview on SiliconAngle.TV during SAPphire 2011. The interviewers, identified by initials, are David Vellante, co-founder of Wikibon.org, and John Furrier, founder of SiliconAngle.
DV: The big news this year we're talking about the new analytics. You're in charge of a growing business; it's a very strategic business. Talk a little about that business and why it's important, the kind of customers, the SMEs, and maybe how they're different than the traditional base.
RZ: If we start with the important thing for us since last year is we now see the market momentum that we have been fighting for for the last couple of years. So just in time for SAPphire we've passed customer number 500 with Business ByDesign, which we were optimistic that we could do 400, so now we've done 500 and we're very happy about that. So Business ByDesign is getting traction in the midmarket.
Are these customers radically different than we have known for the last 30 years? Yes and no. Yes regarding their unique requirements. We met this morning with our customer council, and they talked to us for example about if we could advise them about how to set up support structures. We have in the customer council also a representative from Dow Chemical, which is using in a subsidiary Business ByDesign, and he said he has hundreds of support persons, and he doesn't know exactly what the problem is. So we have a few things, but business process-wise it's the same thing.
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The ByDesign Platform and OnDemand Services
JF: SAP's been very impressive at operating at scale. And you're introducing technology & new stuff at the same time. So its kind of a moving train. How do you deal with that and what has changed? How does that change your schedules, and where are you now?
RZ: Clearly there's a moving plane without any doubt. And some people are saying we're exchanging the engine of the plane while we are flying. But we keep flying, so don't worry about that. The important part is as you said our large enterprise customers say innovate but don't disrupt. The way we do that is to show them how they can extend their business suite with OnDemand Solutions. Therefore the announcement we are making tomorrow with Sales OnDemand is so mission critical for us. It allows our customers to extend their scope business-wise without changing a single line of code in their
So now we have the new one, which is ByDesign as a platform.
We needed to get Business ByDesign stable as a mid-market solution. The next step was we transformed ByDesign into a platform and started building applications on it. That's what we did with Sales OnDemand and we're doing with OnDemand for travel and expense management.
The next step after that is to open up this platform to our partners and customers so they can extend Business ByDesign. So we are offering a business platform as a service, and not a few tiny features and and functions like some of our competitors, but the full business capability of ByDesign.
DV: Obviously going after SMEs is a critical part of that because it is a partnership model. In SME the S is different from the M, isn't it?
RZ: The S's are more of a challenge because they come off of QuickBooks. They've grown out of QuickBooks, but they still have a QuickBook mentality. Excel, QuickBooks, and I have an Access database there, and somehow I squeeze it in. The change management trick is that you now have to take the user by the hand and say you are part of a business process. This is your responsibility, this is the fellow who is working in front of you, and this is the fellow who is working behind you. It is important that you see the entire flow. So this is the education part we do for the S's.
The midmarket companies, the more grown up companies, they know that, and they say we are driving the next round of internationalization, and therefore we need such a solution. But you're right, the S's are a challenge.
Security
JF: How do you talk to customers specifically about security issues, because what's on the mind of the average business is, “Damn, Playstation is down, Amazon crashed, RSA gets hacked – they are a security company and they get hacked.” So you have all this carnage with the public cloud. So share with us how you talk to your customers in light of that negative press, and how do you give them confidence.
RZ: Even if the customer doesn't address it, we address it first, because it is in the back of everybody's mind, and you need to address it. The second thing is we simply say these are the precautions we are taking. And the most important one is the SAS70 Part 2 Certification that we have for all of the compute-center facilities where SAP runs Business ByDesign. That is the second highest level that you can theoretically get. There is only one above that, and that is for the credit card companies.
The second thing we do, and I am talking about this on stage tomorrow with my partner-in-crime, Scott Allen from Intel, is a capability – you've seen all the acquisitions Intel has made lately in the security area. And what they're doing now is they are putting a lot of security functionality on the silicon. So they are creating an unbreakable combination of hardware & software. And what that means is we will soon do is I can say I take the signature of a specific device, and I register it with Business ByDesign. And I cut off ByDesign for all unregistered devices.
DV: Last week we had Pat Gelsinger on the Cube at EMCworld. And he said that security in many ways is a do over, we have to look at the architecture. Do you agree with that?
RZ: Absolutely. If you say this was the hardware layer and here is the software layer. But we saw a couple of cases where people went into this tiny gap between the hardware layer and the software layer. Therefore I'm really happy that Intel moved forward and said come on. We take for example the encryption algorithms which we typically use as software. We put that directly on the silicon. What that means for me is I can write every piece of information I have fully encrypted to anywhere I need it. This is something I couldn't do before because it would have eaten up too much CPU resources. Now I can do this.
Privacy
DV: As applications get more social we hear a lot more about privacy, but CIOs talk mostly about security. Are security and privacy different or are they two sides of the same coin?
RZ: No it is not quite two sides of the same coin. The standards in Germany are much higher than here in the U.S. We even have discussions with customers who say we want you to host us out of Germany because you have higher standards there than we do here. Take for example here in the U.S. from a privacy standpoint Business ByDesign has a built-in learning management system. And every end-user goes through certain learning units, and it's perfectly okay that we have a report in the process that shows you how far is the learning progress of every single user. In Germany, completely unthinkable.
So there you have the difference. It's not one and the same thing, but it's a challenge for us because we now have to look into every single country and understand the legislation there, understand the rules there, and meet these standards. But that is one of the things we bring to the table as a large company.
DV: It's not just information access and data access, it's a policy around that and knowledge of the local laws.
RZ: What do you do if a person leaves the company? In Germany you need to take certain actions with the data – retire the data, physically delete it. In the U.S. it's sufficient if you flag it.
DV: So in some ways privacy is a superset, it's more complicated than security. Is that right?
RZ: I wouldn't say it's more complicated. You need to do both things. You need to do security to be in the business at all. If you can't guarantee security, and the customers aren't convinced that you really do that in the best possible way, you're out of business. The data privacy is more the legal side of the equation, where the employees of the company now says for me it is an important thing to know how my data is handled in the system and that it really meets all the required standards.
Building Simplicity
JF: Talk about simplicity. SAP historically has not been known for its simplicity. But it's a fundamental part of your business. How have you approached that topic, and why will you succeed.
RZ: That was clearly the big ray of light this morning when we saw the survey results from the American User Group of Business ByDesign. We really scored high in usability. It was really nice that I could see this after all these years. It felt amazing.
We took our ego a bit back and simply said let's look at how our applications look like if you look at Amazon, if you look at eBay. In a certain way it's a lot easier these days to build UIs, because you look at the consumer space and you adopt those standards. For example, 10 years ago we would have had an endless debate at SAP about how you would represent something on a screen that is actually a link. Today this is not an issue. If there is a blue line under it, it's a link. There is no need to write a user manual about it. We always ask ourselves ,could somebody who can purchase something on eBay use ByDesign. If yes, that's good. If no, back to the drawingboards.
Mobility
JF: How does mobility play for you? Is that going to be a core part of it? Application mobility is a combination of that usability, but you know where it is going – smaller, faster, cheaper.
RZ: You in the U.S. are on the forefront of all that. I talked recently to a couple of customers on the West Coast who said we not see the first generation of employees walking into our company who, when the CIO gets up on stage and says this is our policy, this is how we do it, hold up a gadget and say, You know what that is? This is an iPhone. Either your crappy corporate applications run on this device, or I'm not coming. So it's that important.
In ByDesign we had the luxury situation that we could really start on a green field. So we built mobility in right from the beginning. Business functionality in Business ByDesign has no knowledge of who is consuming it – is it a traditional device, is it a mobile device, is it an Excel spreadsheet with a macro function on it. So therefore with ByDesign I don't have to add a single line of code if I want a mobile scenario.
In the business suite as this is not exactly a green field acquisition for us, therefore we did the Sybase acquisition. And the Sybase acquisition on the mobility side gave us three amazing things: Sybase is the platform on this planet for all short message systems. Second Sybase has the required device management capability. Even a small SME easily has 30-40 mobile devices. What do you do if you lose one of them? So that is something that Sybase can do. And it gives us an amazing platform on which we can build mobile applications.
Fast Data & Data Extraction
JF: We talked about a term that is probably going to become popular again this year, which is fast data. In these mobile applications you need low latency. So can you talk about those dynamics?
RZ: Simply look at it from the perspective of some of our large customers from the food industry. I recently met with a few of them and they said, “We have such a landscape by now that between entering an order in the system and seeing it in the last information subsystem can take 3-4 days.” And if fast data has a meaning it means I see it 20 seconds later at the latest.
We also saw it from the consumer products companies. Sony does campaign management. The problem with the latency is they run campaigns for stuff that's out of stock already. So they make the situation worse. So fast data means I have real-time knowledge of my stock, and I run the campaign now. And I run that campaign while I still have that quantity in stock, and now I get rid of it. If there's a 5 day latency between me recognizing that there's surplus stock, I then run the campaign and it is way too late.
JF: The other thing that's coming out of our editorial is extracting the data. Ingesting and storing it is one thing, but extracting it via fast data is the real value. That requires a different mindset from a technical standpoint. You invested early in APIs, SOA-like stuff. But now you have an upswing. SOA is translating into the global Web platform. That's an operating system if you think about it.
RZ: It's basically the lingua franca of the way we do applications today. It's really not difficult to link up two systems and say I have this object here and that object there. And I technically can now move the message from here to there. Done deal. We know how to do this. The difficult thing is how do I convert order type 4 on this system to order with a fixed date on that system. So the next big thing is all of the semantics so you get that straight and then you can integrate. And that is what we've done with SOA, first on the technology layer that you can consume everything as a Web service, but the next thing really is the semantics.
For instance, take the latest announcement from SAPphire Sales OnDemand. Our large customers have probably 15 years of a process called sale-to-cash implemented. They love it, it works, super-scalable, just great. But they have absolutely no clue what their salesforce is doing. So every end-of-quarter is a surprise. So they say the next thing I need is lead-to-opportunity, because that gives me visibility up front. Now they do that for awhile, and some of our customers have done that with other products, but two years later they say I have a fantastic view of what my salesforce does. Lead-to-opportunity is great; lead-to-cash would be much better.
Now they need to integrate those two processes. And now they must translate the opportunity into a quote. And that is where we are back to the semantics and you have to say how do we translate that so that I am sure that I don't lose any of the information that I put into the opportunity and carry that forward into the quote.
What the companies really want is the entire process.