SAP.info: On-demand software is widely perceived to be the next stage of evolution in the IT industry. Why is this so?
John Wookey: On-demand represents an advance in a number of areas that I think customers benefit from – for example, the working relationship with the customer. From the very start of the development process, we have to have an intimate knowledge of the customer problem that we’re trying to solve. We have to think about end users and how they are going to accomplish their jobs at a very individual level.
The second thing is the rapid iteration cycles. Ondemand gives us an environment in which we can iterate very quickly with customers. They can use the software and give us immediate feedback– and we can respond to it in a few weeks or months as opposed to a few years, which is what they’re used to in on-premise software. This ability is going to allow software vendors to do a better job and customers to get more value from the software we’re delivering.
SAP.info: How would you describe SAP’s strategy for on-demand for large enterprises?
John Wookey: First, we’re directing our efforts toward building true SaaS (software as a service) applications – rather than trying to take existing on-premise solutions and refactor them for the on-demand marketplace. Second, we’re focusing on the SAP customer base and building around the idea of a singlesolution architecture. We want to leverage SAP Business Suite – something that the customers have received tremendous value from – as part of an on-demand service that we can deploy.
This allows customers to get more immediate benefit since they don’t have to redefine everything to a new on-demand system. Also, administering multiple systems is very difficult for customers. So we give people the opportunity to think about a single solution that they’re managing, which is really SAP Business Suite. The third part of the strategy is embracing what we’re calling SaaS 2.0. This is the second phase of technology evolution, where people understand that this environment is different and that you can solve a different category of problems with it.
SAP.info: What is motivating SAP to offer on-demand solutions to large enterprises?
John Wookey: Market buying patterns have obviously shifted; that’s one of the motivators. We’re finding that more and more of our own customers, while still committed to SAP Business Suite, are investing in solutions from on-demand vendors. So we want to make sure that we can offer something better and more compelling for our customers.
Another motivator is our long-term view that on-demand will play an increasing role in the buying decisions of the marketplace in general. On-demand, although simpler than our current on-premise solutions, meets specific business requirements of certain functional areas.
SAP.info: What solutions can SAP large enterprise customers expect in the months to come?
John Wookey: We will initially focus on a few key application areas – customer relationship management ondemand, strategic sourcing, contract life-cycle management, and expense management.
SAP.info: How will SAP large enterprise customers benefit from these new on-demand offerings?
John Wookey: The obvious advantage of on-demand is fairly simple. There is no capital investment required. Customers don’t pay a license to SAP, and they don’t have to invest in hardware or supporting software to allow the application to work. On-demand solutions will be seen as an operating expense as opposed to a capital investment that the company has to make. So, especially in these tough economic times, this is an important advantage.
Another benefit is that we can deliver incremental functionality on quarterly or half yearly cycles, so customers can give us frequent feedback, which we will respond to rapidly. This means that the solutions they deploy continually improve, based on their feedback and without the need to continually invest in IT resources.
SAP.info: Are there any disadvantages for customers?
John Wookey: There is a control you give up – and that’s something people need to understand. We’ll be putting out a new version of software at regular intervals, and it will be based on customer feedback. So when we upgrade the software, everybody goes at the same time. That’s one of the reasons it costs less – because we manage a single version of the software.
So, if you’re one of the large SAP customers and you’re used to saying, “I want my solution to work exactly this way for me,” then on-demand is not for you. Of course, we’ll work with these customers to try to figure out a way for the current software to support their business requirement. But if a customer has a really unique business requirement, we won’t invest it in the on-demand product because it won’t help the other customers that are using it. It’s critical that every investment we make is to the maximum benefit of the maximum number of customers.
SAP.info: Where do you see SAP’s on-demand offerings for large enterprises in the next few years?
John Wookey: For the next few years, we’ll still be focused on building line-of-business applications. But they will get broader and spread into new domains. The long-term view is that we’re going to have a set of processes that we need to support either on-demand or on premise. And regardless of what choice customers make, we need to be in a position to support those choices – and I think that will make us unique in the market.