Marc Benioff’s Untraditional Love Affair With SAP

March 27, 2012 by admin

It’s comforting to know that Marc Benioff and Salesforce.com “have a very good relationship with SAP” and that Benioff himself has “a very good working relationship with Bill McDermott,” the co-CEO of SAP.

So, given that everything between the two companies is all lovey-dovey, SAP shouldn’t mind that Benioff says that “SAP’s HR product kind of sucks,” or that SuccessFactors founder and CEO Lars Dalgaard has just killed his company by agreeing to be acquired by SAP. As Benioff put it, “[Lars] had a great company and now it’s gone.”

Now, I’m no Dr. Phil when it comes to divining matters of the heart, but even my caveman-ish sensibilities have a hard time squaring the “we have a very good relationship” thing with those other comments.

Why send candy and sweet-talk to the world’s largest and most-successful business software company (that would be SAP), while simultaneously saying of SAP, “I don’t really get what the competitors are doing?”

Benioff revealed the source of his untraditional ardor toward SAP during his company’s last earnings call, and paradoxically—or perhaps not—it came within minutes of his cheeky comments mentioned above.

“We look at our big SAP customers,” Benioff said on the call, “many of the ones that I mentioned and others, we’re probably in now every major SAP customer in the world and as we look at these big SAP customers whether we’re there in a big way or a little way or in emerging way, they want us to be able to work with SAP.”

That sentence says it all: in describing “big SAP customers” and “every major SAP customer” and back again to “big SAP customers,” Benioff spells out the ultimate requirement made by those SAP customers: that any and all add-on applications vendor must “be able to work with SAP.”

So Marc Benioff, it turns out, doesn’t really love SAP at all—but he sure loves SAP’s 186,000 customers.

Which means that the big question for Benioff is, do those SAP customers love him back? And if so, is it just a fling? Can the relationship endure past these early stages?

Benioff says it can—and that’s not exactly a surprise—but what I do find rather shocking in his claim is that he bases it entirely on an old-fashioned and rapidly disappearing model of how modern corporations operate: via the separate and detached worlds of the “back office” which in his view is ponderous and low-value, and the “front office” which is cool and slick.

Here’s how Benioff tries to conjure up this image from yesteryear among SAP customers: “We are becoming their front office and SAP is kind of their legacy back office and we need to hook those two things together—that’s a critical thing for us to be able to do.”

But what happens when companies shatter those antiquated operational models of disconnected front office and back office and restructure themselves, as many companies are doing today, not around their internal operations but instead around their customers and the wants and needs of those customers?

What happens to that Salesforce.com opportunity of nibbling around the edges as SAP continues to help customers transform themselves into fast-moving and customer-focused businesses that have obliterated the silos separating back office from front office from middle office?

Here’s how Vishal Sikka, SAP executive board member for innovation and technology, described that dynamic in comments made a few months ago when Salesforce.com offered an additional rationale for its extreme dependence on SAP and its customers:

“Salesforce.com offers a small sliver of what SAP can do, and customers recognize this,” said Sikka in an article written by Chris Kanaracus of IDG.

“A true social enterprise strategy is about empowering people to work, think and interact in new ways, tackle business challenges in new ways, and connect more directly with each other and with the data that matters,” he said. “This is only truly possible with deep integration of front-end applications that empower the user with core back-end business processes and data. Only SAP brings this expertise, and it is in every aspect of our product portfolio.”

The difference between those two worldviews couldn’t be more stark: Benioff looks to the models of the past to rationalize his criticisms and dismissals of SAP, while Sikka looks to the rapidly emerging future to describe the new ways in which a fully integrated social-enterprise strategy transcends those antiquated approaches.

It’s also why Sikka chided Benioff last year for yet again attempting to portray the world of enterprise software in ways that might match Salesforce.com’s short-term goals but that fail to address customer’s long-term needs. Here’s a great comment from Sikka excerpted from a column I wrote at the time about Sikka’s vision of an enterprise-computing world not defined by cloud or not-cloud, but rather by value to customers:

“One particular leader in our industry talks about ‘no software,’ yet even as he is up there talking about the concept of ‘no software, he is in fact standing on the backs of software.
“Well, you, sir,” Sikka said in reference to Benioff, “are standing on the shoulders of software!”

And that’s precisely why I think Marc Benioff’s outlook toward SAP is leading him directly to nothing but heartache. Because as SAP continues to equip customers with the solutions they need to achieve that full and rich integration of applications, processes, and data—and as SAP offers those solutions across the relevant market categories of applications, analytics, database and technology, cloud, and mobile—Marc Benioff will need more than witty comments and clever soundbites to continue wooing those big SAP customers whose affection he so desperately seeks.

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