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SAP exec says company has the right strategy

26.01.2006
As president and CEO of SAP Americas Inc. and a corporate officer of parent company SAP AG, Bill McDermott oversees the software vendor's business in North America and Latin America. As the cornerstone of its strategy, SAP is promoting its NetWeaver service-oriented architecture (SOA) platform in a bid to gain advantage over rival Oracle Corp. In turn, Oracle is feverishly crafting its own next-generation platform and suite, called Fusion, from software acquired through multiple acquisitions and its own E-Business Suite 11i. On Wednesday SAP announced favorable fourth-quarter numbers. McDermott talked about SAP's performance and how the fight with Oracle is going.

Your thoughts on the latest earnings announcements? We're strong everywhere. If you look at worldwide revenue for licenses, which is the greatest predictor of demand, we grew 18 percent globally. We've had 13 consecutive quarters of growth in North America and eight consecutive quarters of double-digit growth in license sales worldwide. We're strongest because our strategy is right.

How are you defining the strategy? The market is switching from buying component parts and best-of-breed applications and moving to buying a platform. SAP's platform is NetWeaver. It's all about taking component business processes and repurposing them to address the needs of a business and reinvent business models on the fly -- as opposed to the long, arduous task of piecing things together and not getting the benefits. The platform is the only open SOA-based one available, and we're co-innovating with partners on things like Mendocino [a desktop productivity enhancement project] with Microsoft, and many others.

There's been talk lately about your next-generation set of business applications. What can you tell us about that? It's there today. We have an enterprise SOA we branded Enterprise Services Architecture (ESA). NetWeaver [which enables ESA] is a services-enabled platform, and each year we see more and more services enabled. SAP is getting ready for its next generation by building more and more services on what's already there. It's evolutionary. We have it, and the competition [Oracle] talks about maybe having it in 2008.

Some critics argue that customers just want to buy SAP's business apps and not its technology infrastructure, which you're promoting. And isn't SAP's own code, the Advanced Business Application Programming language (ABAP), a proprietary technology? The customer has the right to decide. Therefore, we're totally open with SOA and won't close and lock them in. SAP has ABAP capability, but also we have Java capability. We do both. The bottom line is that it gets back to the platform. The customer can move to the market leader, SAP, which is fully integrated out of the box and is tailored to 29 industries on an SOA and it can handle ABAP and Java. It's there today. Or the customer can wait for Oracle, if they can afford to wait.

Oracle plans to close its acquisition of Siebel shortly, making it the CRM market leader. How does that affect SAP, which also has made strong efforts in CRM? Siebel was stronger when it was a stand-alone company. It was a focused company, a one-trick pony, which led to its demise. Oracle is taking Siebel and PeopleSoft and J.D. Edwards and the Oracle software to get to one common platform and one common code base, all the while doing internal housekeeping. By the time they get Fusion out, there won't be a market for it to serve.