A cheeky end-of-weekly on which articles hit (or didn’t) on diginomica and beyond.
diginomica hit: SAP’s Q2 shows core weakness by Dennis Howlett
quotage: ‘SAP’s second quarter 2013 results show genuine weakness in the core business for the first time. Results, which were posted this morning showed a decline of seven percent in year over year software sales from €1,059 to €982 million. The company attributes the bulk of this decline to weakness in its Asia Pacific and specifically its China market of seven percent. That cannot be the whole story because Asia Pacific represents a small fraction of whole company revenue.’
myPOV: In a series of three important pieces, Den analyzed SAP’s Q2 earnings, made further assessments after his earnings day interview with co-CEO Snabe, and tied the threads together in Weekend speculation – SAP, IBM and Accenture in 2015. Den takes issue with those who accepted SAP’s explanation that the seven percent software decline was due to Asia Pacific market turmoil. Instead, he argues that the core of SAP’s ERP business is starting to show revenue weakness – a position that holds up to common sense.
But in his weekend reflections piece, Den speculates that by 2015, $2 billion in cloud revenues and $2 billion in HANA revenues should make up for his estimated 10 percent year-to-year decline in the core ERP business. The result? ‘Net net, you still see growth for SAP but at lower levels than it has been accustomed.’ There’s more to the story, including the potential disruption to SIs, so you’ll need to check the comment thread for yourself. And chime in.
When Den says ‘SAP is playing the long game,’ there’s the challenge of playing two games: the investor (quarterly) results game and the customer value game. The two should intersect if SAP executes, but when McDermott proclaimed that ‘SAP is a cloud company’ while making the Q2 rounds, I wondered how that played to the on-premise SAP ERP customers footing the bulk of the bills.
If the collective view is that Ariba, SuccessFactors and ByDesign add up to a cloud company, then SAP faces the risk of complacency. The revenues are getting there, but when I think cloud I think lean business models, lightweight deployments, truly painless upgrades, and re-imagining processes in a way that users find truly compelling. Translation: SAP has work to do to achieve Den’s 2015 prediction.
Then again I have yet to meet someone high up in SAP’s leadership who does not grok what I just wrote. With HANA, mobile, cloud, and collaboration resources, SAP has the ability to do all those things and more – if it can stay hungry.
diginomica pick: Why mobile apps are staying native by Phil Wainewright
quotage: ‘You probably thought HTML5 would help you avoid lock-in to specific mobile platforms. You were probably hoping to use existing HTML skills in your development teams rather than having to bring in native app development skills. Now you’ll have to rethink that strategy, and put even more of your budget into mobile than you’d planned.’
myPOV: Avoiding lock-in has been a theme on a number of diginomica articles the past weeks; Phil takes it in a mobile direction, warning us not to get too attached to HTML5 solving app and device-specific dependencies. Riffing on a tech-heavy piece by iOS developer Drew Crawford, Phil summarizes the problem: device power and memory issues will impose performance constraints.
There’s more to the story, so give it a look. Some believe the limitations are iOS specific, creating a possible opening in the enterprise for Windows phones. Bottom line: the pros and cons of living in apps islands aren’t going away anytime soon..
Best of the rest
quotage: ‘Major software and information technology related providers were also pinned toward emerging markets for boosting revenues and profits, and the bubble apparently burst in Q2. High-tech firms Ericsson, Google, IBM, Intel, Microsoft and SAP all disappointed equity markets in their earnings reports or warnings this week.’
myPOV: There was a flurry of earnings news this week, most of it on the disappointing side. No one article pulled it all together, but Ferarri came the closest, tying in the rough earnings to a collective dependence on Asia Pacific markets. Ferrari notes that in his company’s recent global supply chain report, they identified the same worrisome theme: ‘Many manufacturers and retailers have grown dependent on China and other emerging market based revenues and profits to shore-up less than adequate results from Europe and U.S. geographic regions.’
quotage: ‘The tightly integrated supply chain (planning to ERP) was a mistake. The greatest advancements in analytics are happening with best-of-breed providers not with ERP providers. As a result, most companies will need to stabilize their ERP deployments and put them on maintenance, and begin the investment into new forms of analytics.’
myPOV: In my own secretive personal rankings (which I use to sort and prioritize my feeds), Cecere has leapfrogged as many bloggers as anyone. Why? Strong positions like the quotage above, informed by SCM subject expertise and meaty reads. The ‘Espresso’ blog I linked to is the distilled version of the Pot of Coffee post I liked even more. I also like the idea of bloggers providing beverages that suit the readership.
Back on topic, I largely agree with Cecere’s vision of the outside-in, responsive supply chain. I also agree it’s more than a simple evolution to achieve. Where we may differ is the ways to get there. I’m not sure tight integration with SCM and ERP is a mistake, for example. But her views are worth a read and for some, will the (caffienated) wake up call she intended.
quotage: ‘Cloud is hot, salaries are increasing, demand for hot tech skills is really getting big but what should a company do? If your firm is thinking of launching raids on a competitor for hot skills, read this first. You may have a bigger, long-term and structural problem instead.’
myPOV: As the weekend slips away from me, I get snarkier, so I’m glad to have arrived at my final selection – this one from master-of-barbs Brian Sommer. Before mocking bidding wars on cloud talent as ‘stupid’ (Brian counters: invest in your own employees instead), he gets to the clincher: ‘Seriously, do you want to work for a firm that couldn’t see a major trend emerging years in advance?’
A fair point. Brian then goes off on the limitations of salary surveys (tied to past data) and makes his case for talent investment. He sheds no tears on losing ‘mercenaries’ to competitors, and on that point, I agree. Let mercenaries walk. Any company that cultivates internal talent will lose some of it. But if your culture is compelling, you don’t lose sleep.
from JD-OD.com: SAP’s Ian Thain has been doing a series of posts and content on the JD-OD SAP startup videos project (60+ videos to date). After taping a Code Talk interview with me, Ian has written a series of blog posts featuring our videos – here’s the most recent.
from the interweb: diginomica’s own Stuart Lauchlan was part of a Lyrics webcast, Mind the Digital Marketing Gap: Interpreting New Findings from The Economist Intelligence Unit (free w/ registration). Geekwire radio put out a cool video episode on how data is turning the tide on disease.
If your webinar strategy is ramping up, the audio replay of Social Media Today’s Essential Guide to Webinars is worth a check. I haven’t yet featured podcasts from Steve Bogner and gang, but it’s essential listening for HCM enthusiasts, SAP or not. Check out the latest, Topics and Trends in HR Technology with Jason Overbrook. Oh, and if you want to hear the SAP earnings call replay for yourself, the mp3 file is available. Google’s earnings call replay is also posted.
It’s hard not to pick on the investor press but I think I have rights to do so given this was an earnings-oriented week. Motley Fool tried engaging with me on Twitter after I picked one of their blogs as the worst of the SAP earnings coverage – and by a wide margin. I have issues with sensational headlines like The Gory Details on SAP’s Double Fumble, but what really struck me about the post, aside from the lack of analysis: there was no attempt to reconcile the ‘gory details’ with the strikingly positive data on the bottom of the post regarding how Motley Fool’s own members view SAP stock (‘The stock has a four-star rating (out of five) at Motley Fool CAPS, with 346 members out of 393 rating the stock outperform’). Tip: careful about posting data that contradicts your own headlines.
Disclosure: when I mocked Jim Cramer on Twitter for his They Didn’t See The Cloud Coming post, which contradicted his own prior (positive) statements about SAP’s cloud play, I didn’t know that co-CEO Bill McDermott would be charming Cramer again during another interview in the Mad Money studio the following day. The Cramer debate on Twitter was a good one, and I’m not backing off from my view that ‘investotainment’ can be dangerous for the not-always-savvy individual investor.
That said, Cramer did a far better job this time around getting to the meat of cloud challenges and Asia Pacific struggles than he did in prior McDermott interviews, which played more like SAP infomercials. I’ve been hard on Cramer but I thought the most recent interview was substantive, at least by the standards of cable investment shows. I can’t believe I just typed that.
I agreed with Krishnan Subramanian that the Microsoft employees who held a funeral for iPhone and Blackberry were tasteless, not to mention premature, at least in the case of iOS. I was genuinely surprised to learn that Lumia, Nokia’s most popular phone, now sells more than all BlackBerry models put together. That’s a good stat for Windows phone advocates, though Josh Greenbaum’s sobering take on Microsoft’s re-org goes deeper.
Speaking of Microsoft, I enjoyed this piece with Bill Gates on the future of education, developers and ‘just about everything else’. Knowing how aware Gates is of Steve Jobs’ legacy, I have wondered if Gates will also plot a heroic re-assertion of power within his company to try to right the ship. Turns out I am not the only one speculating on Gates stepping in. Oh, and one sneaky story that slipped through this week: BI darling Tableau launched a cloud BI product.
Anyone making excuses for not blogging might want to contemplate that SAP’s Vijay Vijayasankar blogs most of his readable enterprise missives entirely on his iPhone. Maybe I should endorse Vijay on LinkedIn for ‘iPhone keypad blogger.’ I tweeted this week that I almost endorsed someone on LinkedIn for the skill ‘micro-management’. I soon learned that LinkedIn endorsement bombing is becoming a sophisticated thing. If you don’t like gmail’s new inbox sorting (I don’t), here’s how to disable it on desktop and mobile.
On the pros and cons of tech, it was cool to read that many of Peru’s poorest will have electricity thanks to solar power advancements. But on the other hand, this humanoid robot, designed to replace humans for high-risk jobs like toxic cleanups, looks way too much like the Terminator for my comfort level. I’ll take a dog over a walking piece of metal anyway, as in this great story (with video) of a service dog that accompanies his owner even while hang gliding.
If you’re looking for a Netflix streaming movie tonight, consider the steamy Meg Ryan noir flick In the Cut. Showtime viewers should give Ray Donovan a shot, while HBO peeps are stuck with the second season of The Newsroom, a show I’m watching but can’t stomach recommending to others. Breaking Bad can’t start soon enough. See you next week, possibly an abbreviated edition as I’ll be on airplanes.
Which #ensw pieces of merit did I miss? Let us know in the comments.
Image credits: Cheerful Chubby Man © RA Studio, Happy Children © Anna Omelchenko, Waiter Suggesting Bottle © Minerva Studiom, Overworked Businessman © Bloomua, Businessman Choosing Success or Failure Road © Creativa – all from Fotolia.com
Disclosure: SAP is a premier diginomica partner as of this writing.