A few weeks ago I had coffee with SAP co-CEO Bill McDermott. He made a point of saying that SAP is the industry innovator, while Oracle is the consolidator. Good positioning. Now Larry Ellison is fighting back, using a lawsuit that Oracle filed against a company SAP acquired years ago, TomorrowNow, as his ammunition.
There were some analysts who had consensus estimates even higher. But we did everything we said we would do. The market was saying, “SAP is hot, why didn’t you up guidance?” We like to keep promises. We’re in our most important quarter, and we reaffirmed guidance. I bet we’ll look back and say, “Hey, they did what they said they would.”
We took over as co-CEOs on February 8th. The stock is up 25% since then. SAP’s stock tends to run up before earnings. That just happens. We over-achieved with 20% software and software-related services growth globally. We did 42% year of year growth in BRIC and expanded our margins. That’s not bad.
I hate to be short-sighted here, but SAP stock took a beating today, falling nearly 6%. What’s your reaction?
We’ve revamped how we’re going to market. We have a new coverage model dedicated to those department heads. In the past we’d call into CEO and CIO. Now we’ll be going beyond that with new line of business specialists.
He is suggesting SAP’s former CEO, Leo Apotheker, was well aware of the theft. Apotheker now runs Oracle rival Hewlett-Packard.
TomorrowNow was a debacle for SAP. It was a tiny outfit that aimed to support Oracle customers, instead of Oracle. Clever, except they seemed to have stolen some Oracle intellectual property to do it. Dumb.
For McDermott, this is turning into a branding battle with Ellison that hits directly at where he is trying to position SAP. Here’s what he had to say:
Me: Ellison is stepping up his attack, accusing your former CEO of knowing that SAP stole Oracle software code. What do you make of this? It’s a clear suggestion that SAP is not an innovator.
McDermott: I never take any of this for more than it really is. It’s not personal. I think Oracle is using the TomorrowNow issue to target the real competition they’re after, HP. The fact that Leo used to work here is the hook.
TomorrowNow was a $10 million subsidiary of SAP. We acknowledge they did inappropriate downloads of information. We closed down the unit. And we believe the damages are in the tens of millions.
Oracle has chosen to use the courts time to process this case. I’ll be there on Tuesday.
What are you doing about it?
Look, HP is a tremendous partner of SAP. HP is also a tremendous customer. We’re sticking to that. In terms of the PR skirmishes, we’ve done a pretty good job staying out of that. We want to focus our time on the customers. I wish I had more time on my hands to create PR attention. It would be a lot of fun.
You said earlier today that your “money is on SAP” as Oracle starts to compete with Oracle’s new application suite, Fusion. I’m sure it is, but tell me the number one reason why SAP will win deals here.
If you think about what Oracle has done in consolidating the past, they bought point solutions. If you go for the new Fusion application story, you’re getting into the realm of disavowing the roll up strategy. You’re saying it’s about end to end connected business processes – order to cash by industry, procure to cash by industry – then targeted to market segments.
All of that is what we’ve been doing for 40 years. Oracle is asking for the battle of the century, especially with version 1. Businesses almost went under with 11i. Oracle isn’t an application company.
Oracle has their hands full with HP and IBM. Those two companies aren’t pushovers. We’re excited about Fusion. They’re waking up a sleeping dog.
Any change in your sales organization to ready the troops here?
At the enterprise level, SAP has done a good job providing relevant metrics by industry for C-level decision makers. Oracle and others including Salesforce.com have done well selling into lines of business such as sales and HR departments.
Original Article - http://blogs.forbes.com/victoriabarret/
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