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Salesforce.com made a surprising announcement of its agreement to acquire Rypple, a software company that defines its product as a social goals application. I call this a surprise because although Salesforce has been extending its reach beyond sales and customer service to IT in providing a platform, tools and a database for building applications and storing data in the cloud, until now it has not entered directly into other lines of business. After its annual Dreamforce conference last summer, I analyzed the company’s strategy and products. Now I want to consider what this acquisition means for Salesforce and the human capital management market.

Rypple provides a new type of application that operates within the confines of cloud computing that enables managers and team members to collaborate in accomplishing specific objectives in an interactive manner. Perhaps Rypple’s largest challenge has been waiting for potential customers to catch up to this innovation and be willing to try a new approach to coaching team members. Unlike traditional HR and talent management applications, Rypple addresses goals and objectives, coaching and feedback, and performance reviews in a social environment.

I decided to check out the application for myself and ensure my analysis is as accurate as possible, which I think its uniqueness makes necessary to understand what Salesforce.com has acquired. Rypple focuses on three key activities: coaching toward defined objectives, recognition of work accomplished and feedback on the performance of the individual who has done it. The application runs in the cloud, which no doubt pleases Salesforce. It took me just minutes to set up in its cloud computing environment with the application and engage members of my team with it, even accessing it with its native application on the Apple iPhone. Rypple provides a comfortable user experience and intuitive methods for people to work toward common goals and socialize the focus.

Rypple has been active in getting testimonials from its customers, which include Facebook, Spotify, Rackspace, Kobo, Jive Software and other newer companies mostly in the Internet technology sector. Rypple had a simple pricing plan that offers some basics for free and charges $5 to $9 per month for more functionality for goals and reviews, coaching and feedback along with enterprise-level integration and support. Rypple also provides integration with Google, iPhone, Jive and Pivotal Tracker, which demonstrates its ease of access from other environments.

Now the question is what Salesforce.com plans to do with Rypple. It will create a new business unit and rename the produce Successforce and is likely to integrate this with Chatter as part of an effort to make that an enterprise backbone for social collaboration. This layering of applications complements Salesforce’s strategy for Chatter as it has done with its Service Cloud. In the short term I doubt that Salesforce will jump into the larger market for talent management and try to sell Rypple to human resources departments; this requires focused investments into this line of business, which it has not been doing as much as it has with IT. So the impact of the acquisition on the human capital management software market is  not clear. Salesforce  will also need to address the future of its partnership with Jobscience which applies aspects of CRM to administer and support HR and human capital management and has been providing them some significant proof points of its efforts.

Salesforce’s customers in sales and customer service should be eager to examine this application as should those looking to build upon its use of Force.com in the enterprise. Rypple also could help Salesforce gain an edge on Oracle’s Fusion for HCM that I assessed and its recently announced Oracle Social Network that lacks the vision and demonstration as this announcement. This move puts Salesforce.com more in line with the direction of what Saba and SuccessFactors (which is being acquired by SAP) are doing to advance social collaboration into human capital management. At the moment it is not clear if Salesforce will continue to support the existing stand-alone offering and pricing of Rypple, let alone the free version, so users should be cautious until the deal is final and Salesforce communicates the new direction. In any case this is an interesting move as Salesforce continues to surprise the market with its progressive applications of social collaboration for enterprise lines of business.

Regards,

Mark Smith – CEO & Chief Research Officer

 

I attended the annual SAP Influencer Summit (Twitter #SAPSummit), at which executives from SAP meet with analysts and customers from around the world to discuss the company’s direction. Pointing out that in 2012 SAP will reach its 40th anniversary of operations, chief communications officer Hubertus Kulpus and chief marketing officer Jonathan Becher kicked off the summit, then passed the microphones to co-CEO Jim Hagemann-Snabe and CTO Vishal Sikka for overviews of the business and technology strategies. They presented a well-rehearsed dialogue on SAP’s definition of its software business as being in two areas, the “system of record” and “system of engagement”; the first term describes its transactional applications and the second its portfolio of business analytics.

SAP has invested significant resources in expanding from its core of ERP applications. The latest investment is into cloud computing and human capital management with the costly acquisition of SuccessFactors. Its earlier acquisition of Sybase is now showing progress in mobile technology, which I have assessed, and it is progressing also in in-memory computing with SAP HANA, which it launched earlier in 2011 at its SAPPHIRE conference. All of these are important areas for the company’s present and future directions. CTO Vishal used an interesting approach in comparing the company’s technology advancements to events in Greek mythology, but I have to question the effectiveness of describing what SAP is trying to accomplish in the future in terms of the ancient past.

Nevertheless Vishal said SAP aims to help customers advance technologically with no or little disruption to their existing deployments of SAP. It is trying to achieve this by adapting SAP HANA to operate under its current analytic and transactional systems; if that effort succeeds, it could displace what SAP calls 20th century disk-based databases (particularly Oracle’s) with today’s memory-based ones. In addition SAP is integrating other technologies such as cloud and mobile with existing software deployments. Later in the discussion SAP presenters provided statistics and a roadmap of advancing its Sybase-based database technologies ASE and IQ to harmonize with SAP HANA.

Presenters also insisted that SAP is focused on the cloud, devoting the second day of the gathering exclusively to cloud computing and its strategies for the future. This is an important step forward as SAP works to convince influencers and customers that it provides not just applications in the cloud but also a platform and technologies to support them. The company has significant deployments of a variety of applications in the cloud today, and now it’s time to focus on perfecting a cloud platform that can support any type of application. For example, I recently assessed its Sales OnDemand offering, which shows potential if the organization can effectively engage sales organizations with direct marketing and sales. SAP also communicated the steady growth of its SAP Business ByDesign cloud computing application suite that is commonly compared to Oracle Fusion applications but not everyone is looking to rent an entire application suite in the cloud which is why its discrete efforts are so important. I believe that SAP has set expectations unnecessarily high for the role of SuccessFactors in its future cloud computing efforts. SAP definitely is committed to cloud computing, but the question is whether it can fend off major competitors, especially Salesforce.com and even Oracle, and the many smaller vendors that use the cloud to deliver applications to specific lines of business (LOB). In addition SAP has not addressed the customer challenges of integrating processes, applications and data that must interoperate whether they are in cloud computing environments from SAP or other providers and in on-premises applications from SAP. We recently found in our business data in the cloud benchmark research that organizations are just beginning to realize their challenges of just renting applications in the cloud with no information strategy or method to automate the interchange of data across them and the enterprise. Over the years SAP handled the challenges of application and data integration inside the enterprise with its SAP EIM and SAP NetWeaver; now it needs to do likewise with its cloud computing efforts. To do this might take acquiring a software vendor or licensing software from providers such as Dell Boomi, IBM, Informatica, iWay Software, Pervasive or SnapLogic to shorten time to market and ensure it can be as dominant in the cloud as it has become inside of enterprises today.

I see simplicity and accessibility of its applications as critical issues for SAP to address so that more organizations can experience its advances, and the company seems to be working on both. On the simplicity side, SAP has been working to improve the usability of its applications and showed the audience examples of new user interfaces for its upcoming releases. Presenters spoke of providing a “consumer-grade user experience” and demonstrated some examples, but I suspect SAP will have to invest plenty in marketing to prove this point. My own experience of what it’s delivering for mobility shows a need for more human factors in the design. I personally have seen improvement in my recent analysis of the new SAP Strategy Management applications available on the Apple iPad and how applications like this on a tablet are the right approach for the next generation of business computing. I found it odd that this application was not mentioned in the event at all as it is clearly a high-value business application. Regarding accessibility, SAP is making more applications available for trial and purchase through its online stores. Currently an Internet search will reveal many online outlets for SAP products, from business analytics to mobility, but none interlink smoothly to the others; I assume SAP is working on its own software superstore.

As for business analytics, SAP president Sanjay Poonen provided an overview that showed it is investing in all key aspects, from its platform and tools for BI and information management that I assessed earlier this year to applications for finance and operations using its EPM and GRC suites. SAP is making a case for an integrated approach to these “systems of engagement.” Its plan for unifying of them with cloud, mobile and to some extent collaborative platforms is more coherent than Oracle’s or IBM’s, although the latter is beginning to understand the importance of bringing its own software divisions together in a direct approach to the market. Now the challenge for SAP is to convince the lines of business of the value of its business analytics as it focuses on evolving its LOB applications to address real departmental needs better than the generic approaches of CRM, ERP and SCM.

At the summit I spent some time evaluating SAP in the LOB areas including marketing, sales and customer services as well as product- and service-centric industries and operational areas. While SAP has offerings of potential value in each of the lines of business, presenters emphasized its cloud and mobility technology advancements for business in general but did not explain the value of its business analytics offerings to the line of business areas. I wonder whether SAP is struggling to develop messages about why its products would be the best for each line of business. However, speakers did discuss the role of new mobile applications for travel and expenses tracking and order and customer information, and provided insight into its customer and human capital management areas. SAP realizes that application buyers now have a business orientation and leadership and responsibility to invest, but it will require more marketing to persuade them that it is not a vendor that requires more IT resources than others which is why cloud and mobile is so important for them.

SAP is leading the market in terms of the quantity of new applications that operate on smartphones and tablets. IBM, Infor, Oracle and others are not as far along, and you can find SAP’s breadth today in application stores including its SAP EcoHub and Apple’s AppStore. But SAP has to balance this with a mobile technology infrastructure to ensure it does not under invest in the unique design requirements of mobile applications such as collaboration and visualization elements to be competitive in the market. It is too early to tell how this will play out, but a point of concern is SAP’s emphasis on HTML5, for which it has been developing an application container in its Sybase Unwired Platform (SUP). It is risky to believe that developing to a lowest common denominator like HTML5 will help popularize applications across mobile platforms like Apple, Android, RIM and even Microsoft, each of which have unique design aspects in their native operating environments. So far my assessment is that the majority of SAP’s mobile applications are oriented more to tasks than to roles or applications. The company has not articulated a vision of how elements like voice interaction can advance mobility; this is already available on the Apple iPhone 4 and Siri, along with Google’s voice technologies. SAP also will have to deal with smaller competitors providing specific LOB applications such Peoplefluent in HCM or Roambi and MicroStrategy in business intelligence; these are accelerating their growth in mobility with advancements in the user experience and interactivity.

SAP has come a long way in the year since its last influencer summit in late 2010, which I assessed. It has been a busy year with advances from its new blend of management tools to new applications. SAP has shifted its priorities to the cloud and mobility at the right time to attract more customer commitment and market acceptance while still being an innovative supplier of enterprise software. While the technology is advancing quickly, SAP’s communications are lagging in explaining why it provides the best user experience and for line of business  and why they can collaborate better; that is at least as important as investing in the cloud and mobile infrastructures. If it can sharpen a more business-centered focus, SAP will remain relevant to business and IT buyers around the world for some time to come.

Regards,

Mark Smith – CEO & Chief Research Officer

Mark Smith – Twitter

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