SAP Makes Tiny TREX in the Enterprise
April 30, 2009
I pay attention to SAP for three reasons. First, it is a compass company that helps me get a sense of what’s ahead for large, old-fashioned software and services companies. As more vendors push on premises software plus for fee services, the SAP “example” is quite important in my opinion.
Second, SAP made an investment in its own search system TREX and then last year permitted its venture arm to pump money into Endeca, a company that was founded in 1999. I think there was some Inktomi and Yahoo DNA in the company at its inception. The company, therefore, can provide a baked in search solution or point to a third party such as Endeca to crack the findability problems that the SAP file systems pose to some SAP users.
Third, Microsoft wanted to buy SAP. I learned in Europe last year that more than half of SAP’s installations are Windows centric. This means that SAP drinks and must survive on the Microsoft Kool-Aid. With search an interesting initiative at Microsoft, the dependence on Microsoft suggests to me that Fast ESP could be provided as an add on or a component of one or more Microsoft servers. In a nonce (a word I quite like), the TREX and third party solutions have a new challenge with which to deal.
I read with interest the story on CNBC called “SAP Profit Misses Expectations, Keeps Outlook”. You can read the item here. After mentioning tht operating profit slipped eight percent, SAP did return a profit. The CNBC item then stated:
Analysts have said cost management would be important this year as investors are keen to see whether SAP can defend its operating margin and market share against Oracle. SAP said it expects 2009 operating environment to remain challenging and that it will continue with cost-cutting measures, adding that measures initiated in October had “really taken hold”, without elaborating. SAP implemented measures to save costs in October after sales dropped sharply and said it would continue to slash costs amid a reduction of its workforce to 48,500 from 51,800 at the time. Walldorf-based SAP has given no target for its key software and software-related sales this year.
The questions that winged through my mind were:
- If Microsoft bundles Fast ESP with servers destined for SAP customers, what happens to TREX? Will it find itself in the same position as the Oracle SES10g sytem that is desperately seeking connectors and customers?
- Will SAP put more money into Endeca or step back? Either choice will have some implications for Endeca? Uncertainty in uncertain times is like an unknown exponent in an equation in my opinion.
- What about third party vendors who assert support for SAP systems? I don’t want to mention any of these folks, but I know that SAP connectivity and search can be fraught with challenges. Heck, integration can be downright exciting. If SAP goes Microsoft for search, this action may further churn the enterprise search waters.
My opinion is that SAP will have to focus on revenues and margins. If that means sacrificing employees and partners, my hunch is that the SAP ship will toss some excess baggage overboard. I don’t recall many life rafts dotting the sides of the building in lovely Waldorf.
Stephen Arnold, April 30, 2009