SAP Q3 Results are out…..rounding up what some of the press says.

The Register in it’s typical style, suggests some challenges “SAP reassures market: Cloud is sustainable, just don’t look at our wheezing bookings

Whilst Reuters highlights below market expectations and the reassurance that Q4 will be good   “Just relax, Europe’s tech leader SAP tells investors, fourth quarter will be dynamite“.

The FT though focuses on warnings of the impact of the strength of the Euro on SAP earnings “SAP leads warnings on euro strength hit to earnings”

My POV – Q4 is always a strong quarter for any software vendor, it’s when the deals are made and the discounts applied. The underlying interest is cloud sales as a percentage of the SAP business and what impact it has on licence revenue. The 2 key questions being, firstly is SAP getting new revenue from the business that it is putting all its effort into (Cloud and HANA)? And secondly is SAP adding to the revenue base with service subscriptions? And the answer…..probably too difficult to say.

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I don’t normally do this….but

Someone reminded me it’s Christmas in just  10 weeks….again. And the retailers have started their stocking of the shelves and offers are starting to appear. Also today my Facebook page reminded me that last year a local A Capella group released a video for Christmas. I watched it again and it was still as good as last year, and I wanted to see how many of you would watch it on YouTube. See what you think click here.

This could get very messy……

I mentioned a growing scandal in South Africa a number of days ago. Well it seems that now others are concerned that links with those either under investigation or investigating, might drag them in and their links to those companies are now being questioned. It remains to be seen how this will be untangled, but there are some nervous corporates out there. Standard Bank is now considering its links to McKinsey and SAP and also having conversations with KPMG. As the old saying goes “there’s no smoke without a fire”. Question is where and what is the fire? Everyone is keeping very tight-lipped about it.

Retiring is sort of stressful……

The story goes…..it will be so relaxing when you retire.

It’s very early in my attempts to retire so maybe it’s just me, but so far I’ve not noticed this. More it’s a transformation. A move from paid for work to unpaid for work. One of my ex -work colleagues who is about to retire is using the phrase “Taking back control”  to describe this transformation. Unlike the politicians, I think he has hit the nail on the head.

There still has to be a plan, there still has to be financial records and controls, and execution is still key. And there still has to be work….it’s just different and more of what you want to do, rather than the dictatorial direction of the people at the top. But it’s still there….just work you want to do.

Never having been a business owner, I guess it’s a bit like that…….but my customer base is somewhat limited in comparison, just family and friends.

My journey has started, it will I guess never be complete until it is. I’ll still do a bit of SAP related things whilst people want me to, and it doesn’t impact my retirement because that is now the number 1 gig in town.

 

 

So exactly what is safe these days?

There’s a story in the Register that talks about a risk in SAP’s point of sale software. Even the biggest software suppliers are falling victims to flaws and exploits – so what can you do to lessen the risks in this dangerous digital world? The first thing to say is that things are as safe as the way you behave. Think of this as a war. You need to construct your defence, so think like a castle. You should have a layered defence, moats, walls, gates that you open and control who comes in, and you keep the crown jewels safe in the keep at the centre.

So think firewalls, think patches of each of your layers, and for your PII data think only expose what needs to be available on a need to know basis. And this is a never ending activity….because as fast as you build up your fortifications, someone somewhere will be digging that tunnel or designing that battering ram.

So keep up to date, stay vigilant and never, never become complacent.

Data – selling facts

I always visit the BBC News Website each day – I guess it’s my equivalent of a newspaper today – and today a story or rather facts caught my eye. Under the business section was a story about how the oil industry was crying out for support from the government in these suddenly low oil price times. This from organisations that were making record profits only months ago. Also on the page was a link to how much do you pay for your fuel, essentially a country by country comparison.

Diesel comparitive

Diesel comparative

Actually fascinating that the UK – an actual Oil Producer charges so much compared to others, Venezuela another producer charges so little at the other end of the scale. Why is it so? Well interestingly in both cases it is driven by politics and country finances. In the UK around 65% of the cost a consumer pays is tax to the government, whilst in Venezuela conversely it is the government subsidy that covers approximately 99% of the value.  Such extremes reflecting the extremes of political governance.

So sometimes the “facts” revealed by data can be astounding and produce outcomes that are not always expected.

 

http://www.bbc.co.uk/news/business-21238363

 

New CEO brings changes…..why are people acting surprised?

So in the next couple of weeks a new CEO brings a lot of management changes at SAP. But what is all the surprise and concern all about in the press?

A change  at the top always brings change to any organisation, so why should any change at SAP be expected to be any different? What is important is what does that change bring and how does it effect all the stakeholders. Let’s analyse what we know. From my perspective as one of SAP’s customers – change is only a concern if it brings change that impacts them adversely. As a customer those are things like higher costs, lower service, lower quality and directions that generate conflict with their individual business direction and strategy.

Costs – as an existing customer are they seeing increases?  At first you might think not, but actually yes a lot of them are with the gradual increase to Enterprise and Standard support – but this has been in place since 2008 and can’t be pinned on the new singular CEO as this started before his reign. In fact he has publicly stated that he has to effect change without impacting his loyal customer base – but maybe he should effect change by impacting customers and stopping any further rises now – that would be perceived as a positive gesture by the loyal base.

Lower service? Already SAP offer an SLA for Severity 1 support activities – as far as I know, still the only software vendor to do that – and certainly the only one to offer a full suite of products support organisation in their singular AGS team. In fact with the Customer connection program a further strengthening of the support offerings. Will a new CEO change that? Wouldn’t have thought so given how that immediately touches existing customers and with nothing to indicate so, as the solid leadership in this area remains active and intact.

Quality lower? Not aware of any immediate indication of that, and in very simple terms – those that are there today who do the delivery of products and services remain in place. Lay-offs in this cadre of the organisation isn’t apparent and certainly isn’t on the cards at the moment – in fact with the new CEO moving with family to the heart of the operation in Germany (not an insignificant undertaking) a sign to the contrary at this stage.

Change in direction? Well actually there is change in direction – but this isn’t a surprise, mobile, cloud and in memory. This is not new it started with Sybase, and was complemented by Successfactors, Hana and Ariba over a number of years – what is new is the increased determination to deliver this direction, but again a clear statement not at the expense of the existing customer base. That reflects an awareness of the way these directions can be adopted by customers – that in the new cloud and mobile based era we live in,  the whole premise is easy adoption and an almost seamless connectivity of business processes, whilst maintaining options for flexibility, scalability and rate of adoption.

For the new CEO there is a challenge – what differentiates SAP from it’s competitors? The reality, in all the areas there are competitors, the “me-too” products are out there.

I would offer some thoughts. To succeed a business needs to offer difference that it’s customers want and can digest. For any customer to improve its market positioning there are only three things a business can do, cost less, sell more or charge more. In today’s competitive market to charge more is just not an option anymore (even Apple are realising that) so that leaves cost less and sell more. So any offering from anybody offering something, be it software or food products has to entertain those two deliverables. A great example here is the current rumblings of, in fact, food retailing in the UK marketplace so long the domain of the big 5 retailers, where the new upstarts of Aldi, Lidl and Netto are costing less and selling more and more, disrupting the market place in a way that has permanent benefits for them and their new customers. Even Apple have looked inwardly and done the same with the two versions of their series 5 iPhone to try to safeguard their market position.

At the end of the day the choice will come down to the leadership within SAP and the decisions they make – let’s hope they make the correct ones!