Daily Archives: July 14, 2006

The Wired 40 (Innovative Companies)

This month, Wired released it’s annual list of The Wired 40, a list of trendsetting companies that Wired believes is leading the way. This list included software companies in the Supply Chain / Customer Relationship Management space.

In particular,

  • (10) SAP, for rolling its own code and crafting slick modules for everything from analytics to HR and
  • (15) SalesForce.com for its upcoming web-based business platform that will offer 2,000 on-demand applications from purchasing to recruiting.

Of course, the big question is why? In the case of SalesForce.com, it is clear. As one of the first true Software-as-a-Service providers, they paved the way for competitors in their own customer relationship management space, such as Salesboom.com, as well as true Software-as-a-Service providers in the sourcing space, such as Iasta and Procuri

But in the case of SAP, I find it murkier. What have they done in the last year that not only warrants a place on the list, but a place so high on the list? Are they big? Yes. (After all, Gartner Dataquest just ranked them #1 in the ERP, CRM, and SCM markets!) Are they growing? Yes. Are they releasing new applications every year? Yes. Will they continue to improve? Yes.  (And if you asked me which stock to buy as a long term investment, I’d probably pick SAP.)

But are they trendsetting? I don’t think so. In the past year, SAP has essentially been doing what it has always done, build business software and acquire new technology to supplement its offerings. And, as always, it has been cautious and methodical about what it builds, when, and what technologies it uses. It made a calculated decision when it embraced web-services, and it took its time moving toward an on-demand model.  The reality is that trendsetters are risk-takers, and the reality is that risk-taking isn’t always good for business, especially if you’re a software company.  (Now Google might be doing great today taking risks, but Netscape was doing great a decade ago when it was taking risks.  But not all risks pay off, and SAP knows that.  Trendsetters try to change the market, and some succeed.  However, more often than not, the companies that ultimately succeed are those companies that embrace the market, something SAP understands very well.)
If the list was a list of top software companies, or influential software companies, or even wildly successful software companies, then it would definitely deserve a (very) high place.  But the Wired 40 is a special list, a list of trendsetting risk-taking companies destined to lead the way into the future.  Now, there’s absolutely no question that SAP will continue to be around for a long time, but since SAP’s strength is the production of systems for well defined business processes, and not the definition of new process or software solutions, I fail to see how it is trendsetting like Google or SalesForce.com.  

Of course, if they continue on the path they hesitently started on with their recent acquisition of Praxis, then I might have to rethink my take on SAP as an SCM/CRM follower.  After all, as David Bush states over at e-Sourcing Forum, if they continue to acquire and integrate  best of breed on-demand solutions with traditional applications, they will be able to deliver a compelling client solution.  Of course, if they do the usual and simply use the Praxis’ acquisition to keep current SAP customers in the fold (of which Praxis has about 100), then they will be wasting a fine opportunity to earn that prestigious ranking that Wired bestowed upon them.

But that’s just me. Any differing opinions?