Outside the SAP user conference in Atlanta, the cameras were rolling. Looking for sound bites were Oracle operatives, trying to get SAP customers to say – on camera and with SAPPHIRE logos as a backdrop – that SAP’s software was expensive, hard to deploy, and helped make the world safe for global terrorism and $400 haircuts. It was a pretty low-blow, albeit one that was largely deflected by the arrival of the local gendarmerie to hustle them off the premises.

Meanwhile, inside the show, I was comparing notes with colleagues and friends who cover Oracle. All of us have noticed a sudden surge in access, and an even light-hearted attitude towards otherwise negative coverage. I personally haven’t been taken to lunch in a long time, the Oracle analyst relations team’s version of being taken to the woodshed, and that despite some rather unflattering comments about their lawsuit against TomorrowNow. Other than forcing me to buy my own lunch – with a resulting downgrade in quality and taste – it made me wonder if there were any truth to the rumor. The rumor I’m starting right here and now. 

My rumor is the following: John Wookey, head of Oracle’s applications efforts and someone even his rivals at SAP concede is a overall good (not to mention talented) guy, is personally chagrined  at the lawsuit and the negative press (and analyst coverage) his group has been getting of late. Bear in mind John was given a truly Herculean task – (cf the Augean stables) and has pulled together a morass of product and technology into an increasingly relevant product suite in record time. You can argue about whether he is delivering what his bosses promised at the outset of the buying binge, and whether the actual value of what he has been handed – and thereby created –  is really worth the price they paid. But Wookey and his team are plugging away in impressive form, and customers are obviously voting with their dollars. 

In my rumor fantasy –  which I give a high probability of being largely true – Wookey wants to be recognized for his team’s achievements, and would rather not be tarred with the same brush that has been used to pillory his bosses’ strategies and methods. His personal efforts at being a nice guy are genuine, despite his company’s rapacious reputation. I for one would be happy to give him the benefit of the doubt – even if I have to buy my own lunch. The whole market can benefit from raising the level of discourse and dropping the attack tactics and disinformation campaigns. Nice guys don’t have to finish last.

On the plane home from SAP’s Sapphire conference, reflecting on the overall impact of the announcements and the gestalt of the conference, it’s easy to conclude that SAP will survive Shai Agassi’s abrupt departure. It may be hard on the press – who seemed to be craving the acerbic sound bites and pithy quotes that made Shai easy to interview – and it may be harder on analysts, such as myself, who now have to spend their time with four or five senior execs discerning the nuances of a set of strategies that Shai managed to keep in his head at the same time.

But what really matters are the customers and partners, and for these constituents, there was an almost eerie sense that things would be more than okay – and while missed, Shai would not be mourned. (He’s still alive and kicking, btw, and in case you want to see what he would have said at Sapphire, check out his blog here).

There’s a couple of reasons why this transition was so smooth, and in them lie some interesting reasons why business culture is vastly different – and potentially superior – east of the Atlantic. Reason one, independent of geography, was a good quarter. SAP made a major gamble in holding its conference on the first business day following its Q1 earnings announcement. Bad news would have make the whole show an exercise in exhorting demons and offering up excuses, with any positive message being buried in the avalanche of CYA activities. Signs of positive financial momentum can turn even the greatest skeptic into an optimist – for better or worse. 

The second reason is that SAP has a ton of great product and technology – in fact, a helluva lot more than many customers, analysts, press, and other observers often realize. This Sapphire was a great excuse to remind everyone – including not a few people inside  SAP itself – that the company’s vision of organic growth has paid off handsomely in ways that Oracle can only dream. Oracle can buy and buy and buy, but it will take more than the $22 billion it has so far spent to reach SAP’s product achievements – after all, they bought the customer bases of largely moribund companies like Siebel, PeopleSoft and JDE, and relatively few truly innovative companies.

Finally, the reason that the post-Shai era promises to be a good one is that the company’s German-style management culture assiduously cultivated an extremely broad array of talent, and rewarded that talent even before they were ever asked to step up to the plate and fill in for Shai. This breadth of talent starts at the board level and permeates the culture of the company all the way down. Shai himself was particularly good at hiring smart, talented people whose job descriptions did not include sycophantic agreement with everything that that top management said or did – unlike some other companies and managers I could mention (unfortunately, you don’t know who you are.)

The result was a unique transition, one that SAP should get lots of credit for engineering: most companies would have suffered the loss of a charismatic leader with a visible vacuum at the top. At SAP, there was no sense of great loss, and while no one who stepped up to the plate is necessarily as charismatic as Shai, their respective abilities to articulate the message and further the strategic goals of the company speak volumes about what collective management – as opposed to the cults of personal initiative that American companies tend to cultivate – can do in easing transition and ensuring continuity. No a bad showing after all.

SAP has bet a lot on NetWeaver, its platform-cum-SOA strategy, and has endured the slings and arrows of competitors belittling the fact that it didn’t reach universal adoption in the two-plus years since it was first announced.

But it seems like data from ASUG, the US-based SAP user group, augmented with a little analysis from SAP chief Henning Kagermann, would indicate that NetWeaver has finally started to matter in the market.

According to ASUG, 57 percent of users are planning to make NetWeaver their strategic platform by 2010. That’s not a bad start, though it begs the question of what to think about the remaining 43 percent. Here goes my best guess.  

First, we also know from ASUG that 75 percent of customers surveyed plan to be doing an upgrade by 2008. Considering that an upgrade to MySAP ERP – I mean SAP ERP  – requires NetWeaver, it’s safe to say that 75 percent of customers surveyed by ASUG will be running NetWeaver. We also know, thanks to a little color commentary by Kagermann, that a total of four percent of respondents said they would never deploy NetWeaver.

So, that leaves us with 57 percent doing NetWeaver as a strategic platform, with an additional 18 percent (the difference between 75 percent upgrading and the 57 percent doing strategic NetWeaver) planning on deploying NetWeaver without necessarily considering it strategic. If we take out the four percent that said they will never deploy NetWeaver, we’re left with 21 percent that are sitting on the fence. Or, as they say in the land of opportunity – 21 percent of the customer base is still ready to be convinced that NetWeaver might be right for them.

Does this mean that NetWeaver has arrived? I think it’s a pretty good sign. Bear in mind that an ASUG survey is not definitive – by definition it’s a self-selecting group of customers that are leaning towards SAP as a strategic partner anyway, hence their participation in the first place. And it only tells the NetWeaver story on this side of the Atlantic – which still leaves some pretty large markets unaccounted for.

But the general momentum seems to be indicative that critical mass has been achieved. It may not be in every shop, and it may not be the strategic platform of choice, but NetWeaver has arrived. Finally.   

Now that Salesforce.com has injected itself into the current presidential campaign, initially by supporting the Mitt Romney campaign's fundraising efforts, I think a comparison between Marc Benioff and John McCain is in order. I used to think of Benioff as a maverick, an entertaining one at that, and his pioneering efforts in software-as-a-service will forever be enshrined as one of the great follow-throughs in the software business. Marc was actually quite good at being a little more straightforward than the average software exec, the exigencies of marketing notwithstanding. The fact that I've known Marc in one capacity or another for almost 20 years helped in my positive assessment, or at least used to.

I also used to think of John McCain as a maverick, and though I don't know him personally, I know someone who flew with him as a pilot in the Navy, back in the day, and who has vouched for McCains personal integrity. McCain's lifestory, and his efforts on campaign finance reform, will forever enshrine him as a true American hero. And I mean it, no sarcasm or irony intended.

Why we're talking about Benioff and McCain in the same breath (or blog) is based on McCain's recent performance at a Baghdad marketplace and Marc's recent performance in the software marketplace — in the place columnist Herb Caen used to call Baghdad by the Bay, aka San Francisco.

If you want to read how McCain's straight talk reputation went off the rails in one quick visit to Iraq, check out Frank Rich of the New York Times deconstruction of McCain's visit and his claims that all was quiet at the bazaar (sorry, it's a premium page that requires a password.) Suffice to say that in one hot day, McCain's campaign suffered irrepairable harm by his need to pretend that the truth was something other than what it appeared to be. No one was fooled (okay, someone probably was, but even stalwart "pro-surge" Republicans recoiled at his claims.) 

And if you want to read how Benioff's reputation for straight talk keeps running off the rails, read this: at today's press conference, announcing the company's acquisition of Koral and its entry into the unstructured document management market, I asked a simple  question, which boiled down to this: would Marc comment on whether it was necessary for corporate America to move all its unstructured data onto SF.com servers in order to get the admittedly great functionality that the Koral acquisition will bring them. 

The answer Marc gave was a straight as — gee, just insert your own negative metaphor here, I'm at a loss to capture the convoluted answer in just one word. Suffice to say that one of Marc's loyal customers, sitting next to me, raised an eyebrow or two during Marc's answer, and then whispered "He didn't really answer the question, did he?" 

Nope, he didn't, and it doesn't get much worse than that, in my opinion. Whacking away at your own credibility in front of your customers isn't really what I would call a good idea. You can do it do the analysts (as Marc has done before), but one ought not to mislead the customers, or they'll start wondering what else one might be hiding. 

So let me bail Marc out of a tight spot and answer it for him. Yes, the real goal is to get the petabytes of unstructured corporate data out of the data centers and off the desktop and into SF.com's willing arms. At which point a major revolution will take place, as an unbelievable quantity of data — all the unstructured content, the stuff that grows on hard drives like weeds in July — becomes managed by SF.com. This of course would be a very bad day for lots of companies, particularly the ones that provision the corporate data centers and desktops of the world (read: everyone from IBM to Microsoft to Oracle, to, well, everyone). And it would be a major coup for SF.com, the equivalent of taking over the U.S. Mint or something similar. 

It's a pretty audacious vision, one that even a shy flower like Marc can't bring himself to mention. 

For reasons that escape me. Why wouldn't he want to talk about what his new unstructured vision means for the market? And why would he choose to weave and dodge a direct question instead of just coming out and telling it like it is? I think there's more than a few flaws in the vision (coming to a follow-up post any day now), but, as visions go, disruptive, market-shaking, headline grabbing, it's one of Marc's best. 

Unfortunately, like John McCain, Marc Benioff has forgotten that hiding the truth always creates a bigger mess than just coming out and saying what's really up. That's why I liked the old McCain — the Straight Talk Express — and that's why l liked the old Benioff. Time was I might have voted for McCain had he come up for election, and, time was I thought Benioff was truly one of a kind.

But the new Benioff, like the new McCain, is showing himself to be motivated by something that is anathema to not only his self, but his goals and interests too. I really wish that the "end of software" would have also included the end of software BS. Unfortunately, neither end is imminent, and the market — and Marc Benioff — is all the poorer for it. 

Shai Agassi has resigned from SAP amidst a massive reorganization of the company. It’s in many ways a sad day for SAP, and, if you’re spinning the news from the perspective of SAP’s competitors, it may or may not be a great day to be lining up to eat SAP’s lunch. While the line of succession looks strong, we’ll all have to wait until late April for Sapphire, SAP’s big annual user conference, to get the full details on what the new SAP will look and act like. 

First, let’s get the ugly rumor off the table. This management shift was in the works for some time, and has nothing to do with the Oracle lawsuit. About the only material effect of Agassi’s departure is that SAP will have to defend itself in the court of public opinion without one of the executives that companies like Oracle feared the most. And it will be up to SAP to put someone in Agassi’s place who can engender that same, let’s call it concern, among the competition.

It will also be up to SAP to make sure that the entrepreneurial spirit that Agassi brought to the company endures. Among just a few of his notable accomplishments was the growth of a massive ecosystem that has made SAP the company to partner with in Silicon Valley. Agassi also brought SAP into the platform business in a major way – one that has helped it square off against the rest of the Big Four: Oracle, IBM, and Microsoft. He made Duet, and thereby Office, the most sought after interface since the portal, and he pushed for a broad range of initiatives, some like SAP’s foray into SaaS, that are about to have a broad impact in the market, and others that we’ll be hearing about as the year unfolds. What’s perhaps most important for SAP to convey, and what will truly be the measure of this reorg, is if stability and entrenpreneurship can be maintained.

This is the classic dichotomy that all maturing companies face, and one that SAP faces at the time of its greatest competitive threat and greatest competitive opportunity. The good news for SAP is the depth of its managerial bench is impressive. Here's a brief rundown on some of the new execs who will have to make good on SAP’s future.

Doug Merritt, currently an EVP at SAP in Palo Alto, will get the lion's share of global responsibility for product, and will take ownership of Duet, GRC, and some of the other successes that Agassi helped initiate. Jim Hagemann Snabe, will take over responsibility for the MySAP suite, and in general get a much-deserved higher profile in the company. Peter Graf will gain an elevated position in global marketing. I'll profile some of the other changes as they become known. Other power-hitters, like Leo Apotheker, Kraus Kreplin, Peter Zencke, and others are staying put or moving into more important roles

In the end, all companies go through this kind of management shift. SAP has, for better or worse, initiated a major shift at a one of the more critical inflection points in its history. The stakes just got a little higher in the already high-stakes game of enterprise software.  

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Okay, I've had another day to read the suit, and I'm convinced more than ever that Oracle has no case against SAP and TomorrowNow, at least as constituted in the complaint as I read it. There may have been rogue operators doing unsanctioned downloads, but the case as it is written would wash out quickly in my court.

 Here's just a few of the key excerpts from the complaint, and why I think they're going nowhere fast. 

 “Had Defendants refrained from engaging in the unlawful and wrongful conduct described in this complaint, there is a substantial probability that Oracle support customers would have initiated, renewed, or expanded support contracts and software licenses with Oracle rather than Defendants.”

What?  SAP and TomorrowNow had to cheat to get customers to move to TomorrowNow? The customers who make the switch all did so on the merits of the business model, to whit: 22% maintenance is too much to pay for an application that’s no longer strategic. There is nothing in Customer Connect that could help TomorrowNow steal customers — the economic case for TomorrowNow's services speaks for itself.  

“Defendants were aware of these economic relationships and intended to interfere with and disrupt them by unlawfully and wrongfully taking and using Oracle’s Software and Support Materials to obtain and retain Oracle’s own customers at little to no cost.”

Clearly TomorrowNow didn’t need Oracle materials to obtain customers – they had already signed them up in droves prior to November 2006, when the alleged downloading took place. The first part of the sentence is true — everyone who watches Oracle knows that maintenance revenues are sacrosanct. But, again, Oracle's attempts to prove that stealing anything from Oracle could help win over a customer is going to be interesting to watch.

 “As a result of Defendants’ acts, the above-described relationships have been actually disrupted, causing certain current and prospective support clients to contract with Defendants instead of Oracle for their software support and maintenance and, in some cases, for their enterprise software.”

In other words, something in the koolaid that TomorrowNow was able to mix based on their alleged knowledge of Oracle trade secrets made those poor companies become a TomorrowNow customer against their will. And weren't these already TomorrowNow customers? So if you're already a TomorrowNow customer how does ex post facto downloads cause you to drop Oracle?

Tell it to the judge.

Today's announcement that Oracle is suing SAP for allegedly using its TomorrowNow subsidiary to steal software code and other nasties highlights the effectiveness with which TomorrowNow is hitting Oracle where it hurts: right in the old maintenance fee. The lawsuit claims that SAP systematically stole software as part of a concerted effort to beat Oracle, etc. etc. But the real story is that TomorrowNow, which goes around taking over maintenance contracts from PeopleSoft, JDE, and Siebel customers — at 50 cents to the Oracle dollar — has finally gotten under Oracle's skin. Not surprising: cutting maintenance in half can save hundreds of thousands, or even millions, of dollars a year for the company that's not buying into Oracle's Applications Unlimited or Fusion Applications strategy. And, with the lawsuit as a barometer of TomorrowNow's effectiveness, they must be doing a helluva job.

Why would Oracle care? Simple: Maintenance revenue significantly outstrips license revenue in the world of high finance a la Oracle. In the most recent quarter applications license revenue was $1.3 billion, maintenance was $2.3 billion. So you can assume that TomorrowNow is starting to make a dent in these numbers, and that's why Oracle finally filed suit. 

Wait, couldn't there be some merit to the suit? After all, Oracle claims it can trace downloads from its servers directly to TomorrowNow computers, and that this theft is an "essential — and illegal — part of SAP's competitive strategy." The suit further claims that this activity "enables SAP to offer cut rate support services…. and to attempt to lure [customers] to SAP".

Two problems with this. The first is that TomorrowNow has been in business as an SAP subsidiary since 2004, and had been successfully offering these 'cut rate" services without the benefit of the alleged theft, which occured last November. Indeed, one wonders what in the allegedly stolen software and documentation could actually let SAP offer better services? If Oracle's own IP can prove that there's a better way to support Oracle's products, then Oracle had better hope this suit never goes to trial: Then everyone could find out whatever secret sauce gives SAP its "edge," and then go out and offer "cut rate" support services for Oracle software as well. 

But the real reason I have trouble with "essential" and "part of SAP's competitive strategy" is that SAP has been waiting since 2004 for this lawsuit, and set up a series of virtual and real walls between TomorrowNow and SAP in anticipation of this very kind of suit. If, as the suit alleges, there was some downloading from SAP or TomorrowNow computers, it was a rogue operation that in no way could have been as sanctioned by management. To assume anything else would be more than foolish — it would be just plain wrong. The bottom line is that TomorrowNow doesn't need to steal anything from Oracle to take over its customers' maintenance contracts: the customer are legally entitled to all the software and documentation up to the moment their contract with Oracle is over. In fact, TomorrowNow encourages these customers to get every piece of code and doc they are owed — even software they may have absolutely no intention of ever installing — so that if, by chance, they need to do an install after the Oracle contract is over, TomorrowNow can do it for them. Legally, by the way.

In the end, the lawsuit as barometer shows that the pressure is rising as TomorrowNow's business model continues to take revenues that Oracle desperately needs to realize its business model. It will be interesting to see how this one pans out. At a minimum, it proves that SAP's TomorrowNow strategy is working — and that Oracle will stop at nothing to stop it. 

A few nights ago I had the strangest dream. Microsoft had finally decided to go all out and make Dynamics its flagship product – the horse that pulls the cart, the engine that drives the train – instead of the other way around. And so in my dream – I swear this is true – Steve Ballmer took over as head of Dynamics. The rest of the dream is almost immaterial, and, I awoke thinking that the vacation I was planning couldn’t come soon enough.

So imagine my surprise later that day when Microsoft announced that Satya Nadella, after a matter of months as the head of Dynamics, was moving over to the Search and Ad Platform Group, which, as the name implies, is clearly slated for a name change any time soon. I think the "Get Google Group" would be a better choice, but, hey, maybe they mean to turn Search and Ad Platform into an acronym – SAP, in case you hadn’t noticed. That oughta get someone’s mojo working overtime.

But I digress. I don’t suppose my dream will come true, but the ground is now set for a succession search that, quite frankly, will have trouble turning up a better candidate than Ballmer. Not only is he the ultimate insider, and of course one heckuva smart guy, but he is also someone who could really make Dynamics a household name. I was there in the 1980s when Ballmer helped steer this fledgling little software company called, of all things, Microsoft, into the household, and boardroom, name that it is today. He can do it again, I’m convinced, and Larry Ellison wouldn’t be able to do a thing to stop him.

Of course, that won’t happen, mostly because Microsoft doesn’t want to win in enterprise applications that badly, or that quickly. Instead, the company is pushing for incremental growth, while hammering away at its best natural ally, SAP, to the delight of the aforementioned Larry Ellison. Aforementioned’s bad dream, the one that would really ruin his day, is a détente between Microsoft and SAP that would allow his two biggest rivals to focus on putting Oracle out of business. .NETWeaver would be just the beginning of what the two companies could do together. Of course, that won’t happen either.  

What will probably happen, getting back to the Nadella succession question, is that Tami Reller, corporate vice president and all around good person, will take over. Of course she’s no Ballmer, but there’s only one SteveB anyway. What Tami will be able to do is make sure that Dynamics’ momentum doesn’t get lost in the transition. The customers love her, the partners love her, her staff seems pretty fond of her too. And she’ll be able to keep the synergy flowing with the rest of Microsoft, a synergy that has finally begun to make a huge difference in the market, something an outsider will have trouble doing.

As for dreaming about Steve Ballmer, I promise I’ll take a vacation soon. It’s clearly time.

When I read this morning the obituary of John Backus, one of the key creators of FORTRAN, I was surprised to learn that this venerable language was born in the middle of the Eisenhower administration, which makes it 50 years old and shows us all how much our industry is greying. It's also a sobering thought to see these early pioneers heading off to computing's Elysian Fields, particularly at a time when so much more hard work is left to be done. 

When I was a kid out of college, learning to program because that's where the jobs were, FORTRAN was the language. In part for the tight correlations between the language and the largely technical tasks that it was built to solve, and in part because by then (the early 1980s) FORTRAN had become "structured", and the new disciplines that structured programming lent to the world of computer science were eagerly sought by the generation of geeks that I had joined up with. 

Structured programming was a revolution because it was the birthplace of concepts, such as reusability and object-orientation, that are still with us today. Of course, no one called FORTRAN an object-oriented language, that was left up to another generation of pioneers, the originators of C and C++. Nor was FORTRAN as reusable as we would have liked — line editors and other clumsy programmer's toolkits forced us to keep our favorite reusable sub-routines in jerry-rigged libraries hidden in the arcane reaches of the mainframe file systems we were all prisoners of. But FORTRAN was the place where many of these concepts first saw the light of day, and when it came time for the FORTRAN gang to move on to its successors — Pascal, C, C++, and eventually Java, among others — what we learned at the feet of masters like John Backus formed the basis for how the world of computing still turns today. 

What's important to remember is that Backus' quest lives on. His goal was to free computer users from what the New York Times' John Lohr calls the "programming priesthood." That's still a noble quest today. As we strive towards the usual buzzterms of "IT/business alignment" and an enhanced "user experience", it's worth noting that the journey started 50 years ago in the brain of one man. It's a journey that promises to last another 50 years, at least. 

When it comes to John Backus, Sir Isaac Newton's famous homage to the collective endeavors of humanity — "If I have seen further it is by standing on the shoulders of giants" –  says it all. FORTRAN is one of those crucibles of human endeavor, and Backus was the giant who made it happen. 

No good idea goes unchallenged, and today’s announcement at the Microsoft Dynamics Convergence conference that Office has become the new client for its enterprise applications suite follows on the extraordinary success that the Office gang has already registered in the SAP market. That success , aka Duet, has been one of the bright spots in SAP’s otherwise lackluster financial performance of late.

So Microsoft Dynamics, which more and more wants its partners to duke it out in the market with SAP, particularly the growing number of global systems integrators who made SAP the household name it is today (okay, in my house, anyway), has decided to launch its own version of Duet.

Sort of. Duet is really a set of pre-packaged workflows around specific business processes, whereas Microsoft Dynamics, techies that they are, released a more general purpose desktop platform, based on its Sharepoint portal and Office Applications suite. This platform – which comes with a “please use for new customer apps development” sticky note on every box – builds on the momentum that Microsoft has seen from the use of Office, particularly Outlook, as the interface to its hot-selling Microsoft CRM product.

What Microsoft wants to do at a minimum is level the playing field for its partners, who have been just a little jealous of how well Duet has done, and how hard its been to compete against a Microsoft product that, as Dynamics partners, they’re actually not allowed to sell. That’s right – the partners most adept at selling  into the enterprise software market haven’t been able to sell one of the hottest new capabilities in the industry. I’m sure there was a reason for this that made sense to someone somewhere.

But no matter, the leapfrog effect should make up for this strategic blip. Dynamics is focusing  on a toolkit approach, which to date SAP has eschewed in favor of a more  packaged solution approach. So the next leapfrog moment will undoubtedly come with an announcement of a Duet SDK from SAP. Watch this space.

The main question now dogging Dynamics is how fast can it get its customers to upgrade to Vista and Office 2007 in order to take advantage of the new Duet-like functionality. Part of the problem may be solved when attendees at the Convergence conference open up their conference bag, where they’ll find a free version of Office 2007 waiting to installed. Will that be enough? Not too sure. Office 2007 requires all users in an organization to upgrade, or face a more than annoying incompatibility problem between Office 2007 and previous versions. Of course, SAP so far doesn’t require Office 2007 and Vista, which may give it an edge until the new Office and Vista technology gains critical mass – and a critical business case – in the Dynamics market.

Ain’t leapfrog fun?