Interview with SAP’s Agassi

Excerpts from a Steve Gillmor interview with Shai Agassi, “SAP executive board member [who] has positioned the company in a leadership role in the emerging event-based, real-time architecture.”

In ‘IT doesn’t matter,’ there was a comparison between the IT and the railroad business, where we got into the Gold Rush of railroads and overbuilt infrastructure. At some point you didn’t need any more tracks, and the railroad business disappeared.

The one thing they forgot to mention is that the IT businessespecially an enterprise-applications businessreflects the business processes and the best practices in the business. And those keep changing all the while. It’s as if you have a train, but it takes a different route every year or so.

That’s the big shift that is happening. We have to assume that the business will change every year, two years, three years, and we have to build a track that knows how to move itself. We’re in the transportation business.

The first thing we said is, ‘Give me a platform where I can build thingsand reconnect them on the flyas I go through my new strategy, my new plan.’ Second, we went to the applications guys and said, ‘Service-enable your pieces so I can actually connect them easier. I don’t need to service-enable every time, I want you to do it once. And yes, I know it’s hard and I know it’s expensive, but you’ve got 20,000 customers who are paying for it through their maintenance.’

And then we said, ‘What can I innovate as a result of that, what can we build new that we couldn’t do before, which kind of processes can we do?’ There’s a whole family of end users and roles in the business that are almost ignored. And we’re targeting them now with this innovation.

We looked at the guys who did the repeatable, mundane, transactional business on a day-to-day basis, the guy who puts the data in financials into the GL [General Ledger], the girl who puts the accounts receivable into the accounts payables. What about the strategic knowledge workers in financials? The guys who do analysis of which companies to buy?

We’re shifting from different drivers for why the businesses are building their fabricthe infrastructure. Whereas before it was about management of resources, then it shifted to management of information, [now] we’re shifting into management of time.

The biggest driver is time to change. It could be a small event: Somebody writes me a note, and I need to respond to that note. A customer is calling in and their product is not there. Or an XML message comes in that says, ‘I’m doing an RFP, and I have 30 minutes to respond to a TI or an AMD.’ Can you respond to this in 30 minutes?

It’s beyond identity management. It’s now: Who deals with this event, the systems and the people? And the relationships exist already in the information space. They are the drivers for finding these pieces of information. The first thing I do Is that product in inventory? It’s an exception. Who deals with this exception? What’s the relationship between this product and this customer and the people that I have in my business, and how do I drive that event to resolution within 28 minutes and counting.

And you look at these short eventsthey happen so often in business. We’re dealing with millions of events a day. They propagate and they will create more and more events.

The fundamental engine underneath this I call the business event network. It’s the fundamental engine that drives events at all layers, propagates them and aggregates them.

Business Networking

The Economist writes about the use of social networking for making business connections:

A crop of business-networking firmsLinkedIn is the most popularthat let individuals mine the connections of friends-of-friends online, has sprung up in the past three years. After a quiet start, their e-mails are becoming ubiquitous. The idea is that finding a job, freelance project or new employee is easier when trusted friends make the introductions. Already, they have attracted hundreds of thousands of subscribers, mostly through word of mouth.

The potential is hugeif a way to charge a decent price can be found. America’s total hiring market, including online agencies such as Monster and Yahoo’s Hotjobs plus offline headhunters, was worth $5.3 billion in 2003, says Forrester Research. Trade shows, a rough proxy for the market for paying to meet industry contacts, are a $100 billion industry, says Tradeshow Week, a trade magazine.

Business models vary. Ryze, one of the few profitable e-schmoozing firms, offers public chatrooms and organises monthly, face-to-face networking events in big cities to supplement its online networking offering. It charges for a premium networking service, tickets to (offline) networking events and classified advertising.

LinkedIn, with over 400,000 registered users, is invitation-only. It focuses on facilitating one-to-one connections, not community-building. It claims to log 20,000 completed connections a month. In November, Sequoia, a leading venture capitalist, invested $4.7m in it. But so far, there are no plans to charge for its service.

Arguably more interesting are such outfits as Spoke, Visible Path and Contact Network Corporation. They target businesses directly, rather than just business people, and already routinely charge for their services. Spoke, the leader of this group, has raised over $20m from US Venture Partners, Sierra Ventures and others.

Their corporate versions of social networking software analyse (with their permission) employees’ address books, CVs and e-mail to create contact databases that can be mined by all workers. Thus, for instance, a sales person seeking an introduction at IBM could discover if any of his colleagues has a friend, ex-boss or business contact there.

Small-Businesses and Technology

Esther Dyson plans to looks at the small-business market for the next issue of Release 1.0. She writes:

The starting thesis: big businesses have already benefited significantly from IT and the attendant economies of scale – though you often can’t see the results because they are overshadowed by countervailing bureaucracy, politics, inefficiencies and waste. Where will the big wins for small business come from? for some [economies] of scale, outsourcing is key. for others, simply using the same technology available to large companies on a micro basis is the answer.

But I suspect a lot of benefit will come from rationalizing supply chains that the small companies are part of. Second question: what’s the best way for vendors to reach (sell to and support) these small companies? There are VARs, but it seems to me that often the best channel is through their suppliers or customers. E.g., if you want to sell to Ford or JC Penney or now Wal-mart, you have to use X… anyone who knows successes or failures in these arenas, or supporting or contrary examples – and economists to explain it all… I would love to hear from you.

Suggestions?

Document Management Solutions

Phil Windley had asked for suggestions on document management for the small business and invited comments.

  • Zope which was one of my first thoughts.
  • Vignette’s Business Workplaces which used to be called “Instraspect” and seems to have disappeared inside Vignette’s Web site.
  • Xerox DocuShare
  • WorldOx a solution used by small law firms according to Dennis Kennedy
  • AtomZ, who I’d always viewed as a search service (in fact Windley’s Enterprise Computing uses AtomZ for search.
  • Crown Peak, a hosted content management solution.
  • Of these, I have direct experience with Zope. Zope has the disadvantage that it would likely require some upfront customization to do just what is needed. On the other hand, the other’s probably do as well, if they’re customizable at all. If an out of the box solution is needed, that WorldOx, Intraspect, or DocuShare might be good candidates for further study.

    I’m surprised that no one mentioned NextPage or Groove. NextPage may be out of reach of small businesses and Groove is seen more as a collaboration space. On the other hand, document management is partly about collaboration—that’s why you need to manage documents most of the time.

    This exercise started out from a question from a friend. I think I’ll recommend he look at Zope first.

    Pricing in a Networked World

    Amy Wohl points to a paper by Nicholas Economides and Brian Viard. Writes Wohl:

    In it, its authors (Nicholas Economides of NYU’s Stern School of Business and Brian Viard of the Stanford Graduate School of Business) claim that it pays Microsoft, or any creator of both a required base product, and a complementary product that runs on that base product, to price the base product relatively low, attracting others to also build products that use the base product and create a large ecosystem.

    That, of course, is exactly what Microsoft does. In the article, its authors estimate that at the time of the antitrust trial Microsoft sold Windows for a street price of about $60, while sellling Office for about $240 (or about four times as much).

    The existence of many additional players with other complementary products on their base Windows product increases the value of both the base product and the complementary product, they claim. They can make up any losses created by the less than value pricing of the base product by charging more for the complementary product.

    Since improvements in either product are valuable to the vendor in both products (and presumably show that value in increased sales), the vendor (in this case Microsoft) is more likely to make such enhancements over time. This may sound counterintuitive to you (it did to me, at first), since we are inclined to believe that monopolists are disinclined to enhance their products.

    TECH TALK: As India Develops: Distribution Hubs

    Small- and medium-sized enterprises (SMEs) and Rural India are the twin engines for Indias economic growth and development. SMEs need technology solutions which can help them build their digital infrastructure as they search for global opportunities and seek to make operations more efficient. Rural India needs an array of services at affordable price points. The common thread is the need for distribution hubs which aggregate products and services. While SMEs need the equivalent of Tech 7-11s, Rural India needs RISC (Rural Infrastructure and Services Commons).

    I have written earlier [1 2a 2b 3a 3b 3c] about the need for Tech 7-11s, so I will summarise only the key points here.

    Tech 7-11s are local technology distribution hubs, much like the way the 7-11 convenience stores that dot East Asian neighbourhoods make available groceries and other products to families. The first chain of Tech 7-11s needs to be in SME clusters the hundreds of industrial estates that are present in urban and semi-urban India. Each of these clusters has hundreds of SMEs with very little usage of technology. Tech 7-11s bridge the gap between what technology can do and actually making those dreams a reality for these SMEs.

    In some ways, they are akin to the Apple stores in the US. They not only showcase the solutions (hardware-software bundles) but also help educate business owners and managers on how select the right technology and use it well by interacting with the experts at the stores. In India, this is one part of the value chain which hasnt yet happened for SMEs there is no easy way for them to learn the benefits of what value technology can bring for their business.

    The Tech 7-11s will solve one of the major issues that solution vendors have in reaching SMEs their large number, their small investment capabilities and their proliferation. It may not always be cost-effective to set up a direct sales force to touch the SMEs (though the yellow pages companies do just that, but they already have a product that is with the customers). Mass media is also not cost-effective in getting the message across to the SMEs. In fact, in India, the business and IT publications talk little about how technology can benefit the bottom of the enterprise pyramid.

    The Tech 7-11 is an aggregator of solutions and best practices. In some ways, it also becomes an information exchange as SMEs can start meeting and sharing their learnings. While trade shows and seminars can also offer that functionality, they are too infrequent and costly to organise. Think of the Tech 7-11 as a permalink to SMEs.

    The Tech 7-11s can complement the IBM-for-SMEs idea that we had discussed earlier. Taken together, the distribution hubs and the emanating spokes of consultants and implementors can help build out the digital platform for SMEs.

    Next Week: As India Develops (continued)

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