November 9, 2005 SDF SAP’s Shai Agassi

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Strategy and Vision: SAP’s Shai Agassi
By DJ Cline

On Wednesday, November 9, 2005, at a special SDForum Event in partnership with the ‘s strategy and vision.

Agassi began programming as a child. At 14, his father promised to buy him an Apple II computer in exchange for ten percent of his profits for the rest of his life (he kept his end of the bargain). He graduated with a bachelor’s degree in computer science from Technion, the Israel Institute of Technology. By 24, he started the first of four companies (TopTier) that he sold to SAP in 2001 for $400 million. He is now the youngest member of their Executive Board and president of SAP’s Product and Technology Group in Palo Alto. In his current position, he is betting on a services-based approach with Enterprise Services Architecture (ESA).

ESA impacts many products besides the SAP NetWeaver platform, what many consider the key component. It affects every product from mySAP Business Suite and SAP xApps to SAP Business One. Everything from CRM, supply chain, infrastructure, and composite applications to small business applications will change.

He described the consolidation and mergers in the database market as “pirates in the water” and his job is to sail faster. Otherwise, they take your stuff and put you on their boat. It is important to partner 98 percent of the time and compete hard in the last two percent. He thinks Microsoft sees gravity not size as the more important enemy. He thinks Oracle sees the database market as a mature industry with little new growth.

SAP believes that a lot of cross-pollination is about to happen. A common set of process backbones with the level of abstraction moving from the database layer to the object layer like NetWeaver. This migration and commoditization can be seen in the offering of essentially free databases at the bottom of the market. An important shift will be running the database from ‘on disk’ to ‘in memory’ for master data management, An example might be Google’s massive document storage condensed into a smaller data store, making the core of what Oracle does secondary.

In the 1990’s, the trend was that sales, manufacturing, distribution in a company would all have their own data silos to operate in. Having the ‘best of breed’ for their particular silos would hopefully improve the overall performance of the company. Agassi saw the need for integrated flow across the board. In 2004, NetWeaver 4.0 was the first homogenous release, opening up SAP’s backbone to any programmer who wants to develop on top of it. A community of over a thousand developers now build integration into the products on open market standards.

As for the jobless recovery, he says it takes an hour to drive from Los Gatos to Palo Alto. If there are no jobs, there are lots of unemployed people driving to very distant Starbucks. Silicon Valley is the only place that has the right combination of money, brains and infrastructure to innovate. It is the only place where you can find an individual who has worked in every phase of the business. He looks for people who start in product development, move on to sales or marketing, become CEO and then entrepreneur in residence at a large company. With over 25 years of experience, such people have learned leadership where he can say ‘go build me this business and I need it to be 200 million dollars in two years and you figure out how’.

The way to combat outsourcing is with automation. Customer support can be self-service and not in India or Indiana. For America to remain competitive, education infrastructure will be important but resiliency is too. America has a very resilient system that can avoid the kind of large corrections that may occur in China or Europe. No matter where they do business, it is important that ownership of the task is local. Local teams have local managers.

Asked whether he would wind up moving to corporate headquarters in Germany, he said the founder of SAP forbids him to move from Palo Alto. The reason they are successful is that we have people everywhere who know the local network and can bring in the next layer of leaders.

As an example of how globalization can improve relations, he talked about hosting the German president in his company headquarters in Israel. An SAP employee in Palo Alto pointed out that they had built a great relationship around innovation. They see themselves as one team, building a bridge to the future.

DJ Cline
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