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Microsoft Should Acquire SAP, Not Yahoo
Reservoir Hill writes "Randall Stross has an insightful article in the NY Times that says that if Microsoft thinks this is the right time to try a major acquisition on a scale it has never tried before, it should pursue not Yahoo but SAP, another major player in business software, thus merging Microsoft's strength with that of another. This is more likely to produce a happy outcome than yoking two ailing businesses, Yahoo's and Microsoft's own online offerings, and hoping for a miracle. Stross points to Oracle as a company whose acquisition strategy has picked up key products and customers while avoiding venturing too far from its core business, or overpaying. Stross recommends that Microsoft acquire SAP and leave it alone as an autonomous division — which would avoid a culture-clash integration fiasco. Besides, large enterprise customers are arguably the best customers a software company can have. A few dozen well-paying Fortune 500 customers may actually be more valuable than tens of millions of Web e-mail 'customers' who pay nothing for the service and whose attention is not highly valued by online advertisers."
The article is looking at things totally from the wrong point of view - it's as if they believe that Microsoft's problem is that it has a huge pile of cash & don't know what to do with it.
It's not. Microsoft's problem is Google. Google are eating them in the only arena where you can make serious money on the web (ad brokerage) and doing things to threaten MS's monopoly elsewhere (Google Apps, Photoshop on linux, Webmail, etc)
The Yahoo purchase might not be a solution to this problem, but a SAP purchase sure as hell won't be.
(and frankly, I can't imagine SAP's websphere/java using userbase being enthused with the next SAP release being C# only)
There are shills on slashdot. Apparently, I'm one of them.
Maybe it will SAP their will to live.
"Trademarks are the heraldry of the new feudalism."
SAP is already a nightmare, I can't imagine Microsoft expending serious efforts to roll it into the Windows Server platform. It'd be like watching a thousand train wrecks, again and again...
512 MB RAM, 20 GB disk, 200 GB transfer, five datacenters. $19.95/month.
SAP isn't so much a finished application as a license for the vendor to bleed you dry with "special" modules supposedly tailored to your business. In one way, Microsoft software doesn't fit that model (i.e. SAP isn't just a shrink wrapped product like Office). In another way, the endless bleeding of your tech dollars while your practices are changed to match the (in)capabilities of SAP would suit their revenue requirements perfectly. The real problem is that SAP is probably too labour intensive for a company like Microsoft.
MS has failed dismally with its various acquisitions, with very few exceptions. MS core money makers are OS and Office. They seem to be putting very little energy into Vista and fixing its problems, doing something which would make their core business sound. In fact it looks like they've just cut these adrift.
If Google had not emerged as the new obsession, they'd still be aiming for Apple with knock-off interfaces, Zune etc.
This is reaaly the MS tradgedy: instead of being customer focussed and delivering new exciting products and technologies (something such an organisation should be able to do with their huge resources), they have become competition focussed.
Engineering is the art of compromise.
Instead of paying dividends or buying back stock, let's overpay for companies and enrich investment bankers.
According to their Cash Flow Statement, they do pay dividends and they do buy back stock.
No it wouldn't.
Aquiring IBM would just make them brag about how they had something better in the pipeline whenever anyone released anything.
How can Google kill them?
Google does not make operating system, dictate standards, or make make office software that runs 99% of all businesses.
I think Microsoft fears loss of control. Its silly and sorry Microsoft but Google IS THE STANDARD in search engine technology. Is that going to kill your business? Please
MS should be fear Google but not kill the Hen that lays the golden egg to do it. Wasting billions wont destroy a set standard. ITs going to be very very hard if not impossible. Otherwise Microsoft would have been unseated long ago.
http://saveie6.com/
Many people don't realize that MS already has a business Strategy for ERP systems. They've bought several small to large system. Navision, Great Plains, Axapta, Solomons. They have built in house CRM system and they are creating the Dynamics Product. Getting TOP 500 customers doesn't make sense for MS. They have already spent their money and won't change or grow. It's the small-mid businesses that will be growing and MS will be right there providing them with the right software. MS already considered buying SAP 6 or 7 years ago and the culture clash and business model did not fit MS goal, which is every business to run on their ERP system.
Wrong platform: SAP runs on all sorts of platforms. Short of gutting the customer base there's no way they'll ever push platform support purely onto a windows platform. If they don't make that change though, then you'll have a mircrosoft division (SAP) selling you a product that runs on a combination of Solaris and Oracle. Talk about a non starter.
Wrong business model: SAP is a platform, meaning you buy it and then spend millions of dollars and years of consulting to "customize" it to your organization's needs. It's about as far from shrink wrap as you can get. Microsoft has virtually no experience in this kind of enterprise software market.
Wrong culture: SAP is about as germanic as a firm can be and, in their own way, every bit as committed to global domination as Microsoft is (albeit in a different market space). Trying to integrate the two firms, even into a loose confederation like, say, GE or Mitsubishi, and expecting anything other than all out, internal, bureaucratic warfare is willful ignorance (or gross stupidity).
Google is working on number 3, is rapidly getting the necessary position to do number 2, and regards number 1 as irrelevant.
The article is very likely right, but I don't see it happening, because what drives Microsoft is not so much profit as control and being seen as top dog in the computer world. Even if it proved even more profitable than their current business, MS would not be happy ceding its dominant position in the personal computer world and becoming a backstage purveyor of business software and services. MS would be obsessed with Google even if there were no threat from network applications because Google has been much more successful in an arena visible to the average person.
That way, they'll have most of the shit I desperately want to avoid in one spot.
Whose side are you on, Benedict?!
The "benefits" of SAP are quite debatable. I'd say that's true for practically ALL of these "enterprise class" applications that try to tackle the problem of integration of incoming sales orders, corporate accounting, shipping, human resources, etc. etc.
It's "beneficial" for the consultants who get highly paid to train employees on how to use the software, and for the people who customize the software for each business that takes them up on a purchase. But beyond that, it's unclear that it's *really* an efficient, worthwhile solution.
From past experience, I've observed a trend where these companies (whether it's Oracle, SAP, or you name it) make big promises, a company "bites" (knowing that the problems outlined really ARE big issues they'd LOVE to solve), and then the vendor proceeds to bleed millions of dollars out of their new customer. Eventually, something is constructed/customized that accomplishes SOME of the original goals, but does so in a rather clunky, bug-infested manner, while other items on the "want list" get bumped to "future stages of implementation" (which often never really get completed, because they're too costly and complicated). By this time, upper level management is forced to cost-justify the monstrosity, so they do their best to keep their jobs (and pride) by praising the software as a "big improvement" or "big step towards greater efficiency". Vendor then makes sure to quote them on that, and moves to the next sucker... uh, I mean customer.
IMHO, as disappointing as most Microsoft products are, they built their empire on the exact OPPOSITE philosophy. They promised "relatively inexpensive, out of the box" solutions to problems. Microsoft has never been about customizing their software for individual clients while charging by hours spent on them, nor do they tie customers to "maintenance contracts". They simply develop applications they feel will appeal to the majority of PC users out there, and make corrections and additions as they go, largely based on the collective feedback they receive.
So sure, you have silly things like people running around in large numbers, waving their MCSE certifications, expecting they should command top salaries because of them. But it's probably no more "silly" than companies scrambling to hire "experienced SAP implementation specialists" - when in reality, it just means you have people who helped muddle through the process of selling the stuff to previous customers. (You have no idea if they've ever done any customization work relevant to YOUR company's specific needs.)
I think SAP is a poor fit. Yahoo fits Microsoft's needs. Microsoft wants to further entrench user lock-in to their company. Buying SAP gets them more income directly, perhaps, but that money coming from big companies who can demand flexibility or hire IBM and go open source if need be. What Microsoft wants is to get their claws into more users' online services, which can be tied to Windows and MS specific protocols and formats. Their greatest fear is that the Web will allow other companies to supply al a user's basic needs via the browser, meaning those users can buy a Linux box or an OS X box or a Solaris box or an iPhone or a Blackberry or anything that is not Windows.
MS doesn't need more revenue. Their users will continue to pay because they have no choice. MS has their data and their networks locked up and the expense of switching is too high. MS doesn't want Yahoo to get more revenue. Almost all Yahoo users are Windows users and MS already collects their tithes. MS wants Yahoo to make sure Yahoo users are not given a choice of migrating to being Yahoo/Linux users or Yahoo/MacOS users instead of Yahoo/Windows users. Further they want the lion's share of the market so that most people are locked in. Right now, between Google and Yahoo, most users are not locked in for their mail and messaging and calendaring and in a short time, perhaps their office suite and IM and internet phone and internet TV and whatever else becomes a Web service. If they have most users then they can use that to break compatibility with Google and so Google will have to waste time, effort, and money trying to reverse engineer all of their proprietary apps, to the point of having to screen scrape to get data back to an open and usable format (which they already had had to do to some degree).
In summary, MS wants to buy people so they can use their normal tactics instead of competing to create a better product. If they were interested in making money on their acquisitions they would not have bought dozens of game companies and created the XBox. They want a presence in the living room so they can lock in people even more. Once they have lock-in they can take all the money they wish from people for perpetual upgrades and fees, so long as they make the pain of getting away from them greater than the cost at any given time.
Okay, I understand that MS is hurting and they need to do something. My answer is MS research. You have the development labs. You have the cool ideas. Use them. INNOVATE DAMMIT. Google didn't get to this point by the standard merger philosophy. MS, you didn't get to where you are by stupid mergers and desperate acts. You got there by providing something that people wanted, in a better manner or for cheaper. Keep doing it. PUSH the boundaries of what you're doing. Yeah, it's higher risk. But the reward is higher. You get the revenue, the soft benefit of everyone loving your company vs everyone hating it. You'll avoid the monopoly claims because you won't be a monopoly. The only downside is higher risk. You have the cash to offset that. Use it.
My current employer is a dominant player in our field, in a smallish country, that sells about a billion dollars of $stuff a year to 10,000 or so customers.
:)
Our $30m+ competition for a new ERP system came down to SAP vs Microsoft.
SAP gave us 50 reference companies of similar size in similar industries, 5 of them in the same country as us, 3 of whom let us visit on site and grill them about their setups.
Microsoft gave us one reference company smaller than us in our country AT ALL, and one company in the US in a similar industry, but 10 times smaller than us.
We got the distinct impression that we would be pretty much the largest deployment EVER of Microsoft Business Apps in an industry similar to ours, by an order or magnitude.
SAP won, of course.
Microsoft has a horrid bootstrapping problem. Until they build up experience and a userbase that people like us can go visit and actually SEE their stuff working, they're going to struggle to be competitive.
The other big plus for SAP was their upgrade attitude "We understand that most of our customers want to upgrade their core ERP around every 8-12 years, on a Saturday afternoon"
Oh, really? Sworn to never run core business components on a Microsoft platform? I doubt there are very many companies out there like that of the appreciable size necessary to run and get benefits out of running SAP. If Microsoft turns out to have the best platform for what you need to run, then you run a Microsoft platform.
What's more interesting is what happens to SAP's consultancy if Microsoft were to take over. There is a large percentage of SAP employees out there already who are less than enamored at all the cuts to their benefits and pay that they've had to endure since the tech boom. I know one woman who worked on the HR module who was getting billed out at 1300 dollars an hour. Another fellow who was pretty much the lead on developing the module left the tech world altogether to become a chef.
1) Knock down their own share price by announcing ridiculous hostile takeovers of companies that will never agree to it.
2) Buy back Microsoft stock on the (relatively) cheap
3) Profit!
Well, OK, the math isn't all that impressive, but slowly taking the company private through stock buybacks is considerably more sane than most other suggestions of what to do with their cash horde. If you ignore the huge chunks of stock controlled by Gates and a few other early owners it looks more plausible. Effectively going private over time by getting rid of the public stockholders would give Microsoft the ability to take more risks. Paying dividends to employee-owners is a much better model than handing out stock options now that the dot bomb insanity has wound down. (It's late, hopefully that's coherent...)
I would tag it "wtfissap" .
Copyright infringement is "piracy" in the same way DRM is "consumer rape"
That's simply not true.
Microsoft has been, for a lot of its history, very customer focused. They would not be able to achieve their current market position without being customer focused. It wasn't until they have secured their monopoly on Windows through OEM deals that they became the evil company they are today.
I can remember a couple brilliant examples where they outsmarted their competition by paying attention to what the market really wanted:
- Windows for Workgroups: They realized people did not want file and servers - they wanted to share files and printers and do e-mail. WfW, for all its failures, was a bright example of simplicity. With this, they more or less took the low-end of the NetWare business from Novell. This foothold allowed them to claim the rest of NetWare's share with NT.
- Visual Basic: People wanted an easy to use language to develop for Windows. The C/C++ tools they had were hideously expensive and painful to use (they more or less still are - C++ on Windows helps create the ugliest C++ I ever saw). VB surpassed all other development environments for Windows for flexibility, ease of use and productivity. It was the Ruby on Rails of its time. Sadly, it pretty much caused massive brain damage to a generation of programmers that never quite recovered.
Windows 3: People wanted GUIs but couldn't care less about bulletproof multitasking. OS/2 was great, but Windows 3 hit the sweet spot. 3.11 hit it even better with its TrueType rendering.
Windows 95: The last major overhaul of their consumer OS. Gave a nice (for the time) and easy to use GUI overhaul to the tired Windows 3 desktop. Thanks to the problems with the 68K to PPC transition, it was even stable compared to Macs - a first for MS.
http://www.dieblinkenlights.com
I agree, Google apps don't have the full feature set of desktop office software. But it is a way better for shared document editing than MS Office. Granted, I've never really seen Sharepoint used to it's best, so maybe that's not entirely true if you have the full MS kit setup.
If you have a group of people who need to work on a simple spreadsheet together to collect data (e.g. mailing addresses), a Google spreadsheet is perfect. Reasonably easy to learn, and excellent maintainability.
For some tasks, online document editors are going to dominate. For a shrinking portion of tasks, the desktop software will rule. Just like the old days, web mail did not exist. Today, for many (most?) people I would only recommend web mail.
Not everyone is a Slashdot level computer user...
"It was the Ruby on Rails of its time. Sadly, it pretty much caused massive brain damage to a generation of programmers that never quite recovered."
:)
Hey, that really DOES sound like Ruby on Rails
If you mod me down, I shall become more powerful than you could possibly imagine.
actually I work a lot with business students, and (at least in academic circles in Vienna) it's different (from my POV): most people ask me, if I boot my laptop in front of them*, if I am using that "ubuntu thing". Some of them never heard linux before, or just read it somewhere as a word. but many more seem to know ubuntu!
;)
I also have to do with a lot of students from the states, or different countries (since vienna business school is one major destination for most exchange students in the business sector) and I also experienced this a lot with them.
It was a topic not long ago with colleagues, and they shared the same experience. we were all together puzzled about this phenomenon.
my conclusion: ubuntu is in fact a very well known word in the world. also mostly for non-linux-users. and I thought otherwise. maybe it is only the experience we had from other words (alongsided with some disappointment) like linux, which leads us to the conclusion, that nobody knows "this or that", so we might not emphasize the true spreading of some special vocabulary
it is however of course not that famous as google.
and of course we will never know for sure, but somebody feel free to make a study about it, it is a good theme for a diploma
*) Yeah, posing in a nerd stylish way of course.
NetWare 3 was painful to the extreme. It would require you to set up a dedicated server just for sharing files and, IIRC, the machines that shared the printers took a very heavy performance hit. That and the NLM way of deploying server software made NW3 the worst thing I ever saw in server software. Of course, these were because of the compromises derived from running it on crippled computers. The catch is that it was too complex and expensive for small offices that only wanted to work smarter.
WfW mirrored the simple networking of the Macs of the time, but I am not sure it could be called a copy - it used some of the same code and protocols LAN Manager used. Besides that, it allowed people not to fork out the big bucks it would cost to migrate to Macs.
Architecturally, LAN Manager was vastly superior to NetWare 3 because if offered an environment with real multitasking, memory protection and central authentication. Windows NT grew out of this structure. It's useful to remember that OS/2 and NT performed better and were much less expensive than comparable Unix solutions running on the same hardware.
It's then unfair to say that WfW only succeeded because it sucked less. It was a good product for its time and filled a niche (the "we need a network without throwing away our current computers and programs" one) that needed filling badly.
http://www.dieblinkenlights.com