At SAP, putting software in drive

High-ranking exec Shai Agassi looks to Henry Ford's heyday as he faces present-day software challenges.

Dan Farber
5 min read
Shai Agassi has a technical mind, as one would expect of the president of product and technology for the world's largest enterprise software applications vendor, SAP.

But this fast-rising star at SAP has also proved deft at kicking the tires of the automobile industry when discussing where the enterprise software applications industry is headed and the challenges it faces.

Agassi, whose responsibilities include oversight of SAP's software, services and development of existing SAP products for its next-generation technology platform, recently sat down with CNET News.com to discuss the road SAP is traveling.

Q: You said that working with Hasso Plattner, who is co-founder and chairman of SAP, was like working with Henry Ford. Considering what is going on with Ford Motor at this point and your last quarter wasn't that spectacular in comparison to Oracle, how is your thinking going forward in terms of your growth?
Agassi: These are two different questions. One, the comparison between Hasso and Henry Ford is one that goes back to the fact that this gentleman (Hasso) actually started this enterprise applications industry together with his colleagues. They didn't start a company, they started a whole industry that was then imitated.

I feel like I have the opportunity to work with Henry Ford in his last days in his workshop, which is a tremendous opportunity that any entrepreneur would like to get as a mentor.

When Hasso said three-tier client server, the last time I checked Larry (Ellison, chief executive of rival Oracle) said two tiers are still enough. So, you see, a guy who really ran well ahead of the curve and had the foresight to actually go through three generations of revolution in this industry and lead the company to a leadership position again and again and again. To have the fortune to actually work under his wings, his mentorship, is a tremendous opportunity. I feel like I have the opportunity to work with Henry Ford in his last days in his workshop, which is a tremendous opportunity that any entrepreneur would like to get as a mentor.

But not under Bill Ford (chairman of Ford Motor)?
Agassi: No, I think Bill Ford is also a great guy. You're running in an enterprise that is also going through its own transition. The automotive industry, to a certain degree, is shifting today for the first time, in I don't know how many years, to the next generation. And whether Bill Ford is the guy who will take them into the next generation or not, Ford (Motor) will still be there.

Don't you think that's optimistic? In the last 25 years, 200 of the companies in the Fortune 500 no longer exist.
Agassi: They may be merged, but it doesn't mean that they don't exist. You could claim Chrysler doesn't exist, but they are part of Daimler and their legacy is still there, and their brand is still there. You don't find their "C" on the New York Stock Exchange, but they are still there.

Just like PeopleSoft is still there?
Agassi: You don't see that brand anymore (since Oracle acquired its former rival last year). I don't think you see the people who made PeopleSoft still in that organization, and so I really question whether PeopleSoft's genome still exists anymore. I think Chrysler you still see, and I think a lot of what Daimler Chrysler is today is a mixture of the spunk of Chrysler with the engineering in Daimler.

If you talk about the automotive industry, a lot of it is standardized parts. One car is the same as the other, people are profiting at the margins and the technology is kind of, well, mature. Do you think that the software industry is very similar at this point?
Agassi: Toyota changed one very, very tiny parameter--hybrid cars. One could say that the automotive industry has not changed that much: You still have an engine, you still have a car, you know, you still drive. But putting hybrid technology into the car (has brought great change). That's foresight, that's innovation. You take the software industry and there are parts in the software industry that are definitely mature. I would not recommend anybody today go into the operating systems business. It's not a very high-growth business. I don't think the applications part of business is mature, and I think that most people are missing that there is tremendous opportunity in the applications business. The reason they miss it is because somebody said, it's the end of the road. It's not the end of the road; it's just the beginning.

Where do you think the opportunities are?
Agassi: I think there's a tremendous opportunity on multiple axes. One is on flexibility and simplification of the experience. I think that is something that we all still have ahead of us. The amount of time it takes for an organization to implement an enterprise landscape and to change the enterprise landscape is a tremendous opportunity for us. If you can shrink it down by orders of magnitude, and it can be shrunk down by orders of magnitude, you open up a lot of (customer) spend that goes into innovation.

You can see that, in a sense, in the amount of spend that gets around applications, be it Oracle or SAP, versus the amount of spend that goes into license and maintenance versus the amount of product spend that goes into this market. If you can alter that equation, there is tremendous growth and innovation that comes as a result of that.

The second part is if you look at the core of the enterprise applications business, you say we build processes and we consume processes, as SAP. But if you change that equation for a second and say SAP provides processes, then lots of people can consume them and you get an ecosystem effect around it. Applications that use to be for the consumption of the platform become the platform themselves. With that you open up a whole wave of innovation.