In the realm of IT products, there’s much discussion taking place regarding “cloud computing.” In essence, it means that businesses stop purchasing computer systems to run software on and instead pay other businesses to purchase computers and then transfer their programs to the cloud in order that they can take care of the entire process to keep their software running and running. The financial benefits are pretty attractive, and a large number of people in the field of management are moving to this type of business. But is it really possible to do this too quickly? At SAP, their product management team is probably thinking about this issue right at the moment…
What is the reason SAP Changed to The Cloud?
If you didn’t realize in the realm of management and business software, SAP is the king of the hill. They have a staggering 24 percent in the marketplace. Their nearest rival is Oracle which has only 12percent. In the year 2000, SAP generated US$6.2B in revenue from this sector. This is an excellent company to be in, and it’s a fantastic thing to have on your resume as a Product Manager.
But there’s trouble in the near future. It is evident that the companies with the highest growth in this sector are all “cloud built.” That is, their software is run on computers located in a data center in someplace, and their customers can access the software via the Internet. This is different from SAP’s business model, where they offer software to their customers, who then run it on their personal computers at their data centers. The emerging players on this market have been growing by an astonishing 86 percent! They are currently only just a tiny portion of the market, but the writing is up the wall.
The thing SAP did modify their definition of development for their products and to try to make two versions of the software. One is what it’s always done; it’s software on discs which you can load onto your computer. Another is “cloud built,” which means that you do not purchase it but instead subscribe to it, and it runs on servers located “somewhere and not in the same place.”
Cloud-related issues for SAP
As every product manager knows, the impact of a significant change has its own unique set of challenges. One of them is it was that SAP software was never intended to run on the cloud. This means they’ve needed to change the code for a large portion of it, including the database, which is at the center of the product. They now have two variations of the exact product, which product managers have to manage.
You can imagine, the introduction of a brand-new product has caused problems in this SAP Sales team. They had been used to receiving sales credits for the most significant sale. The company receives lots of money when customers purchase the software upfront and install it on their server. The cloud version doesn’t make as much in the beginning; instead, the revenues are derived month-by-month. This is because the SAP sales teams were driven to sell the software but instead of the product. The SAP management of the product is declaring that they have fixed this issue, but it’s not easy for the leopard to change its stripes…
You can also imagine the confusion this creates in the case for SAP customers. They’re interested in the cloud; however, many customers aren’t ready to switch to the cloud currently. Specific customers have stated that if they need to think about switching to the cloud-based version of the software, they’ll take the occasion to review their vendor. They’re worried that SAP product managers aren’t sure exactly what this means! Customers who stay to the “old” method of doing things are worried about the possibility that SAP could not be paying enough focus on their needs. It seems like SAP product managers face an important task in front of them.
What Does This All Mean for What Does This Mean For
As product managers, we understand that change is inevitable, and it’s a significant part of our job description. What our product operates today is not the same way it will be in the future. At SAP, the product managers are tackling this exact issue. Their product is required to be moved into “the cloud”; however, their customers might not be prepared.
The most significant expansion of the business management market is from companies already on the cloud. What does this mean to SAP will be that they need to migrate to the cloud? They’ve come up with two versions of their product: one “old” one and a “cloud” model. They must get the way they will pay sales representatives set up so that both services will be offered in a similar manner. Also, they must ensure that customers are satisfied to make them feel that they’re being looked after and don’t look at other suppliers.
The good news for SAP Product Managers is that they’re likely to be making the best decision. It is now the time to start looking at the ways they can migrate their current software into the cloud. But this kind of transformational change to a product isn’t easy. It is the SAP Product managers need to oversee their own teams and the expectations of their customers.