Why SAP Should Open Source NetWeaver
Thursday, May 18th 2006 | Ismael Ghalimi
SAPPHIRE 2006, Day Two — One problem with Open Source is that perfectly valid business motivations for adopting an Open Source development and licensing model often get occulted by counter-productive religious positions that bring no value to the debate whatsoever. When it comes to Open Source, I consider myself a true atheist. And if I ever come across as sounding too evangelical, it’s not because I adhere to any particular dogma, but rather because I find the business case for Open Source just too compeling for it to be dismissed, in very many instances. Today, I got a chance to spend some time with Frank Witte, Head of the Global Open Source Office at SAP. What came out of this meeting is further validation for an idea that was lingering in the back of my mind as of late: SAP should open source NetWeaver.
But before we get to the details of the business case, let me clarify a couple of points. First, the aforementioned proposal certainly is a bold one, and should not be considered as an all-or-nothing idea. Instead, it should be viewed as a process that would lead SAP to open source the entire NetWeaver stack incrementally, starting with the most commoditized components, such as the application server and the portal. Second, Open Source is both a development model and a licensing model. Establishing the right developer community and defining the appropriate licensing terms are no trivial efforts. This article provides no guidance regarding these issues, but is an attempt at fostering discussions that will serve as a foundation for future work, which will eventually lead to the open source release of the NetWeaver platform.
There is no doubt in my mind that business applications sold by SAP ten years from now will be built upon an Open Source foundation. The real questions are how long it will take to get there, and how difficult will the transition be for SAP customers. The sooner SAP embarks on this journey, the easier the transition. Here are some reasons why such an Open Source foundation makes sense:
SAP is a process company, not a technology company
SAP executives made it very clear that SAP is a process company. It delivers value to customers in the form of best practice processes that customers can turn into best-in-class processes through the use of advanced tools, which together form what SAP calls the Business Process Platform. In that respect, technology is a means to an end. As Henning Kagermann pointed out, SAP is in the business of solving customer problems. Business applications are developed in support to such solutions, and the underlying infrastructure is developed in support to such applications. In other words, NetWeaver is two degrees of separation remote from the value customers buy from SAP. Something like NetWeaver is required for the solution to be delivered, but it is not where the value comes from. As such, it might as well be free. Not surprisingly, many parts of NetWeaver come at no extra charge with mySAP Business Suite 2005.
Open Source is a great insurance policy for customers
Service Oriented Architecture (SOA), or what SAP calls the Enterprise Service Architecture (ESA), will become the fabric of tomorrow’s IT environments. As such, more and more customers express concerns regarding the prospect of delegating the responsibility of building and maintaining such a critical piece of their IT infrastructure to any single vendor. The lower you move through the IT stack, the least customers are willing to accept any kind of vendor locking, which is one of the reasons why the Linux operating system has been so successful. Above the operating system lies SOA, and this is the next layer of the stack that customers will demand be open sourced. If we believe in this never ending commoditization process, and the role played by Open Source as an enabler and an accelerator for it, the question is no more IF, but WHEN and WHO. Very few vendors will have the scale necessary to support the development of a complete Open Source Service Oriented Architecture. IBM and Oracle will be among them, but SAP could lead the pack.
SAP has little to lose
What makes the idea of an Open Source NetWeaver so attractive is that it should actually be possible for SAP to make such a move without losing much. Unlike IBM and Oracle, SAP derives very little revenue from its infrastructure software. As a result, moving to an Open Source model for it should have limited impact on the balance sheet. Should IBM consider making a similar move, it would alienate both its salesforce and its network of resellers. No such thing would happen with the open sourcing of NetWeaver.
SAP has a lot to gain
The most significant challenge in SAP’s attempt at becoming the leading business process platform vendor is in building an active network of partners that will develop value-added applications on top of SAP’s platform. For an independent software vendor to adopt any platform for building its applications, barriers to adoption and switching costs must be as low as possible, while the market directly addressable through the platform’s adoption must be as large as possible. A successful Open Source strategy is a good way to offer both. If NetWeaver were to be made available under an Open Source license, ISVs that are not necessarily targeting the SAP customer base would nevertheless consider it as an alternative to other Open Source platforms such as Apache Geronimo or JBoss JEMS. As a result, it would extend the range of applications available for the NetWeaver platform, and it would accelerate the development of an ecosystem around it. The return on investment for such a strategy should be higher than any other business development initiative I could think of.
Customers would benefit from it
SAP customers might not pay directly for NetWeaver, but they only get what SAP can develop on its own. While an Open Source development process is by no means a way to reduce engineering costs for a software company — managing an Open Source community requires the dedication of significant resources, it’s a great way to get contributions from others, which over time can make a significant difference. For example, if NetWeaver were to be made avaiable under an acceptable Open Source license, it is likely that collections of connectors to third-party applications would be developed for it by end-users, system integrators and independent software vendors, then integrated back into the platform and made available for free to the rest of the community. Today, customers have to pay for such connectors, usually buying them from vendors others than SAP. The less money they have to spend on such third-party components, the more they can spend on SAP applications.
As more discussions take place around this idea, I expect more justifications for it to emerge. Of course, a lot of objections will be raised too, which will have to be addressed in a pragmatic manner. At the end of the day, SAP is very much a customer-driven organization, and the fastest way for it to embrace an Open Source model for NetWeaver is for SAP customers to explain why it would benefit their business and the business of their own customers. I invite all of them to use this forum as a starting point for such a fascinating endeavor.
Entry filed under: Open Source
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Extremely well said. There is a lot to talk about in terms of commoditization of the new application operating system stack. This was a great lead into it!
Even though you are quite right to raise the issue, there’s a stack (no pun intended) of problems around this Ismael. First is the question of definition here. In other words, are you limiting your argument to the NetWeaver stack? It’s not the only game in town. Certain parts of the more traditional EAI stack — like messaging — I thought would have been fully commoditized by now. Apparently that’s not the case, at least in the financial services industry. Parts — like the portal — are easy targets.
I enlarge this thoughtstream at Integration Monitor.
Dennis,
I tend to over-simplify the picture and view SAP’s product offering as being made of two main components: the infrastructure (NetWeaver) and the set of applications that run on top of it. I am advocating the open sourcing of the entire NetWeaver stack, comprised of the application server, the integration broker, the service repository, the portal, the business intelligence engine, etc. I am not advocating the open sourcing of the applications, even though SAP has been shipping them with source code to customers for as long as I can remember.
Yes, very interesting, and with significant ramifications for IBM and Oracle (much more so for IBM). And, it’s a move not without a precedent. That is, SAP’s substantial investment in (and support of) MySQL is arguably its first move to open source a key part of its FUTURE middleware layer (in a round-about way).
Cheers,
Tuffers
Ismael,
NetWeaver could also lose some sales to SAP — we developed a business KPIs dashboard with Business Objects software and integrated it through NetWeaver for about $15,000, which is considerably less than buying their SEM module that in the end served almost the same purpose as our dashboard. There may be more to SEM that I don’t know about, but don’t you think they are taking a risk with NetWeaver, Open Source, etc.?
Also, in a non-related question — what font are you using for your blog? I use Lucinda Sans Unicode and it looks similar to yours, but it seems mine eats up more real estate. I like the compactness of your text.
Whether or not SAP should “open source” Netweaver depends upon whether SAP needs the input of the open source community. Rather, SAP could be a user of open source software. There is, in reality, no need for them to provide these components. Better still, SAP could be platform independent.
Ryan,
I’m not sure I understand the risk you’re referring to. Can you clarify?
The font is Trebuchet MS.
Howard,
If you believe in SAP’s vision for the applistructure, they need to own both the infrastructure and the application, and make sure they work very well together, therefore deploying the mySAP Business Suite on the infrastructure of multiple vendors is not really an option.
[…] Zoli Erdos goes deep on Duet, the Microsoft/SAP joint development effort. Ross Mayfield wrote about his Sapphire experience, calling it a "watershed moment for how enterprises engage in social media." Vinnie Mirchandani has several posts from his Sapphire sojourn. Ishmael Ghalimi provide his reasoning as to why SAP should open source NetWeaver. Niel Robertson ponders SAP’s proposed new corporate world order and promotes the role of the ‘chief process’ officer. […]
Ismael,
What I meant was that NetWeaver opens up SAP for integration with solutions that may compete directly with SAP modules, at least to a certain extent. We directly needed a KPI Dashboard and the IT people were looking at SAP SEM, which is quite expensive, though richer in features. We ended up using a much cheaper solution: Infommersion from Business Objects, and for now gave up on SEM.
Could this happen to other SAP modules or solutions?
Ryan,
I guess it could, but then I have to ask the following question: what is better for SAP? For you to use an Open Source (free) version of SEM, or for you to use a competing product from Business Objects? In either case, SAP makes no money selling the product, but in the former case, SAP’s marketshare increases and SAP gets the opportunity of selling services on top of the Open Source layer.
Absolutely spot on analysis. This would remove half of the risk of integration and create real options not only for higher level solutions, but reaching new markets.
I would like to see NetWeaver open-sourced, but I don’t think SAP will do it unless they are in real trouble — and that’s going to take at least 5 years. I see it like Solaris. It was a great move for Sun, but only because of the position they are in. They never would have done it if the company was doing well. Open-sourcing NetWeaver now requires SAP to admit that they can’t compete with IBM and MSFT and ORCL in the enterprise platform arena, and they won’t admit that yet. I think in three years time, SAP will realize that most of their customers want nothing to do with NetWeaver as a platform — they want SAP to be their ERP vendor, not something else. That’s when the time will be right.
[…] Lastly, it’s somewhat ironic that Andy points to Josh Greenbaum’s piece given that Josh is a newly minted blogger. Josh was at SAPPHIRE and did a fine job, but the 10 bloggers we had at SAPPHIRE provided equally compelling commentary, if not eclipsing at times. […]
A brilliant argument!
I just started learning Enterprise Portal as part of my new job scope, and Enterprise Portal is a decent portal and has many good pre-configured features.
However, I find it terribly over-engineered, making it rather cumbersome and painful, especially when it comes to web design work. Of all the components that can go open source, I believe that the Enterprise Portal is an ideal candidate simply because UI is not SAP’s core expertise and there are already many decent open-source portals and content management substitutes out there.
[…] Back then, I wrote about SAP’s Business Process Platform, explained why SAP should Open Source NetWeaver, and advocated for duos in complement to Duet. Today, through Shai Agassi’s keynote and a couple of executive briefings, I got a nice update on what SAP is up to these days. Before getting into details, all I can say is that it’s not your father’s SAP anymore. The market for enterprise software is undergoing one of the major transformations it’s going through every ten years or so, and SAP is embracing these changes better than many other vendors I could think of. Here is what SAP is getting right, and here is where it could do an even better job. […]
[…] Back on the technical point for just a minute, I wrote earlier that this future we are finding ourselves in is not about technology but about a business model. To be more direct, it’s my opinion that SAP and Oracle should be in a race to commoditize NetWeaver and Fusion Middleware respectively by giving it away to everyone - and I mean everyone - that wants it. This implies open sourcing it as a means of kicking distribution up, but whatever the vehicle it’s second order to the primary goal of making it broadly available for free. Ismael Ghalimi wrote a post last year that went into exquisite detail on why SAP should do this, you could substitute “Oracle” for “SAP” and it would still hold up. […]
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