Yes We Are Being Aggressive

Sarah Lacy over at The Tech Beat blog about SAP's recent aggressiveness with regard to Oracle, writing:

"I’ve noted a few times that SAP has become the PR pit bull when it comes to Oracle"

Yes Sarah, what's your point? Should it surprise anyone that in a market with as much as stake as there is in this one, and in a market dominated by two competitors, and both companies heavily imprinted with the personalities of their founders, that we would be aggressive?

Quite frankly the only thing that is surprising is that Sarah would be surprised that either company is aggressive. SAP has been taking the "high road" for years by focusing on customers, quality products (yes they are complicated), and all the other things that we are successful at, blah blah blah. Oracle, on the other hand, has embarked on a campaign of mistruths (their last 4 ads) and dirty tricks (hiring Ashcroft in Washington to paint SAP as a "German company controlled by the German government, therefore a threat to national security") and nobody in the mainstream tech media seems inclined to put them in the penalty box. I'm not saying we're going to be like Oracle, let's be very clear about that because at the end of they day you really can't be anyone other than who are you, but we're not going to turn the other cheek either.

Lacy goes on to protest that our recent fact sheets campaign to press people is tantamount to attempting to do their jobs for them, saying:

"Whoa. Last I checked, coming up with questions and sources was my job."

Yeah, it'd be great if the analysts and press people did a better job at getting to the bottom of Oracle's numbers and distinguishing their fact from fiction. I can't tell you how many analyst calls I have heard or read the transcipt on where nobody just got up and called "bullshit!" when Oracle execs were stating outright mistruths. Perhaps it is that Ellison, Phillips, and Catz have bullied the analyst community into submission, I wouldn't think anyone would be surprised by that especially given their reputation for being adversarial with analysts is legendary. I don't think it should be SAP's responsibility to write a briefing book for analysts on Oracle, but if we have to we will.

Lacy says we crossed a line, I say that the days of media being the only conduit to the truth are over. We're going to take this message to the "tech street" any way that we can, that includes hammering journalists with fact sheets, going hard to blogs (we've started a blogger relations group), direct to customers and prospects, and in any way possible if it allows for us to expose the truth about what's going on in this business.

Finally, Lacy comments that some of the analysts were ticked that we circulated their research and contact details. It's their research, they published it, we didn't! If they don't want to stand behind it then why publish it in the first place? And no, we are not drafting an apology letter, and none of the analysts are sending us "strongly worded letters" about our use of their research, but Gartner and Stratascope (reg required, but it's free) both did that in response to Oracle egregiously mistating their research. This is exactly why we are being aggressive now, Larry puts out an ad (and he still reviews the ad copy) that crosses a line, he knows it takes a week for anyone to react and when they do (like Gartner and Statascope in just the last month) it's in a form that is largely ignored by the press. Oracle then backs off their ad but he's had it out there for a few weeks and hasn't been challenged on it so he's still gotten the mileage out of it, and when he corrects it the fact that it's corrected at all is largely ignored. We've hired enough of their senior executives in recent years to validate that this is what they are deliberately doing, if anyone in the media is interested we'll hook you up.

Technorati Tags: SAP, Oracle

Comments

[Jason Wood]

Jeff,

You know I'm in your camp completely when it comes to the fairness of disclosure. Ellison has a long and storied history of quasi-misleading marketing campaigns.

From an investment perspective though, you should be aware that there's no greater confidence we instituational investors can have in your dominant position than when you take the "high road." Whether the perception is fair or not, once you start engaging in muck raking with Oracle in an aggressive manner, it signals to many that you're taking Oracle's competitive threat more seriously and are less certain in your own abilities to simply out execute Oracle and the rest of the enterprise applications pack.

It's a delicate balance, and I think as long as you focus your attention on pointing out mis-truths versus simple pots shots of your own, SAP will be well served.

[jeff]

Jason,
It's a fair point, and we'll continue to take the high road by simply focusing on truth and fact-based initiatives.

The other reality of all this is that customers don't like the feuding, it really turns them off everyone involved. We are walking a fine line, we know it.

It's easy to degrade into trash talking, which is pretty much the sum total of Oracle's efforts. I would like to avoid that as much as possible because it does blacken our own reputation. Having said that, we are taking the Oracle threat seriously, given another 6-8 quarters one of these 2 companies is going to come out a winner and the other a loser, but we not less confident in our ability given that perspective. We fundamentally believe that we have earned the right to win and it is with that belief that we feel confident going out and letting the facts speak for themselves, that is if the facts are given an opportunity to be heard.

[Brian Phipps]

Oracle would seem to be employing a powerful strategy based on the Judo principle of “kuzushi,” or moves intended to break the balance of the opponent. Much deeper than trash talk.

“Kuzushi is very often thought of as simply pushing or pulling . . . [but] . . . is much more than that. For example, kuzushi can also be achieved by breaking the opponent's rhythm, fake attacks, strikes, changes of body position . . . or a sudden change in speed or tempo. A critical element in kuzushi is that it should disrupt more than the body. Kuzushi is very much a mental thing.”

“Another way to apply kuzushi is to set up or force your opponent into a weak position. There are many ways of moving that will result in your opponent responding in a predictable way so that you can anticipate it and take advantage of it.”

The best defense for all this, as you point out, is to have a counter strategy going in, and never just react.

[Dennis Howlett]

Not gotten around to reading Nick Carr yet? Look forward to the bloodbath...

[jeff]

Hi Dennis,
Actually I have been reading Carr's posts about the use of analyst data.

I thought about commenting on his blog, and may still do so, but I'm not sure I want to throw gas on the fire over there.

The big difference between what Oracle is doing and what we did with the analyst data is pretty straightforward. We went to Stratascope and said "hey, here's a list of our customers, we want you to look at the public companies and compare their profitability to the rest of the market". As it turns out, the profitability that SAP customers achieve is 32% better than the broader market. Now we can debate all day long whether or not the software is the reason for this and we still won't come to anything definitive, but the fact remains that nobody can say that the technology that this group of companies relies upon is not responsible for their greater productivity, when taking into account how they restructure their businesses as part of the implementation of something like SAP. The methodology is really straightforward, Stratascope will tell you how they came to the conclusion.

Oracle, on the other hand, takes research data and cherry picks bits and pieces, or reinterprets the data to fit their agenda. They then take that research remix and put it out in a full page advertisement, never mind that they violated the analyst's rules regarding the usage of the data. They lie.

Carr doesn't really care about any of this, his agenda is that the "IT doesn't matter" and anything he can use to rail against software companies is good in his book. I also take offense to Carr lumping SAP and Oracle together and saying we're both using analyst data inappropriately.

In his own post there is a differentiation but he doesn't bother to dwell on it. What Stratascope said is that they couldn't say with certainty that SAP customers were more profitable because of technology, what Stratascope said of Oracle is that "the press release misleads the public by improperly attributing capabilities and action to Stratascope." There is a big difference between the two and if Carr was intellectually honest about it he would acknowledge that.

[Dennis Howlett]

Hi Jeff:
Haven't you let the cat out the bag by saying:

"...the fact remains that nobody can say that the technology that this group of companies relies upon is not responsible for their greater productivity..."

Did anyone ask them?

[jeff]

all the time. Case studies, customer design partners, ASUG, account eams, you name it.

The Stratascope research was a statistical analysis, the data is what it is. Period. The results of that statistical analysis are what they are. Period. We didn't misquote Stratascope and they didn't say we misquoted them or that we mislead anyone, they saved that criticism for Oracle.

[james governor]

jeff- perhaps if SAP was more willing to brief or talk to industry analysts at smaller firms your point about fair disclosure would have more weight. is your agency still burson marsteller? you talk about full disclosure?

there is no need to "hammer" us or "go hard" on us - just talk to us.

[jeff]

James,
Great, I just added your blog to my blogroll and put you in our blogger database.

[james governor]

that's great jeff, thanks. evidently you get it, in spades.

i would still like to see more attention to smaller industry analyst firms, but calling myself a blogger means i get some attention from SAP then i can certainly live with that.