Sramana Mitra: If you look at the industry in your space and the adjacent spaces, where do you see open problems that new entrepreneurs could be working on?
Jerry Melnick: The real movement today is clearly around service-based versus product-based offerings. When I say that, I’m referring specifically to cloud service. Utility computing is finally being realized in the cloud space. Probably the applications that we make highly available are the laggards in the industry in terms of moving into the cloud in providing services, mainly because of the conservative nature.
You can imagine that if your job depends on making sure that the application is running, you are probably going to keep it on your purview for as long as you can. But at some point, the need for flexibility and the need to reduce cost becomes more important than anything else. Given a tool or the capability that we provide, they can take and move that application into the cloud now and provide that kind of service level to an application. Now, you’ve opened up a whole new realm of applications to a cloud service model.
Just to get back to the original question you asked, anybody who’s been working in selling either hardware or even software, to some extent, is now exposed to the movement towards commoditization in the utility computing models of the Amazons. You just can’t beat the buying power that those guys have and they’re going to provide it on a per CPU cycle basis – lower than you’ll ever be able to implement.
The issue then becomes, how do you go to places where you significantly add more value to that services model. We see our customers going and we see where the opportunities are. Clearly, now that we have opened up to bring even more valuable applications to the cloud, we can bring SAP into a cloud environment. We see people do that.
All of a sudden, SAP is a managed service provided to a cloud. We fit the pieces of puzzle that enables those customers who wanted to bring high-value services to their customers without them having to procure and manage all that stuff. The answer to your question now more directly is, it’s clearly in the realm of how do you build high-value services in the cloud and get away from selling software and hardware to customers.