The news came out Friday as part of a flurry of SAP announcements. Another of those also relates to a departure – that of human resources chief Luisa Delgado, whose responsibilities will be taken on by CFO Werner Brandt – but the big non-quitting-related news is that SAP is consolidating its business to better reflect its newfound cloudiness.

SAP’s cloud “go-to-market” strategy will now all be under the purview of Bob Calderoni, CEO of Ariba (alongside SuccessFactors, one of SAP’s major cloud buys of the last two years). And development will all be under the control of technology chief Vishal Sikka.

SAP is pitching this new structure as an innovation accelerator, but does it finally signal a streamlining of the company’s sprawling and often confusing portfolio (a condition I like to call IBMitis)? Yes! And no.

As Sikka said on a conference call today:

“We see an opportunity to not only consolidate and streamline the portfolio, but bring incredible efforts… to transform that in the power of the cloud. We will get into areas that are truly unprecedented – applications for new industries that weren’t possible before [such as] healthcare, banking, oil and energy.”

Which is nice, but – as co-CEO Jim Hagemann Snabe chipped in – SAP has “a lot of commitments” to its existing customers too, and “we’re a company that stands by our commitments.” This may mean we should expect some redundancy within the portfolio to continue for a while yet, in order to keep those with more old-school SAP systems in place happy.

As for SAP’s ongoing cloud strategy, co-CEO Bill McDermott promised that Dalgaard’s exit would lead to “zero business disruption”:

“Our cloud DNA is now embedded across 65,000 minds and hearts and it’s become the soul of SAP. While it’s nice to have one evangelist for the cloud, it’s even better to have 65,000.

“Lars took us from $20 million in terms of revenue to a $1 billion run rate in the cloud. Now it’s about scale because everything is cloud. No other company has gone through this transition so fast – it literally happened in 12-15 months under his leadership.”

McDermott added that Dalgaard had been having “open conversations” with him and Hagemann Snabe for some time about his plans to downgrade his role to that of advisor. “This is the nicest balance he could find in his personal life and we were happy to accommodate him because we think the world of the guy,” he said.

Speaking of SAP’s thorough cloudiness, the company also announced on Thursday that it would deliver its products – including, of course, those on the in-memory HANA platform — on VMware’s newly-re-announced vCloud Hybrid Service IaaS platform, as well as vCloud Suite. This will allow for fully managed services on-premise, in the cloud and in hybrid deployments.

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“Every story I read about Google is us versus some other company or some stupid thing. Being negative is not how we make progress. The most important things are not zero sum.” Page said Google struggles “with people like Microsoft,” he said. As for Oracle, which is suing Google over Android’s use of Java, Google has “a difficult relationship with Oracle, including having to appear in court … Money is obviously more important to them than any collaboration.”

In comments emailed to CIO.com, Microsoft responded:

“It’s ironic that Larry is lending his voice to the discussion of interoperability considering his company’s decision — today — to file a cease and desist order to remove the YouTube app from Windows Phone, let alone the recent decision to make it more difficult for our customers to connect their Gmail accounts to their Windows experience.”

Page’s words came a few days after Microsoft announced interoperability between its Outlook.com email service and Gmail and just after word came out that Google demanded that Microsoft rip its home-built YouTube app from the Windows store (and remove the app off the Windows Phones that were already running it.) So, who’s the winner in this melee? Neither vendor comes out looking good. For Microsoft to complain about Google’s business practices is laughable given its own track record. But for Google to claim it’s not evil while restricting consumer choice is also awful. Consumers might just say a pox on both their houses.

IBM spreads Watson around …

Watson, the natural-language-understanding software that played (and won) at Jeopardy, will be made more broadly available to third-party software makers, IBM CEO Ginny Rometty said last week. Thus Watson technology could be used perhaps even by IBM competitors, to build self-teaching computer systems, according to Bloomberg News. IBM has made the most possible PR use of Watson capabilities, working to embed that intelligence in medical and other applications. Last week, IBM took its show on the road to Washington D.C. last week to show Congress the progress Watson has made in healthcare applications.

… as SAP doubles down on HANA

German enterprise software giant SAP, in a move you could see coming miles away, said this week that HANA, it’s in-memory analytical database, will be the brains of its ERP software going forward, according to InformationWeek and other  outlets. Running do-or-die ERP and CRM applications on HANA is a big step up from data warehouses because ERP and CRM cannot go down for hours or a day without severe blowback. And yet at the annual SAPPHIRE conference last week SAP announced general availability of its core Business Suite applications on HANA. Or, as CRN put it, it “bet the farm” on HANA.

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There weren’t a ton of details on pricing and dates which could come at the company’s annual SAPPHIRE conference, next week, but according to the release, SAP HANA Enterprise Cloud will be delivered by SAP and its partners:

 ”SAP intends to adapt this open ecosystem strategy with its managed service providers to offer the capabilities of SAP HANA Enterprise Cloud from their data centers, as well as from multiple SAP data centers worldwide.”

In a research note, Nomura Securities analyst Rick Sherlund wrote:

“SAP indicates it will price its elastic cloud-computing service based size, scale of data, and application usage. The advantages are faster time to market and time to value, with lower total cost of ownership. Offering a service that delivers quick value and easy implementation should be a nice complement to the real-time capabilities users seek from HANA for a wide variety of new, real-time business processes, in addition to the Business Suite.”

SAP will continue to offer HANA via AWS, a spokesman said. But it’s clear that more contention is arising between legacy enterprise IT players and Amazon which is starting to compete with them by offering more higher-end services that compete with their products.  AWS has made no secret about its ambitions here —  it all but called out IBM, HP, Teradata, and Oracle by name when it announced its RedShift data warehousing service last November.

Meanwhile, SAP — along with these other legacy enterprise IT giants — has rushed to embrace cloud. Better to cannibalize your own on-premises business than to let Amazon do it after all. But, SAP got a rocky start in cloud. It launched Business ByDesign as a SaaS product four years ago to underwhelming response. But it vowed to do better and started buying up cloud expertise, with its $3.4 billion  acquisition of SuccessFactors, a SaaS provider of human resources management, two years later. But HANA, the hot in-memory database and analytics product  has become the company’s focal point in  cloud and big data efforts.

What would really be surprising is if SAP didn’t offer HANA from its own cloud.

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That’s the back story to Friday’s SAP Startup Forum held at the hack/reduce facility in Cambridge, Mass.’s Kendall Square neighborhood. There SAP talked up HANA, the company’s analytics database as a development platform data (or big data) applications to more than a dozen startups including Hadapt, Entagen, Diffeo, Objective Logistics, InsightSquared, Luminoso, Sqrrl, and Veracode. Those startups, in turn, were able to tout their business plans and demonstrate their products to an audience of reporters, VCs and others.

Wanted: (big) data startups

“We’re pitching to the startups and they’re pitching to us,” Scott Jones, SAP’s senior director for startup training and enablement told about 100 attendees. HANA, which debuted three years ago, has given SAP traction in an audience beyond its usual big-company ERP customer base and SAP fully intends to press that advantage.  SAP Ventures, the company’s VC arm, is increasingly active in finding and funding data startups. And it would very much like them to build their technology atop HANA.

The SAP execs repeatedly talked up HANA ONE, which runs on Amazon Web Services, as if to say “this isn’t the traditional, big iron, expensive SAP” of another era. It costs $3.49 per hour to run HANA ONE on an AWS EC2 8-core cluster.

As for the startups, many were clearly intrigued by HANA’s capabilities although none of those I talked to had actually run it. The consensus was this type of event and the promised perks — Jones offered free “no strings attached”  licenses and training — are what cash-strapped startups need. Indeed, that may be only way for a large commercial software vendor like SAP to hook small companies born-and-bred in a world dominated by free or nearly-free open-source software and rentable AWS infrastructure.

Plea to local startups: Stay put

A gaggle of area VCs were also on hand to sweet talk entrepreneurs into staying local rather than decamping to Silicon Valley after graduating from Harvard or MIT — as has been standard practice. Chris Lynch, the former CEO of Vertica Systems, who has helped nurture a big data startup community in and around Boston, was on hand to talk up that effort.

And, Dr. Sam Madden, of MIT’s Computer Science and Artificial Intelligence Lab (CSAIL) was there to help out. “Boston is an awesome place for startups — there’s a spectacular pool of outstanding, hungry young talent [here].” It helps that the VCs that used to live way out on the Route 128 corridor have relocated in closer into The Hub.

In the past two years, Kendall Square has seen a huge building boom with growing presence from Microsoft, Google, Amazon, IBM, Oracle and others. It’s a hip area to work for young techies — many of whom don’t own cars and like how mass transit and bike-friendly the area is.

Still, not every attendee was buying either pitch completely. Cyrille Vincey, CEO and founder of qunb, a data analytics and visualization startup that does use HANA, extolled its features and performance, but had one suggestion: “HANA is simple and fast. It feels like open source. Why don’t you open source it?”

And Timothy Jones, CEO and founder of Buzzient said his company, which has been based both Cambridge and Boston but is now virtual, may relocate to the San Francisco area. “We can get office space cheaper there than in Kendall Square,” he noted.

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The point of ‘SAP Business Suite powered by SAP Hana’ (currently available to existing customers) is to marry online transaction processing with analytics, with the primary benefit being speed. Indeed, SAP chairman Hasso Plattner said at the launch on Thursday that the goal for transactional query response times was three seconds. Now SAP’s purchase last year of enterprise mobile tech company Syclo starts to make more sense.

“Why is speed so important? One reason: mobile,” Plattner said. “When we use mobile devices… we do not want to wait more than three seconds.

“We will build a new world of front-end and we will do this together with our customers… We have to be on every device.”

Analysts at Ovum reckon processing speed is “the least of Hana’s potential benefits”, though. In a note on Friday, Ovum pointed out that there were clear efficiency benefits to embedding analytics with transaction processing. It also suggested that the ability to generate data views on-the-fly should trim database footprint requirements and, over time, simplify the design of applications running on top of Business Suite.

For SAP, though, this is largely a bid for relevance. Customers are used to running its ERP applications on other companies’ databases – Oracle, IBM’s DB2, Microsoft’s SQL Server – and this is a way of bringing them onto SAP’s own platform.

And Hana is clearly core to SAP’s future. The platform went into the cloud last October – perhaps finally giving SAP a lasting foothold in that arena – and Plattner noted on Thursday that all new SAP applications will be developed for Hana. That said, those rival databases will still be supported, although their vendors may need to do some optimization.

“Customers have the choice,” Plattner said. “There are some features missing in the other databases [but] we will tell the other database manufacturers what those features are and, if they can develop them, we will also support them.”

Will the Hana-fied Business Suite tempt enterprise customers? SAP is touting a ‘comprehensive’ set of migration and rapid deployment services for those who want to make the leap, but Ovum’s cautious, partly because it thinks SAP may have a messaging problem on its hands. After all, Hana was a database then an analytics platform, and now it’s just a platform — and it’s only a couple of years old.

“SAP Business Suite on HANA has the potential to be a game changer by making SAP much more relevant to its customers. But in the near term, SAP Business Suite on HANA should be seen as opportunistic upgrade for existing customers or greenfield opportunity for new ones,” the analyst house said.

“Few if any enterprises currently rank replacement of enterprise systems as top priority. Convincing customers that the ‘transformative’ benefits of Suite on HANA will be non-disruptive technically is the challenge SAP faces with an entrenched Business Suite customer base. Companies don’t swap out their database and ERP investments overnight.”

One thing that could help convince existing Business Suite customers to jump to Hana is the pricing model, which SAP set after consultation with its German user group, DSAG. Essentially, customers will only have to upgrade licenses that access the Hana database, rather than having to upgrade the whole license agreement.

“As far as licensing costs are concerned, the database for the Business Suite on Hana will now cost existing SAP customers exactly the same as the conventional databases,” DSG board member Andreas Oczko said in a statement. “This will give each individual customer the chance to use in-memory technology at a reasonable price.”

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The purchase augments a push into portfolio management that Oracle started with its 2008 acquisition of Primavera. Per usual, the move seems to take on ERP giant SAP, which fields its own project portfolio management. These two enterprise software giants have been one-upping each other for the past three or four years, after Oracle started competing more with SAP in business applications and SAP launched a full-on onslaught against Oracle in databases with Hana, its in-memory database appliance.

Instantis’ Enterprise Track SaaS product gives work groups the ability to build and share dashboards of their individual projects or a portfolio of related projects that lets them track the life cycle from inception to proposal to execution and results.

Once again, the database market leader shows a willingness to buy customer lists and revenue streams. Instantis claims customers including Dupont, Grace, Cardinal Healthcare and NCR.

In early October, Oracle CEO Larry Ellison said the company was not planning any “big” acquisitions but did not rule out smaller, tactical buys.

Over the past 14 months, Oracle has bought RightNow to boost its cred in CRM Software-as-a-Service, Vitrue for social marketing, Taleo and SelectMinds for talent acquisition; Xsigo for networking expertise, and Endeca for big data wherewithal.

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Pressed for details, Vogels demurred:  “I’m not going to tell you. If Steve Jobs can get away with that, I can.” So, if he’s not saying, we’re free to speculate. Here are five things to watch for from Amazon over the next few months.

1: More high-end analytics.

Within hours of Vogels’ appearance, Amazon announced that customers can now run SAP’s glitzy HANA in-memory database on Amazon for $0.99 an hour, plus $2.50 per hour if they want to spring for an extra-large EC2 instance. Elastic Block Storage (EBS) and data transfer fees are extra, which might seem like nickel-and-diming you if you don’t consider that a Hana appliance from Fujitsu can be had for “as little as” $12,000, according to this SAP blog.

This is an example of a third-party letting it’s IP run on Amazon’s marketplace. But also look for Amazon to offer more of its own analytics smarts much the way it’s come up the stack with higher end services like DynamoDB, Simple Workflow Service and Simple Queue Service, said Johan den Haan, CTO with Mendix, a PaaS provider based in Amsterdam.

2: Smaller bite-sized chunks of infrastructure.

If you want to rent Amazon compute firepower now, you pay by the hour. At least one new competitor — ProfitBricks – is selling smaller increments of scale-up infrastructure by the minute.  As GigaOM reported last month:

While Amazon’s cloud epitomizes massive scale-out architecture, ProfitBricks’ focuses on vertical scale. Customers can elect to use 1 to 48 processor cores and 1 GB to 196 GB of RAM which they can consume and pay for by the minute —  not by the hour. (Amazon EC2 instances come with 1 to 16 virtual cores and from 1 to 60 GB RAM.)

Update (November 14): There is other precedent for smaller chunks of consumed resources. CloudSigma, the Zurich-based IaaS provider used by CERN and the European Space Agency offers its resources in 5-minute increments.

Zev Laderman, founder and CTO of Newvem, a company that helps customers get the most out of their Amazon resources, is sure that smaller increments of consumption will happen soon.

“Some of that is already happening in the secondary market by companies like Strategic Blue and it also happened in the cell phone world when billing went from minutes to seconds,” he said.

3: More enterprise-y options.

Vogels disputed contentions by others at the show that big enterprises are not deploying important workloads on Amazon. I would agree that any CIO who says his company is not using AWS does not know what his developers are doing. You can run Oracle databases and financial applications or SAP All-in-One ERP on Amazon now, and things don’t get more corporate than that. Amazon’s sponsor list for its customer and partner conference in November includes such corporate stalwarts as BMC, CA and Red Hat.

4: Co-opetition/market segmentation with big software vendors.

Some see IBM, Oracle and others ceding the low-end of their markets —  the small and medium businesses or SMBs — to Amazon over time. Where both of these giant software vendors offer “Express” versions of their big-boy products to SMBs, look for that work to flow more to Amazon. The vendors will say this seeds the market for their more enterprise-focused, expensive and self-hosted enterprise editions of the same products.

5: Deeper integration and more PaaS capabilities.

Amazon dipped its toe in the Platform-as-a-Service market with Elastic Beanstalk already and now some see it designing a sort of super-PaaS where customers can one-stop-shop for variety of cloud services from Amazon and partners — all of which would be aggregated and run on — you guessed it — Amazon infrastructure.

Sharon Wagner, CEO of Cloudyn, which helps companies avoid over-provisioning cloud services, posits an interesting scenario. Amazon could try to play off both customer and vendor needs by creating an exchange of web services. “Vendors will integrate into AWS’ new PaaS and expose [application programming interfaces] that developers can use. Developers can develop apps using compute, storage, CDN, database, mail or any other service in that marketplace,” he said. Amazon would bill for the overall purchase, take its cut, then pay the other vendors, Wagner said of this sort of mega-Heroku model — which happens to mirror the model of Amazon’s big book-selling business as well.

It’ll be interesting to see if one or more of these scenarios play out at the Amazon Re:invent Conference in Las Vegas next month.

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Just as big enterprises look at unstructured data from social networks to gauge consumer sentiment, and relational data from databases, and perhaps machine data to see how well their equipment is working, smaller companies need the same data points. Many small companies are small, after all, because they’re just starting out, and the smart application and analysis of outside data is one key to growth.

“If you’re a sub shop, you probably don’t have to worry about big data, but if you’re a small online business, or a small financial service provider or a medical practice, you probably should,” said Laurie McCabe, cofounder of The SMB Group, which researches how small and medium businesses use technology. “There’s more and more data out there you can use to make decisions and get better outcomes.”

Even in the sub shop example, there are caveats. A single mom-and-pop store can probably do okay gauging consumer wants and needs in its area, but a small chain of such shops across a small geographic area had better keep its fingers on the pulse — watching its competitors’ special promotions, keeping tabs on consumer comments on Twitter and Facebook

And retail is a cauldron of big data needs. “Retailers need to predict trends, track in-store repeat business, look at pricing dynamics,” McCabe said. If you’re in that business, it’ll be harder for you to compete with companies that can leverage even just the public data if you can’t or don’t.

SAP’s new products take the structured and unstructured data analysis capabilities that were available in its hot-selling HANA in-memory database appliance and repackage it as an add-on to its BusinessOne and All-in-One for smaller companies.  (To be clear, defining SMBs can be tricky. SAP puts any company with annual revenue up to €500 as a small or medium enterprise or SME. McCabe classifies small businesses as those with up to 99 employees and medium businesses as those with 100 to  500 workers.)

All the reasons big companies have to use big data pertain to smaller companies, Christian Rodatus, SVP for SAP HANA, said on the call. Smaller “manufacturing companies need text mining and analysis to provide better quality analysis [of their products] and predict the effect a lack of quality can have on the supply chain, dealing with the impact of production changes,”  he said.

That being said, small and medium companies are notoriously cost-conscious. The availability of inexpensive SaaS-based analytics products will be attractive to such budget-constrained shops. Whether or not SAP’s new HANA packages, which will be available later this year, takes off will depend on price — something SAP did not provide on Tuesday’s call.

Photo courtesy of Flickr user swanksalot.

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It’s not that SAP, a giant in enterprise resource planning (ERP) software hasn’t bought before. It purchased Sybase — mostly for its mobile database technology  – for about $6 billion last year — and three years before that it snapped up analytics leader BusinessObjects. But compared to rival Oracle , which has bought something like 40 companies in the past few years — including RightNow Technologies and Endeca just last month — SAP has been positively demure.

Now, Snabe thinks SAP needs a higher profile among consumers, most of whom wouldn’t know SAP’s MySAP, All-in-One, or BusinessOne ERP systems if they tripped over them. Speaking to The Financial Times, Snabe used a computer game maker as an example of what he hopes to do to make SAP a bigger name among more users.

Snabe said:

“At Electronic Arts they have a rule that if they don’t see visible joy in a user in seven minutes a game will not sell. I would like to do the same with business software … We are not quite there yet, but sometimes we do get visible joy, with people saying ‘this is really cool and I am going to show it to my children.’”

SAP needs more cloud savvy

The comments show that SAP, which has ridden its ERP horse for years, knows it needs to branch out. It’s early cloud efforts, notably BusinessByDesign have underwhelmed, but its new in-memory appliance HANA won rave reviews. But, while Snabe talked up consumer-appeal, others said SAP has a cloud deficit that it should address.

Dana Gardner, principal analyst with Interarbor Solutions, said that given SAP’s installed base of ERP users, it needs to “take the Software-as-a-Service path to the cloud.”

“They need to build, buy or partner on SaaS ERP apps , or closely associated business apps as services to then move toward cloud values,” he said. “Buying may be the best option now, given how fast the market is moving, so NetSuite and Workday come to mind.”

Since NetSuite has a very large shareholder in Oracle CEO Larry Ellison, a buyout is not likely there. Workday, founded by PeopleSoft pioneer Dave Duffield, is a hot property now, having just closed a whopping $85 million in a Series F round of funding, so it clearly does not need to be bought and would be pricey. Given Duffield’s and SAP’s shared animus towards Oracle, an alliance of those two companies would be extremely interesting.

But, SAP still has a lot to prove in cloud computing so my bet is that’s where it’s looking (provided Oracle has left anything on the table.)

When Snabe’s comments surfaced in The Financial Times this week, the twitterati weighed in. Ray Wang, founder of Constellation Research, said Tibco — and its middleware and service-oriented architecture expertise — would be a good fit. Others said OpenText. Tibco is good on enabling infrastructure but isn’t a name that leaps to mind in consumerization.

SAP has the resources to make deals: as of its most recent quarter, ending September 30, SAP had $5.93 billion cash on hand.

Snabe’s quest shows how deeply consumerization is impacting even the biggest legacy IT players. This consumerization of IT theme will be front and center at the GigaOm Net:Work Conference next month in San Francisco.

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