Dubbed the Paris Airshow of enterprise software by Vinnie, SAP’s mega-conference represents all that is good and bad about the industry. Good in that a significant amount of business gets done this way within the ecosystem of the largest enterprise vendor. Bad in that half of the cost of enterprise software is sales and marketing.

The competitive anti drives this spend, but a good part of the industry has moved towards SaaS, open source distribution, and ad hoc events as alternatives. Initially this happened because of necessity (SAP itself froze such spending just before the bust, .pdf). Hasso Platner once remarked that one day buyers will simply serve themselves through their site. Beyond self-service, community models are beginning to support this shift.

The precursor to the watershed moment was when the blogger corps gathered for Port and Cigars on the first night. Many met for the first time, some old friends, similar to the usual suspects feeling at Web 2.0 conferences. We didn’t know what we were in for, but formed a tight knit community with conversation built upon conversation. The next morning we arrived to the Blogger’s Corner within a Press Room that took up half a wing of the Orlando Convention center. We had tight schedules of one-on-one interviews and immediately shared them to create the right many-on-one encounters.

There is certainly camaraderie within a press corps, an experience I’ve had from the days in politics, but there is definitely competition that prevents such productive behavior. From second-hand feedback, we even outperformed the core. How often is it that a journalist has hands-on experience as an ISV, an analyst has no commercial bias, or even an employee that has a reputation that in some cases trumps bias? Every scheduled interview, time a SAP executive stopped by the blogger’s corner or casual encounter with one at a reception — the conversation was more than bargained for. Either rigorous domain expertise was applied, or a cutting edge Enterprise 2.0 perspective sliced through well curdled butter.

When I was briefed on Duet (enables a more usable interface to SAP within Microsoft Office), I argued that the same old structured thing within Outlook doesn’t make it as simple as email and asked if Duet would be as open to develop upon as NetWeaver. I met the guy who runs Open Source within SAP and was pleasantly suprised at their level of engagement. We had a wild conversation with a guy representing Enterprise 2.0 within SAP that boiled down to a debate over scarcity vs. abundant thinking, that made me realize the need for shared language. I got to see the concept of a true Enterprise 2.0 app by a designer that if productized could enable SAP to be more than the process company. This proof point was important because the thrust of formal presentations was SAP’s focus on becoming more usable and collaborative. But the news of the event to me was that SAP isn’t just some stogy massive German company. If course, I know this because of the work I do with folks in the Valley, but that was the takeaway from the conversations.

The greatest contention I have with the more formal message came from Bill McDermot who runs SAP America, a cute soundbite that Best of Breed does not Breed. Well, Best of Show is a Dog. First of all, the longstanding claim against a diverse vendor population is that if proliferated results in complexity unwanted by IT. Second, this contradicts the NetWeaver vision of SoA reducing the need to standardize on a software stack and enabling ISVs to deliver value. Third, it’s the ecosystem that wags the dog into needed change. Fourth, why would software be the one area of spending that shouldn’t adopt a portfolio strategy. Fifth, when I look at the industry today I see substantial innovation. I’m harping on a soundbite out of context, and the comment was probably more directed towards Oracle.

Perhaps the funniest moment was when a guy from a Canadian newspaper came over to the blogger’s corner and got in an argument with me about the quality of blogging and trustworthiness of Wikipedia. It didn’t start that way, and one of the better guys for such a debate, but while explaining the basics I showed him how his newspaper had 40 inbound links, compared to others with 400 that week — his simply claimed he didn’t believe it. He’ll probably go off an write a damning article on the bias and quality of the blogosphere, to complete his own circular reasoning, but I’m sure he discovered something new.

Perhaps the best moment for me in the newsroom was talking with Don Tapscott, who happened to be in the press room, about wikis and economics. Don does some SAP stuff and research with Next Gens these days, and definitely gets it.

But the watershed moment was more likely Niel Robertson’s encounter with Henning Kagermann, the CEO of SAP. He was pulled aside from a reception by a man who had genuine interest in the new, probably what got him to where he is, a genuine conversation occurred.

Now think about what SAP accomplished, with credit to Jeff Nolan, at relatively little cost:

• The leading enterprise bloggers participated in the conference. They didn’t feel handled and while there was a bit of controversy in posts, nothing became a crisis.
• A wiki with open editing was used responsibly as the center of activity, without an edit war
• Executive interviews and exposure resulted in conversations beneficial for all parties
• A blogger corps convened as an exercise in easy group forming that leveraged a backchannel to make sense of complexity in a constructive way
• The quality of blog posts, rare with any event, was substantial and gained outside coverage
• The same blogger corps now has a shared experience around the SAP brand that will probably influence future opinions

All this took was a little trust and access. I’d venture that other enterprises will follow suit.

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Ross Mayfield is CEO and co-founder of Socialtext, an emerging provider of Enterprise Social Software that dramatically increases group productivity and develops a group memory.

He also writes Ross Mayfield’s Weblog which focuses on markets, technology and musings.

It’s an interesting strategy put forth by in advance of its Sapphire ’06 Orlando conference. The plan could be enough to give Oracle’s top man Larry Ellison an upset tummy, provided a traditional Japanese of miso soup, sugared eggs, and natto with rice doesn’t accomplish that for him.

SAP plans to slash prices on Siebel application support offered by its TomorrowNow subsidiary, said a report in the Wall Street Journal. Oracle acquired Siebel last year, and earns hundreds of thousands of dollars on high-margin support contracts for its software products.

When Sapphire ’06 kicks off next week, SAP should talk more about the decision to add reduced cost Siebel support to the options it offers for PeopleSoft and JD Edwards products. Oracle owns the latter two firms as well.

Oracle has put a brave face on the threat. An Oracle executive cited in the article dismissed the SAP challenge as one that would cater to an “extreme niche.” Oracle possesses more expertise on its products and better source code access.

The numbers could be hard to ignore for customers, though. Olin Corp saw its $200,000 PeopleSoft support contract drop to $100,000 to $125,000 when it switched to TomorrowNow.

The support initiative looks like another facet of SAP’s aspirations for greater growth. BusinessWeek noted how company co-founder Hasso Plattner wants the company’s market capitalization doubled, to over $110 billion, by the year 2010.

SAP will put about $380 million in incentives out there for managers and certain employees as part of “If you have outrageous goals, then probably you can achieve outrageous things,” he said in that report.

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David Utter is a staff writer for WebProNews covering technology and business.