Has SAP Found Magic Formula (One) To Learn The Ropes Of Marketing?

Has SAP Found Magic Formula (One) To Learn The Ropes Of Marketing?
P.J. Jakovljevic - October 23, 2000

Event Summary

On September 22, SAP AG (NYSE: SAP), the leading provider of enterprise software solutions, unveiled a wide-ranging, global advertising and promotional awareness campaign designed to "build upon its success as the world's leading provider of e-business solutions". The brand-awareness campaign has gotten an impressive promotional start with SAP's title sponsorship of the inaugural running of Formula One racing at Indianapolis, one of the most famous racing venues in the world and the birthplace of motor sports. This is only part of the new global-awareness campaign. SAP will also be a corporate partner of the West McLaren Mercedes Formula One racing team through 2002, providing exposure for SAP at each of the 16 Formula One events around the world. In addition, the mySAP.com collaborative e-business solution platform will garner tremendous exposure by appearing as the primary sponsor through 2002 of the two McLaren-run cars in the F3000 racing series.

"The global appeal of Formula One is consistent with our efforts to expose millions of people to the SAP brand, continuing our ongoing efforts to build awareness for one of the world's leading technology brands, and to symbolize that SAP is racing to the pole position of e-business solutions," said Martin Homlish, executive vice president and chief marketing officer at SAP. "The combination of powerful, creative, focused messaging and broad media execution will create tremendous excitement for SAP and the mySAP.com solutions."

Launched also through an advertisement in the U.S. edition of The Wall Street Journal, the new global campaign explores the challenge of finding business success in the so-called "new economy" and documents how 13,000 leading companies use SAP e-business solutions to create value and increase competitiveness. The campaign includes print and television advertisements to be run in more than 25 countries. More than 40 leading business and information technology publications will be targeted for print advertising, and television placements are planned for each of the four major networks in the United States, as well as networks in 10 other countries. Wide-reaching airport and Web-based banner advertising also is included in the new program.

Market Impact

SAP continues to reinvent itself from a large, inert business applications software company into an Internet leader. Despite its huge customer base and mind share, created throughout the 1990s, SAP has had notable challenges over the past two years. The company has belatedly recognized that its US image problem is of not being flexible enough, and has resorted first to an internal restructuring and then to an external image renovation.

Launching a global TV marketing campaign is not new to SAP. The company launched its last effort - an over $100 million global advertising campaign earlier this year with 90-second TV commercials during the 2000 Academy Awards, one of the most widely watched programs of the year. However, it had only a limited success. For the last few years SAP has repeatedly lost marketing wars against Oracle. It complacently responded to Oracle's savvy marketing with its cumbersome technical marketing in a vernacular that consisted of SAP-idiosyncratic buzzwords and acronyms not understandable to a typical business executive.

While SAP has so far struggled in its attempt to develop and articulate its image and strategy for new e-commerce technologies, it has recently been making moves in the right direction to remain competitive in the "new economy". The company seems to be more committed to partnerships and working with other vendors that specialize in e-business and CRM software. Moreover, it has replaced its clumsy former message that emphasized its mind-boggling technological superiority with a simple message of satisfying customers' requirements and helping them achieve results in the new Internet economy. SAP has finally realized the need to explain what mySAP.com really is and what it can do for existing and potential users. Its new global marketing director and former Sony marketing executive, Martin Homlish, deserves the most of the credit for the long awaited and needed change in direction.

The campaign comes in the nick of time to fend off increasingly formidable competitors, most of them being established marketing savvy businesses. Since SAP's major revenue successes appears to be attributable to mySAP.com as opposed to its traditional breadwinner, R/3, SAP faces further challenges from Siebel, the IBM/Ariba/i2 alliance and Manugistics (as if the competition from Oracle and other ERP archrivals were not enough!).

User Recommendations

Only time will tell whether the prospective and existing users will understand the new SAP message - and how they will take it. More important will be how well the SAP sales and service force, particularly in the US, can demonstrate the touted benefits to the prospect or customer. One should expect a less arrogant and condescending approach than in the past.

Due diligence should always be paid to satisfying your unique requirements as derived from your unique e-business strategy. While selecting a strategic software partner is a challenging and risky undertaking, the positive news is there are more companies competing for your dollars. Nonetheless, one would be hard pressed to find a case where SAP should not be included on at least an initial long list of vendors in a global ERP selection. The depth and breadth of mySAP.com's offerings are attractive at first sight.

More comprehensive recommendations for both current and potential SAP users can be found in SAP - A Leader Under Reconstruction.

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