SAP - A Humble Giant From The Reality Land? Part 5: Challenges and User Recommendations
Written By: Predrag Jakovljevic
Published On: August 9 2001
SAP - A Humble Giant From The Reality Land?
5: Challenges and User Recommendations
During its international e-business conference, SAPPHIRE, on June
12-15, SAP AG (NYSE: SAP), the leading provider of business software
solutions, released a spate of upbeat announcements in its effort to portray
itself as a reformed vendor of choice for all aspects of e-Business, including
planning and collaboration. As an illustration thereof, SAP cited that
its flagship mySAP.com suite has met with remarkable success in the market.
SAP reached a major milestone in 2000 when the number of licensed users
of its mySAP.com platform reached 1 million. Since then, more than 3 million
additional users have reportedly licensed mySAP.com.
This Note: This is a five-part note covering the announcements at
the SAPPHIRE conference.
One covered Alliances and Partnerships
Two covered Expanding Functionality
Three discussed Market Impact
Four discussed SAP Strategy
Part Five covers the challenges faced by SAP and User Recommendations,
Delivering on this extremely ambitious strategy will be an enormous challenge.
Although SAP has done a remarkable job of demystifying the mySAP.com conundrum,
there will still be confusion as prospects might be overwhelmed with all
the new products and unfamiliar terminology.
appears that SAP's recent revenue growth is attributable to its market
recognition, large customer base, and to risk-averse customers' unwillingness
to go for less viable vendors, rather than to SAP's immaculate marketing
effort. Moreover, SAP's sales force will not only have to learn how to
sell the products but also whom to target within a prospect's organization
with every piece of software.
fact remains that many new SAP modules are quite cross-functional, while
some may even require the creation of new roles within an enterprise (e.g.,
a VP of new product introduction (NPI)). One should also account for the
ongoing costs of cross training the SAP consulting force on new and still
developing e-business applications from its traditional ERP functional
orientation. The same holds for the sales force that has been reorganized
around vertical industries in respective CRM, SCM, business intelligence
and other product areas.
caveat is that as a result of the changes within the company, a significant
part of the SAP US-based workforce has been with the company for only
a year of less. The challenge for SAP is to get enough experienced people
who can sell point solutions CRM, SCM, PLM, e-procurement, etc, both within
the realm of SAP and as stand-alone components that can be integrated
with other products. Since the longer term SAP sales people are accustomed
to selling the monolithic ERP SAP product, 'the whole enchilada', contracts
and /or upgrades rather than selling CRM, SCM and PLM point products,
it will take time for them to be retrained or cross-trained to sell the
new components. The result is when it comes to the new components, the
entire sales force is still learning. The lack of experienced sales resources
in these new areas may impede SAP's proficiency in selling these products
outside of its install base.
Key is Execution
Therefore, SAP's potentially unwieldy and scattered global development
organization, disparate product components and their developments' coordination,
and the lack of sales focus may hamper the execution of its otherwise
should clearly articulate the delivery milestones of its recently announced
e-business strategy. These should address time frames for all main product
lines releases, and also, how customers can feasibly migrate piecemeal
from individual components to the integrated whole. SAP R/3 Enterprise,
the next major release of its flagship ERP suite, which is slated for
general availability in 2Q 2002, and which will supposedly provide an
R/3-based kernel of horizontal components, upon which customers can incrementally
deploy new mySAP.com and 3rd-party components without the need to update
their core ERP systems, is the step in the right direction, but with the
long way to go. Also, although SAP Web Application Server (SAP Web AS),
which is an incarnation of SAP Basis as the underlying technology for
most of SAP's solutions, should enable new Internet paradigms to be combined
with the transactional operations of ERP, it will also require significant
mindset change and retraining of former ABAP programmers into e.g., HTTP
While SAP seems to have finally realized that it would unlikely be the
sole application provider within a single enterprise and that, for it
to provide more value to its customers, it must be more open with its
competitors, some reservations in the market about its sincere intentions
will remain. Partnerships have been ephemeral, however, and remain effective
only as long as the partners have common interests. Any partner's commitment
to SAP is certainly not unique. However, SAP relationships with Commerce
One and IBM do seem to have merits and should remain solid
and produce results for both partners for some time to come.
SAP's business applications market's leadership remains unquestioned although
it will continue to be vigorously challenged my many. SAP seems to be
doing well in both perception and the wars on the ground. More important
will be how well the company will execute its impressive but highly ambitious
vision. The market has often in the past witnessed how long the road is
between the vision and execution, SAP huge resources notwithstanding.
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 application software
selection. The depth and breadth of mySAP.com's offerings should be attractive
to a wide range of companies, both industry- and size-wise. However, users
should question the company's delivery fulfillment of its strategy and
appreciate that migrating older instances of SAP R/3 to mySAP.com and/or
integrating mySAP.com components to other software will remain painstaking
for some time to come despite SAP's commendable initiative in easing that.
comprehensive recommendations for both current and potential SAP users
can be found in SAP
- A Leader Under Reconstruction.