SAP to Become Leaner, Meaner and More Organized
As reported in a number of industry reports at the beginning of June,
German ERP software vendor SAP AG is to reorganizing its software division
into three separate units. It is planning a radical revamp of its software
development operations in an effort to regain dominance of the North American
business software market.
will make our research and development department more customer oriented,"
said the SAP spokesman, who asked not to be named. According to the spokesman,
the software division will be divided into three business units - new
development, maintenance, and product enhancement - and will not affect
spokesman denied that the restructuring had anything to do with comments
made by SAP's Chief Executive Officer Hasso Plattner at the company's
customer conference in Berlin in May. At the conference, Plattner acknowledged
that SAP would be working with partner companies to add depth to its mySAP.com
move like this is quite normal. We are a very large company," the spokesman
rumors, nonetheless, emerged that SAP's new head of American operations,
Wolfgang Kemna, is planning some internal changes of his own. The new
SAP Americas CEO plans to cut several layers of management in order to
streamline operations and bring SAP closer to customers.
SAP is pragmatically moving in the right direction, although somewhat
belatedly and with a heavy heart. The company has recognized its US image
problem of not being flexible enough, partly due to a large, unwieldy
organization. The internal restructuring and the external image renovation
may indicate that SAP is getting an idea of how the new economy works
- the company that responds the most swiftly to customers' demands and
anticipates vacillating market conditions will be the winner.
SAP has so far failed in its attempt to transition quickly to new CRM
and e-commerce technologies, it has recently been making moves in the
right direction to remain competitive in the new economy. We endorse SAP's
recent humility and willingness to partner with other vendors for software
components it cannot develop efficiently in-house. However, this is a
notable departure from its previous strategy and will require a significant
the new anticipated SAP units correspond with the strategic areas of Customer
Relationship Management (CRM), supply chain management (SCM), and product
lifecycle management (PLM). Ironically, these are also the product functionality
areas where SAP has stumbled, particularly in the United States, where
competition from more nimble point solutions vendors like i2 Technologies,
in the SCM market, and Siebel Systems in the CRM market has taken its
toll. SAP has also been feeling additional pressure from direct US ERP
competitors Oracle and PeopleSoft, who have been more aggressively marketing
their Internet-extended ERP products.
down a large organization into smaller, more manageable and responsible
units should give SAP a better chance to be more flexible and focused.
So far, SAP has been trying to simultaneously move in too many directions,
without getting very far in most of them.
Notwithstanding, SAP should be included on almost any initial long list
for global extended-ERP selections. However, existing and potential users
currently evaluating SAP products, particularly its extended-ERP product
components, may benefit from considering already available and fully functional
components from other vendors on the merits of individual components,
instead of blindly following their brand loyalty. Each component should
be put through its paces using a well-documented set of requirements,
scripted scenarios demonstrations and rigorous reference checking.
clients are also advised to request SAP's written commitment to promised
functionality, general availability date, price, length of implementation,
and seamless future upgrades, particularly for recently announced partnered
offerings. SAP has traditionally been honest and forthright in addressing
these questions. Therefore, it should not be difficult to make SAP grant
a single contract and help desk for all the disparate components of its