News & Views

November 15, 2011 from The Enterprise System Spectator – “I attended two days at SAP’s SapphireNOW conference in Madrid earlier this month, at the end of a month-long trip to Spain and Italy. The trip to Madrid gave me a good opportunity to catch up with the latest developments with SAP since the Sapphire conference last May in Orlando.

Jim Hagemann Snabe gave the Wednesday keynote, which I found tighter and more balanced than similar messages delivered in Orlando. Back then, the keynotes seemed to overly emphasis HANA, SAP’s new in-memory database technology. Although HANA is still hugely important to SAP, the message is now more balanced between SAP’s three focus areas of innovation: mobile, cloud, and in-memory computing…

My consulting team at Strativa recently evaluated ByD (Business ByDesign) in a competitive deal and came away favorably impressed. Customer reference checks during the Madrid conference were also encouraging. I believe SAP has a winner with ByD: both for subsidiaries of its large customers and in net-new small business deals. Those who question the viability of ByD at this point should reconsider their assumptions…”

180 View – Although the author, Frank Scavo, was paid to attend the conference by SAP, Frank did a good job in providing an unbiased opinion about the conference. What was also interesting about the article was what was not discussed – mainly SAP ERP, SAP Business All-in-One and SAP Business One. SAP ERP and All-in-One are the same system except that All-in-One is preconfigured for a specific industry. It seems that SAP is betting on in-memory computing for these systems – “From an economic standpoint, in-memory computing is a sustaining innovation for SAP. SAP can use in-memory computing to continue to sell big-ticket licenses to big-ticket customers and receive large annuities in the form of maintenance fees.” But there was no mention of SAP Business One, which is conspicuous by its absence.

December 7, 2011 from Bloomberg Businessweek – “SAP AG, the largest maker of business-management software, agreed to buy SuccessFactors Inc. for $3.4 billion in cash, stepping up competition with archrival Oracle Corp. in the cloud-computing market…

The deal extends SAP’s reach in the market for cloud computing, which lets customers rent software delivered over the Web rather than install it on their own machines. The company is promoting the idea as a safe way to outsource data centers and reduce the need for hardware. The SuccessFactors acquisition comes six weeks after Oracle agreed to buy another cloud competitor, RightNow Technologies Inc., for $1.5 billion…”

180 View – If you had any doubts about the future of cloud computing, follow the money.

September 1, 2010 by InformationWeek – “In a strikingly detailed and rare peek inside a huge ERP deal, Airgas Inc. has disclosed that its highly customized enterprisewide SAP implementation carrying a price tag of about $85 million should begin generating significantly more than that investment in annual incremental operating profit by 2013…

So just as we had all been led to believe that big ERP deals are a relics of the past, that they’ll never happen again, that they don’t work, and that they inevitably blow up in the faces of the customer, the software vendor, and the integrator, here we have one of life’s surprises: a big, multi-year, many-moving-parts ERP implementation that by all accounts is succeeding beyond everyone’s wildest expectations…”

180 View – On the surface, it looks like a huge win for Airgas and SAP. But scratch the surface and it does not look so great. For example, there are more costs to keep the highly customized system up to date with future releases. Also it’s not clear whether only out of pocket costs were considered and not the internal costs to implement the system. The benefits include $25 million to $50 million increase in income as a result of anticipated sales growth because of SAP. But I can’t imagine anyone at Airgas or SAP could prove the direct link between the sales growth and implementing SAP. At the very least, they should have provided a little support for their claims.

May 13, 2010 from Newsfactor – “In the largest technology industry acquisition of the year, SAP announced plans to buy Sybase for about $5.8 billion. SAP said the merged company will focus on serving “unwired enterprises.”

There are clear synergies between SAP and Sybase across both product lines and markets. SAP expects the merger to help the company hasten its reach across mobile platforms and drive adoption of its in-memory computing vision, which in turn is expected to spur greater adoption of SAP software. Sybase’s mobile platform will also connect and enable SAP apps and data on mobile devices.

Meanwhile, the companies expect SAP’s in-memory technology to give Sybase the opportunity to improve the performance of its analytics offering and extend the reach of its event-processing and analytics solutions to new industries. SAP’s tech should also beef up Sybase’s core database business, the companies said….”

180 View –ERP was developed initially to automate business processes across the silos/departments within organizations. Now, ERP is being extended to automate business processes anywhere in the world. Being able to approve a purchase order is just one example of a mobile application.

SAP may soon offer something similar to Oracle in providing not just the ERP application but also the underlying database.

May 24, 2010 from Forrester –  “…With 5,000 attendees in Frankfurt, 10,500 in Orlando and 35,000 online participants, this was the biggest SAPPHIRE event ever.…”

180 View – If you’re interested in what happened at SAP’s really big show, this link is a good way to glean the highlights without needing to watch online videos…

February 26, 2010 from itbusiness.ca – “It seems unheard off or near impossible to implement SAP in 30 days, but SAP Canada president and channel chief believe they are heading in that direction with the help of channel partners…

Joel Martin, principal analyst for Toronto-based Business Software Strategies, believes that if SAP can execute on Fast Start and allow partners to bring templates to the mid-market, which enables low cost sales and implementation, then SAP can be successful down market.

“The thing that struck me most was if a partner can help a customer deliver SAP in 30 days. That is unheard of. That is something that is very powerful, very compelling for customers to consider SAP than before,” Martin said…”

180 View – We have also recently heard of a fast implementations from a  SAP partner that has done it. Although we don’t have any experience with such fast SAP implementations yet, it does change the playing field in software selection. SAP is clearly targeting small to medium-sized companies now with their SAP Business All-in-One system. It makes you wonder whether SAP still needs SAP Business One, which was initially targeted to the same market as All-in-One.

January 14, 2010 from InformationWeek – “SAP has stepped back from its plan to move all customers to Enterprise Support contracts priced at 22% per year. Instead it will adopt a two-tiered system that reintroduces a Standard Support option set at 18%…”

180 View – In the past, most organizations did not worry too much about the annual support fee or only considered it in the final contract negotiations. Today, it has become an important consideration as buyers have become more sophisticated and ERP systems have matured. Buyers don’t want to go through another ERP implementation in their lifetime and the Net Present Value of the maintenance costs should be considered over a long period of time.

May 2009 from Aberdeen “After a year of silence surrounding SAP’s newestEnterprise Resource Planning (ERP) solution, SAP Business ByDesign is back. During that year, many of its competitors pounced on SAP’s silence, even going so far as to initiate and spread rumours that the new product was dead. At Sapphire 2009, SAP showcased about a dozen Business ByDesign customers…”

180 View – This is a good article by Aberdeen which helps distinguish the target market for SAP’s ERP products. Although Aberdeen states that Business ByDesign is ready for a test drive, they don’t say it’s ready for prime time.

180 View – This looks like a great service by SAP but it seems like a well kept secret. Benchmarking will allow you to compare your organization to others (that are considered best in class by SAP) to see whether your business processes are working well. The program covers 20+ processes, with 3,500 + participants from over 1,500 companies. But it also only free to SAP customers and select prospects. If you qualify, check it out.

January 30, 2009 from ZDNet – “…He says that mainstream adoption within small and medium-sized businesses is “accelerating” – and that 20 percent of enterprise IT workloads will be run “in the cloud” by 2013. This will lower operating costs, reduce IT staffs and cut down on carbon footprints, he says… By the end of 2010, in fact, he expects 70% of companies will have deployed at least one application in the service “cloud”…

180 View – It’s hard to find good stats on SaaS. The survey in this article is based on a survey of 150 chief financial officers with budget authority. So it’s not based on actual SaaS but planned adoption. It’s also based on a small number of companies. Nevertheless we agree that SaaS has become mainstream. There are currently few options for ERP SaaS but that will inevitably change as companies seek ways to reduce costs. The article ends with “70 percent of SAP’s installations of its R/3 set of business applications predate 1998.” Pre 1998 there were not that many ERP systems available and SAP was extremely successful in attracting companies especially those with Y2K fears. But it’s still surprising that 70% predate 1998.

July 16, 2008 from eWeek – “SAP is taking a one-size-fits-all approach to product maintenance, in which customers of all sizes will be switched to an Enterprise Support program regardless of their size or IT budgets.

SAP will start transitioning current customers into Enterprise Support this month at no additional cost, but it will start phasing in pricing for this level of service at the rate of 8 percent per year over the next four years starting in 2009, until it reaches the standard cost of 22 percent of product license fees…

SAP contends that the cost of Enterprise Support is below the average maintenance fees charged by other software companies. Cordrey said that the phased-in price increases will help make Enterprise Support affordable for customers of all sizes.

Enterprise support provides a 24/7 service-level agreement, continuous quality checks, produce support advisories, and advanced support for implementing ERP application enhancements and support packages.”

180 View – We anticipate a backlash on 22% product maintenance from SAP customers. We think that maintenance fees will become one of the more important criteria in selecting a new system. Organizations in the selection process should be evaluating NPV (Net Present Value) over 5 years to make a cost comparison between systems. But make sure that vendors have disclosed all maintenance and support fees, which are sometime charged separately.

May 5, 2008 from IT Business.ca – “SAP and Research in Motion have teamed up to bring SAP’s back-end business applications, beginning with CRM, to BlackBerry devices… SAP’s CRM is the first application that will run natively on the BlackBerry, but eventually the companies plan to build mobile versions of SAP’s applications — including ERP (enterprise resource planning) and supply chain — for BlackBerry devices, said Bill McDermott, president and CEO of SAP Americas, Asia Pacific and Japan.”

180 View – ERP in the palm of your hand with access anywhere anytime sounds good to us. The only concern is ERP will need to be dummied down to make it easy.

May 8, 2008 from itWorld Canada – “Installing SAP applications is not easy. Employees who are capable of deploying and maintaining SAP software are in extremely valuable and practically form a whole profession by themselves.

SAP, which built its reputation with ERP software, is rarely chosen by enterprises for one-off applications, AMR Research analyst Jim Shepherd notes in a report this month titled “The five SAP strategies that you need to understand.” “For huge organizations, this is typically a multiyear, multimillion-dollar effort to transform the business,” he writes. Unfortunately, executives often pay little attention to SAP installations after they are deployed, he adds. That’s a big mistake. Let’s take a look at the five SAP strategies Shepherd details in his report, and how they affect your technology decisions…”

180 View – Despite bad press, SAP keeps on truckin. The thing is they had the vision and ability in early ERP days to build systems that would work across large organizations with complex business and infrastructure. Decision makers are risk adverse and think that if it works for the best companies (as the SAP ad says), then it will work for me. Another compelling reason to go to SAP is that the most well known and trusted consulting and accounting firms were on board and would help with the implementation.

SAP won the first ERP War fought over automating business across departments, Client/Server technology, and support for multiple databases and operating systems. We are now in the midst of the second ERP War being fought in the trenches of ease of use, web based architecture, SaaS, embedded BI and CRM, customization outside of source code and integration tools.

March 27, 2008 from ITBusiness.ca – “The trash disposal giant, Waste Management is suing SAP over an ERP implementation it dubs “a complete failure.” In its court complaint, Waste Management said senior SAP executives, including SAP Americas’ president and CEO, Bill McDermott, participated in the “rigged and manipulated” demos.”

180 View – It’s hard to believe that SAP would intentionally rig or manipulate a demo. A canned demo is apparent if you are asking questions. The demonstrator will be unable to show anything other than what was planned. It’s also unlikely that SAP would have answered specific functionality questions dishonestly. That would be a big problem in court. It would also be a big problem during the selection process if the truth was uncovered as the decision is largely based on trust. But perhaps the requirements were not well defined. And perhaps SAP was not forced to be specific in responding to requirements. A “Yes” can mean many things including out of the box functionality, third party, customization or workaround.

It’s not to say that the vendors are always blameless. We have recently heard a number of horror stories of failed implementations. In these cases, the problem lay with the Value Added Reseller who promised the world and failed to deliver. One question raised by these failures is to what extent the developer should be responsible for the failures of their Value Added Resellers. Many of the developers have certification processes, but it’s no guaranty. We would like to hear your thoughts on this.