December, 2008

What are your SAP resolutions in the New Year?

At the newspaper I used to work at, one of my assignments every time the price of gas went up was to head to a gas station and ask people if the cost would change their driving habits. I estimate I’ve performed this task at least five different times.

Inevitably, two out of every 10 drivers I interviewed would say yes. The rest would say, ‘Not really.’ But then, they’d add things like, ‘well, we aren’t taking our vacation this year,’ or ‘I do bundle all my errands into one trip now,’ or ’I am carpooling to work.’

Television news gave the impression that gas prices were truly crushing people, as if no one was driving anymore. But many people didn’t think about it like that. Sure, gas was really expensive, but they were finding ways to manage because they had to.

I thought of this as I was interviewing SAP customers last week about their SAP resolutions for the New Year. With so much news on how the recession would decimate IT budgets, IT projects and consequently, vendor sales, I expected to hear from SAP customers that they’d prioritized some sort of cost cutting measures.

So I was surprised by the optimism I heard, each one chiming in with the new projects they had planned for the coming year, not even mentioning cost cutting. And when I asked how they’d pay for them, they said they would just have to get creative.

I know a resolution is what you want to do, not necessarily what you will do. But the resilience exhibited by customers is a bright spot in a year that has been filled with some pretty bad news.

So let’s head into 2009 remembering this — despite a dismal economy, just as people are still driving, companies are still finding ways to innovate, because they have to.   

I’d be interested to hear how you plan to deliver innovation in the New Year, and some of the creative ways you’ll do it.

Will more companies halt SAP projects?

Most companies that have already started IT projects will finish them even in this economy, analysts and customers have told me in the last month. It seemed like, for the most part, that was holding true.

But the paradigm seems to lose a little luster with Select Comfort’s announcement this week that it’s halting its SAP implementation as part of cost-cutting measures. It appears from SEC filings that the implementation was costing millions of dollars. The bed retailer is also laying off around 120 people — about 22% of its workforce.

No doubt there’s more than one reason why this implementation was halted. But there’s one clue that’s far more interesting than it perhaps being over-budget or behind schedule.

It seems like it was a huge project, and one which the company expected would be completed in early 2008. The company was implementing SAP ERP, CRM, SCM, PLM, SRM, HCM, SEM, BI and enterprise portal to replace its current disparate software systems and facilitate a growth strategy, according to an earlier SEC filing.

“Our current management information systems may not be adequate to support our growth strategy,” one SEC filing said. “We believe this SAP-based IT architecture, along with best-practices-based processes and greater utilization of off-the-shelf, packaged solutions, will provide greater flexibility and functionality for our growing and evolving business model and be less expensive to maintain over the long-term.”

The recession, however, changed everything. Select Comfort now plans to close dozens of stores, according to a press release from the company. Therefore, the software implementation it wanted to help pursue those business plans may need to change as well.

“There are several alternate SAP implementation approaches and given the smaller than anticipated current size of the Company, the approach to SAP software originally adopted may be outsized for the Company’s needs,” a letter from an investment adviser to the company’s board of directors filed with the SEC and quoted in this ComputerWorld story said.

It seems likely that other companies, which started implementations a year or more ago but haven’t yet finished them, may too be facing similar challenges.

SAP and its customer relationships

People don’t generally trust corporate blogs, according to a Forrester Research study on the topic.

There are, however some exceptions -- among them are Dell, Rubbermaid, Microsoft and, SAP, the report said. Blog Council, a watchdog group that reported on the study said it’s “because they put their customer first and exist to help solve their problems.”

These sentiments lend some insight into the SAP Enterprise Support controversy, and the brouhaha that’s been stirred back up this week with SAP’s decision to allow German and Austrian customers another year of support. They’ll be able to pay for support according to the terms of their existing contracts until 2010, while everyone else moves to the enhanced, but pricier, Enterprise Support offering in January 2009.

Patching up bad feelings and restoring trust, not cutting price, most analysts agree, seems to have been central to that decision. In fact, many German and Austrian customers will wind up maybe paying more than if they had just opted to upgrade and/or move to SAP Enterprise Support. Under the terms of their existing contracts, support for R/3 releases costs more than 17% of net licensing fees.

While customers certainly don’t like paying more, trust, not price, seems to have been one of the central issues in this entire controversy. Forrester’s Ray Wang has been stressing the importance of restoring the vendor-customer relationship through this whole affair. Similarly, analyst Josh Greenbaum pointed this dilemma out months ago in his fictitious speech by SAP co-CEO Leo Apotheker, in which the soon-to-be sole CEO pledges to do a better job of explaining why they increased support prices. In his latest blog, Greenbaum points to ways vendors in general can build better trust, including giving customers 6% back on their maintenance fees, providing they re-invest it in new software from the vendor.

SAP has repeated time and time again during this Enterprise Support rollout that they’re just charging what everyone else in the market charges for support, and at the same time, unlike other vendors, they’re actually giving customers more services instead of just raising their bills. They’re right.

But SAP’s customers seem to hold their vendor to a higher standard. Maybe, taking steps to build that trust will finally help quiet down the controversy.

SAP customers: What’s your Unicode strategy?

What is Unicode? Until fairly recently, you had to be a techno-geek to know, but now it seems that all SAP customers had better become familiar with it.

In a nutshell, Unicode is a text encoding standard. For example, when you enter the letter ‘A’ into a computer, the letter is transformed into a certain number of bytes — 2, in the ASCII standard. The purpose of Unicode is to shrink the space (and complexity) associated with traditional character encoding, even when complex non-Western characters such as Chinese ideograms and ligatured letters are being represented.

Let’s consult SAP’s Unicode support policy to learn why that’s such a big deal.

“For new SAP software products and new releases of existing software products new installations will be possible only with Unicode.”

Historically, it’s been possible to do workarounds for non-Unicode systems, but there’s undoubtedly some time and expense involved. Imagine if some of your SAP data is encoded in Unicode UTF-16/UCS-2, in which all characters consist of two bytes while other data encoded in a system friendly to more complex languages will require more than two bytes. If you want to access information on one of these databases via the other’s character set, you’ve got a problem that requires coding and workarounds to solve.

Many SAP customers are global companies maintaining global data in more than one language. In a business environment that demands frequent exchange of data across geographic and linguistic boundaries. Unicode is a way of guaranteeing basic standards that make exchanging and storing SAP data simpler. SAP hasn’t had good experiences with mandates — consider the recent response to Enterprise Support and NetWeaver –and may never officially ask customers to move to Unicode, but SAP’s own Unicode policy is a mandate nonetheless.

In our recent podcast with Unicode expert John Visser, we learned that you can’t install some of the newer SAP modules unless you have Unicode capabilities. That makes it all the more urgent for new and existing SAP customers need to get up to speed on Unicode.

Demir Barlas, Site Editor

Who’s shopping for Business Objects?

Business intelligence initiatives are on the wish lists of many CIOs this year. That even includes President-elect Barack Obama, according to this InformationWeek story on a government pilot BI program.

That’s why it was good to hear from Business Objects CEO John Schwarz that SAP Business Objects isn’t laying off people in research and design in this recession. He gave the lunch keynote recently at the Credit Suisse Technology Conference in Scottsdale, Ariz. He said they’re not hiring or filling empty positions,, but these days there’s not too many people doing either.

And there seems to be some neat things happening as a result. In October, Schwarz said they put the NetWeaver and Business Objects teams under one management for development.

Moreover, unstructured analysis is being embedded in the entire BI suite. They’re building an integrated business planning and analysis suite on top of OutlookSoft and Cartesis and hope to deliver a fully integrated suite of financial planning applications in the next year. Just to name a few initiatives, Schwarz said.

So it begs the question many readers have been asking — should you wait until the dust settles on the Business Objects acquisition to invest in Business Objects?

In fact, the full product integration between SAP and Business Objects will probably take another nine months to a year, Schwarz said.

It’s certainly on people’s minds. SDN has an excellent post on SAP and Business Objects front-end integration. And Jon Reed is fielding questions on the Business Object product roadmap in his blog.

But, from the numbers Schwarz gave, it doesn’t appear that many customers are sitting on their hands when it comes to investing in the BI technology.

When SAP acquired Business Objects, it represented 1/7 of SAP’s business. Today, it’s more than three times that portion of revenue.

Uptake is particularly high in the SAP base, Schwarz said. With only 5,000 common customers between SAP and Business Objects at the time of the acquisition, the latter has seen uptake “we could not have dreamed of in our own, independent life.”

Are you waiting for another product roadmap before investing in Business Objects? Or is business intelligence too important for you to wait for?  

Courtney Bjorlin, News Editor