Panorama Consulting just came out with its annual ERP report.
Not surprisingly, when it comes to timing and costs, traditional on-premise ERP implementations are taking a back seat to Software-as-a-Service (SaaS) and hosted/on-demand offerings. SaaS is implemented in less time (11.6 months) and at a lower cost (6.2% of sales) than traditional on-premise ERP solutions (18.4 months and 6.9% of sales, respectively), according to Panorama Consulting Group’s 2010 ERP report.
SaaS may seem like an ideal alternative to on-premise, but the road ahead isn’t free of potholes.
Implementing SaaS is likely to result in delivery of fewer business benefits than expected — only 23.5% of implementations realize at least 50% of the benefits (on the flip side, 42.9% of traditional ERP solutions deliver 50% or more of the benefits expected), according to the report.
The report attributes those drawbacks to unrealistic implementation expectations, as organizations might fall victim to hype from SaaS vendors. As such, those companies underestimate the time and resources needed to come out with a successful implementation.
Late last year, SAP expressed its vision for hybrid on-premise, on-demand deployments at large companies. The vendor is also planning to finally release SAP Business ByDesign, its SaaS offering for small to mid-sized companies. SAP is also trying to have it both ways when it comes to on-premise versus on-demand business intelligence (BI).
It has continued to stress how serious it is about on-demand, and that on-demand software would be a big focus for the vendor this year with applications such as on-demand supply chain management (SCM) software as well as a host of other SaaS offerings.
Will the vendor be able to deliver the best of both worlds — quicker implementations and more tangible business benefits — with its applications?
Bill McDermott and Jim Hagemann Snabe fielded a few questions about acquisitions during Tuesday’s CeBIT press conference.
With the importance SAP said it’s placing on mobile and in-memory, we can make a guess on at least one possible acquisition target.
Not long ago, former SAP CEO Leo Apotheker made the prediction that all of the company’s customers would have upgraded to SAP ECC 6.0 by 2010.
With 2010 now upon us, the estimate might seem unlikely. About half of SAP’s ERP users have upgraded, analysts say.
But several factors seem to support Apotheker’s theory, or at least the notion that there might be an influx of upgrades this year.
Over the past year and a half, the SAP User Group Executive Network (SUGEN) has been dedicated to the Enterprise Support affair.
And last month, SAP finally relented on a lower-cost maintenance option and reinstated a two-tiered support model. Standard Support will cost 18% of net licensing fees, while the enhanced but costlier Enterprise Support offering will eventually cost 22%.
SUGEN’s first victory was a mighty one. It was able to get SAP to abandon its uniform maintenance and support hike.
So what’s next for SUGEN? How can the group wield its influence down the road?
Hasso Plattner made it quite clear during his press conference announcing the resignation of SAP’s CEO that he didn’t want to dwell on the past. But as reporters, dwelling on the past is one of the things we do best.
So around here we got to thinking — what if Shai Agassi had never left SAP? Before Leo Apotheker was named deputy CEO in 2007, Agassi was SAP’s golden boy and the heir apparent to Henning Kagermann. He left the company once it became clear that he wouldn’t succeed Kagermann, at least right away.
This guest column was written by Axel Angeli, SearchSAP.com NetWeaver expert. Angeli runs Logosworld, a management consultancy that specializes in SAP project rescue and is next the the SAP headquarters in Bruehl, Germany. He has more than 20 years of industry experience and shares his knowledge as an author, conference speaker and analyst.
A German adage says: “Plenty of enemies, plenty of honors!” Maybe it was that dogma that drove Leo Apotheker. But in the end, Apotheker had plenty of enemies and was sacked without honors, leaving a trail of damage behind him. He shocked SAP clients with his new maintenance policy that did not come down as an offer but a dictate. Employees, especially the senior ones who helped build SAP from the early days, were extremely intimidated, fearing for their jobs both due to the unpredictability of Apotheker’s decisions and the risk that his business strategy would negatively impact the future success of SAP.
Bill McDermott and Jim Hagemann Snabe may not be the first choice for the financial markets. The market sees a company like SAP not as an organization that is primarily dedicated to its clients, but as a play ball for its short term investments and chart betting games.
But McDermott and Snabe are the right people at the right time with the right vision. Both already have a positive image within the SAP organization. McDermott is the economical brain and the only one within the organization who occasionally criticized the previous CEO in public. Jim Hagemann Snabe was the technology lead and will most likely continue to be so. Both appear to be thoughtful, philosophical minds; both more scientists than Machiavellian business men. The team strategy is underlined in promoting the humble and always friendly CTO Vishal Sikka to the SAP Executive Board.
The new captains shall be seconded by SAP Co-founder Professor Hasso Plattner who currently chairs the Supervisory Board of SAP. Although he is certainly the technology driver behind the scenes, he is also responsible for his faltering crown prince and for inaugurating Apotheker while never really benefiting from the bright brain and visions of Henning Kagermann. He also allowed the cunning and superior ABAP technology to be watered down with an irritating Java adoption strategy that led apparently into nothing but annoyed and frustrated customers and high costs of maintenance and ownership.
Where shall SAP go from here?
In reinstating a tiered maintenance and support model, SAP gave customers exactly what they wanted – a choice.
But in getting this choice, customers also learned another thing – they have a strong voice.
The Enterprise Support affair opened the door to something rarely covered in the enterprise software world – negotiating lower maintenance contracts. As one CIO put it to me, maintenance and support was never even questioned in his budget. But the news drummed up by the Enterprise Support affair brought it to the attention of the CFO, and gave him the idea that it’s an area for cost savings.
And it won’t take long for more value questions to come up. For starters, there’s the lingering question of whether, with the adjustments for inflation, Enterprise Support will wind up costing the same as Standard Support in the long run.
As Joshua Greenbaum put it to me in an interview when SAP first introduced the KPI program, “This issue of, ‘Why am I paying this enormous fee?’ isn’t going to die.” Continued »
If you’re one Wal-Mart’s 100,000 suppliers, you know that the retail giant has become somewhat synonymous with sustainability. Wal-Mart’s taking measures to be supplied 100% by renewable energy, create zero waste and sell products that sustain people and the environment over the next five years.
And if you’re even marginally tuned into SAP, you know the vendor’s big push over the last year or so has been to sell software that will help companies with sustainability initiatives like Wal-Mart’s.
The two took the stage to highlight their respective sustainability stories at the National Retail Federation annual trade show yesterday in front of a standing-room only crowd of attendees. SAP also shared details on its leading sustainability practices, and its product roadmap.
SAP says it has some 2,000 customers using its sustainability software.
Too bad Wal-Mart isn’t one of those customers.
“Not yet,” was the answer SAP Chief Sustainability Officer Peter Graf gave when asked whether Wal-Mart was using any of SAP’s sustainability software.
To be fair, a deal could be in the works. But it made me question who’s actually buying this sustainability software. It would seem that Wal-Mart is a natural fit for SAP’s software. It’s a big SAP customer, and a total of 85% of Wal-Mart’s suppliers are SAP customers.
If Wal-Mart isn’t running it, who is? And if Wal-Mart isn’t running it, why? Have they found something better out there? Or have they found they can manage and track these programs with software they already have?
It would make sense. We’ve heard over and over again that companies are trying to get more value from the very expensive applications they already have in place.
And by extension, the mood at yesterday’s NRF show was one of cautious optimism. Most of the folks I spoke with said they weren’t planning any big application purchases this year. In fact, a few told me they weren’t at NRF to look for applications at all.
Graf said sustainability is no longer “all tree-hugging and luxury.” I think that’s true. There are few businesses out there that haven’t figured out that switching to more efficient light bulbs or idling computers will save them money in the long run, or that consumers are starting to care more about sustainable business practices in the creation of the products they buy.
But is sustainability software still a luxury?
It’s certainly no secret that license sales are way down for software vendors. In fact, new license revenue for ERP vendors was down 24% in 2009, according to Forrester Research.
That means more discounts on software, as well as more calls and emails from ERP account representatives, pitching more add-ons as they try to increase volume in existing accounts.
But it could also mean some changes in the makeup of IT departments.
In its recent ERP trends report, Forrester asserts that there’s a vast shift underway in the ERP vendors’ business model. They need to increase recurring revenue streams to make up for what they’ve lost in non-recurring lines like license sales.
It was hardly a dull year for SAP news. Failed implementations, SAP’s take on the Oracle-Sun merger, SAP cloud computing and mobile applications all drew much interest on our SAP blog. Here’s a look at the most popular SAP Watch blog posts of 2009.