Will 2010 be the year of the SAP upgrade?

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.

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What’s next for SUGEN?

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?

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What if Shai Agassi never left SAP?

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.

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Guest blog: McDermott and Hagemann Snabe are the right men for the job

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?

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The lingering effects of SAP’s bungled Enterprise Support rollout

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 »

Wal-Mart, SAP and sustainability

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?

Why SAP’s 2010 market strategy should matter to you now

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.

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The Top 10 SAP Watch blog posts of 2009

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.

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Developing the right supply chain sustainability software

While supply chain sustainability software is key for green IT strategy, the software itself is still in its early stages.

SAP is amongst a host of vendors that sells some form of sustainability software focused on the supply chain. But it still may be a while before the industry sees software geared toward enabling green, end-to-end manufacturing. The reason? There aren’t really standards and methods at the moment for what should be tracked and reported.

That could begin to change next month, when AMR Research releases its first Sustainability Top 25 report – an index ranking the top 25 companies with the most sustainable supply chains. The list is expected to be released in January 2010, and subsequently will be published annually, just like the firm’s Supply Chain Top 25 ranking (on which the methodology for the new index is based).

AMR acknowledges that this index would join a slew of other like-indexes focusing on sustainability.

That said, many of the existing indexes, such as the Dow Jones Sustainability Index (on which SAP was named the highest-ranking software company this year), lack the ability to keep track of the operational sustainability of corporations, AMR Chief Strategy Officer Kevin O’Marah said at the recent AMR Sustainability Exchange event in Boston. 

Meanwhile, the need for an in-depth index to track performance and measure improvement continues to grow. As such, the Sustainability Top 25 will focus specifically on the operational standpoint of corporations and their supply chains, as opposed to a company’s overall approach to sustainable practice.

Will AMR’s new supply-chain focused sustainability ranking be the push vendors like SAP need to better develop their sustainability software?

ASUG will improve in the New Year

Count ASUG amongst those who pledge to do better in the New Year.

New CEO Bridgette Chambers said the organization is making improvements to its communities and special interest groups that will “get us back to the core of what’s made our brand strong,” including efforts in education, networking and influence. Chambers promised more details in January, when they will reveal the initiative to their members.

“[We] took a look at the value ASUG members were getting in the past and decided it needed to improve,” Chambers said.

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