SaaS ERP — with its irresistible pay-as-you-go model and less-costly deployment — is well positioned for the current economy, most analysts agree.
So is SAP missing out on big chances to sell Business ByDesign?
In a week when there’s been no shortage of digs on SAP’s debuted, then-delayed SaaS ERP, and attempts to sway SAP customers to other vendors, it’s tempting to think so. NetSuite is trying to lure SAP customers to its own SaaS ERP offering with discounts and freebies. Salesforce.com CEO Marc Benioff took aim at SAP during Salesforce.com’s annual Dreamforce conference, saying that SAP — along with Microsoft and Oracle — were too late to the game.
Analysts say that NetSuite’s 50% off offer to SAP customers is less likely to appeal to the R/3 customers it’s targeted at, than to enterprise-size SAP customers who were thinking of deploying SaaS ERP in a smaller division or subsidiary. Those are potential, new SMB customer wins SAP could be missing out on.
But there’s also another view emerging.
The Wall Street Journal, in its Business Technology blog, took aim this week at the claim that online software is recession proof, citing NetSuite’s slightly lowered guidance for the remainder of the year, as well Benioff’s answer on how the economy had affected Salesforce.com — that these were difficult and unusual times, but Salesforce.com was in a position of strength.
And evidence is starting to emerge that IT budgets are, at best, uncertain. A recent story on our sister-site SearchCIO.com, centered on a Forrester Research survey on how IT is riding out the recession, revealed the approach to IT spending right now is somewhat unclear.
While the report said that “more than half of the IT executives said they are not cutting budgets and do not have plans to make cuts for 2009,” it also added that “the number of CIOs responding thus far is roughly a third of what Forrester normally sees at this point in a survey…suggesting deep uncertainty about what is going to happen.”
Will SaaS vendors just ride out the recession better than on-premise vendors, or will they really get a significant boost?
And is SAP missing out on a bunch of chances to sell its SaaS ERP, or, is it no big deal? Is the economy actually good, or at least neutral, for Business ByDesign?
Courtney Bjorlin, News Editor
SearchSAP.com site expert Axel Angeli recently leveled some criticism against SAP’s leadership and technical direction. This week he offers some support of SAP’s policies.
There are areas in which SAP is making positive progress, mainly in the embedding of communities and in collaboration with customers and vendors. SAP has learned a lesson from the enthusiastic engagement of Global Communication and the community experts. SDN is doing great and discussing product strategies in SDN would give better insight than listening to internal plans for the future.
A new member in the family is the SAP EcoHub. The idea is great. It creates a marketplace where SAP third party-vendors and SAP customers can meet in a single place. The questions that remain are: Why is a marketplace not simply called a marketplace, and why did EcoHub come into being shortly after some former SAP employees started a similar project under the name SolutionsScout.com?
The business counterpart to SDN, the Business Process Expert community (BPX), is getting more and more popular. A BPXer is a knowledge engineer, an advisor who should be able to explain the technology to business and explain the real business needs to the technical staff. Here is where paths cross: Listening to the true BPX community would give SAP an idea of where they need to invest, rather than investing in something later pushed into a market that hasn’t asked for it.
SAP has established standards for certified Business Process Experts. The idea here is to deliver a canonical set of knowledge and methods as the common ground for everyone working as ERP consultants. There are plans for training and certification in order to make BPX more popular and to quickly get a critical mass of qualified BPXers all over the world.
SAP is a good company and SAP has great products. SAP customers enjoy working with the ABAP stack; not for nostalgic reasons but because it is reliable, stable, still elaborate by design and superior to everything else that competes with it. SAP ERP is also the best choice for SMBs, if it is installed and if all service is rendered by an experienced SAP partner who specializes in the SMB customer’s industry sector. SAP ERP is still the best, and only Microsoft Dynamics AX will come close.
There is still potential for SAP, but management has to understand that listening to customers and freely giving out information early — even if details change later — is better than hatching strategies in an ivory tower. SAP leaders, wake up: Listen to your community and treat customer complaints as sacred!
In part one of this blog, published earlier this week, Axel Angeli discussed why he isn’t fond of SAP CEO Leo Apotheker, SAP’s service fee increases or elements of NetWeaver. In part two, Axel criticized some of SAP’s technology decisions.
SearchSAP.com site expert Axel Angeli isn’t one to pull his punches when it comes to SAP and he makes no exception in discussing SAP’s technological direction in this guest blog.
Has SAP lost its mojo?
In the good old days, SAP was an extremely successful technology company and the darling of many analysts. This was in the last millennium, before SAP lost its belief in its own strengths and virtues.
In 1998 SAP undertook its last breath-taking act of innovation when it introduced the BAPI framework. BAPIs had been designed to transform SAP’s transaction-based system into a component-based service suite where any functionality would be programmatically accessible. Back then, SAP was already an SOA-aware software package! But this successful path was needlessly abandoned in the years to come. The old SAP crew that defined the company’s technological success — in terms of ABAP, RFC and Batch Input — was mugged by the dogma of Java.
Even though it was implemented in the mindset of assembler programming, Java is a language that decorates itself with the feathers of object-oriented programming. It is unstable, unreadable, incomplete and completely redundant, since it did not introduce a single new feature that the world had been waiting for.
How should SAP escape the Java trap? Go back to its old merits. Make a clear and non-negotiable decision in favor of ABAP. This would also mean polishing up ABAP with a more modern syntax. The new ABAP 7.2 kernel has already taken some first steps in this regard. Technically the rudders are in the right direction. What is missing is the clear commitment of the SAP board.
In terms of SOA, there is another problematic area that requires immediate action: Process Infrastructure (PI). SAP doesn’t have the power to make technology changes from the inside and needs to shore up PI by buying a standing technology as an enhancement package for the existing stack. IBM bought Mercator Datastage TX, Progress took IONA, Oracle snagged BEA and Software AG showed mercy to suffering webMethods. The number of possible candidates for purchase is limited. If looking for quality products with an inherent Event-Driven ESB architecture, there are mainly Fiorano, ActiveBPEL or the not-for-sale SAP partner Seeburger.
In part one of this blog, published last week, Axel Angeli discussed why he isn’t fond of SAP CEO Leo Apotheker, SAP’s service fee increases or elements of NetWeaver. In the next part of this blog, Axel will explain what SAP is, in his opinion, doing right.
My colleague Shayna Garlick, who writes for SearchOracle.com, blogged on something this week that is timely for SAP customers as well -whether Web 2.0 for the enterprise will take a hit in this economy.
The post’s premise was that as established vendors and start-ups compete for Web 2.0 deals with companies, prices will fall, but so will vendors’ profits and, consequently, innovation.
It’s one reason why SAP’s investment in sort-of start-up LinkedIn is particularly interesting — as it could prove to be the best of both worlds for customers and the vendor alike.
Last week, it was revealed that the venture capital arm of SAP, SAP Ventures, poured some money into the young, social/business-networking site. LinkedIn provides an online community for professionals to pass their “business cards” around, recommend colleagues and even search for new employees among its members. And this week, LinkedIn added new applications for activities like blogging.
While investments made by SAP Ventures are somewhat independent of SAP AG, (if you’re interested in some of its other investments, here’s a list) LinkedIn said it decided to work with SAP as a “strategic investment.” They’ve been hearing for a long-time from members who run SAP software — including many CIOS — who want to leverage the online community to help people do their jobs more efficiently, a LinkedIn spokeswoman said.
“The idea that we could work with SAP was intriguing to us,” said Ellen Levy, LinkedIn’s Vice President of Corporate Development & Strategy, declining to give any clues as to what the two might work on, or when customers might see it.
SAP had this to say about the deal.
“LinkedIn is one of the leading Internet companies in the world that targets business users,” SAP spokesman Saswato Das said. “When Web 2.0 technologies are smartly applied to the enterprise, they can produce significant efficiencies for small, medium and large companies, and we believe in LinkedIn’s pioneering approach.”
SAP has poured money into its own Web 2.0 initiatives. But while vendors like Oracle, with its WebCenter Suite, and IBM, which announced in the fall it’s opening a social software research center in Massachusetts, are working to improve their own initiatives, SAP’s LinkedIn partnership signals an approach to Web 2.0 of leveraging and improving ideas from start-ups that are already working.
What’s the best way for vendors to optimize Web 2.0 for the enterprise, while still making money off it?
Courtney Bjorlin, News Editor
SearchSAP.com site expert Axel Angeli isn’t one to pull his punches when it comes to SAP and he makes no exception in discussing SAP’s recent earnings in this guest blog.
Deputy CEO Leo Apotheker blames the financial crisis. This is an attempt to avoid mentioning the turmoil ignited by the raising of annual SAP service fees from 17% to 22%. Customers haven’t shown the least bit of understanding for this decision. As a consequence, many customers have put their SAP purchases on hold. For example, the German SAP User Group (DSAG) decided in a common action to withhold any SAP purchases until next year.
The new enterprise support is a marketing disaster. The way it was communicated left the impression that SAP makes decisions behind the backs of its customers. Since Apotheker is the SAP marketing guru, he has turned into a burden for all of SAP. There is no one he can blame for this unfortunate move, and I have no idea how Apotheker will be able to escape from this trap. I myself am a techie and therefore feel indifferent towards Leo Apotheker; he is simply not my kin. But the analysts, also, do not seem to like him very much, which makes it difficult for him to explain his position. If this mishap would have been linked to Henning Kagermann, he might have escaped with a simple “Sorry, we meant it differently!” But the contract of the congenial, bright-minded professor is ending soon and he seems to be partially retired, like many of the old SAP crew.
The explanation given by SAP for the steep increase in support fees is the same old story: Due to the increasing complexity of the full NetWeaver stack, the costs invested by SAP into support rose heavily and now need to be recouped. Customers see it differently. The higher costs stem only from the new dimension of components that SAP introduced in the past decade, against customer wishes.
High support costs and a high frequency of support requests are signs of low quality or a depreciation of support-friendly design. And the same products that have been under fire for years have caused the problems. These are the products that require the Java stack, with the biggest culprits being Enterprise Portal (EP) and Process Integration (PI). PI is awkward to use, costly to install and operate, difficult to examine for causes of malfunctions and no longer based on state-of-the-art Enterprise Service Bus technology. There is no time to pimp up PI into a full featured, modern Event-Driven-Architecture process engine.
In part two of this blog, Axel Angeli discusses ways for SAP to get back on track.
Forrester Research’s recent SAP support fee report has made quite a splash over these last couple of weeks – with its challenge to customers to push for more value from Enterprise Support.
But it also raised something that’s getting little press – a suggestion that bolder measures might need to be taken to contain maintenance and support costs in the long-run.
Third-party support provider TomorrowNow’s operation officially comes to a close at the end of next week, and the court is starting to push Oracle and SAP toward a settlement in the TomorrowNow case.
It’s all a stark reminder to customers that their options are limited when it comes to maintenance and support. Oracle customers have a few alternatives, but the vendor has a cigarette-like warning label on its website cautioning its customers about using them. And while Rimini Street is getting ready to deliver third-party support to SAP R/3 customers in January, the options for SAP customers are limited.
Plus, Forrester says it has “started to see SAP become more aggressive about discounting when competing against Oracle — a practice SAP has not historically embraced. At face value, this may seem like good news for new customers. But it also may spell trouble as parity between these two giants grows – along with the distance between them and smaller apps vendors.”
“To keep the market competitive, government regulators may ultimately have to force a third-party maintenance option via antitrust legislation,” the report reads.
Some argue that enterprise software, because of its very nature and purpose, needs to stay on an upgrade track.
But it seems more and more customers want a choice. In contrast to the picture the economy is painting for much of the rest of IT, Rimini Street announced this week it had a record quarter. And netCustomer CEO Punita Pandey said in an interview earlier this summer that they were exploring providing support for SAP customers.
Is Forrester’s suggestion the way to ensure customers have a choice?
Courtney Bjorlin, News Editor
SAP service has been a hot-button issue ever since SAP resolved to raise its maintenance fees earlier this year. As long as everyone’s talking about SAP service, this is a good time to familiarize yourself with what kinds of service and support SAP offers. This week, we’ll take a closer look at one of those services, SAP EarlyWatch.
SAP EarlyWatch is exactly what it sounds like — a diagnostic and reporting service designed to catch potential problems in your SAP system before they negatively impact your organization. EarlyWatch covers problems that can occur in:
- SAP applications and programming. For example, EarlyWatch can find ABAP dumps that can cause a program to shut down.
- Databases. EarlyWatch can find expensive SQL statements that increase your database server load.
- Operating systems. EarlyWatch can detect and diagnose various performance issues.
When you run EarlyWatch, SAP will monitor your system, run a full slate of reports and send you an itemized action list explaining your existing and potential system problems, prioritized by urgency. EarlyWatch can be set up to run proactively, so that your system is monitored on an ongoing basis; it can also be requested whenever you need it. If your SAP environment has plenty of moving parts, it can be a good idea to have EarlyWatch running constantly, as the frequently daily changes that take place in your IT stack can have a deleterious impact on SAP applications and SAP-supporting infrastructure.
Knowing how to run, and act upon, EarlyWatch should be standard knowledge for an SAP Basis administrator. For the business, utilizing EarlyWatch is a way of preventing SAP downtime, which can be extremely costly and disruptive to operations.
Demir Barlas, Site Editor
SAP Basis is one of the most important functions in the SAP ecosystem, as it touches so many components of SAP, such as system administration, security, user interface (UI) and development. Interestingly, though, there aren’t that many books pertaining directly to SAP Basis. That’s why we thought it was a good idea to bring together this following list of six books that cover Basis from different angles. We hope the list is helpful both to working SAP Basis administrators who want to get better at their jobs and to Basis consultants.
SAP FI/CO Questions and Answers: FI/CO remains a bread-and-butter SAP module, and this book offers a Basis overview grounded in the context of FI/CO. Don’t be fooled by the title; this book touches on Basis, ABAP, and a bunch of other modules, such as MM, SD and PP, so it can be of use to a lot of different job functions.
SAP Security Interview Questions, Answers, and Explanations: Security is a foundational concept within Basis, and this book prepares you for the security- and audit-related questions that can come up in an interview.
SAP Basis Certification Questions: Basis certification can add some market value to working Basis administrators, or help consultants break into the field. Whatever your role, it’ll help to be acquainted with the nuts and bolts of Basis certification.
SAP Security: SAP Security Essentials: What’s more essential than securing an SAP system? This book covers the fundamentals you need in order to put an SAP system in lockdown.
SAP R/3 Transaction Codes: Finding transaction codes can be a headache for SAP Basis administrators. This book lists them so you don’t have to hunt them down.
ABAP Objects: One of the interesting features of this book, here translated into English for the first time, is that it comes with two CD-ROMs containing a test version of SAP Basis for 2000/NT.
As always, be sure to read user reviews and book excerpts before deciding which book, if any, is right for your needs.
Demir Barlas, Site Editor
One of the most interesting, and neglected, stories to come out of SAP’s just-concluded TechEd event in Berlin was how slowly some end users are moving towards service-oriented architecture (SOA), despite the investment that SAP has poured into eSOA. Blogging on site, Andy Hayler noted one of the reasons why SOA adoption is still delayed, over half a decade after its appearance on CIO agendas. Hayler, founder of MDM vendor Kalido and now an MDM analyst, spoke to a German utility company running an SOA pilot, and noted how “difficult it is to do debugging across a Web services application which touches a whole series of different applications in its wake. If something goes wrong, then they have found it is a lot more fiddly to trace where exactly the fault lies, given the cross-application nature of the project.”
Normally, the cross-application nature of SOA is touted as an SOA advantage, so it’s refreshing to hear from an end user willing to offer a new perspective on SOA’s complexity. Hayler, for one, isn’t drinking the SOA Kool-Aid. He described the Germany utility company’s SAP project as “this is a project driven by the IT department as an exercise in proving technology, rather than one with a quantified business case.”
Given the current IT spending atmosphere, it’s a strong bet that the tolerance for sandbox-style projects is down. However, there are plenty of folks who think that SOA is very much about the business: consider Forrester’s latest SOA survey, which shows SOA adoption rising impressively, and globally.
To judge by SAP’s user base, SOA certainly has some momentum. TechEd Berlin’s Enterprise SOA Experience Workshop, priced at $1,000 per attendee, was one of the few sold-out conference activities. But what are the prospects for SAP end users to move beyond sandbox-style experiments and truly commitment themselves to SOA, a la Volkswagen? Our SAP expert on the scene, Axel Angeli, is going to be digging more deeply into SAP and SOA issues in the coming weeks. Watch for his guest blog entries for more insight.
Demir Barlas, Site Editor
In weeks such as this, when we are constantly reminded that we are either edging toward or in the middle of one of history’s greatest economic crises, I like to turn to tools like “Google Trends.”
It gives me a sense of what people around the country are thirsting for information on in tough times like these, and typically cheers me up. Most times, things like “NFL week three picks” or “Paris Hilton commercial” or some gaffe one of the presidential candidates or their running mates made tops the list.
This morning, the number one search was for “Halloween candy coupon.”
So there you have it. Thousands of people are surfing the web in search of a way to save 50 cents on something that costs around $2 to begin with.
And it seems no one is immune from these conditions — even SAP. The news that drew the most commentary from the blogosphere was an internal SAP email someone leaked to Wall Street Journal reporter Ben Worthen on Tuesday. It detailed the cut-backs the software giant would be making, which include a hiring freeze and a freeze on non-customer facing travel. Last week, SAP said its third quarter earnings wouldn’t be what it expected because its customers were putting software purchases on hold.
The last people you would expect to benefit from this situation are SAP’s customers – but could they?
Forrester Research analyst Ray Wang thinks so. He wrote in his most recent blog post that this economy creates some good conditions for customers looking to buy new software, because vendors will be more inclined to discount as credit becomes harder to get.
In fact, looking for vendor discounts and re-negotiating contracts when possible is a “CIO best practice for thriving in a recession,” Forrester’s George F. Colony, wrote in his blog, CounterIntuitive.
It may be a smart strategy. Analyst Josh Greenbaum, in his latest blog post, writes that soon, people will settle down and realize their high-tech investments are something they need to maintain.
Seems like a smart strategy to spend this money when there are still some coupons to be had.
Courtney Bjorlin, News Editor