SAP Watch

March 24, 2008  10:09 AM

DTE’s $120 million SAP overrun

JackDanahy Jack Danahy Profile: JackDanahy

A recent article in Crain’s Detroit Business disclosed that DTE Energy Co. of Michigan posted a $120 million overrun in the cost of its SAP project. DTE, which had budgeted $263 million towards its SAP project in 2003, finished the migration in 2007 at a total cost of $383 million.

While only insiders know exactly why the project finished with such a large cost overrun, it’s possible that DTE could have paid more attention to preparation and training, which studies have revealed to be the most important factors in a successful ERP implementation. For example, DTE apparently elected to upgrade to a newer version of SAP in 2005. Leap-frogging its own original implementation plan suggests that DTE didn’t think hard enough about the project at its inception. Floating intentions can doom otherwise efficient projects.

That said, one shouldn’t minimize the difficulty that DTE faced during its SAP project. David Meador, the company’s CFO, explained on a conference call last month that, “We had systems that we’re replacing that were over 30 years old. In total, we replaced over 160 systems, and it caused some disruption in our operations.”

DTE’s overrun should be a warning to companies facing an SAP migration or upgrade that anything less than optimal training and preparation can result in a tough implementation experience. Educate yourself further by reading this tip on 10 things to watch out for during an SAP implementation and this explanation of the respective roles of SAP service and third-party consulting before and after an upgrade. Also feel free to browse our SAP upgrades and integration topic center for other tips and tricks. The more you know, the less chance you’ll have of becoming the next SAP overrun story.

Demir Barlas, Site Editor

March 20, 2008  11:22 AM

SAP and Novell’s open source initiative cuts TCO

JackDanahy Jack Danahy Profile: JackDanahy

At BrainShare 2008 SAP and Novell announced that they are taking their relationship to the next level and are making SAP enterprise applications compatible with Linux Enterprise in an attempt to satisfy the open source crowd. The companies intend to:

  • Optimize SUSE Linux Enterprise for SAP’s data center infrastructure requirements.
  • Further promote SAP Business All-in-One solutions based on SUSE Linux Enterprise.
  • Collaborate within the SAP Enterprise Services Community program to help strengthen customers related to the SAP governance, risk and compliance (GRC) practices.

In theory, this will simplify SAP deployments for companies by allowing mission-critical operations to be run on Linux and effectively reduce TCO. The need for this initiative was explained briefly by Léo Apotheker, deputy CEO, of SAP, who pointed to customer demand for Linux as a core platform.

SAP also mentioned the importance of Linux Enterprise in conjunction with SAP All-In-One and Business ByDesign, thus clearly stressing that the midmarket is a target.

Eric Samuels, Assistant Editor

March 19, 2008  11:09 AM

SAP to have co-CEO again?

JackDanahy Jack Danahy Profile: JackDanahy

According to Germany’s Boersen-Zeitung newspaper, SAP is considering the elevation of current Deputy Chief Executive Leo Apotheker to co-CEO alongside Henning Kagermann.

If it pans out, it won’t be the first time SAP has had a co-CEO; Kagermann was once co-CEO along with Hasso Plattner. Co-CEOs aren’t unheard of in business; companies ranging from Schwab to Verizon have had them. For some reason, though, the phenomenon is much rarer in the technology industry. Can you imagine Larry Ellison or Marc Benioff having co-CEOs?

Apotheker is supposed to become co-CEO next month, according to Boersen-Zeitung’s anonymous sources. Keep your eyes peeled.

Demir Barlas, Site Editor

March 18, 2008  10:28 AM SAP hasn’t innovated

JackDanahy Jack Danahy Profile: JackDanahy

According to Marc Benioff, CEO of, SAP has “not seen innovation in the last 10 years.” Those comments were made in a recent interview with ZDNet, in which Benioff twice claimed that SAP has not been responsible for creating anything “unique to the industry or value-added technology.” This comment was particularly provocative because Benioff seems to believe that has been responsible for e-business innovation in a way that SAP has not. The logical response to that assertion is that, whatever the case with SAP may be, is not an innovator either. Siebel tried hosted CRM before, and the AppExchange is manifestly indebted to the iTunes and eBay B2C models.’s key innovation has actually been its marketing strategy, which has caused to become the company most commonly associated with the hosted/on demand paradigms despite the fact that other companies got there first. Sure, got the execution and marketing right, but this still doesn’t constitute the kind of disruptive innovation that Benioff wants to claim for himself and deny to SAP.

SAP, meanwhile, pursues innovation through not only its regional labs, which may commit as much of 10-15 percent of their resources to investigating emergent technologies, but also through the SAP Innovation Institute, which reaches out to universities and executives to collaborate on emerging technology and business trends. Much of SAP’s innovation is on the business process front, as the company assimilates process flows into the core platform. Business process change is not as sexy as the debut of a fancy Web 2.0 tool, and the daily grind of development represents more of an incremental than a game-changing innovation, but it’s none the less important for all that.

Benioff states, “I have a hard time thinking about what SAP is going to be known for at the end of the day.” This comment demonstrates the guerrilla marketing culture in action; it signals the importance Benioff places on an e-business company to be “known” for something rather than, for example, to do something quietly well.

To read what SAP thinks about’s model, read our interview with SAP’s Zia Yusuf.

Demir Barlas, Site Editor

March 17, 2008  12:52 PM

Partners, platforms and the SAP economy

JackDanahy Jack Danahy Profile: JackDanahy

It’s important for SAP to succeed in growing its partner ecosystem. In any battle with Microsoft, for example, SAP will need to muster a credible challenge to Redmond’s vast partner channel.

We recently spoke to Zia Yusuf, EVP of SAP’s Global Ecosystem and Partner Group, to get a status check on SAP’s collaborative efforts. We ended up learning more about SAP’s equity investment strategy, the importance of SDN, and even an opinion on why the kind of Web 2.0 embedded in’s AppExchange won’t work in a B2B context.

Read our writeup of the conversation with Yusuf here.

Demir Barlas, Site Editor

March 13, 2008  10:22 AM

Microsoft targets SAP

JackDanahy Jack Danahy Profile: JackDanahy

The inherent tension in the Microsoft-SAP alliance was spelled out by Microsoft CEO Steve Ballmer during his keynote at yesterday’s Convergence 2008 event: “SAP is sometimes a collaborator, sometimes competition.”

Competition is the aspect of the relationship that is coming to the forefront right now, as Microsoft’s ongoing interest pits Redmond against Walldorf for high stakes: The small and medium-sized business market. Convergence 2008, for example, has highlighted Microsoft’s ERP and CRM products, both of which play to the mid-market.

Cooperation between the two companies is largely in the form of Duet, the technology partnership that allows Microsoft products to serve as a front end for SAP applications. Duet has several hundred thousand customers and is generating revenue for both companies.

With both Microsoft’s business applications and Microsoft-SAP Duet going strong, the question is when the existing ‘co-opetition’ between the two companies will tip over into full-fledged rivalry. The mid-market is a hugely lucrative space for e-business software providers and may yet break up the Duet.

Finally, it’s interesting to see how Microsoft’s messaging geniuses managed to pull one over on SAP on Microsoft’s SAP partnership page. Here, Microsoft defines itself as making SAP “People-Ready,” as if SAP on its own is not people-ready. It’s a subtle point, but it illustrates the scope of Microsoft’s ambition and calls into question Redmond’s ability to sustain a long-term partnership with a ‘co-opetitor’ such as SAP.

Demir Barlas, Site Editor

March 12, 2008  11:24 AM

The cost of SAP HCM

JackDanahy Jack Danahy Profile: JackDanahy

How much does it cost to go live with SAP Human Capital Management (HCM)? The Park Hotels of India, speaking to trade journal Express Hospitality, recently disclosed that it paid roughly $371,500 for SAP HCM software, training, and implementation for an organization of 1,800 people.

The Park Hotels’ purchase of SAP HCM price disclosure was an interesting event in a number of ways. The company, which went live with SAP late last year, is:

  • The first SAP customer of any kind in the Indian hospitality sector.
  • One of the first publicly known Indian customers of SAP HCM.
  • One of SAP’s few service-oriented purchasers of HCM (many of SAP’s reference HCM customers are manufacturers and public sector organizations).

The Park Hotels’ deal with SAP HCM was in 15 million Indian rupees. The Indian rupee has not depreciated too badly against the Euro, meaning that it is not prohibitively expensive for Indian companies to buy SAP and other European software. However, the Indian rupee has done quite well against the dollar since 2006, raising the question of whether Indian companies may reinvest some of that currency strength in buying U.S. IT products.

Demir Barlas, Site Editor

March 11, 2008  10:08 AM

Process manufacturers: A guide to ERP functionality

JackDanahy Jack Danahy Profile: JackDanahy

A new report from Aberdeen Research discovered that best-in-class process manufacturers tend to take specific approaches to their ERP strategy by deploying:

  • ERP that provides integrated order entry, procurement, planning and production, and financial management.
  • CRM, logistics, and delivery management systems integrated with manufacturing operations [themselves owned by ERP].
  • Forward and backward traceability.
  • Attribute-based rules and routing.
  • Supplier compliance and collaboration.
  • Enterprise Asset Management (EAM).

Being a good process manufacturer isn’t as simple as your ERP strategy, but the best process manufacturers do indeed have a recognizable approach to ERP characterized by the action points above.

Aberdeen adds that sound business process discipline, knowledge management, performance management, and reporting (e.g. for regulatory reasons) also characterize best-in-class process manufacturers.

SAP was one of the Aberdeen report’s sponsors.

Demir Barlas, Site Editor

March 10, 2008  10:07 AM

SAP Argentina: A hot opportunity

JackDanahy Jack Danahy Profile: JackDanahy

One of IT’s most frequently asked questions is, “How can I turn SAP knowledge into money?” The answer to this question typically involves becoming a consultant or systems integrator employee. However, SAP itself offers a limited number of employment opportunities for everyone from developers to business-level consultants.

An interesting trend in SAP’s employment practices is the way in which smaller countries are becoming hotbeds of SAP hiring activities. Consider, for example, Argentina, where SAP is currently trying to fill 36 jobs. For Spanish-speaking SAP career aspirants in position, these are plum opportunities — some of which have been listed as open for several months, perhaps indicating that SAP has had trouble filling them. This is an interesting situation because, as some you may know from experience, it is much rarer to find SAP positions that remain open this long in the United States or Western Europe.

Some of SAP Argentina’s jobs don’t even appear to require a knowledge of Spanish, as they are posted in English (other job notices are in Spanish only, or in English and Spanish). Potential applicants, take note!

Demir Barlas, Site Editor

March 7, 2008  4:18 PM

SAP GRC Conference Preview

JackDanahy Jack Danahy Profile: JackDanahy

On March 10, SAP’s annual Governance, Risk, and Compliance (GRC) conference will begin in Orlando, FL. We talked to Narina Sippy, SVP and GM of SAP’s GRC Group, to get a quick preview of the major announcements from the event. Sippy made four product news disclosures:

  • The Enterprise Risk Management module will integrate with SAP Strategy Management. This means that risk appetite, KPIs, and other policies defined in Risk Management can now roll down to an entire business through Strategy Management, the layer in which risks are tied directly into policies.
  • The Access Control and Process Control products have been updated so as to achieve integration with a greater number of third-party products. For example, SAP can tie into Identity Management provided by IBM, Sun, or Novell in order to verify if a specific employee is allowed access to a sensitive location or process.
  • The new x-App Query Tool, developed in conjunction with SAP partner Greenlight, allows users to adopt a write-once approach to control checks. For example, a query written to check the presence of a control in an SAP application can be reused to check the same control in an Oracle system.
  • A Global Trade Services application will allow companies to make certain that their cross-border transactions are compliant with trade regulations and environmental regulations.

More news about the upgraded GRC suite will be released next week.

Demir Barlas, Site Editor

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