February 27, 2008 2:28 PM
Posted by: JackDanahy
Good news for aspiring SAP professionals in India: Wipro, the Indian IT and business process outsourcing company, plans on raising its overall resources in China. On Tuesday, A. L. Rao, Chief Operating Officer of Wipro, told the media that his company hopes to increase the number of its employees working in China from 200 to 2,000 in the next two years.
Forrester Research Inc referred to Wipro as “a leader in SAP Implementation services” in the December 2007 report titled, “The Forrester Wave: SAP Implementation Providers, Q4 2007.”
These SAP implementation services are increasingly in demand in China. Keeping true to the words of Forrester Research, Wipro is on the scene ready to aid with IT resources; and I can’t help but imagine that this news is lit kindling underneath a prepared bonfire of SAP resources. This is a big step for SAP India, as we will surely see the emergence of more and more SAP careers opening up in China.
What does this mean for SAP professionals? Here is what Jon Reed, of JonERP.com, had to say:
“If there is any doubt that the SAP market is global in nature, look no further than Wipro’s planned expansion into China. The fact that the SAP labor pool will soon be truly global is either good news or not so good news, depending on whether you are in a country where the hiring growth is expanding or contracting. All SAP professionals need to take this kind of globalization into account as they plot their careers. I recommend placing an emphasis on cutting edge skills that are crucial to have on site and therefore cannot be easily outsourced.”
I would go further and say that aspiring SAP professionals in India should keep an eye on this news as it develops. The SAP job market in India is a competitive one right now, and this could be the opportunity that many have been waiting for.
February 21, 2008 3:56 PM
Posted by: JackDanahy
For all you SAP users out there looking to save on SAP maintenance and support beware, SAP has eliminated its Basic Support option for net new customers. It’s actually eliminated Premium Support as well, replacing both with one option — Enterprise Support. Where once customers could choose between 17% of net licensing fees or 22%, now there’s only one option — 22%.
SAP went to great pains to say it wasn’t raising maintenance fees, but if it’s eliminated the cheaper option, that may be an issue of semantics.
It’s an interesting move that prompts a few questions:
Why do this in a time when Software as a Service (Salesforce.com, NetSuite, Business ByDesign) is firmly entrenched in the market and third-party support vendors (Rimini Street, TomorrowNow) are gaining traction? It seems that rather than extra support, there’s an appetite for cheaper alternatives.
SAP is now in line with Oracle’s maintenance fee structure, giving up what appeared to be a competitive advantage. Why?
What does this mean for TomorrowNow? SAP has already indicated it is inclined to sell off the division after the fiasco with the Oracle lawsuit. This move suggests it’s less interested than ever in offering cheaper support options.
Are you getting what you pay for in maintenance fees as it is? A similar question about Oracle Support posed on Eye on Oracle drew overwhelming response, with many raising some serious concerns about Oracle’s responsiveness, while others were perfectly satisfied. How does SAP measure up?
Over at the Software Insiders, Ray Wang says it’s time to stop the anti-competitive maintenance fee madness and suggests its time for software buyers to revolt.
Of course, if you’re going to spend the money to deploy SAP, it makes sense to get some help keeping it up and running right, but at 22% are you getting what you pay for? Or is that something you should have negotiated about a little harder? After all, maintenance fees have always been a cash cow for enterprise software vendors.
February 20, 2008 5:03 PM
Posted by: JackDanahy
Last week reader Chris Young of B2BSX made the following comment:
“I am interested in your perspective on how customer to customer exchange of custom development may impact both the rate of innovation in the community of companies using SAP and also the total cost of deploying and operating SAP…I see a tremendous opportunity to leverage much IP around the landscape.”
The tremendous opportunity in what Chris calls customer-to-customer exchange in the business-to-business arena (C2CXB2B, anyone?) has been apparent since the heyday of e-marketplaces in the 1990s, when so many people were awestruck by the Web’s ability to disintermediate business relationships. The idea of disintermediation was hot in B2B because people had already seen how the consumer Web successfully encroached on the turf of once-unassailable middlemen such as travel agents and brick-and-mortar stores.
I see a direct link between the e-marketplace paradigm and the Web 2.0 paradigm to which Chris is making an oblique reference in his comments. Both are do-it-yourself (DIY) paradigms that emphasize the way in which traditionally real-world interactions — such as partner discovery, negotiation, and sales — can be ported to the Web and de-emphasize the role of gatekeepers. As it turns out, however, the customer-to-customer idea behind these paradigms has had only partial purchase in the B2B world. Despite the presence of any number of startups out trying to convince VCs that the business Web will go the way of Facebook, the business world has stubbornly resisted the idea.
Salesforce.com’s AppExchange is an excellent case in point. Some years ago, Salesforce.com took a visionary direction, deciding that its future lay partly in becoming a platform for applications that customers created, shared, and sold to each other. AppExchange never did as well as its analogues in the B2C world — iTunes, for example — and Salesforce.com is still, in revenues and perception, overwhelmingly a CRM provider. To me, that proves that the time is not right for customer-to-customer exchange in the B2B world. Most of the customers still prefer dedicated mediators between themselves and the products they buy; in other words, customers want to deal with vendors, systems integrators, and consultants, but not necessarily with other customers.
If you’ve spent any time in the world of open source, it’s apparent why this is the case. When you buy something from another customer, there’s little control and less support. The fate of your module (or whatever you’ve bought) could depend on finding a long-buried technical post on some obscure open source website. Coders don’t answer phone calls. Forums are only sporadically updated and maintained. The person who created the code leaves the company. Whatever the case, the bottom line is that buying technology or technology customizations from your own peers isn’t a predictable experience. You get what you get, and a lot of enterprise buyers simply don’t want to take that shot in the dark. It’s not a good risk management move. Of course, the economics change downstream, where risk management is outweighed by budget constraints. But if you’re a larger company, why not spend the extra money getting customization straight from the vendor or from a vendor-approved partner?
I don’t necessarily agree with this dynamic, because I am an enthusiastic user of open source who loves the idea of disintermediation, but I do think that it exists, and it is the reason behind very slow enterprise adoption of customer-to-customer, Web 2.0, or any other flavor of the DIY Web. I’d welcome a debate on this topic, especially now that SAP is making noises about exposing its underlying SOA to community-designed custom mini-apps and interfaces. Leave your comments here or email them to email@example.com.
February 19, 2008 5:53 PM
Posted by: JackDanahy
SAP announced today that it has admitted Business Objects CEO John Schwarz to the Executive Board, effective March 1, 2008. SAP has also created a new business branch, SAP Business Objects, for Schwarz to lead.
Before his tenure at Business Objects, Schwarz was President and Chief Operating Officer of Symantec Corporation, where he played an integral role in the Symantec and VERITAS merger. Prior to Symantec, Schwarz spent 25 years with IBM in several development, manufacturing, sales and marketing positions.
This event raises the number of SAP Executive Board members to seven, and the number of non-German members to one. Due to this fact, the panel is reminiscent of Shai Agassi’s time with SAP… and if Schwarz does for SAP what Agassi did in his time, we should see leaps of innovation and also keynotes free of sleeping spectators.
February 19, 2008 5:53 PM
Posted by: JackDanahy
Resident SAP Careers Expert Jon Reed wants to know how I think SAP has changed since the late 1990s, when I began to cover the company. This is my attempt at a brief but hopefully meaningful answer isolating three key areas that I find important.
ERP Direction: Staying the Course
I remember how much pressure there was on SAP, from at least 1998 to early 2003, to change its DNA. In the early part of that period, a lot of people — including analysts, investors, and journalists — pressured SAP to make an accommodation for the e-marketplace model that was so hot at the time. Then, after 2000, SAP was increasingly browbeaten to put greater emphasis on CRM. SAP didn’t really listen. Sure, there were bones tossed to the crowd — remember SAPMarkets? — but on the whole, the company went forward on the strength of its own ERP suite-based convictions, not the voice of the multitude, which at one point considered both ERP and suites passé.
Not listening earned SAP a reputation for being stubborn and maladaptive. In retrospect, however, the company was justified in not betting the farm on marketplaces. As for CRM, SAP refused to hurry the decision to enter the domain. The jury’s still out on whether delaying the move into CRM was the right move — I for one believe that, if SAP was willing to buy a portals company like TopTier, it should also have been willing to invest in a leading CRM company — but it’s by no means an easy call.
The bottom line is that SAP did not succumb to the exhilarating atmosphere of the dot-com era; it remained unchanged in this important respect, at a time during which it could easily have gone in another direction.
More Globalization: The World Outside Walldorf
SAP started to get heavily involved in India towards the end of the 1990s, and since has demonstrated a deepening commitment to that country [editor’s note: I am working on an upcoming “SAP in India” feature that will explore this history and examine the future prospects for SAP in the Subcontinent]. India is now teeming with SAP developers, process experts, and customers. SAP engineers in India are responsible for much of the work on core SAP products that are used all over the world, representing a globalization of SAP’s German roots that began during the late 1990s and continues today.
In addition to India, SAP Labs sprung up all over the world. Israel, for example, became an important development center and was also the home of Shai Agassi, the CEO of portals company TopTier, which SAP acquired in 2001. Shai was a quiet but confident leader who came close to becoming SAP’s CEO in 2007. Had that happened, I think SAP would have altered perceptions that it is not so much global as German. But in any case, all the globalization that has taken place after the late 1990s has already moved SAP into closer contact with the world outside Walldorf.
CRM: A Taste of Things to Come?
I think that SAP moving into CRM is more important for what it might say about the future of SAP than for the CRM marketplace itself. That’s because, for the last couple of years, CRM has been the site of a great deal of e-business experimentation, collaboration, and user-generated functionality. B2B CRM is getting very close to consumer-flavored Web 2.0, and Web 2.0 is the last thing that comes to my mind when I think about SAP. So I feel that, by entering CRM, SAP is at least conceptually associating itself with the wild and woolly world of Web 2.0. I would never have imagined that SAP would even be adjacent to Web 2.0, and I am dying of curiosity to learn whether, through some back door, Web 2.0 will actually wend its way into the SAP vision. If it takes place, that would be one of the most momentous changes in SAP’s history!
February 11, 2008 3:36 PM
Posted by: JackDanahy
An interesting tidbit today from SiliconValleyWatcher: according to an unnamed, “reliable” source, Salesforce.com has approached Oracle seeking to sell the company for $75 a share.
Tom Foremski lays out the reasons a buyout would make sense for Oracle and for Marc Benioff. I’m not sure I see the Salesforce.com side of it. Nevertheless, it’s certainly a fun thing to speculate and ponder. And as long as we’re doing that, we might as well speculate as to whether Salesforce.com wouldn’t be a better fit for SAP.
For now, we’ll leave aside whether SAP would be willing to pay that much, but an easy-to-use, established, on-demand application with a large base of customers would certainly help Walldorf get to its stated goal of 100,000 customers by 2010. Besides, SAP all but admitted when it rolled out Sales OnDemand that it was trying to keep customers from turning to Salesforce.com to get their CRM systems up and running quickly and easily.
And, while not really SAP’s style, buying a company founded by Marc Benioff, a Larry Ellison protégé, and partially funded by Larry Ellison, would certainly kick up the rivalry a notch.
Of course, this all could be a PR move to take the attention away from Microsoft-Yahoo as Dennis Howlett suggests. That’s certainly not something Salesforce.com is above.
Anyone remember the Wall Street Journal story from an unnamed source claiming Salesforce.com and Google were preparing a partnership? That gave Salesforce.com a nice bump in its stock price and a lot of press for a week. Until the “partnership” turned out to be an application that integrated Salesforce.com’s CRM system with Google AdWords.
February 5, 2008 11:47 AM
Posted by: JackDanahy
While SAP is looking to unload its TomorrowNow division in the wake of Oracle’s lawsuit against the company, there may be more to the story. Most think the two companies will settle, but as reported by MarketWatch yesterday, Oracle hints at a more serious charges in the latest filing from the trial.
Here’s what Oracle says in the document, filed with the court on January 29th:
Virtually all discovery sought and received thus far has centered on Oracle’s current allegations. However, in the process of conducting this discovery, Oracle has uncovered a broader program of copyright infringement that is entirely different from the scheme alleged in the current complaint.
Based on this evidence, Oracle is gathering additional facts and analyzing the need to file an amended complaint that will encompass these new claims. It expects soon to share a draft amended complaint with Defendants, and to seek their agreement to allow the filing. If Defendants do not agree, Oracle will seek leave from the Court to file the amended complaint.
Not surprisingly, SAP disputes Oracle’s new claim:
Oracle claims to need more time to present a further amended complaint, yet it has not provided even the barest description of its supposed new claims, either to the Court or to Defendants. While there may be some discovery disputes (which Judge Legge will handle), and Oracle may want to take some follow-up depositions, no developments have occurred which justify changing the case schedule or discovery limits.
As a result of these new accusations, Oracle is requesting another Case Management hearing in about 60 days, at which time it would, “be able to make specific proposals for extending the time and limits on discovery.”
When this case was first brought to court, SearchSAP.com interviewed Hillard Sterling, an IT litigator with Freeborn & Peters LLP, a Chicago-based law firm. When asked about what we should expect from the case he said that Oracle would try to keep the case in the news:
This is a great weapon for Oracle — it’s rare and beneficial when a company has a lawsuit that is only a sword and not a shield. Usually, counterclaims come flying back at a plaintiff. Here, however, Oracle has a unilateral set of claims that it can press ahead with, with little fear of boomerang counterclaims.
We’re going to see some aggressive discovery from both sides, especially from Oracle. It will get messy before it gets clean.
We should know more in 60 days, but it would appear, at this point, that Sterling is right on.
January 30, 2008 10:19 AM
Posted by: JackDanahy
It is well documented that in order for SAP to achieve its goal of 100,000 customers by 2010, the midmarket will have to play a large role. Specifically, Business ByDesign (BBD), SAP’s new software as a service (SaaS) offering for the midmarket, will be leaned on heavily to achieve this growth.
In SAP’s earnings press conference today, the company put some numbers to the impact it expects Business ByDesign to have. CEO Henning Kagermann said SAP hopes to grow the Business ByDesign customer base from the current 150 to 1,000 by the end of 2008. Perhaps more surprising, he said that SAP sees 10,000 customers and $1 billion in “revenue potential” for the product by 2010.
Is this realistic? In SAP’s 2007 earnings filing, it reported $182 million in revenue from “subscription and other software related service revenue.” Even if all of that were attributable to Business ByDesign, which it is obviously not, it would represent a 75% compound annual growth rate (CAGR) for BBD revenues to reach $1 billion by the end of 2010.
SAP will be investing €175 – €225 towards the effort in 2008, so it is clear that the company is committed. But it also appears to have its work cut out for it.
SearchSAP.com editorial staff
January 14, 2008 11:44 AM
Posted by: JackDanahy
“What is the most important thing that SAP customers/users/etc should watch for in 2008?” Here is the response, from an upcoming Forrester report, we received from Ray Wang, Principal Analyst, Forrester Research:
SAP’s acquisition of Business Objects was out of pattern for SAP, which historically has grown organically with some small spot acquisitions. In terms of scale, the Business Objects deal will continue to be an exception for SAP – we don’t expect SAP to make other acquisitions of this size, and certainly not of large application vendors. However, SAP will be a more active acquirer of mid-size software companies with middleware products that help SAP strength its NetWeaver platform. NetWeaver lags behind the IBM WebSphere, Oracle Fusion, or Microsoft .NET application server platforms, which are the core of any service-oriented architecture. So, SAP will make some mid-size acquisitions, maybe Open Text in enterprise content management or Amber Point in runtime governance, but while it may make sense to us, we do not expect them to make a bid for BEA Systems nor become an active buyer of mid-size app vendors.
We do expect SAP to make small-scale acquisitions that will add or improve capabilities in the NetWeaver middleware tools that partners and customers need to build out last-mile solutions. In fact, SAP doesn’t need to make big acquisitions to fill these holes. SAP will no longer be the bottom-fish acquirer of small vendors ($10-$50 million in revenues) with promising technology that it can build on and extend. Instead, it will become more aggressive in buying vendors in the $100-$500 million revenue range in order to gain more mature and proven products that it can plug into its middleware portfolio. The October 17th, 2007 acquisition of YASU, a BPM tool provider provides another proof point. For this reason, the need for better tools in its NetWeaver stack such as UI, BPM, App Server, ETL, Hosting, MDM and others will drive SAP to acquire smaller vendors who provide key commoditized infrastructure solutions, while it will continue to use partnerships at the application level to drive new capability (see Figure 4).
In short, we think SAP APPS will remain mostly home grown, but middleware components will have to be acquired.
Business process and apps professional have always been able to count on SAP to provide a coherent, consistent application portfolio. Its few acquisitions of applications have been quickly converted over to and absorbed within the portfolio. SAP users can count on that to continue. However, SAP will be making more acquisitions of middleware and information management vendors like Business Objects to strengthen the NetWeaver platform and incorporate products like content management and business intelligence that increasingly will be combined with process applications. So, SAP users will have to get used to SAP adding non-application software to its portfolio, with the resulting product rationalization roadmaps to be navigated. Users of the software that SAP acquires can be confident that those products will continue to be enhanced and improved, as well as absorbed into the widely used SAP product set.
Do the words of Ray Wang resonate with you? What are your predictions for the world of SAP in 2008? Leave comments, We want to know!
SearchSAP.com Editorial Staff