SAP Watch


August 9, 2007  2:51 PM

SAP PLM job prospects: A Jon Reed guest column

JackDanahy Jack Danahy Profile: JackDanahy

SAP PLM (product lifecycle management) is growing, and that means it’s time for SAP professionals to pay attention. Here’s what veteran SAP jobs expert Jon Reed had to say about the career opportunities a PLM surge may bring to your industry:

SearchSAP.com’s recent piece on the growth of the PLM market bodes well for SAP consultants for a couple of reasons: First, because PLM is becoming more central to corporate business processes, and second, because more and more companies are choosing the add-on extensions from their ERP provider instead of opting for best-of-breed solutions. This should be the case for PLM buying decisions also. We can also be confident that SAP puts a lot of stock in its own PLM product – PLM is a highlighted part of SAP’s Business Suite offering.

So that’s the good news. The more sobering aspect is that we have heard a buzz about PLM consulting from the year 2000 onward, and we have yet to see a big uptick in demand for PLM consultants. It’s important to realize that until the demand for a particular product becomes widespread, the consulting market will be limited to SAP’s own service line, its Tier One partners like IBM and Accenture and a handful of elite independent experts. A few boutique specialization firms round out that picture. Up until recently, that’s been the case for PLM, but we’re starting to see more widespread adoption of SAP PLM. I think we’ll see an even bigger surge in the demand for PLM skills a couple of years from now. At that point, more companies will have their core SAP upgrades behind them and will be looking to build on those long days of project work with strategic product line extensions.

That’s why I personally think the SAP PLM market will probably see its greatest activity in the 2-5 year window ahead of us. But it never hurts to add some PLM skills to your toolkit. The next question is: How would you go about that? Like most areas of SAP, there are numerous entry points into PLM consulting from both the functional and technical side. But let’s focus on the functional PLM opportunities. I see a couple of classic PLM profiles that work out well for functional consulting. One is that of the PLM industry expert who is new to SAP but has deep PLM and engineering experience outside of SAP.

These folks can be a real asset, especially as full-time employees who are pulled onto an internal project team. From the SAP side, the most common entry point I have seen into PLM is from that of the logistics-oriented module set including SD, MM and PP. We are also seeing some PLM project activity in the process industries and the Environmental Health and Safety area, so there are some entry points into PLM from those with industry expertise and SAP vertical experience in one of those two areas.

Finally, SAP is starting to gain some traction with its ECM (Engineering Change Management) product, so we are starting to see more PLM-ECM jobs. SAP skills associated with such roles include project/portfolio management, project collaboration (cProjects), design collaboration (cFolders), as well as CAD/CAM and DMS platform integration. We’re also seeing some PLM-related activity connected to the PPMDC Business Package, an up-and-coming “xApp” from SAP. That’s a lot of alphabet soup there, but if those acronyms are familiar to you, that’s a good sign that PLM consulting might be right up your alley.

Adding any of the above tools to your SAP skills would begin to position you for PLM consulting, and as the demand for SAP PLM skills picks up, you could be in a great position.

Jon Reed is the President of JonERP.com, an interactive web site which features Jon’s SAP Career Blog and his podcasts for SAP professionals. Jon has been publishing SAP career and market analysis for more than a decade, and he serves as the career expert for SearchSAP.com’s “Ask the Expert” panel.

August 8, 2007  5:28 PM

SAP PLM on the rise

JackDanahy Jack Danahy Profile: JackDanahy

SAP PLM (product lifecycle management) is emerging as a growth area in the enterprise in general. This is hardly a surprise, seeing how innovation is becoming the key competitive factor in the global marketplace. That means ERP vendors like SAP, Oracle, IFS and others have to stay on the ball to retain and up-sell existing customers.

Today, SAP upped the ante with a slew of PLM enhancements. We can expect new portfolio planning processes and portfolio management capabilities by the end of this year, followed by an extensive interface overhaul of the SAP PLM interface in 2008. This move will cut down on manual tasks and training time. 2009 and 2010 will see even further integration support, along with tidbits like new product information management capabilities and enhanced RFID/barcode functionality.

This is part of SAP’s plan to outmaneuver arch-rival Oracle, which in turn made headlines with its $495 million Agile acquisition earlier this year. But is SAP equipped to pull this off? Blogger Chris Kelley is skeptical. PLM is ‘messy’ by nature; it has to be flexible, juggle multiple input sources and so on in real time, he said. The strength of ERP titans like SAP has always been that rock-solid structure that prevents messiness.

“PLM is just too different from what they are good at,” Kelley said. “It’s too ‘miscellaneous’. Its too dynamic. Its too creative.”

Roy Wildeman, senior analyst for Forrester, doesn’t agree.

“Manufacturers that are also SAP ERP customers will want to investigate SAP’s PLM offering,” Wildeman said. “[Look closely at] the potential integration benefits from interdependent process areas like project and portfolio management, direct material sourcing, and configuration management.”

Stay tuned as we follow up with SAP career expert Jon Reed’s take on what this PLM growth trend brings in terms of new job opportunities tomorrow.

Matt Danielsson
Editor


July 31, 2007  6:30 PM

Beyond SAP A1S

JackDanahy Jack Danahy Profile: JackDanahy

It’s easy to lose sight of SAP’s push into the midmarket beyond the never-ending hype/secrecy surrounding SAP A1S, the upcoming on-demand ERP solution slated for a 2008 release. Business One, the baby bear of the SAP family targeting the under-100 employee crowd, makes up a sizable chunk (15,000) of SAP’s <40,000 customer base. SAP All-in-One, the other current midmarket solution, makes up another 10,000 customers. And they’re not going anywhere, even though A1S tends to grab all the headlines.

With that in mind, it’s worth noting that SAP is pushing Business One forward with new CRM functions, financial tools, printing tools and general polish in the new release. Business One 2007, as the solution is called, is being tested by partners now and should be generally available in November or December this year, James Niccolai reports.

It’s also worth mentioning that SAP is beefing up the partnership network with another 26 Business One partners. All-in-One scored another seven partners of it own to boot. That’s on top of the nine existing software vendors were announced at its summer sales meeting July 30 in Washington, D.C., Barbara Darrow said. Don’t be surprised if you hear about additional strides in this space before TechEd in October either, as SAP is under increasing pressure to lay the groundwork for that lofty 100,000-customers-by-2010 goal they announced earlier.

Bottom line: There’s more to SAP’s midsize strategy than A1S, and with last year’s 19% growth rate for All-in-One alone, customers seem to realize this too.

Matt Danielsson
Editor


July 19, 2007  5:38 PM

SAP talks A1S, Agassi in Q2 earnings call

JackDanahy Jack Danahy Profile: JackDanahy

Earlier today, SAP released its Q2 2007 earnings results. Usually we leave coverage of that type of thing to the financial publications, but when we saw that some were expecting SAP’s profits to drop for the first time in three years, we figured we’d have a listen to SAP’s senior management roundtable.

As it turns out, SAP came out looking pretty good. Profits in Q2 were 449 million euros, compared with 415 million euros in Q2 of 2006. License sales checked in at 715 million euros, above the 676 million euro average forecast. For those interested, there are many more financial statistics in SAP’s press release.

Henning Kagermann also got into A1S a little more, saying we can look forward to learning the product’s real, market name, example customers and more details about the release schedule in September.

An interesting question that came up was if SAP expected its enterprise customers to see the on-demand A1S and say, “hey, we want that too!” Kagermann’s response was as vague as you would expect, but did give some insight:

Clearly we will leverage some of the innovations [of A1S] for large enterprise clients, as we leverage our experience from large enterprise clients in the set-up of the system because it’s a “suite in a box”… in our case, innovation goes top down and bottom up. So, you will see over time more and more how we are doing it, you will see more clarity at Sapphire. And, believe me, our large clients are pretty happy with the setup.

That comment seems to keep the door open for SAP ERP on-demand beyond the midmarket sometime in the future, right?

Robert DeSisto, a vice president at Gartner Inc., agreed that larger enterprises would be watching A1S with interest, and agreed with SAP that the original recipe A1S is not designed, or suited, for them.

“People in the higher end will want the usability and concepts that are used in A1S, but they will quickly see that this tool won’t work for them,” he said.

While the press conference lacked any of the thinly veiled shots at competitors that sometimes make these calls interesting, there was one question that generated a good quip from Kagermann:

Question: In what ways are you missing Shai Agassi?

Kagermann: “I’m missing him in my heart… but not in my business.”

Jon Franke
News Editor


July 18, 2007  4:25 PM

Tech jobs going strong in the U.S.

JackDanahy Jack Danahy Profile: JackDanahy

Just a quick follow-up on the previous posts SAP and H1B visas: What an H1B increase would mean and SAP, H1B visas and… India outsourcing its IT jobsThe Bureau of Labor Statistics recently released a report basically saying the IT industry is rocking with a super-low unemployment rate of 2%, way below the 5.3% unemployment rate seen in the 2003-2004 slump. The biggest winners: software engineers, IT managers, and network systems analysts. Straight-up programmers will continue to see their opportunities going overseas, however.

Judging by the official numbers, Bill Gates et al. are on the right track in advocating for an increase in H1B visas; skill shortages rarely help the industry or society as a whole. But then again, as some readers pointed out, more foreign workers mean less opportunities for U.S. greenhorns trying to get that first, crucial foot in the door. The balance between the two can certainly be debated, but let’s not lose sight of the good news at hand: Most American IT workers are gainfully employed with fairly bright prospects for the next couple years. That should count for something.

Matt Danielsson
Editor


July 5, 2007  3:47 PM

SAP A1S: The true cost of SaaS

JackDanahy Jack Danahy Profile: JackDanahy

We wrote about the increased crowding in the SaaS/on-demand space earlier this week, as NetSuite went public and announced ambitious plans to go up against Microsoft, SAP and others. But then there’s a financial detail buried in there that may play a role in SAP’s A1S plans even though it’s not immediately obvious.

As you know, putting the financial cards on the table is a key part of the IPO process. It turns out NetSuite, like Salesforce.com, is spending vast gobs of money on sales and marketing efforts. We’re talking well over 50% of revenue for SaaS vendors, versus 20-25% for traditional software vendors. InformationWeek’s Mary Hayes Weier summarized it pretty well:

Marketing and sales costs for SaaS vendors run high for a number of reasons. Because they’re typically pursuing small and midsize businesses that don’t want to pay high upfront costs for software licenses, a lot more outreach is required, both through online advertising and marketing and in person. SaaS vendors also spend money on not just marketing to new customers, but to replace those that have left.

That makes a lot of sense when you think about it. A Fortune 50 company or a public works behemoth has money to spend, and it won’t just jump ship at the drop of a hat. That’s SAP’s bread and butter right there. Now they’re going after considerably more fickle game. Of course, SAP has been chasing smaller fish for years through its Business One and All-in-One products, but A1S is seen as the big kahuna that’s going to bring SAP the 60,000-something new customers it needs to hit the 100,000-customers-by-2010 mark.

Is SAP equipped to handle this kind of churn? There’s a lot of smart people working at SAP so I’m assuming they’ve thought of this already in terms of customer support, retention programs and so forth. Of course, the biggest impact of the different models will be felt by the number jockeys on Wall Street; a profit-per-customer number based on Business One and All-in-One obviously won’t translate well to a considerably more expensive SaaS customer win. Let’s hope SAP manages those expectations as well, since investor backlashes rarely lead to good things for the company or its customers, and especially not the product line that triggered the backlash.

Matt Danielsson
Editor


July 3, 2007  5:16 AM

SAP admits to ‘inappropriate downloads’

JackDanahy Jack Danahy Profile: JackDanahy

SAP has officially responded to Oracle’s lawsuit. While a good chunk of the case remains bluster and hot air, according to SAP, chief Kagermann did raise some eyebrows by admitting certain “inappropriate downloads”. It’s worth noting, however, that SAP is taking great pains to isolate itself from its TomorrowNow branch. From the Brisbane Times:

[SAP] said its US subsidiary TomorrowNow had legally downloaded support documents from the website of Oracle but had also made “some inappropriate downloads of fixes and support documents.”

SAP stressed however that the rest of the group did not have access to the intellectual property downloaded by the US unit.

“What was downloaded at TomorrowNow stayed in that subsidiary’s separate systems. SAP did not have access to Oracle intellectual property via TomorrowNow.”

This is an interesting yet not entirely unexpected move, since it in effect seals the hatch between the main SAP ship and TomorrowNow’s leaking compartment. I’m no legal expert, but what I do know is that it’s too early to read too much into it. Yes, SAP could be preparing to jettison the whole thing (very unlikely). Or they could be working on a legal strategy that will end up with a sensible settlement (yes, that door has been nudged open again, despite initial assurances to the contrary). Or, it could be something as simple as PR damage control. If nothing else it seems like putting a neat little box around the problem might help preserve some integrity in the minds of the customers.

Either way, SAP probably has good reasons for keeping TomorrowNow at arm’s length until the dust settles.

Forbes reported that the SAP executive team were disappointed with Oracle’s aggressive litigation, arguing that it would have made more sense to come to them directly rather than get courts involved. Disappointed but hardly surprised, I bet, kind of like I’ll be disappointed but not surprised next time I fail to get a non-canned response from my Internet provider’s support site.

No, this is just too nice of a show for Ellison to pass up. I still believe he has little incentive to see this all the way through, but he’ll wring every ounce of fun out of it up until that point. Stay tuned for more as the story develops…

Matt Danielsson
Editor


July 2, 2007  4:47 PM

NetSuite is coming, NetSuite is coming…

JackDanahy Jack Danahy Profile: JackDanahy

SAP A1S, the new on-demand ERP solution we’ve been hearing about for quite a while now, is something of a tease when it comes to actual specifics. We know a few basic facts, like that it’ll be for the 50-500 user crowd, feature a try-before-you-buy option, and general tidbits about how industry-specific configuration will be a snap. Beyond that, there really hasn’t been much on the news front beyond some hemming and hawing about whether it’ll cannibalize the existing Business One and All-in-One markets.

Frustrating as the secrecy is (especially in combination with SAP’s continuous pre-hype), there’s little doubt in my mind that A1S will indeed make a bit of a splash when it comes out in Q1 2008… Or whenever the final launch will be. SAP is betting big bucks on this one, and most analysts agree it better be the silver bullet SAP thinks it is if the company has a chance of hitting the 100,000 customers-by-2010 mark. The move to an on-demand model may seem strange for a company like SAP, but it’s in line with the general SOA push the company has been espousing over the past few years.

That’s why this latest article from Computer Business Review Online caught my eye. Says Angela Eager in her article:

With its new release, NetSuite is moving up in the market, taking it closer to the SMB ground covered by SAP, Oracle, and Microsoft, through the addition of features designed to automate complex operations and make processes simpler for growing mid-sized companies.

In a nutshell, NetSuite, which registered for an initial public offering (IPO) today, is upping the ante with easier installation, multinational sales support and new BI functionality. Now, Ellison’s baby isn’t going to drive the SAP juggernaut into retreat anytime soon, but it does make the SMB space just a little more crowded.

We’ve written about the upcoming face off with Microsoft Dynamics before, and the ongoing war with Oracle is hardly news either. But what I want to hear is your take on the midsize market by this time next year. How do you see this playing out? Will SAP crush the midmarket with technical superiority, or will Microsoft sucker-punch the German giant with its many SMB beach heads? Will Oracle’s grand plans hit the big time?

Send your thoughts to mdanielsson@techtarget.com by July 10 and you’ll be entered to win an SAP book bundle:

  • Succeeding with SOA, by Paul Brown
  • SAP Enterprise Portal: Technology and programming, by Arnd Goebel
  • Inventory optimization with SAP, by Marc Hoppe

Good luck!

Matt Danielsson
Editor


June 12, 2007  6:40 PM

SAP, H1B visas and… India outsourcing its IT jobs?

JackDanahy Jack Danahy Profile: JackDanahy

There is something both strange and ironic going on right now. Remember the heated debate about the proposed increase in H1B visas just the other week? Well, earlier today Mary Hayes Weier made some interesting comments regarding the IT talent shortage in India. Among other things, research firm Gartner has gone so far as advising Indian CIOs to — wait for it! — outsource IT work.

Yes, you read that right. At the same time as American IT workers are up in arms about a perceived army of cheap, foreign competition charging the castle Gates (sorry!), the very same Indians that tend to drift into the crosshairs are now looking to send their own IT jobs offshore. It’s an odd twist, to be sure. From Weier’s article:

There’s plenty of anecdotal evidence that shows India on the verge of a talent crisis […] they start looking offshore, to Hong Kong and Singapore, for IT workers rather than fight for talent within their own country. The growing economy in India has created big IT budgets, yet India CIOs often can’t beat the big service companies like Tata and IBM at the recruiting game.

SAP career expert Jon Reed shared his thoughts on the initial H1B debate last month, so we figured it was time to check back in for an update on this latest development:

The irony of India soon having to offshore its own technical needs is a fascinating one. But how much does this really change the globalization of the information worker?

To get a handle on this story’s impact on the SAP market, we have to start with the assumption that offshoring trends in SAP follow a similar pattern to overall IT offshoring trends. Since the bulk of IT offshoring is done by large companies running either Oracle or SAP ERP platforms, this seems like a fair assumption.

So how does this news impact the SAP market? It’s a tricky question because the overall technical capacity across the world has not yet been fully leveraged by offshoring. However, this Information Week piece makes a good point: The cultural and language mix with India was perfect for U.S. based companies. Other countries may have the technical capacity but the cultural and language barriers might negatively impact the return on investment for offshoring.

Overall, I would say that this is good news in the short term for SAP consultants, in particular those based in the U.S. Any limits on the supply of qualified consultants means a corresponding uptick in rates is likely. But in the long run, as this author concedes, the
globalization trends are not going away. Ultimately, we are far from reaching worldwide technical capacity. It may take time to conquer some of the barriers, but I guarantee you there is a wave of entrepreneurs in Russia, Mexico, China and elsewhere working feverishly to do just that. I wouldn’t bet against them.

This means that the general advice I have always given SAP consultants about offshoring still holds: Try to avoid commodified skill sets, especially on the development side. Become indispensable by gaining a business process background, industry expertise, team lead experience, and crucial exposure to the latest SAP tools and releases. Yes, the offshoring question has gotten more complicated with India at capacity. But the long term trend of the globalization of the information worker is still in the adolescent stages. It will continue to grow, and functional work will eventually be impacted also.

There you have it: Potential short-term respite, but the worldwide globalization movement isn’t going to stop anytime soon. Use the time wisely — beef up your skills and make yourself outsourcing-proof before India increases capacity and/or other markets unlock the key to easier partnerships with U.S. companies.

Matt Danielsson
Editor


June 8, 2007  3:50 PM

SAP and Web 3.0

JackDanahy Jack Danahy Profile: JackDanahy

Most IT workers I talk to have trouble getting up to speed with Web 2.0. Isn’t it asking for trouble to start talking about Web 3.0 in that case? Apparently, SAP doesn’t seem to think so.

ZDNet’s Dan Farber reports a “dog and pony show” surrounding the opening of SAP’s new Palo Alto lab, where SAP execs predictably talked about stuff like the importance of collaboration, the upcoming SAP A1S ERP on-demand solution, and of course, Web 3.0. From Farber’s post:

“If you look to the services that we are defining with our enterprise SOA and things a bit beyond, we know that these type of enterprise services over time, in collaboration with many customers, associations and partners, a kind of standard can bring the Internet of business services,” Kagermann said. “We don’t have the semantics today that go beyond Web 2.0 and will allow software to to speak to each other.”

There’s the keyword: Semantics. The oft-cited example of Web 3.0 is a “smart” scheduling app that handles the eternal back-and-forth between meeting participants automatically. Problem is, beyond that, Web 3.0 is rather fuzzy. How can you look at a product and say: “This here piece o’ software is Web 2.0, while that app over there is Web 3.0″? More importantly, what does this concept really mean for SAP shops, and what practical benefits vs. costs are we looking at?

While not SAP-specific, David Siegel provides a pretty good explanation on his blog. Everything in the future will be smart, he says, not just scheduling apps but mundane stuff like chasing down the best flight (enter your preferences and let the computer run the two dozen searches on Orbitz). He also uses an example of a team of construction engineers working a lighting challenge to highlight the potential collaboration benefits of Web 3.0.

The key to getting there is enabling computers to interpret “human-readable” phrases rather make a loose guess based on just keywords. For a SAP shop, this could be a boon to areas like analytics and reporting, or bringing truly personalized CRM into the world. Other areas that could use a boost of “smarts” would be logistics, SCM, or pretty much any scenario where you need to tap into multiple heterogenous solutions.

That’s the benefit portion. Cost and maintenance remains largely an unknown at this point. Of course, time will tell how far these theoretical scenarios will play out in reality, but we’re going to dive deeper into this in the weeks ahead. Stand by for a comprehensive Web 3.0 for SAP overview by Eric Samuels!

Matt Danielsson
Editor


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