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
The cracks in IT demand have started to appear, as Financial Times blogger Richard Waters wrote in a recent post.
On Monday, SAP CEO Henning Kagermann pre-announced that SAP’s third quarter earnings would be lower than expected.
“The market developments of the past several weeks have been dramatic and worrying to many businesses,” Kagermann said in a press release. “These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter.”
Entering the third quarter, customer sentiment was cautious, but still resolute, Kagermann explained on a conference call.
That predictability disappeared once the financial crisis accelerated dramatically during the last two weeks of September, Kagermann said. This had a strong impact on SAP’s ability to sign contracts, as many customers expressed the need to put planned IT investments on hold for now.
There was also some hesitation on new software purchases where it seemed getting the financing was an issue, he explained.
Companies like SAP and Oracle are “the last refuges of tech investing,” as blogger Jim Kerstetter wrote in a recent blog post on making sense of the tech meltdown on Wall Street.
And if SAP’s hurting, as Boston Globe columnist Steven Syre, wrote, it’s one of the “ominous signs in pullback by businesses.”
There are many questions left unanswered. Will the economic downturn affect SAP’s product development? Are there some parts of the country and the world where IT spending is slowing more than others? Which industries will be hit hardest by the downturn and what does that mean for IT spending there?
SAP said it would have better answers to some of those questions when it delivers its official third quarter earnings at the end of the month.
But another task that could be made more difficult by this economy will be explaining Enterprise Support to its customers. This is not only simply because many customers are upset about the price increase, but because travel and training budgets will no doubt be scaled back in this economy. Even SAP’s trimming its travel budget, according to Reuters. And while there has been a series of webcasts hosted by ASUG on the new support system, some in-depth education on Enterprise Support has and is scheduled to take place at conference events, where customers can ask industry analysts and SAP their own questions.
Kagermann made clear during the call that SAP would continue to roll out Enterprise Support, and that customers would find value in it. SAP offered up this explanation last week in a podcast interview on the new support offering with SearchSAP.com, and explained that part of its “full-court press” would be to continue to partner with user groups to explain how to find the value in it.
Explaining the “how” may get even tougher now.
Courtney Bjorlin, News Editor
The use of acronyms in e-business disguises the fact that behind every three-letter abbreviation is a complex collection of functionality. Take supply chain management (SCM), our editorial focus for this month. Some aspects of SCM are often confused with supplier relationship management (SRM), even by working SAP professionals. That’s why we thought it would be helpful to offer this brief technical primer on what exactly comprises SAP SCM and the latest developments.
SAP SCM consists of the following modules:
Advanced Planning and Optimization (APO)
Forecasting and Replenishment (FM)
Event Management (EM)
Supply Network Collaboration (SNC)
Extended Warehouse Management (EWM)
You can read more about SAP SCM components on the SAP Developer Network (SDN) wiki devoted to SCM.
One interesting development in SAP SCM is its relation to business intelligence (BI). If, following the example of companies such as Dell and Apple, you find yourself moving from a tactical to a strategic supply chain, you have to extract more data out of SCM. Otherwise, your forecasts, planning schedules and warehouse management processes won’t be as effective as they might otherwise be, and you may be stuck with a supply chain that’s only a cost center.
There a couple of options when it comes to apply BI to SAP SCM. You can:
- Use the innate analytical features of SAP SCM modules. While helpful for basis analysis, these features may not be able to deliver the advanced intelligence you need for strategic SCM purposes.
- Integrate an external BI system with SAP SCM.
If you choose to use an external BI system in this context, you now have a wider variety of SAP-specific BI choices and challenges than ever before. There’s SAP NetWeaver BI, which can integrate data from a Geographic Information System (GIS) or other SAP products into your SAP SCM system. NetWeaver BI is included in shipments of SAP SCM.
But the real strategic potential comes from SAP’s acquisition of BI specialist Business Objects. Some SAP customers (Callaway Golf comes to mind) have realized that applying Business Objects to SAP SCM and SRM modules will result in deeper and broader BI information than can be derived from the modules themselves, or from NetWeaver.
Research group AMR has demonstrated, for several years in a row, that companies with strategic supply chains are more profitable. One way to join the ranks of the supply chain elite could be to apply Business Objects’ capabilities to your SAP SCM and SRM systems.
Demir Barlas, Site Editor
We’re coming up on the one-year anniversary of SAP’s last major acquisition – Business Objects. The deal was announced over a sleepy Columbus Day holiday weekend in the United States.
There’s been a bit of buzz (no pun on Oracle’s new Beehive collaboration platform intended) over the last few months that since Business Objects worked out so well, is it time for another deal?
A couple of weeks ago, the rumor that SAP was interested in acquiring Teradata started floating around the Web. The Miamisburg, Ohio-based company is a data-warehousing vendor.
“Teradata could help SAP expand its offerings to better compete against Oracle and could complement SAP’s Business Objects acquisition,” Patrick Walravens, enterprise software analyst at JMP Securities, told Tech Trader Daily.
The market liked it, and Teradata’s share price rose. And it excited the blogosphere, with Deloitte consultant and blogger Vincent McBurney saying it would give SAP “a hell of a data analytics platform.”
Given the buzz around Teradata before OpenWorld, and the never-ending drama that is the SAP vs. Oracle storyline, could SAP be planning its own special “October Surprise” on Oracle?
SAP exec Bill McDermott told SearchSAP.com this summer that growth through acquisition was possible. Might Teradata make a nice anniversary present for Business Objects?
Service-oriented architecture (SOA) has been a major background piece of SAP’s product architecture since the debut of NetWeaver. However, SOA took a front seat in 2008.
SOA is, strictly speaking, middleware — a platform that allows software systems to connect to each other, use bits of each other’s functionality/interfaces and draw from a common library of reusable logic. As such, SOA can lie at the heart of both an application infrastructure paradigm such as NetWeaver and specific developer tools. For example, consider the way in which SOA is now enabling SAP developers to work in Microsoft environments and vice versa. SOA was also behind one of the hits of TechEd, a spell check program for SAP.
But SOA is also very close to both the tools and techniques of business process management (BPM). It’s impossible to succinctly explain how these domains overlap, but one of our recent podcasts examined the interface between SOA and BPM in more detail. If you develop a stronger understanding of why SOA and BPM overlap, you’ll be well equipped to approach SAP’s new Business Process Expert (BPX) certification. Both SOA and BPM are fundamental components of the BPX curriculum and, if you want to call yourself a BPXer, you’ll have to master basic concepts that apply to both.
If you’re not sure whether you have a decent baseline of SOA knowledge, take our SOA quiz. It covers topics ranging from foundational concepts in Web services to SOA’s application in specific product components, such as the Enterprise Portal.
Finally, because SOA is right at the heart of both business processes and enterprise applications, it brings together what you might call the suits and the geeks. SOA is making these disparate communities speak each other’s languages, as you can discover on SAP’s BPX forum.
As always, don’t hesitate to let us know how we can continue to educate you on matters related to SOA.
Demir Barlas, Site Editor
I spoke with Rimini Street CEO Seth Ravin yesterday for an update on their third-party support offering for SAP R/3 customers.
Rimini Street will begin rolling out the service to a pilot number of SAP R/3 customers – between six and 12, Ravin estimated – in January of 2009. And the service will be generally available by the second quarter, or late March to early April, of 2009 at the latest.
But Ravin said yesterday that while the rollout of the ambitious SAP support program is still on schedule, the majority of R/3 customers, many of whose SAP support contracts run out in January and are clamoring for support now, will have to be patient.
Rimini Street wants to test out service on a few SAP customers, in order to figure out what is really needed, Ravin said.
“You’ll see a very modest move into SAP for 2009,” on Rimini Street’s part, he said. “What we’ve seen is a much more rapid acceptance of the concept and the idea. A lot of those customers would love to be in contracts already, but the service just isn’t going to be ready by then.”
Ravin wouldn’t say how many customers he eventually aims, or could, sign on for the offering, only that he’s been inundated with calls. And those customers are looking for value, he said -value they’re not seeing in Enterprise Support, SAP’s new, enhanced offering which will cost customers 22% of net licensing fees, up from 17%. Rimini Street promises support at half the cost of SAP.
“They felt like this has really been a dance,” Ravin said. “It’s not value that a lot of customers want.”
Ravin’s remarks underscore a claim made by many bloggers and analysts recently that SAP still needs to prove to its customers where the value is in Enterprise Support, particularly for small and mid-sized customers.
SAP, for its part, has been trying to make its case. Here in the United States, SAP’s been doing a webcast series through ASUG and hosted a forum on the topic at ASUG’s recent conference in Nashville. Another forum on the topic is planned for ASUG’s conference in Dallas in October.
“SAP customer dissatisfaction with the maintenance fee increase is a bigger story, because it threatens to pose a setback to the impressive strides SAP has made with its customer base in recent years,” Reed wrote.
Famed former CEO Jack Welch singles out SAP in this article in the latest issue of BusinessWeek, as a beacon of how to boost customer loyalty, specifically, by building user communities and getting people together physically at events like TechEd.
The article made me think back to a conversation I had last week at SAP TechEd with some of the SAP executives who are heading up SAP’s ecosystem, or rather, the “customer-focused ecosystem.” They insisted it was, and would continue to be, a major competitive differentiator for them.
We’ve started to see, over the past week, an example of this assertion.
Such a strong, and large, user community would seem to come in particularly handy at a time when enterprise application vendors are trying to figure out how to develop, and sell, Web 2.0 for the business.
By now, you’ve likely heard of the SAP development challenges being offered through InnoCentive, a Waltham, Mass.-based company that brings developers together to solve business problems.
One is drawing particularly strong interest.
A total of 688 “project rooms”– individuals or groups who have expressed interest in solving the challenge — have been opened for SAP’s Web 2.0 challenge so far. SAP’s asking developers to find uses of social networking to enhance business applications in corporate computing environments.
That’s in only the week and a half since it has been offered, there’s still another month to sign up. InnoCentive tells me that is a very high number for a challenge that’s been open only a week and a half.
It’s a great example of how SAP’s working these days, and why their attention to this “customer-focused ecosystem,” could in fact further separate them from their competitors.
It’ll be interesting to see how it plays out, and what SAP does with the winner’s solution.
Courtney Bjorlin, News Editor
The SAP-Microsoft partnership, so momentous on paper, is actually quite modest, limited as it is to Duet. A recent SearchSAP.com readership survey indicated that many SAP customers are either unfamiliar with Duet or aren’t clear about what kind of real business value it can add to their companies.
This year’s TechEd offered signs that the SAP-Microsoft partnership is going deeper. Specifically, SAP offered a preview of the SAP Enterprise Services Explorer for .NET (call it SESEN for short) that will jazz up the partnership by offering .NET as well as ABAP developers a way to create interoperating services.
To understand SESEN better, remember that one of NetWeaver’s goals is to be a single interface to, and environment for, all of a company’s SOA-based services. Since services can be created by a number of different tools, this requires NetWeaver to be able to interact with other UDDI-based registries, such as those provided by Microsoft. SESEN functions as an add-in within Microsoft Visual Studio that effectively lets .NET developers more easily invoke and utilize SAP enterprise services in a Microsoft environment.
What does this mean in practice? SAP’s TechEd demo offered a thought-provoking use case. Imagine a scenario in which employees can choose their own company cars from a list of approved models (hardly a common case, but it made for a flashy presentation). With SESEN, you could use a Microsoft tool, such as Windows Media Player, as a front end from which to see a view of the cars. Clicking on the car invokes Microsoft Visual Studio logic, which would then pull up the SAP HR system to allow the employee to make a request to have a specific car assigned. This request would effectively go into the SAP workflow by being routed to a manager for approval.
That’s an example of an SAP service (call it “choose and approve company vehicle”) being consumed by a .NET application, but SESEN would allow you to go the other way as well, by calling a Visual Studio-defined service into the SAP environment. For SAP end users, this means easier access to services created in Microsoft and vice versa, and it should take Duet further by offering meatier integration between SAP and Microsoft.
SESEN, currently available on a trial basis from the SAP Developer Network, will be generally available at the end of the year. You can download it here.
Demir Barlas, Site Editor
Amidst talk of upgrades, Business Objects and excitement over the racecar demo in the Community Clubhouse, SAP has been encouraging professionals here to join the SDN and the BPX communities.
It brings up this year’s TechEd theme — connect, collaborate and co-innovate, one that seemed to really resonate with attendees.
A few attendees remarked to me that they were impressed with how open everyone at TechEd was, and the community-feel that the event had. Several said they were really benefiting from the opportunity to come together and learn from their peers.
To that end, SAP put out a new challenge for you to solve this week.
SAP announced at TechEd that it’s reached an agreement and put some money into a Waltham, Mass.-based company called InnoCentive. The company creates development challenges and offers prize money in return for solutions. InnoCentive is offering $25,000 in prize money for three SAP-related development challenges – the use of social networking in enterprise applications, another on unified heterogeneous web server handling and another on the creation of a video regarding the benefits of community networks.
About 1,000 new members join SAP Developer Network every day, making it the equivalent in numbers to the 8th largest city in the United States, according to SAP executive Zia Yusuf.
And if you look at the next statistic, you can see why your participation is important – a total of 50% of the world’s business transactions go through an SAP system, with 12 million users in about 120 countries.
“There’s not much economic activity that happens without somehow going through the SAP system,” said Zia Yusuf, the global vice president of Global Ecosystem and Partner group. “Collaboration is a cornerstone of building software. We are all here to build bigger, better, cheaper solutions. You can learn a lot not just from SAP, but from each other.”
It’s one case in which, at least SAP hopes, what happens in Vegas, doesn’t stay in Vegas.
Courtney Bjorlin, News Editor