SAP Watch


April 22, 2008  10:04 AM

SAP downgraded: TomorrowNow, Business Objects, economy at fault

JackDanahy Jack Danahy Profile: JackDanahy

SAP has taken a couple of hits from financial analysts recently. J.P. Morgan’s Manoj Singla downgraded SAP from Overweight to Neutral, and Patrick Walravens of JMP Securities issued a research note in which he claims that “the Business Objects sales organization may have missed its Q1 targets by a wide margin in North America.” Given that most companies still don’t use Business Intelligence (the functionality that Business Objects supplies) properly, if at all, that would hardly be a surprise. BI has been slow to get going, and difficult for executives to utilize properly.

Meanwhile, Singla is more bothered by what he called “increasing macro-economic concerns” and “signs of a slowdown in technology spending.” In the past, even in tech’s dog years of 2000-2004, macro-economic trouble and IT spending slowdowns did not impact large enterprise applications providers, so it remains questionable whether the factors identified by Singla will bleed over into SAP’s business. A much more immediate concern is TomorrowNow, which continues to torment SAP by means of the lawsuit that Oracle has filed against it. Oracle plans to go after senior SAP executives as part of this lawsuit, which looks like dragging out for quite a while. Then there’s the $100 million lawsuit Waste Management has filed against SAP.

Combine all of that with hard competition from Oracle, macroeconomic trouble, and a very strong Euro, and it adds up to a tougher time than SAP has experience for some years.

Demir Barlas, Site Editor

April 21, 2008  12:20 PM

SAP assists in Smart Grid

JackDanahy Jack Danahy Profile: JackDanahy

In an age of smart devices, energy consists of dull infrastructure: age-old meters, for one. As it turns out, the utilities industry wants to change all of that. The new industry vision, Smart Grid, will replace the old infrastructure with meters and communications devices that can broadcast outages, give residential users a daily, Web-based readout of their energy usage day by day, and radically simplify the way in which utility companies provision service.

SAP is part of the transformation. As enterprise applications provider of choice to many of the major utilities vendors, SAP is helping them change the infrastructure needed to deal with all the new data (for example, meters broadcasting usage statistics every fifteen minutes). As utilities reconfigure their systems and business processes, the participation of SAP and other vendors, including systems integrators and niche players in utilities data management, provides an example of how only vendors of a certain size can keep up with a big industry’s changes.

Demir Barlas, Site Editor


April 18, 2008  10:11 AM

TomorrowNow lawsuit update

JackDanahy Jack Danahy Profile: JackDanahy

There’s a new development afoot in the SAP-Oracle dustup over TomorrowNow–the filing of a joint Case Management Conference (CMC) Statement that stakes out SAP and Oracle’s positions in advance of the Case Management Conference that will take place on April 24, 2008, with Judge Phyllis J. Hamilton presiding.

The CMC Statement is notable for setting out Oracle’s case against Tomorrow now in a fair amount of detail. Here are excerpts from the most damning accusations:

“Defendants [SAP] have a dedicated bank of 20 “download servers” to accomplish the unauthorized taking and infringing conduct…”

“Defendants compiled a master download library of Oracle-based Software and Support Materials that exceeds five terabytes in size – so large that Defendants could not produce it for over six months…”

“Defendants have approximately 3,000 copies of Oracle software applications on their systems, each one of which may additionally have included within it illegally downloaded Software and Support Materials…”

“Virtually every one of the almost 200 TN employees had some involvement in TN’s illegal activity. Documents produced by Defendants suggest that SAP AG and SAP America employees and managers had involvement in or knowledge of TN’s infringing conduct.”

SAP won’t admit that any overt illegality took place, preferring to put the emphasis on what it considers Oracle’s misguided use of the legal process: “Oracle insists on overly broad, unnecessary discovery into what TN accessed as part of providing third party support; it should be compelled to explain how TN’s support of its former customers harmed Oracle, and to permit immediate discovery into that elusive claim.”

Whatever the case, the TomorrowNow acquisition continues to be a headache for SAP, which is unable to find a buyer for the company and has spent a lot of money on the Oracle lawsuit.

For more context, check out today’s SearchSAP story on the CMC.

Demir Barlas, Site Editor


April 17, 2008  9:44 AM

NetSuite versus SAP: Something’s weird

JackDanahy Jack Danahy Profile: JackDanahy

NetSuite, the on-demand applications provider, has released OneWorld, which pulls together ERP, CRM, e-commerce, and business intelligence into a hosted format. NetSuite CEO Zach Nelson took some shots at SAP during the product’s launch, telling the U.K.’s IT Week that OneWorld is “far more robust a system than you get when you pay $100m.”

As it turns out, though, there’s some tension between this statement and what NetSuite says in its 10-K: “Until NetSuite, we believe there was no provider of an on-demand, integrated suite of business management applications that addresses [sic] the needs of SMBs in the comprehensive manner that Oracle and SAP address the similar needs of large enterprises.”

So, in its 10-K, NetSuite admits that SAP and Oracle do indeed address enterprise needs in a “comprehensive manner,” an admission that is directly contradicted by the Nelson quote. After all, if SAP and Oracle are indeed comprehensive business applications suites, how can NetSuite be “far more robust” than them? Logically, it doesn’t make sense.

Hyperbole is common in the B2B software market, but it seems excessive when a company’s own 10-K contradicts the CEO.

Demir Barlas, Site Editor


April 16, 2008  10:20 AM

H-1b overload: What’s the cause?

JackDanahy Jack Danahy Profile: JackDanahy

163,000 applications for U.S. H-1b visas were filed this year, according to U.S. Citizenship and Immigration Services (USCIS). Most of these applicants will be disappointed, as the regular H-1b cap is 65,000. Those whose H-1b applications are approved can expect to begin hearing from from USCIS in June.

For the SAP market in particular, the high number of H-1b applicants suggests that the pool of consultants, developers, and other members of the SAP ecosystem is growing outside the U.S., and badly wants entry into this market. While the U.S. economy suffers from the mortgage fallout, high energy prices, and eroding consumer confidence, the rise in H-1b applications indicate that foreigners continue to prize economic opportunity in this country. Last year, by contrast, there were only 133,000 H-1b applications.

A serious question that has to be asked about the 30,000 new applicants is–where did they come from in only a year? H-1b holders typically apply to technical jobs that can require at least 5 to 7 years of operational experience. It’s a long curve. Thus, in a single year, one wouldn’t expect this many qualified new workers to have come online. A possible answer is that certification mills in India, and even less scrupulous companies who help their clients manufacture false experience in technologies such as SAP, have turned out tens of thousands of new H-1b aspirants who lack substantive experience or competence.

What’s the hard evidence for this possibility? Admittedly, it’s anecdotal. If you subscribe to any of the large SAP email groups, you’ll notice the high volume of messages from people whose ability in SAP (or Oracle, or PeopleSoft, for that matter) is quite limited, and who are actively looking for ways to fudge their credentials and experience. Some of these people have no idea of what to expect in actual SAP interviews, and ask more experienced workers on the message boards to help them bluff their way through.

Based on our talk with SAP Labs India, it seems likely that the most talented and experienced IT workers in India have already been snapped up by multinationals based in India, or absorbed into the U.S. and/or Europe during the IT workforce crisis that began before Y2K and ended a few years later. Therefore, the people who are not working in the field now — i.e., the H-1b applicants — are likely to be new graduates, employed in fields tangential to enterprise applications, or, frankly, less skilled than their employed counterparts. This population is a far cry from the highly skilled tech workforce that Bill Gates says is supposed to rescue America’s position in the global economy. It’s more likely to be represented by the person who wrote to an SAP email group this morning that he would like to “brush up” on SAP FI…despite being a Flash designer with no experience in either accounting or SAP.

SAP customers should find this kind of situation frightening, just as patients who learn that their prospective doctors are house painters who “brushed up” on surgery last week would be frightened. Unfortunately, in the wild world of tech, there is no strict system of governance to ensure that people have the skills they say they have. In an ideal world, the 163,000 2008 H-1b applicants would all conform to a minimum standard and truly add value to the global economy, but one wonders how many of them are in fact viable workers.

Demir Barlas, Site Editor


April 14, 2008  9:54 AM

Clouding the issue: Google and Salesforce.com partner

JackDanahy Jack Danahy Profile: JackDanahy

Fresh off a throwdown with former SAP CEO Hasso Plattner, Marc Benioff, CEO of Salesforce.com, has hooked up with Google. Going forward, Google Apps (including Gmail and Google Talk) will integrate seamlessly with the Salesforce.com platform. For sales reps working in both Google and Salesforce.com environments, this integration greatly simplifies work processes. However, early media coverage of the partnership goes much further, claiming that cloud computing is finally about to take off in the enterprise environment. In order to evaluate that claim, it’s a good idea to look at what enterprises can actually do in Google Apps:

  • Google site search
  • Google internal search
  • Google Earth and maps
  • Existing Google tools (including Gmail, Google Talk, Google Docs, intranet functionality)

All of these are popular and important online tools, but it isn’t clear why their integration with Salesforce.com represents any kind of forward leap for cloud computing. To relate this back to the Plattner-Benioff debate, one has to ask if online calendar syncing and email integration is the future of software. Whether you call it Software as a Service (SaaS), on demand, or cloud computing, can it: Calculate the profit margins on products based on changing inputs and production activities? Create flow-through, executable production plans for manufacturing? Segment suppliers based on their profitability to a buyer? Prevent stock-outs? Speed up the order-to-cash cycle? No one’s arguing that it’s impossible for SaaS to address some of these business needs, but it’s telling that two companies the size and prominence of Google and Salesforce.com are still trumpeting calendar syncing as some kind of killer business app.

Enterprise applications already address the core issues and challenges of business, which are not likely to change. In order to prove Benioff’s debate point against Plattner, SaaS companies have to do what companies such as SAP do, only cheaper. For SaaS to try to convince businesses that what they actually need is not a suite of applications but a handful of productivity tools is condescending to the complexity faced by business.

Demir Barlas, Site Editor


April 11, 2008  10:58 AM

The end of IT

JackDanahy Jack Danahy Profile: JackDanahy

Everyone knows about the bottom-up pressure on in-house IT — namely, that IT outsourcing has made it cheaper and more efficient to move basic functions such as maintenance and testing outside the four walls of the enterprise. After ten years, this can’t be called a trend anymore; for enterprises, it’s now a best practice to move tactical in-house IT employees elsewhere, whether to an IT outsourcing partner or to a captive center offshore. After all, most enterprises are not in the IT business, and especially not in the tactical IT business.

There are plenty of signs that there is top-down pressure on in-house IT as well. In three separate conversations — with consultancy Sapient, and with SAP executives Zia Yusuf and Richard Probst — we’ve heard that the top tier of IT discipline is going to be changing is well. This isn’t just an abstract notion; SAP and its partners are engineering real products in such a way as to change the discipline.

The change afoot is that higher-level IT people will have to gain increasing knowledge of business processes. To put it another way, t he business-IT war is over and business won. From now on, IT will have to speak the language of business.

SAP’s products are taking on a process-centric hue, with workflows, continuous refinement, drag-and-drop modeling, and other aspects of business process management. No matter how abstruse the technology at the core of these products, they speak business language and are designed to be usable by process experts, not coders.

As cyberpunk author William Gibson famously said, the future is already here, but it isn’t widely distributed yet. When we talk to people who used to refer to ‘IT departments,’ we are beginning to hear about ‘centers of business enablement,’ ‘process competence,’ and the like instead.

To IT people: learn your code, but remember that you have to learn the language of business processes. The old-style IT department is dead.

Demir Barlas, Site Editor


April 10, 2008  11:38 AM

More TomrorowNow trouble

JackDanahy Jack Danahy Profile: JackDanahy

SAP’s bid to keep what it called “highly confidential” information pertaining to the Oracle lawsuit over TomorrowNow has been blocked in a California courthouse. Of course, there’s no telling just what that information is, but it might reveal strategic insights into TomorrowNow’s operations and/or intellectual property. Coming just after the news that Rimini Street won’t buy TomorrowNow, this latest twist is another headache for SAP, which may well be wishing it had never bought TomorrowNow in the first place.

It’s easy to forget that the idea of third-party ERP service was very hot in 2005. However, the fate of TomorrowNow indicates the potential for litigation that can arise when one company services another company’s product. Support and service offer big profit margins, and it’s no secret that enterprise applications companies will work hard to keep these functions close to the vest. In any case, given that SAP and Oracle have tens of thousands of customers, but only a few hundred opt for third-party support, it doesn’t seem to be a very viable domain in the first place.

Demir Barlas, Site Editor


April 9, 2008  5:18 AM

Rimini Street won’t buy TomorrowNow

JackDanahy Jack Danahy Profile: JackDanahy

TomorrowNow, the support company that specializes in PeopleSoft, was acquired by SAP in 2005 and hit with an Oracle lawsuit in 2007. SAP has been eager to sell the company since the second half of 2007, and Rimini Street was rumored to be a buyer. Now the Financial Times Deutschland has put that rumor by to rest by quoting Rimini Street CEO Seth Ravin as saying that his company could not make a business case for such an acquisition, and that in any case Rimini Street has already won over a number of TomorrowNow clients.

Ravin, a cofounder of TomorrowNow and former PeopleSoft VP, sold his 50 percent stake in TomorrowNow to SAP in January, 2005, and stacked it with former PeopleSoft managers.

Just as SAP took advantage of the uncertainty created by Oracle’s hostile bid for PeopleSoft to offer a “safe passage” program, Rimini Street has been offering a transition plan for TomorrowNow clients. Rimini Street has even organized a special transition team to poach these clients. The fact that Rimini Street is no longer interested in TomorrowNow indicates that the transition plan has borne some fruit. SAP will have to look elsewhere for a suitor for TomorrowNow, whose fate seems increasingly troubled.

Demir Barlas, Site Editor


April 8, 2008  8:31 AM

SAP certification: anatomy of a false promise

JackDanahy Jack Danahy Profile: JackDanahy

Is SAP certification worth much? It depends on who you ask. The JKT-SAP Solution Academy of India is a firm believer in the value of certification, making the following assurances on its website:

1. The certificate shows that the consultant has sound knowledge of the SAP system in the area in which he/she has been tested.

2. The certificate provides customers with assurance that the consultant has passed the SAP Project know-how, which is required to successfully implement SAP for customers.

3. The Academy ends with a certification where your acquired skills of SAP are tested and evaluated by SAP, which is a benchmark to enter the SAP industry.

Each of these claims is contestable.

Let’s start with Claim 1. While JKT Academy states that certification demonstrates “sound knowledge” on the part of the trainee, consider that the company considers a score of 70% a passing grade. By comparison, you need to get 83% on the California DMV Written Test to get your driver’s license. If you don’t get 70% on the JKT Academy SAP certification test, you can retake the test a total of three times within three months (after paying a fee for each attempt). The bottom line is that 70% and three tries do not reasonably demonstrate “sound knowledge” of SAP. SAP projects can involve hundreds and millions of dollars and the fates of companies. Would consultants who received 70% on an SAP test really instill confidence in clients?

Now for Claim 2, which claims that certification “is required to successfully implement SAP for customers.” This is straightforwardly false, as very few, if any, SAP jobs require certification. However, JKT Academy claims otherwise, creating a misleading impression of the SAP job market (and, thereby, making its own product more attractive).

Claim 3 is in a similar vein. Certification, JKT Academy claims, “is a benchmark to enter the SAP industry.” It is not fully clear what this means, but it appears to be a variation on Claim 2. The purpose in both of these instances is to convince gullible IT graduates from India into forking over $625 (plus housing, transportation, and some meals) for certification, in a country whose per capita income is only four times this amount. Certification is neither a benchmark nor a qualification.

It seems that JKT Academy and its peers cleverly convince young Indians, who grow up in a centralized bureaucracy, that the SAP job market is some kind of monolithic entity that cannot be entered without some kind of diploma in hand. The belief in the power of paperwork is a legacy of British rule in India, and the magical belief in ‘qualification’ pervades everything from SAP certification to the matrimonial market. SAP customers, however, are far more interested in people who have played roles in actual SAP projects than in certificate holders. Paper won’t get you through the door; however, in highly bureaucratized India, this is a frightening idea. It’s much easier to believe in the predictable power of qualification than in the messy improvisation of real life.

Technically, JKT Academy doesn’t promise an SAP job. Instead, in a oddly-worded disclaimer, the company concedes that “SAP and its education partners inform candidates about the opportunity available in companies who have a requirement for SAP consultants certified consultants.” [This raises a tangential point–would you, as a student, give four months of your salary to a teaching organization capable of writing this bizarre sentence?] So, essentially, JKT Academy can’t offer its certificate holders any placement services different from those of the free Monster.com.

Of course JKT Academy, Genovate, and other third-party SAP training and certification companies provide a legitimate service by teaching people about the nuts and bolts of SAP, albeit in imaginary environments. This is not a question of scamming. However, there is a very fine line between merely misleading the gullible and robbing them.

JKT Academy’s marketing materials are designed to convince people that certification is an important part of being an SAP consultant, whereas the feedback SearchSAP receives from professional recruiters, consultants, and industry experts holds is that this is simply not so.

Demir Barlas, Site Editor


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