SAP Watch

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

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

June 7, 2007  10:39 AM

SAP vs. Oracle food for thought

JackDanahy Jack Danahy Profile: JackDanahy

Did SAP steal Oracle’s customers? As in, nefariously done on the sly as opposed to, oh I don’t know, offering better products? That’s what you’d conclude if you believe the over-the-top aggressive amended complaint filed by Oracle the other day. But the reality of the case is anything but clear-cut. Dennis Byron, who has provided insightful guest columns on in the past, took a closer look at the issue in a recent blog post.

Byron raised a couple issues that deserve consideration:

  • If SAP used old Oracle customers’ passwords to gain access to Oracle’s systems, why didn’t Oracle disable those accounts when the contract expired? Is it standard practice to leave the barn doors wide open for years, and then be shocked — shocked, I tells ya! — when someone comes by and takes a peek inside?
  • After raising hell with the initial complaint, why, exactly, did the really nasty talk about “aiding and abetting” and “conspiracy” suddenly evaporate in the second filing?

Furthermore, Byron points out, the customers covered here (former JDE, PeopleSoft etc.) stems from a frenzied series of acquisitions that happened years ago. Back then, there was a lot of uncertainty for the new Oracle users, and SAP was more than happy to bring concerned companies into the safe SAP fold. But the lawsuit focuses on the past couple months, when the dust had been settled for quite some time. Why are former PeopleSoft and JDE customers bailing out now, 2 years after the acquisition by Oracle?

Interesting stuff for sure. Stay tuned as the case goes to court and, we would imagine, a solid return-salvo from SAP in the weeks ahead.

Matt Danielsson

June 1, 2007  3:19 PM

Oracle files amended SAP complaint

JackDanahy Jack Danahy Profile: JackDanahy

Just when things appear to die down a little bit, the Oracle-SAP lawsuit always seems to bubble back up. Today it was Oracle stirring the pot, as it tacked on copyright infringement and breach of contract complaints to its existing suit of SAP’s TommorrowNow division (SAP TN) in San Francisco federal District Court.

The amended complaint, which now checks in at 51 pages, makes particular note of some alleged similarities between Oracle’s and TomorrowNow’s Daylight Savings Time fixes. Quoting from the amended complaint:

In at least one instance, SAP TN has also, publicly displayed, distributed, and thereby profited from Oracle’s copyrighted Software and Support Materials. In December 2006, Oracle developed a knowledge solution related to the recent early change to Daylight Savings Time (the “DST Solution”). The DST Solution is a narrative document with specific instructions for how to conform certain Oracle software to the new Daylight Savings Time change. Oracle fielded more than a thousand service requests from its customers related to the Daylight Savings Time change, and its DST Solution helped resolve more than 750 of them.

SAP TN’s “solution” is substantially similar in total — and in large part appears to be copied identically from — Oracle’s DST Solution. SAP TN’s copied version even includes minor errors in the original DST Solution that Oracle later corrected. SAP TN’s version also substitutes an SAP TN logo in place of the original Oracle logo and copyright notice.

It’s no secret that these two enjoy tweaking each other whenever possible, and the language used throughout the complaint is a prime example. It’s worth going through and reading it for yourself, but here’s one example:

It was not clear how SAP TN could offer, as it did on its website and its other materials, “customized ongoing tax and regulatory updates,” “fixes for serious issues,” “full upgrade script support,” and, most remarkably, “30-minute response time, 24x7x365” on software programs for which it had no intellectual property rights. To compound the puzzle, SAP continued to offer this comprehensive support to hundreds of customers at the “cut rate” of 50 cents on the dollar, and purported to add full support for an entirely different product line – Siebel – with a wave of its hand. The economics, and the logic, simply did not add up.

Oracle has now solved this puzzle. To stave off the mounting competitive threat from Oracle and to do so without making the requisite investment, SAP unlawfully accessed, copied, and wrongfully used Oracle’s Software and Support Materials.

The gloves have been off for some time. Now it seems the combatants are reaching for the Louisville Slugger. We will, of course, continue to follow the lawsuit as it continues its long, slow boil towards a conclusion.

Jon Franke
News editor

May 30, 2007  2:17 PM

More on the future of SAP consulting

JackDanahy Jack Danahy Profile: JackDanahy

In a guest column on today, Jon Reed discussed many skills that will be important for SAP consultants in the future. As is sometimes the case, not all of Jon’s thoughts could fit into the piece. But, he had some interesting thoughts on industry specialization, so here’s a bonus piece of advice from Jon for SAP consultants going forward:

Hopping from industry to industry will be risky business. Up until this point, consultants with solid implementation skills could jump from industry to industry in search of the best project at the best rate. However, both SAP and its customers are emphasizing the importance of consultants who know a particular industry. I had one SAP product manager tell me that consultants without an industry focus would have a hard time in tomorrow’s SAP market.

SAP ERP 2005 ships with 25 different industry solutions — industry solutions no longer have separate and sometimes confusing release schedules. Consultants who know how to apply an industry’s “best practices” are going to be in demand, which also emphasizes the importance of overall business know-how as opposed to configuration skills.

So if customers are asking for more industry experience right now, why is it a future skill? Because as much as customers want this type of industry background, the SAP consulting market is hot enough that I’m not sure SAP hiring managers will always be able to hold out for industry-focused consultants. But in the future, consultants with a consistent industry focus are going to have a big edge and it may eventually become a non-negotiable requirement.

We’ll plan on running the second installment of Reed’s piece (“The present”) tomorrow and the final chapter (“The past”) on Friday.

Jon Franke
News Editor

May 25, 2007  4:31 PM

Great SAP Leaders Among Us contest update

JackDanahy Jack Danahy Profile: JackDanahy

Just a quick update on the Great SAP Leaders Among Us podcast contest. As you may recall, the topic is BI/BW challenges and how regular SAP users like yourself overcame those obstacles. Now we have whittled the field down to two strong candidates, but we need you to cast your vote to decide who wins the grand prize. There’s plenty of useful tips to be gained, yet both podcasts clock in at just five minutes each. Tune in today!

Matt Danielsson

May 24, 2007  7:02 PM

SAP and H1B visas: What an H1B increase would mean

JackDanahy Jack Danahy Profile: JackDanahy

As you may have seen in the news, there’s a movement afoot to boost the number of H1B visas next year, from 65,000 to 115,000, plus the continuation of 20,000 visas for highly educated foreigners. It doesn’t take a genius to see why this idea isn’t received with open arms by American IT workers, especially not independent SAP consultants and others who would see a direct impact on both opportunities and compensation levels. Some, like the Washington Alliance of Technology Workers, are determined to put up a fight to save their jobs.

But then again, the hiring company always benefits from more options, more competition and lower rates, so it’s not a clean-cut situation. We asked veteran SAP career guru Jon Reed for a quick comment on the matter. True to form, he replied with a guest column:

The proposed increase in H1B visas would have an immediate impact on the SAP consulting market by expanding the availability of experienced SAP consultants. The compelling question is whether this is good or bad news. It all depends on where you land in the market. For SAP hiring managers and SAP customers, this is good news. Additional consultants means more choices and lower rates. For consultants trying to make a living in North America, anything that affects the supply and demand curve by increasing the supply of qualified consultants is decidedly bad news. More consultants on the market means lower rates and less opportunities. For those who believe strongly in fostering “American jobs for American workers,” any increase in H1B visa limits is also bad news.

On the other hand, there are quality H1 professionals from many different countries who will do a great job on projects when given the opportunity. Increases in visa limits is a good thing from their vantage point. As for where I stand, I can appreciate the validity of all of these different takes on the pros and cons of H1s. It’s also good to remember that some major areas of the SAP market, such as many Public Sector projects, cannot hire H1s for legal reasons, so an increase in the supply of H1 consultants does not affect all sectors.

The one thing I feel strongly about is that I don’t believe the H1B visa controversy should take on the tone of ethnic backlash. It’s important to remember that there are SAP professionals of all ethnicities who are U.S. citizens and permanent residents who are also impacted by the increase in the supply of H1B consultants. So it’s good to dial down the anger-filled ethnic angle and look at this from a calmer vantage point of whether an increase in H1s is really necessary to satisfy the demand for experienced SAP and IT professionals. That in itself is a worthy debate.

In the past years, I would have said that there are enough SAP consultants and that it would be better in the long run to preserve higher rates for good consultants and limit H1s. But with all the upgrade projects going on right now, you could make a serious argument that more senior SAP consultants are needed, and that companies would surely be glad to have the option to hire more H1B consultants also. This is a serious debate without any easy answers so I won’t attempt to provide one here.

Jon Reed is the author of the SAP Consultant Handbook and has been publishing SAP career and market analysis for more than a decade. Most recently, he served as the vice president and founding editor of SAPtips.

Matt Danielsson

May 21, 2007  1:05 PM

Oracle vs. SAP lawsuit: Hardball or posturing?

JackDanahy Jack Danahy Profile: JackDanahy

The Oracle lawsuit against SAP has kind of faded into the background since the news broke in March. There’s been a flurry of acquisitions on both sides of the fence, SAP and Microsoft have deepened their relationship, and a bunch of other stuff popped up around the Sapphire events in Atlanta and Vienna.

But the fight is far from over. The alleged misdeeds of SAP’s support organization TomorrowNow are not forgotten by Oracle, even as the first judge recused herself from the case. Indeed, first the Oracle team pushed through a measure to make sure SAP kept all relevant records around the alleged incident and now Larry Ellson has gone on the record stating that he would not accept an out-of-court settlement with SAP.

Not so fast there, Larry. Is SAP really on the ropes, trying to weasel it’s way out from under certain defeat? Columnist and veteran SAP expert Josh Greenbaum doesn’t think so.

In the absence of a definitive statement offering a settlement — and there has been no such offer — Larry’s statement to the German press is pure posturing. SAP is on record as being willing to see this battle through, and I expect them to. But I’m not surprised at Ellison’s statement: this lawsuit is all about posturing, and has no real merit with respect to its principle allegations, particularly those that allege direct senior managment involvement and approval in the actions Oracle is saying happened.

At some point I think Oracle should worry that this lawsuit could backfire: there’s a danger for Oracle is pursuing this, as discovery would put a large amount of unflattering information regarding Oracle’s maintenance fees and contracts into the public domain.

That’s a valid point for sure. We asked Steve Bauer, SAP’s VP of global communications, to comment on SAP’s side of the story on Ellison’s latest play. Here’s the official response:

Through this suit, Oracle seeks to limit customer choice and impede competition. SAP and TomorrowNow offer a viable alternative to Oracle support that the marketplace has embraced. SAP firmly believes that third-party support, which meets a growing customer need, plays a vital role in the enterprise software industry. SAP will vigorously defend against the charges brought by Oracle.

Our take on this: Oracle is trying to pull a fast one to confuse the market. SAP never offered a settlement, and those of you who attended Sapphire Atlanta may recall SAP Americas CEO Bill McDermott making SAP’s stance quite clear weeks before Ellison made this latest move. “We will, in the coming days, vigorously respond to this allegation, and the strength of our response will be clear and decisive,” McDermott said.

There’s a good chance that Oracle is trying to blow as much hot air as possible into this debacle now in an attempt to shame and discredit SAP, only to fold before the rubber hits the road. There has already been an extension to give Oracle more time to put together an “amended complaint,” allowing Oracle two more weeks to strut around. Will there be a second extension request? Will Oracle really have the guts to lay all the cards on the table? Time will tell, but Ellison’s latest move reeks to high heavens.

Matt Danielsson

May 17, 2007  6:41 PM

SAP and Microsoft keeps dancing — and competing

JackDanahy Jack Danahy Profile: JackDanahy

The peculiar SAP-Microsoft partnership continues to deepen. We’ve written about this in the past, but I think Jon Reed summed up the situation best with the image of “one set of hands shaking and another set in a thumb war“. In the upper end of the market, SAP and the ‘softies are best buds, as evidenced by their solid Duet commitment. Last I heard they were well past the 300,000 user mark and it was one of the big stories at Sapphire Atlanta last month.

This week was Sapphire Vienna, and sure enough, another big SAP-Microsoft story dropped: SAP and Microsoft are setting up a joint German lab to marry SAP’s Business Suite with SQL Server 2005. That makes a lot of business sense, and it doesn’t take much imagination to see this as another way of teaming up and sticking it to Oracle. Ellison had a pretty big week too by the way — the Agile acquisition alone is enough to keep SAP on it’s toes.

But then there’s this midmarket business, the elephant in the room neither company seems to want to talk about. Microsoft is serious about Dynamics, and they’re starting to get nods of recognition. But SAP is betting hard on A1S, the upcoming on-demand ERP solution targeting the niche of customers that fall between the already existing SMB solutions BusinessOne and All-in-One. Furthermore, SAP made the public commitment that it will nearly triple its customer base by 2010 — a goal that puts it squarely on a collision course with its friends in Redmond. Indeed, as 2010 and the inevitable SMB surge SAP needs in order to hit the magic 100,000 customer-mark draws near, I predict considerable friction at just about the same time Duet 2.0 rolls out.

But for now, everything is peachy. Kumbaya, and so on.

Matt Danielsson

May 14, 2007  5:42 PM

Sapphire Vienna and SAP globalization

JackDanahy Jack Danahy Profile: JackDanahy

Sapphire 2007 — Vienna this time, not Atlanta — is already proving to be an interesting event with many new stories and announcements. Unfortunately, none of the staff had the opportunity to attend this year. Good news is, we have some local contacts including veteran expert Axel Angeli helping us keep tabs on things — watch for his comments and exclusive interviews on the recently announced Maxdata acquisition.

Among the new announcements, SAP GRC Risk Management is a new application tapping into the rising interest in GRC we saw at Sapphire Atlanta. The new addition promises to bring risk management to a more strategic, high-level plane where it becomes part of practically every aspect of a business. Components include Risk Planning, Risk Identification and Analysis, Risk Response and Risk Monitoring, IT News Online reports.

John Blau from InfoWorld reports that SAP is acknowledging problems with A1S, the on-demand ERP solution we wrote about last week, but adds that “nothing has changed” according to SAP executives. Slated for Q1 2008 release, rumors were circulating that it may be pushed back to a later date. SAP now insists this will not happen, Blau reports. Time will tell how this plays out, but rest assured we’ll be there to cover it when A1S hits the market.

On a side note, Larry Dignan at ZDNet brought up an interesting point about SAP’s globalization efforts as reported in the Wall Street Journal last week. With Agassi gone, he said, things get more difficult for a company many perceive as a tad stodgy and inflexible. Compounding the issue is a somewhat unorthodox methodology for going global on such a broad scale. From the WSJ article:

“Few companies try to globalize from top to bottom. Many companies build extensive sales, service and manufacturing operations abroad, but most keep top posts and important areas like corporate strategy and product development close to headquarters. Microsoft Corp., for instance, continues to set software strategy from Redmond, Wash., even as it hires thousands of programmers in India. SAP, by contrast, split up its pivotal product-development effort into eight centers around the globe, directed from California by Mr. Agassi.”

What happens now? Dignan describes it as a tug-of-war between the continents, and that rings true. The vacuum left by Agassi’s abrupt departure won’t be filled with a snap of the fingers. Having said that, does this mean SAP’s globalization efforts are about to implode? Most certainly not. The course is set and the juggernaut is in motion — the only question is how much friction there will be in the year ahead as a new equilibrium (or something close to it) is established.

Matt Danielsson

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