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Wednesday, February 04, 2009

SAP Business Suite 7: selling value in tough times

SAP had a launch event in New York this morning to present the latest incarnation of its enterprise systems: Business Suite 7.

SAP has been doing a good job of opening events like this to a virtual audience as well as to those that can attend live. I was giving a webcast at the same time and was not able to take part. However, a number of other bloggers tuned in and have already put together some excellent analysis of what Business Suite 7 (BS7) is about.

One thing that BS7 does not appear to be: a major functionality upgrade. SAP already has more functionality available off-the-shelf than any one company can implement. There used to be a time when you could rank vendors against functional requirements and come up with very different profiles. Although every system has its strengths, especially when it comes to industry-specific requirements, the buyer's decision today often comes down to factors other than functionality. These other factors are what SAP appears to be addressing with BS7.

These factors include:
  • Ease of implementation and upgrades: SAP is emphasizing a modular approach to instead of the proverbial big-bang. Although you could always purchase SAP systems on a modular basis, SAP used to push comprehensive sales to establish as large a footprint as possible within the client's operation. Such an approach doesn't fit the economic times, however, so SAP is emphasizing its ability to work in smaller bites using its service-oriented architecture (Netweaver).

    Although new functionality does not appear to be the main focus of BS7, SAP did announce over 150 functional enhancements today. However, they are being rolled out as "enhancement packages," which customers can implement selectively--again, forgoing the need for a big bang upgrade.
  • Value scenarios. Again, fitting in with these recessionary times, SAP is emphazing short term ROI instead of pitching its products as a long-term strategic platform. It coined the phrase "value scenarios" to denote "end-to-end business processes that focus on industry-specific outcomes and can be implemented incrementally as the customer has need. Examples given include integrated product development for manufacturing, collaborative demand and supply planning for high-tech and consumer product companies, and integrated sourcing and procurement for all industries.
  • Integrated analytics. SAP is incorporating select analytics capabilities of its BusinessObjects acquisition into BS7. Business Intelligence systems are frequently treated as analytics outside of core transactional systems. As such, integration can be a major effort taking years of effort. By incorporating some BI capabilities directly into BS7, SAP appears to be addressing the need of decision makers to have analytics as an earlier deliverable.
As I've indicated, SAP's emphasis in announcing BS7 fits with the times. Our annual IT spending survey now underway at Computer Economics is showing a major cutback in IT capital spending this year. This hits big-ticket vendors, such as SAP, hard. SAP is right to emphasis investment in smaller bites, measurable short-term ROI, and the needs of decision makers. Whether buyers will be willing to open their wallets, even with this sort of pitch, remains to be seen.

Other bloggers, who attended the event, have more insight on what SAP's announcement means. Larry Dignan gives a good overview on the BS7 modular approach, but views it more as an SAP sales strategy than new technology that SAP didn't already have. He also has another post where he expresses his doubts that SAP is done with scary upgrades" and "sleepless night projects. Dennis Howlett gives his take on SAP's announcement, including a description of the dialog taking place on Twitter between analysts as the presentation took place. Read all of these reports for a fuller picture, as they contain more insights than I am able to pull together here.

For the official view from SAP, read SAP's press release on BS7, which contains quite a bit of detail on the new offering.

Update: Brian Sommer reports that SAP upgrades are indeed faster on BS7, based on experience of one early adopter:
An earlier meeting with a global CIO confirmed the much shortened timeframes and costs possible with these new BS7 capabilities. This CIO verified that 1-3 month timeframes for new enhancement rollouts are indeed possible. Some functions though (e.g., data conversion, data quality, change management, etc.) may drag out rollout timeframes.
More from Brian Sommer here, expressing some skepticism on SAP's claims regarding the use of BS7 to achieve "process excellence."

Update: Vinnie Mirchandani was in the live presentation and gives a great account of his direct interaction with SAP's Co-CEO Leo Apotheker.

Update: Larry Dignan has an analysis of Apotheker's Q&A session with bloggers, which he attended. Interesting read.

Related posts
SAP layoffs, January, 2009
SAP's Leo Apotheker on Charlie Rose

by Frank Scavo, 2/04/2009 12:56:00 PM | permalink | e-mail this!

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Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

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