SAP's annual user conference is always greeted with enthusiasm as some of the industrial world's best-known companies gather to hear the ERP giant's vision. At least that's how it has been for the past four years. In 2000, it's been a very different story, with a weary and sometimes rambling co-chairman Hasso Plattner devoting much of his time to attacking Oracle or running a complex product demonstration.
His performance left customers, partners and analysts sharing the reaction from AMR Research: "SAP unleashed a torrent of old news". The press conference, which was broadcast live, continued in downbeat fashion. Instead of taking the chance to make grand announcements, SAP said little to capture the imagination.
On the plus side, it did provide users with some relief on pricing. The pricing for mySAP.com has been a thorny issue. In essence, customers have been required to move from a per seat, per module pricing scheme for their R/3 applications to one that is roles-based in mySAP. They receive a bundle of applications, but there is a requirement to re-license, with an attendant cost increase of about 20 per cent.
That still leaves customers to wrestle with the not-so-simple upgrade process. Stephan Raemeakers, leader of Deloitte Consulting's European SAP practice, said: "Customers should be aware this is more than a new GUI. Training and some implementation mean that putting mySAP.com to work will take time." Even so, Dave Boulanger, head of AMR Research's SAP advisory practice, welcomed the changes: "SAP seems to have finally got the message about the difficulty of upgrading to mySAP.com."
But SAP faces many problems. Plattner suggested it was late to the Internet, and it is true that it has lost out to Oracle on the crucial mindshare issue because Oracle's marketing has been superior. Clearly bemused, Plattner said: "I don't know what we do wrong." Kagermann was more forthright: "Our marketing isn't good enough - we need to change that."
Also, SAP Markets, the recently announced Palo Alto based subsidiary that will concentrate on developing software for electronic markets, is not yet fully operational. Kagermann said: "We've resolved where the sales responsibilities lie so that SAP has one face to the customer." But in the development back rooms, no one is sure what's going on. One partner, who preferred to remain anonymous, said: "We cannot complete on contracts. Documents are passing between Walldorf and Palo Alto and no one knows who is supposed to take the responsibility." Josh Greenbaum, principal with analyst firm EAC, said: "Henning is distressed about what's going on. He feels it is an impediment to the momentum SAP Markets needs."
SAP is in a period of transition, and is attempting to alter the way it develops and goes to market. In an about turn, Plattner said: "In an Internet economy, no single vendor can do it all. So we are partnering for strategically important technology." Asked whether this is really tactical, Peter Zencke, the board member responsible for SAP's CRM effort, said: "Partnership is absolutely crucial in some areas." Referring to the recent tie-up with Clarify/Nortel for its call centre technology, he added: "We don't have those skills and we needed to get to market quickly, so yes, we're in this for the long term."
But development partners are suspicious. In the engineering dominated HQ at Walldorf, salespeople are described as "klinkenputzers." Literally translated, the expression means "door knocker polishers," a term of derision. The feeling is that SAP will continue to develop in the background, but will concentrate on large-scale integration problems. In the interim, this means that partners like webMethods and Tibco may be able to renew contracts, but their future will be uncertain. Plattner said the company is developing an application engine that will have a ten-fold performance improvement on the current engine.
The company is also working on ensuring that the many instances of SAP's R/3 suite that will be needed in the collaborative markets of tomorrow will work seamlessly, even though they may not all need to run in real time. "This is good news, I just wish SAP had announced it formally," said Bruce Richardson, senior vice-president strategies at AMR Research.
SAP has for many years tried to solve the complex problems of large-scale global enterprises by providing an integrated platform where business processes are seamlessly linked regardless of function. This will continue to be the focus but it will be on an inter-enterprise basis. It is a huge challenge, but one that SAP has the engineering resources and money to overcome.
In the meantime, it needs to take the fight to Oracle and its other competitors if it is not to be perceived as a legacy player and so discounted from the customer selection shortlists. According to Trevor Salomon, marketing director at JD Edwards, this has been happening in the mid-range: "Oracle is ferocious at the moment, but we're not seeing SAP get on even the long lists of candidates."
SAP is finding transition tough and the mood at Berlin was a clear reflection of the issues it faces. Its engineering-led culture is no longer enough, and its marketing must change radically. But one should not write SAP off. As Boulanger said: "We should never forget that, with [a few] exceptions, SAP can take out anyone it wants at any time."