SAP Skillz that Pay the Billz

Jon Reed conducted a pretty interesting Podcast today, along with yours truly and K2 Partners, focused on the state of SAP Skills & Resources, particularly during this economy. (I'll post a link here once the podcast is available... definitely suggest checking it out!).

My take?

While SAP projects are definitely not immune to overall IT cuts, activity is still pretty high (comparatively...) yet changing fast (as far as in which industries, countries and topics!)

As I began saying the end of last year, the Business Objects-related services business is doing quite well, since it is well suited to the data insights companies desperately need as many of their business fundamentals get flipped upside down... Additionally with little top-line growth opportunities in sight, healthy SAP customers are now serious about efficiency gains to improve margins... I just spoke to a large retailer who has been battered, yet is still standing and profitable. They are now taking multi-channel more seriously than ever as they actively reduce their store footprint to the most profitable sites (sorry SAP, I would love to mention that they are using Business Objects, but they aren't...), while shifting more emphasis and resources to their e-commerce business (and here, they are looking to rely on SAP).

It is also worth mentioning PAC's new outlook on the SAP Skills Ecosystem came out yesterday, which in its last edition caused quite a stir in '07/08... check it out or email me for the summary!

On SAP BO Skills Transitions, Roadmap Questions, and How Data Beats Chest Thumping

It’s still early in 2009, but in the spirit of the Academy Awards, we have an early nominee for over-used “SAP buzzword of the year.” That word, of course, is “insight.” Insight has become the oft-used catchphrase for the dreamy achievement of transforming ERP data into actionable information that can be used to make more informed business decisions. Now is a time when companies need all the “insight” they can get, so it’s probably not a surprise that this phrase is gaining, ahem, traction.

To further the collective desire to better understand the SAP BI product line, I’ve been working with PAC on an upcoming report on SAP Business Objects market opportunities. We’re currently conducting interviews and getting fresh perspectives on the BO roadmap from inside and outside of SAP. The focus will be on identifying the issues SAP customers are thinking about now that influence SAP BO buying decisions.

Up to this point, the responses I have been getting range from enthusiasm about the combined SAP BO offering to genuine confusion about pricing and long term product integration. There *are* two things I can confirm at this point in the research: one, not surprisingly, is that BI remains on the spending priority list even in this time of obsessive cost reduction. Two is that whether you are an independent consultant or a large SAP services partner, the edge you are seeking in the BI/BO consulting world requires more than just proven hands-on skills. You also need to be able to speak to SAP’s long term BI strategy and help customers understand how the products they are investing in now will (or will not) align themselves with where SAP itself is headed.

As we continue this evolution from “transactional ERP” to the era of (get ready for this catch phrase) “value-enhanced ERP via embedded analytics,” we know that the skill sets of ERP consultants are also changing. That was one of the biggest questions on my mind when I recently issued a podcast on SAP BO skills with Franz Aman, VP of Intelligence Product Platform Marketing for SAP Business Objects. Franz had an interesting take on the skills consultants should be pursuing to be relevant in the SAP BO world.

During the podcast, I asked Franz what technical SAP teams need to do in order to become bigger contributors on BI projects. He encouraged technical listeners to go beyond tools mastery and engage with the business problems at hand. “I always encourage IT folks to look at two sides of the coin: first, you have to have the product knowledge, so definitely brush up on BI technology, the SAP Business Objects portfolio and all that,” said Aman. “You have to have that technical knowledge, understand the products, what their value is, how to best deploy that to the business, but brush up on the business side. Really understand and build a bridge to the business side to make sure you know what problems the business has to deal with. Really understand what the questions are that the business is grappling with. Don’t just ask for requirements. The business, a lot of times, has a hard time spelling it out. And, as we know, business and IT aren’t always talking the same language.”

One of the big skills debates in SAP BI is about functional roles in BI. To what degree should the SAP functional consultant be working to expose themselves to BI technology? Franz responded by stressing the importance of turning the data you are working with and turning it into meaningful benchmarks. “From my perspective, what always helps in functional lines is to move away from ‘guesstimates’ and gut feeling and all that. Really train yourself to measure, understand data, make database decisions. Fundamentally, you can’t really manage what you can’t measure. It’s a really old expression, but it’s so true. So, really think about the KPIs, really think about what measures you have to put in place in order to drive certain outcomes.”

For me, one of the highlights of the podcast was when Franz described meetings where the room’s attention shifted to the person, regardless of role, who had the best information. “It’s stunning every single time when you get into a discussion, whether it’s at the board level or whether it’s at the project team level, the moment the person with data around the table speaks up, shows the data, the discussion immediately takes a turn,” said Aman. “I’ve seen so many of these discussions at all kinds of levels where people are arguing their points, they’re making great arguments, they’re very convincing, very assertive – but the moment the one person around the table with the data speaks up, all that crumbles and you have a whole different level of discussion.”

I was struck by what Franz was saying because the ERP blogosphere is filled with posturing on controversial issues, perhaps for the sake of getting page views. The arguments that ensue often seem designed to whip up emotionality for its own sake, rather than furthering the conversation. Franz has seen these same dynamics in boardroom settings. He believes that business intelligence, properly used by savvy individuals, can alter the conversation.

“What I’m encouraging everyone to do on the line of business side is to be that person around the table who actually has the data,” said Aman. “Contribute that point of view and take the discussion from people being assertive and chest-pounding. Go towards data, rational approaches, and make sure that everyone understands the business, understands your function, what’s going on. Drive it that way. You’re going to have better outcomes, and your company is going to be more successful.”

Finding the right BI skills mix depends on the individual, or in some cases, the focus of a consulting practice. But I know that in my own work, I left the podcast with Franz more determined than ever to compile useful data. I’d much rather be the one who shifted the conversation with good information than be the one who captured attention with a loud argument that was forgotten the next day when someone with better data came along. I’ll bet I’m not alone.

BearingPoint Files for Bankruptcy

Just hours ago, BearingPoint filed for chapter 11 bankruptcy protection...

According to the filing, international operations have not been included. As part of filing, a $500 million senior secured credit facility will be replaced with a new secured, senior credit facility. New preferred stock will be issued, unsecured debt will be exchanged for different classes of common stock and all existing shares will be canceled. This essentially helps to reduce its debt load owed to major lenders, and gives the company a chance to emerge smaller/leaner, yet alive!! ...while unfortunately wiping out its former shareholders!

In the U.S., both BearingPoint's SAP practice and its public sector business were still performing well until mid-year 2008, clients include 15 U.S. federal cabinet level-departments, 23 U.S. states.

While poaching has been ongoing, bankruptcy may now open up more of the firm's SAP resources to the market...

What Services Opportunities Will Be Created by Business Suite 7?

Last week, Peter Russo and I were amongst the group of reporters, analysts and bloggers who attended SAP’s Business Suite 7 event in New York City. You had to feel for SAP’s challenge: make the largest application release in the company’s history relevant during a time when most companies are worried that there is another economic shoe still to drop. I thought Peter did a good job of summarizing the potential of “BS7,” as well as the timing challenges, in his post last week. In this blog entry, I’ll take a look at some of the services and skills opportunities the Suite will eventually create.

The most compelling thing about BS7 from a cost standpoint is that once a company is running ERP 6.0, they can implement only the functionality of BS7 they need. This fits into SAP’s “no more upgrades” promise for its ERP suite. The fine print is that SAP is leaving itself an out: SAP is committed to using its enhancement package approach for the next five years for ERP 6.0. Nevertheless, the avoidance of large scale upgrades for the foreseeable future means a shift in how SAP (and its services partners) are going to do business once the customer base in on ERP 6.0.

Those who are looking to capitalize on the services opportunities in Business Suite 7 are advised to follow a similar strategy to SAP itself: start the “skills ramp up” now, but be aware that the BS7 work is not going to intensify until more customers are up and running on ERP 6.0. SAP has cited that 13,000 of its customers are on ERP 6.0 now (though Peter notes in his last post that most of those have only completed a technical upgrade to this point). No matter how you count it, that’s less than half of SAP’s current install base. The SAP reps I spoke to in New York were confident that all customers would be running ERP 6.0 by 2010. This seems a tad optimistic to me, but that gives some idea of the time frame in question.

Once SAP users are running ERP 6.0, we can expect them to take an “incremental” look at BS7 functionality, flipping the switch on the most useful pieces for their needs. This adds a twist to the skills rampup, because we can’t necessarily know which narrow areas of the suite will be the most popular with customers. I do believe, however, that while the Suite is more SOA-friendly than ever before, the first option most customers will look at when it comes to the Suite itself are basic functions pertaining to the four Suite components: SCM, SRM, PLM, and CRM.

In terms of these four areas, we can certainly do some comparisons in terms of which products are creating the most job opportunities as of today. On Sunday, I did some searches amongst the 57,000 job postings on Dice.com. I compared the amount of search results for all four Suite areas. Then, I did a narrower search that restricted the search to a job title itself. This allowed me to see which Suite products are becoming part of a broader job description, and which ones are becoming focused jobs of their own.

Here’s what I saw:


This basic data shows us that SAP CRM, has, by a wide margin, the most market acceptance to date. SRM and SCM are competing for a solid second place, with PLM remaining a niche offering. The way I translate this into a services mentality is as follows: I’d avoid a PLM skills focus unless I was part of an elite group of PLM specialists. With SRM and SCM, I’d be more comfortable investing in skills opportunities for those consultants who already have some relevant background in SAP procurement or logistics respectively. I probably wouldn’t focus only on those Suite areas though: I’d make sure I had plenty of skills in the core SAP “R/3” modules like SD, MM, and PP that integrate with the Suite in those areas.

SAP CRM is probably the only area of the four where the market footprint is broad enough to take a harder look at training less skilled SAP consultants into an SAP CRM focus, or even considering a standalone SAP CRM practice in the future. Of course, within each of these Suite products, there are areas more in demand than others. Further investigation of the consulting needs within each Suite component will be a worthy project for all of us this year.

Beyond a closer look at the Suite, there are other skills trends that bear watching. For example, in a blogger session I attended with co-CEO Leo Apotheker, he made a point of saying that the potential of BS7 could not be realized without a well-managed SAP environment via that tool we are hearing about in almost every SAP context: Solution Manager. We also know that SAP is emphasizing embedded analytics in BS 7. Business Objects/BI capabilities are going to be entwined in this release in such a way that BI needs will surely maintain their status at the top of the SAP skills demand list, even as those skills expand in BS7 to include geo-spatial analytics and customer “sentiment analysis.”

What are the other BS7-related skills trends we should be tracking? Here is a list I have compiled to date. I believe you’ll have an edge if you can:

- advise SAP users on enhancement package timeframes, functionality, and usage, including the differences between the Suite enhancement packs and the NetWeaver enhancement packs.

- know the switch framework and how to turn the lights on with BS 7 functionality.

- have expertise in the “SOA ready” aspects of BS 7, which is fully service-enabled. In particular, a familiarity with how flagship customers have actually used SOA for measurable success stories, and the challenges they had to overcome, will be valuable.

- get a head start in mastering some of the most likely “value scenarios” that SAP is pushing that track business events and end-to-end processes - even across organizational boundaries.

- know the “Harmonized UI” of the Suite and be prepared to support SAP users with the range of UI options they will have going forward, from Portals to Duet to handheld devices.

- last but certainly not least, it’s more and more difficult to separate SAP business applications from the NetWeaver stack. Those who have the SAP technical expertise to compliment the Suite’s process know-how will have the edge over the classic functional consulting background.

When we think about the consulting opportunities generated by the Suite, one interesting angle is: how much of this service business will SAP try to keep in-house, and how much will be available to SAP’s service partners? Skeptics I talked to during and after the event felt that SAP would be scooping up more of this business than ever before, partially to make up for the loss of revenue from large scale upgrades. During our blogger session with Leo Apotheker, however, he emphasized the importance he places on SAP’s service partners, at one point saying that if SAP gets overly involved on the services side, then “we’re not a software company anymore.”

Assurances aside, how the services landscape will change during the BS 7 era remains to be seen. But one thing never changes: no matter who is staffing an implementation, the edge always goes to the senior consultants armed with specialized know-how in the latest SAP apps. If the firm managing the install doesn’t have the folks they need on staff, they will be compelled to source them from the outside. That’s why cultivating SAP skills will always be just as important as cultivating client relationships.

As SAP Turns up the Dial on Certification, Partners & Vendor Clash!

For the past couple of years, SAP has been ramping up its partner certification program to move beyond entry-level resource training, to include more experienced consultants categorized by their rather new "master" and "professional" levels of certification, aligned with increasing complexity of the SAP product footprint and technology stack.

While acceptance by partners has been rather mixed by company and by region, I have been aware of a recent push by SAP to certify the consultants in its ecosystem... and for some very honorable reasons. First of all to ensure quality in a rapidly growing pool of resources (many of which coming from offshore can be suspect), and of course to lessen the amount of botched implementations, which typically end up giving a black eye more to SAP rather than the IT services partner. However, I believe that for all of these good reasons, SAP is basically missing the point, and is somewhat out of touch to a degree.

Adding some fuel to the fire, a Colorado-based jewelry retailer, Shane Co., declared bankruptcy, and in part blamed the failure of a $36 million SAP inventory management system project on its decline. It might also be due to the worst U.S. economic situation in decades, but that's just one of my crazy ideas I guess... ;-)

With this in hand, SAP has unfortunately taken the old route of blaming its partners for some of this recent bad news. Leo Apotheker recently was quoted last week by ZDnet as saying:

"I don’t give a s**t if it’s Accenture or IBM. I care about the customer. I find it shocking people are walking around talking to customers and have no experience on [SAP]. [Consultants] get hired of people and have no clue. It’s annoying but that’s a fact. Let’s start by certifying people...” (BTW, I have made this my first nomination for "Best IT Exec Quote of 2009" - check back later in the year to see if Leo wins...)

After this eloquent exchange, Leo went on to highlight HP/EDS as being one of its first large partners to sign on for certification of all of its SAP consultants. Soon after, IBM announced a major expansion of its relationship with SAP rival, Lawson Software, to support its new strategic push into HCM. Touche!

But let's get to the heart of the matter... dealing with or at least speaking with most of SAP's large IT services partners, the question of whether to certify their consultants comes down to dollars and cents, plain and simple! For any of the top 20 providers of SAP-related consulting services, the process of certifying their consultants would cost millions at a time when new projects are slowing down and profits are becoming lower. IT services companies, like all other companies, are scrutinizing their costs and investments right now. Can certification be a good way to bring new/entry-level resources to a reliable and billable level? Yes, and in most cases I advise companies to consider that. But should all consultants be certified? Hmmm....

On the other side, at least from my experience, SAP customers are not asking for certified consultants. Today when an SAP customer is considering an external services supplier, they are interested in references, the experience of the project consultants, and whether that experience maps well to their own industry needs. Make no doubt, experience (especially during a downturn) is king, and that simply cannot be taught in a classroom. New technologies? yes! Experience? no! And while in the mid-term, there will certainly be a need to up-skill consultants to more of the components of Business Suite 7 and Netweaver, customers are not yet flocking to these new technologies during these difficult times.

So at the end of the day, customers are not asking for certified consultants, nor (at this juncture) are they prepared to pay a premium for certified consultants. They are willing to pay a premium on experience, and this is why IBM, Accenture, Deloitte Consulting, along with substantial challengers, such as CSC, Capgemini and T-Systems, are winning projects and market-share.

In particular, IBM and Accenture own over 22% of the worldwide SAP consulting services market, and have the skills and reputation to disregard certification... A combined HP+EDS, which was the company sited by Leo, is forecasted by PAC to be under 3% market share... two very different situations and set of offerings, in fact. While HP+EDS is certainly a legitimate and growing player, and in my opinion, has an excellent opportunity around the "cost of running" SAP; it is still developing its positioning on this market, and may not be indicative of what all services suppliers should do.

So is there a place and value from certification? of course... Is it right for all companies and all consultants? I'm not convinced this is the case today.

I've activated comments on the blog and would love to hear your thoughts!

SAP Launches "Business Suite 7" - Are Customers Buying it?

Yesterday… in case you hadn’t heard was SAP’s “Business Suite 7” launch event in NYC, which I attended along with what looked like about 70-80 analysts, bloggers, reporters and SAPer's at their global marketing office.

Leo Apotheker started things off by making perhaps his most aggressive case on why customers should consider investing in a new suite during what might be the largest economic crisis of our lifetimes. And on several fronts, he did a commendable job and echoed many trends PAC has been seeing and writing about, including:

• During this quickly changing business environment, companies require more facts, faster and more reliable data… ahem, cue Business Objects BI
• With a clear “ceiling” placed on revenue growth for many industries (retail…), companies will need to look at ways to be more profitable and more efficient… cue a technical (and maybe, functional) upgrade
• Companies need more flexibility to support actually business and process changes… okay, that clearly plays into Netweaver very neatly!

So what is new about Business Suite 7?

Well to start off, I see Business Suite 7 as an evolution of some SOA topics (that have been talked to death!), including eSOA and xApps, evolving now into something more easily consumable (at least in concept) by the end-user. This has evolved into the “Value Scenario,” where the integration of a full process runs not only across industry and horizontal applications, but also outside of the organization. One example shown was for “Integrated Product Development,” which is not simply supporting time-to-market, but also measuring scalability of a product, quality and market information. For market information, one portion of the solution collects external “product impressions” and tag cloud from twitter and other sources, in order to understand how a product is perceived against how the product has performed against sales and other metrics. These “Value Scenarios” will be offered mainly as industry-specific solutions (I see them more as overlays then solutions), through the enhancement package system.

SAP trotted out three of its best customers to pledge their support, including Colgate-Palmolive, Roche and IBM. Although none have used these “Value Scenarios” as of yet, all did state their intentions to move forward with their SAP system investments. And this isn’t surprising; they are Colgate-Palmolive, Roche and IBM! They can afford to always invest at a higher level in IT, in order to prepare themselves for better days. However, clearly this is a very select group and not indicative of average SAP customers, which as SAP likes to point out often is dominated by SME’s (over 70% if you take SAP’s word on this!).

While there’s much more to the contents of this release and other benefits I’ve skipped over, I would like to get to the main point now: will customers be interested in Business Suite 7… today?

Well to start off, according to our own research, slightly less than 4,000 SAP customers have done an upgrade beyond technical-only to ECC 6.0. This PAC figure is somewhat confirmed by SAP’s own statement that there are “more than 1,000 live customers” using the enhancement packs. Being generous, let’s just say that 2% of SAP’s customer base is using enhancement packs today, even if it may just be piloting.

SAP’s approach now to SOA, focused around providing integrated solutions across and outside of their modules is quite similar in many ways to Oracle’s AIA and process orchestration. SAP may have the upper hand in that all of its own applications (besides Business Objects) have been consistently designed on the same platform, and are not integrations between different acquisitions, architected differently, etc. As well, the ability for customers to pick and choose which new functionality to switch on/off within the framework of enhancement packs is again a very forward-looking move by SAP compared to its competitors.

However, will this all be enough to entice customers to adopt, when the bulk of them must go through an upgrade to 7? While “Value Scenarios” could be very efficient and hard-hitting solutions if the customer base had already moved to ECC 6.0, I believe customers are in way too much of a “wait and see” mode this year to consider such a move.

Activity in the UK Retail Sector Picks up With Marks & Spencers win

With significant attention being given to how organisations are reigning back on IT spend, particularly among the retailers and bankers, it was good to hear that all was not doom and gloom with the announcement of Marks & Spencers' deal with SAP and IBM to implement a suite of SAP Retail applications. M&S hopes to gain more accurate business data and robust core processes to enhance cost and operating efficiencies. It is in this way that the UK-based retailer hopes to gain a greater control over net margin.

While increased uncertainty and longer sales cycle is hampering IT spend, retailers that realise the importance to invest in IT to meet business objectives even in the toughest of conditions. As Pete mentioned in a previous blog - IT Outlook in the Retail Sector & NRF Wrap-up - "for those retailers that are still standing, I believe many will take this period to reinvent themselves to a degree, whether it be a shift away from stores to more multi-channel, creating more customer intimacy, or having the ability to diversify their product categories...."

There is no doubt that retailers are facing a tough time in the market. However, in order to overcome the market challenges, retailers must look at innovative ways to cut costs while standing apart from its competitors. Retailers realise that they need to look for ways to add value to their business and increase cost efficiencies.

SAP counts some 50 larger retailers as UK customers, with other key accounts including The Body Shop, Somerfields, Halfords and Matalan. However, competition is strong in the UK, where the software market is diverse, with approximately 200 players operating in the retail sector today. Specialist players such as Retalix and Torex retail, for instance, have demostrated some success in 2008 with new contract wins. On the other hand the larger players include the likes of Sage and SAP's arch-rival Oracle. Oracle won a major deal with Morrisons last year, one of UK's largest supermarket group, to implement a range of Oracle products over 5 years to help enable its business transformation programme.

IT vendors and their partners will need to articulate a clear message to the market to help retailers understand the need for investment. Investment in IT is very easy to overlook in the current economic climate but the likelihood of losing market share otherwise is one that retailers want to avoid!

PwC + BearingPoint?

I usually don't blog much on rumors, but one that has taken on much traction has been PwC Consulting potentially acquiring BearingPoint, which has the blogs and twitter on fire...

No surprises really, since BearingPoint needed to either sell or declare bankruptcy VERY soon...

While BearingPoint still has an excellent US SAP team and some small international pieces, as well as its strong public sector practice... it's fiscal situation has certainly taken its toll and some good resources along with that.

On the other hand, PwC Consulting (as well as other audit arms, KPMG, remnants of Arthur Andersen) has moved back into the SI and specifically SAP-SI space, mainly around compliance and risk. Besides all of the debt from BearingPoint, it could be an easy way for PwC Consulting to really jump back into the US market at least.

Let's see if there is anything behind this rumor...