SAP's Recent Developments in the Dutch Market

SAP has continued to strengthen and forge new relationships in the Dutch market. Among its key partners, the strong local Dutch IT services players include Atos Origin, Capgemini / Sogeti, Ctac, Logica, Ordina and Uphantis, as well as the larger global players and the very small niche specialists. More recently, SAP and PinkRoccade Healthcare announced a partnership in March 2009 to develop solutions for Dutch healthcare organisations.

Partnerships are crucial even more so in a country like the Netherlands where businesses tend to favour working with local software and IT services players over the larger international/global providers to address local requirements. The large multi-national companies such as ABN AMRO and Shell however tend to be more open, working with different types of local, global and offshore players and these tend to leverage the global/international SAP services partnerships.

While a large part of SAP's business stems from manufacturing (just over 40%), there has been growing activity in the public sector. SAP has made some significant progress through its partners, such as the recent deal signed with the Ministry of Defense in February 2009 that was secured by Capgemini consortia and Logica to redesign processes around materials management and logistics and translate these designs into a SAP-based system.

However, on a more negative note, there has been bad publicity surrounding the deal with the Province of Noord-Holland, which was undertaken by both SAP and Ctac. Last year, the province of Noord-Holland announced that they had spent €500,000 on a SAP accounts module Grantor Management. According to the province, the implementation of this new grant module failed and exceeded the initial budget - an additional €500,000 was still required to complete the project and thus, was put to a stop. Last month, the province of Noord-Holland revealed that they would no take legal action against SAP nor Ctac.

The deal comes as a blow to SAP, particularly as the public sector presents major growth opportunities compared to other vertical markets in 2009. This deal will inevitably impact SAP's reputation as well as its partner Ctac among local provinces. However, SAP has plenty of reference in other parts of the Dutch public sector to try and offset this negative publicity. Also, the fact that no legal action will be taken against SAP or Ctac implies that the province was unable to concretely prove SAP/Ctac as liable. In addition, there will continue to be some ongoing cooperation with the software and IT services players.

The Dutch market relies heavily on the manufacturing and export business, and consequently the recession has hit the Netherlands particularly hard due to the strengthening Euro against the pound sterling for instance. Despite the impact this has on the IT services in 2009, the SAP services still presents opportunities particularly in the outsourcing space.

In addition, the Dutch government is focusing on open standards and open source initiatives, and as one of the few growing sectors in 2009, it is important for both SAP and its services partners to articulate a clear message and marketing campaign about the openness of SAP solutions. The Dutch SAP services market is expected to grow by 3.5% this year, according to latest PAC figures. The decline in consulting and systems integration activities will be offset by strong growth in application management and hosting.

PAC will be publishing its InBrief reports shortly, which provides an graphical/analytical overview of the SAP services market for key countries including the Netherlands. Also look out for "SAP in the Netherlands" profile to be published in the coming weeks!

A Little Humor for the Weekend: "Vendor-Client Relationships"

It's fair to say that since the recession started last year, pricing pressure in the SAP Services market (and the IT services industry overall!) has picked up a fair amount once again, as well as some SAP customers leveraging in-house IT staff more than before.

This also places even more importance on relationship managers at IT services suppliers, and their ability to properly manage client expectations as well as reaching the right balance of profitability and project value between the IT supplier and the customer.

Here's a very funny clip of real world situations of the vendor-client relationship from a friend of mine at Accenture... I hope it gives you a laugh going into the weekend!

Our 1 Year Blogaversary!

Today is officially the 1 year anniversary of the Feeding the SAP Ecosystem blog, and I just wanted to thank our thousands of viewers, customers, market contacts and PAC contributors (especially Jon Reed (PAC Fellow, USA), Rajeena Brar (PAC London), Tobias Ortwein & Klaus Holzhauser (PAC Munchen), Eric Menard (PAC Paris) and George Mironescu (PAC Bucharest)) for making this a big success! Despite the tough times, I have been glad to see our viewership to continue to grow in the high double-digits every month since we started out, along with PAC engaging with the cream-of-the-crop IT Services suppliers and large SAP users with our SAP Services Research Program!



As a special thank you, I would like to offer a free PAC country report from our upcoming "SAP Services InBrief" reports, which are due out in June. These reports offers a comprehensive view on the SAP Services in 20 countries covering:

• IT maturity and status
• SAP services market maturity and situation
• Local characteristics
• SAP’s local positioning
• Local and Global competitive situations

Email me your selection from the following list of country reports that PAC is producing with your name, title, company, and when the report is released, you'll receive your free copy:

Australia
Austria
Belgium
Brazil
Canada
China
Czech Republic
Denmark
Finland
France
Germany
Hungary
India
Italy
Japan
Mexico
Netherlands
Norway
Poland
Portugal
Romania
Russia
Slovakia
South Korea
Spain
Sweden
Switzerland
Taiwan
UK
USA

Sapphire '09 (Part II): The High Stakes of NetWeaver BPM

Since Peter Russo has done a nice job of hitting the high points of Sapphire 2009, I want to hone in on one of the less-reported stories of the show: the gradual emergence of NetWeaver BPM (often still referred to by its “code name” of Galaxy). Yes, SAP BusinessObjects took center stage at Sapphire; the press conference following Leo’s keynote felt more like a BusinessObjects Explorer demo than a press event, with little discussion of the guts of back-end data cleansing, save for one potent question on whether SAP is ready for prime time when it comes to Master Data Management. But with all the hubbub over BusinessObjects, BPM is still very much a part of SAP’s product strategy going forward. I think the stakes of BPM are actually rather high.

I was able to attend ASUG’s pre-conference seminar organized by Marilyn Pratt entitled "A BPX Guide to Business Suite Value Scenarios." While much of the day was geared towards making sense of SAP’s Value Scenarios, the day ended with some useful sessions from key BPM product and strategy leaders within SAP. I was able to continue those conversations over lunch later in the week. My goal? To understand how BPM fits into SAP’s value proposition it is pushing to customers. At the heart of that proposition lies the question: when do you go with standard SAP functionality and when do you customize to differentiate?

The answer to that question has changed dramatically in the last few years. While it would be going too far to say that altering SAP source code has been discredited as a winning approach to ERP, I would expect SAP to actively discourage this practice going forward – at least for customers on the ERP 6.0 platform. So what’s the alternative?

SAP has been tackling this on two fronts: first, SAP aims to provide a rich collection of pre-configured, industry-specific ERP content. SAP would say that “standard SAP” is no longer vanilla, but a tested collection of industry best practices which can be supplemented with “plug in” solutions from certified partners via that little-mentioned new marketplace known as EcoHub (yes, I was joking about the little-mentioned part).

The biggest change to core ERP content? SAP now envisions its pre-configured content in a process-driven context. In other words, instead of shipping an improved version of, say, CRM, SAP aims to ship, via enhancement packages, continual improvements to end-to-end processes, such as “order to cash,” which would impact the functionality in ERP, CRM and other areas. Trivia question: where will that business process content be stored and accessed? If you were able to catch the Bill McDermott/Jim Snabe keynote, you already know the answer: Solution Manager. When in doubt, the best answer to any SAP question these days is, “It’s in Solution Manager somewhere.”

So on the one hand, we have SAP providing business process “best practices” to its customers via Solution Manager. Whether they will be perceived as such, or welcomed out of the box, remains to be seen. In the longer view, these end-to-end processes will be presented as “Value Scenarios” that span from core ERP into SRM, CRM, and the like. SAP is thinking: no more functional silos, follow the process where it needs to go, and give the customers as much “plug and play” process content as possible. But the pressing question returns: “If all customers have access to the same business process content, then how do they differentiate?” SAP’s answer involves SOA, process modeling, and innovating around the small percentage of processes that directly relate to a company’s competitive advantage. Composing services on top of the suite therefore replaces custom coding as SAP’s recipe for competitive edge.

Perception problem: SOA has become somewhat of a clunky acronmym these days, implying tech-driven projects with scope creep issues. Enter BPM, which is both a philosophical approach to managing businesses through process monitoring, a tool to do this with (Solution Manager), and in the case of NetWeaver BPM, an actual application, now in general release, that allows SAP customers to visually model differentiating processes that can be integrated with existing SAP functionality. Unlike other process modeling tools, BPM generates executable, SAP-ready code. SAP would say that BPM would allow such processes to be “seamlessly integrated” – another proof point that customers will surely investigate for themselves.

For a product that went into general release right before Sapphire, BPM did not get a lot of fanfare at the conference. However, I see NetWeaver BPM as much more important to the future of SAP than the BusinessObjects Explorer tool that got all the demo time, but with this caveat: “only if it works.” I have no doubt that BPM basically functions properly. By “only if it works,” I mean “only if business users embrace the tool to model processes that integrate easily into the SAP core.” While we’re on the subject of user adoption, we should note that BPM is NOT part of the standard NetWeaver license but a premium pricing product.

The tool looks friendly enough, though some business users have told me they find the UI more like a techie composition tool than something they would plop down in front of an executive. The BPM team is conscious of this criticism, and they are working to pull NetWeaver BPM out of the NetWeaver Composition Environment (CE), though it will still be tightly integrated. What they are trying to do is to hide the complexities beneath a simple interface, rather than simplify the processes. It’s a worthy challenge.

During his presentation at the ASUG pre-conference session, Thomas Volmering, who is the Senior Product Manager for Business Process Management at SAP, previewed some very interesting NetWeaver BPM functionality. The most compelling? The long-term plan for complete integration with Solution Manager. This would be a powerful addition to the BPM tool: existing processes could be pulled in from Solution Manager, enhanced within BPM by adding additional services (either from the Enterprise Service Repository or built from scratch), and then integrated back into Solution Manager.

As I write this, it seems almost like science fiction (perhaps that’s why they called it “Galaxy”?), but if it works, it will be worth watching. BPM-Solution Manager integration is currently planned in two installments, with version 7.2 shipping towards the end of this year, and 7.3 sometime in 2010. The 7.2 version is currently envisioned as “read only Solution Manager content,” and the release dates are subject to change, but that gives some idea of the timeframe. (If you want to test-drive a preview version of NetWeaver BPM, Volmering has a useful blog on this topic.)

Of course, SAP would say that you should only focus on a small percentage of competitive processes with this “service composition” approach. The figure varies – during the McDermott/Snabe keynote, I heard the percentage “less than 10 percent.” Ann Rosenberg, BTC Global Practice Ownership for Business Process Management and co-author of the book Business Process Management: The SAP Roadmap, often says that of a company’s processes, twenty percent are automated, and of that twenty percent that are automated, twenty percent of those are typically key to competitive advantage and thus candidates for service composition. By my math, that amounts to six percent of the total.

The BPM team I talked with are a talented bunch. Between Rosenberg, Volmering, and their colleague Wolfgang Hilpert, that’s a pretty sharp team. But lest we assume that BPM is just a case of a few over-enthused product evangelists pushing their case, I would also refer you to a blogger session we had with Pascal Brosset, Chief Strategy Officer with SAP.

Pascal sketched SAP’s product strategy on the back of a program schedule; Vinnie Mirchandani later published the official version in his blog. You can see from the illustration on Vinnie’s page that BPM represents the cutting edge of SAP’s product vision. If you’re wondering where SAP currently sees cloud solutions fitting into this visual, it’s closer to the expanding circle of BPO (Business Process Outsourcing), with the "cloud" tackling on-demand processes in areas like HR and procurement (what SAP calls “standard but non-commodity processes”) and moving outward. BPM is far away from that core, in the area of custom innovation, albeit using as many reusable components as possible.

If SAP’s BPM approach works, it will help to justify the years of hype SAP has invested in SOA, allowing users to build competitive apps by “innovating on top of the core,” as opposed to the expensive and difficult path of custom development, which brings with it support and upgrade-related hassles. If the BPM/SOA approach doesn’t work, it will be back to the drawing board, though by then, we may all be lost in a different kind of hype, likely somewhere in the clouds.

Talking to the BPM team, it was clear to me that they realize the stakes of what they are up to. Though the spotlight isn't on them now, if they can pull this off, they will surely find themselves in front of a Sapphire press conference before too long, showing how business users can team with technical composers to alter business processes on the fly, with the transactional ERP system humming along, no interruptions. For now, they’ll be back in Walldorf, playing the high stakes game of trying to realize this vision!

Sapphire '09: PAC Wrap-up

I've had the chance to attend most of the other significant application vendor events this year, and so far attendance, and more importantly, "vibe" has been pretty depressed... And actually I would say that while the mood was very low key, and at most gatherings (sans Don Henley) the population was scant. In comparison, Sapphire was maybe more active than others, even if it was much different from Sapphire 2007 or 2006 (2008 was kind of quiet too...).

This reflects SAP's recent results, as well as what we are hearing currently from SAP users and IT services suppliers. The cream of the market (Fortune 500) are still moving forward with projects, however they tend to be smaller and incremental for the most part, in order to keep moving forward with strategic goals but balance risks. While below this level, SAP projects are a lot shakier and most probably on hold. I also noticed this when speaking to various IT services suppliers available on the expo floor at Sapphire. The leading suppliers reported anywhere from high single-digit growth to low single-digit or flat... while the suppliers serving the upper mid-market, or those who have a larger exposure to the sub-contracting business are seeing -15%, -20% or even less! This correlates with PAC's new market forecasts, in particular in the U.S. where we are forecasting a -6% decline in the SAP SI market.

On the product side, Leo Apotheker kicked off the show on Tuesday, and as such took the first step as becoming the face of SAP for years to come (he is still co-CEO until the end of the month until Henning Kagermann formerly retires). Leo placed a focus on clarity, accountability and sustainability. Clarity has been a focus for SAP for a year now as the Business Objects acquisition has become a real part of the business, and Leo drew a few lessons learned from the economic crisis and how better visibility into data can help clients survive and thrive. As usual, Ian Kimball did his best "Billy Mays" up on stage and helped to demo BO Explorer and from the crowd reaction, I believe interest is really started to grow on this segment as expected in our recent report on the subject.

While clarity (which replaced "enterprise visibility" last year as one of the usual buzz words) as well as accountability (GRC, etc...) have been covered many times before, the issue of sustainability was never as front and center in an SAP keynote, and as I've commented before on this blog, this is not simple "green-washing" from SAP, but something much more concrete, covering its own activities, its solutions for customers and on-going leadership to help set direction and standards for a customer base that emits a sixth of the worlds CO2, with Peter Graf serving as one of the industries few Chief Sustainability Officers. Similar to BusinessObjects, this is also a solution area where SAP is delivering products today that in many cases tend to have a short-term impact, not only in a moral way but also for the bottom line, through better compliance and measurement of energy use throughout organizations. With Leo's smile/smirk I wasn't very sure if he was delivering a plug or a jab to Shai Agassi when speaking of sustainability, when he commented, "... and we don't have to wait for Better Places..." but it nonetheless made me laugh. Anyone else catch this??

This brings me to my final thought on the event. Given the current economy coupled with many customers issues surrounding pricing, I came into the event wondering if SAP would be able to patch things up? My feeling so far is that the revamped program for enterprise support has gone a long way to help improve things. Customers are still cautious since they would like to see what the SUGEN report in September will show. Will they start to realize some benefits? But for the time being, I think it will have a positive effect akin to "Applications Unlimited," when... let's remember, former PeopleSoft and JD Edwards customers were screaming like mad at Oracle and in many cases suing them! Credit has to be given to SAP that they've outlined very publicly what type of value they will try to achieve for their customers and over what time frame; something that is leading the market (at least on paper for now...). Having this pricing/maintenance hurdle removed (or at least lowered) towards the second half of this year may also go a long way to move customers forward with many of SAP's new products.

There's also a whole lot going on with the SAP Ecosystem... check back next week for a few posts on this and other Sapphire subjects!

Making Sense of SAP BusinessObjects Reporting Options – Two Views from the Field

Recently I served as the lead analyst on a “PAC on SAP” report entitled “Opportunities around BusinessObjects Services.” (Here’s a link to a webinar replay where Peter Russo and I review the highlights from the report. If you’re not registered with PAC, you can do so from the same link and obtain a free copy of the webinar).

We gathered a lot of interesting market data for this report, not all of which we could print in full. One high point of my research - the conversations I had with SAP BI services experts Peter Scott and Arthur “Pat” Pesa. Both of them had some useful insights into the SAP BusinessObjects reporting products (Xcelsius, Webi, Crystal Reports, and Voyager) that are now getting a close evaluation by the SAP user base.

In this blog entry, I’ll share quotes from Peter and Pat on all four of these reporting products. Peter is the Managing Partner of Traxion Consulting, and Pat is a Chief Architect – DW/BI Solution Delivery. Both are trusted sources with deep experience in SAP’s Business Warehouse that I turn to when I want a fair evaluation of the trends in the SAP BI services market.

So, what follows is their comments on each of these products in turn. At the end, I’ll close with a few thoughts of my own.

Xcelsius

“There has been some real interest and consequent work that has grown around the new version of Xcelsius 2008. In terms of dashboard development and presentation work, Xcelsius seems to have been chosen by several large companies as the platform of choice for graphical display of BI analytic information that resides within Excel. It is also seen in conjunction with Crystal Reports and has established a foothold in customers where Excel and Crystal Reports has been the standard reporting framework.” – Pat Pesa

“I think Xcelsius is a really great visualization tool that existing SAP customers should look at first. It fills a gap in the BEx portfolio and it provides a “wow” factor to end users that promotes usage and adoption. Its ease of use also makes it simple for users to
become proficient with. There are a few different options for IT to read up
on - Xcelsius Engage, Xcelsius Engage Server or Crystal Reports Visual Advantage.” – Peter Scott


Web Intelligence (Webi)

“I have not seen any real interest in Web Intelligence recently. I feel that the current WAD environment, combined with BO/Crystal-Xcelsius, has brought an entirely new reporting environment into the picture. This means that companies have to begin to understand what is out there, and more importantly, how to effectively develop and deploy what will be in their best interest. There does seem to be some movement towards
integrating Webi with Xcelsius and BO in general, but I have not seen any real work in these areas.” – Pat Pesa

“Webi is an adhoc web browser reporting environment and it’s popular with traditional BO customers. It does have some easy integration features, such as incorporating plan data from Excel. However, SAP customers have their own version of this called BEx Web which can play the part for this area of reporting. It comes down to individual preference on which tool someone will favor. Short Answer: Keep the one you've already deployed and are comfortable with.” – Peter Scott


Crystal Reports

“Crystal Reports has been a leader within the BI space for years and has been bolstered by its inclusion into the SAP BI/BO suite of tools, further justifying its position within the SAP NetWeaver space. Currently there has been renewed interest in Crystal and Xcelsius as a combination reporting and development environment for graphical and non-graphical reporting and BI Analytics. Having a single development environment that gives the customers a single place to develop, deploy and manage BI analytics is central to mainstream adoption, and Crystal seems to have done just that.” – Pat Pesa

“Again, like Xcelsius, Crystal Reports seems like an obvious starting point for SAP customers to focus in on. Designing and generating formatted reports from a wide range of data sources is an easy assignment for this tool. The BEx Report Designer was added to the BEx suite to handle this need, however because it's new, it lacks many capabilities needed to compete with the incumbent champion in this formatted reporting category.” – Peter Scott

Voyager

“While SAP BO has done a great job developing and integrating a great tool set for reporting, I have not seen a real push towards Voyager as yet. I think the SAP customer base is just getting their arms around the new non-Excel Web-based reporting front in NetWeaver and will need some time to digest just how to incorporate what is needed within an organization.” – Pat Pesa

“There is an interesting roadmap for this product, as it’s going to be rubbed up with the BEx Web Analyzer and BEx Excel Analyzer into a new tool called Pioneer. It should provide a superset of capabilities which makes it interesting for OLAP analysis. Too early to get excited about in practical terms, so I’d put it on my calendar for 2010 and use the tools that I’ve already invested in as an SAP customer.” – Peter Scott

The sum of the research I did on this report convinced me that for most SAP users, the biggest questions on ramping up BusinessObjects products had less to do with functionality and more to do with pricing and roadmap compatibility. Most SAP users are evaluating each of these reporting products individually, which is why I found it helpful to get different takes on each one from experts like Peter and Pat who acquire their knowledge in the field.

For the most part, their observations gelled with my own research, though I did hear from others who would have ranked Webi a bit higher in the pecking order of “products to look at now.” Of the four products discussed here, clearly all are on the table for consideration except Voyager, which is not likely to make much headway in the SAP market until the plans for the combined BEx/Voyager product, currently called Pioneer, become clearer.

Of course, reporting products are only one piece of the combined SAP BO product offering. For a broader view of the research, I’d suggest checking out the webinar or the full report.