November 25, 2009

SAP 'not delivering on innovation' user group conference told

Oh, yes we are, claims ERP giant's new UK MD

By Computerworlduk.com reporter

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SAP has consistently failed to deliver the innovation its customers need and pay for.

That was the blunt message of Ray Wang, enterprise strategy partner at analyst house Altimeter, to the UK and Ireland SAP User Group conference in Manchester this week.

Wang listed a series of SAP "failures," highlighted the fact that many leading SAP customers are looking for software as a service alternatives to SAP, and suggested ways end users could free the funds to make the most of their enterprise systems.

SAP invests a significant proportion of its income on research and development, said Wang, yet achieves poor return on its investment.

The German ERP giant invested 1.6 billion Euros in R&D last year - some 19.4% of revenues, yet it has been consistently late on product delivery and is promising no new innovations until 2014, according to Wang. Oracle, SAP's bitter rival, in contrast only invested 13.7% of revenues in R&D.

Wang highlighted "Five big failures in five years amidst legal battles and poor adoption of new products and functionaility". Among SAP failures, according to Wang are:

• Netweaver
• Duet
• BusinessbyDesign
• Solution manager
• Enterprise support

He went on to say that at the minimum SAP needs to deliver on past promises.

An Altimeter survey of 73 global SAP customers revealed a list of key priorities:

• Reduce cost of ownership and complexity
• Address integration with existing investments
• Complete original and promised product road map
• Reduce cost of maintenance or show value
• Renewed focus on innovation (e.g. Web 2.0 and SaaS)

Wang urged SAP to unlock the considerable amount of innovation which exists within the company, but which is often kept hidden from end users because of internal company politics.

He also urged end users to get involved with the SAP use group to get effective input into SAP's future product roadmap. He urged IT managers at the event to use SaaS solutions to fill any gaps they needed and to fund innovation with systems optimisation.

Responding, Tim Noble, who became managing director for SAP UK and Ireland, in June said, “SAP has a strong focus on innovation as a company, as well as co-innovation with both partners and customers alike. We have a clear roadmap until 2012 that has been announced publicly, and we will have more announcements next year as we stated at the time of our Q3 earnings.

“Putting the customer at the heart of our organisation is our main objective and listening to their innovation needs, as well as better communicating our plans is critical to our plan now and moving into 2010.”

Talking to ComputerworldUK from the conference, SAP UK and Ireland User Group Chairman Alan Bowling also focused in on innovation.

"We've seen good collaboration with SAP this year, but as always would welcome the opportunity for more. Innovation is an area we'd love to get involved in. As users we could play a big role in helping them decide which innovations come out of the lab and are taken to market.

"It would be great to get better visibility of what's going on in the labs and help SAP more with the direction of its R&D efforts.

He was also less critical than Wang over some of SAP's recent product difficulties. "SAP has admitted they didn't get it right with the first iteration of BusinessByDesign, but what they are doing now is really interesting," said Bowling.

"The hybrid approach where you can have some of your processes in the cloud and others still within the business is very innovative. For business that don't want to put their business critical processes in the cloud as they see it as too risky this could really work, as they can keep those in house and put less critical processes in the cloud."

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