There is currently a lot of positive buzz about the next iteration of SAP’s Business ByDesign, an Saas offering (or, not really: http://blogs.zdnet.com/Howlett/?p=999) targeted at small clients like those of Salesforce.com, Workday, and others.
While the initial version of BBD resulted in a general market shrug, my impression is that SAP will, in time, come up with a creditable offering. They usually make good on R&D promises, though they often take a very long time to do so (APO, CRM, nearly every element of NetWeaver). Once the software is robust, one might assume, BBD will make its way successfully into the marketplace because “it works”.
I have my doubts. SAP, as an organization, has very little understanding of small or medium enterprises and has a spotty record of supporting firms in these markets. This isn’t only my observation. It is SAP history.
1. SAP believes that the smaller the firm the less complex the operations
In 1995, I began working in the world of SAP and my first impression was that it was intended for very large organizations. This impression was driven by a high volume of press about mega-projects such as Hershey, Georgia Pacific, Proctor and Gamble, et al.
I soon got wind of a “Heidelberg Project” (AKA SAP-Lite) that was apparently underway and was intended to service small and mid-sized firms. We never saw evidence of a successful conclusion to this project and over the next seven or eight years SAP continued to trot out SME solutions that had two common elements: 1) the offering was a chopped-down version of R/3 and 2) abject failure in the marketplace.
The thinking at the strategic levels of SAP has persistently been hamstrung by the belief that the smaller a client organization the simpler it is to run. Anyone who has ever implemented SAP software in firms of $50M to $300M knows that truth runs in the other direction. Volume does not necessarily result in complexity. Flatter organizations (those with fewer layers of management) are not necessarily simpler.
While very large clients have a division or department for everything under the sun, SME staff is most often populated by “hyphenates”, staff with multiple roles. Someone in sales also heads up marketing. A factory foreman also supervises distribution. SME’s often have no one for a given function for which a VLE will have dozens to hundreds (quality control, research, …).
Note to SAP: What I am addressing here is software deployment and operation and should not be confused with the level of difficulty of software implementation, which we all know is vastly more complex for VLEs.
The problem of scaled down software has at least been rectified as the All-in-One (A1) offering includes all the features and functionality of basic SAP enterprise software since in essence, All-in-One is simply a marketing term. It is the same software licensed by Fortune 100 firms.
What has not been rectified is SAP’s view of how clients in the SME should be enticed, how implementations should occur, and how installed base clients should be supported.
2. SAP SME staff usually knows less about the market space than does its alliance partners
SAP not only has roadmaps for its clients but also for its alliance partners in the services arena. Second tier and boutique SAP systems integration firms are regularly pressured to follow the official SAP roadmap (or playbook) for software sales and implementations. Often these playbooks emanate from Walldorf and while some of the practices included therein may work well anywhere, others more clearly address the German market than the North American market.
Messaging and marketing to this market have vastly improved in recent years and SAP provides a number of websites (e.g. PartnerEdge) with a vast store of tools, templates, case studies, and the like.
However, many of the practices are flat out wrong for the SME market. Value Engineering is too heavy for most small clients in both conception and practice. Others are flat out wrong, like a template implementation plan pawned off on systems integrators with vertical solutions that gives the impression that any implementation will be done in nine weeks at a cost of $500,000. Besides the one price fits all idiocy, what’s really cool in this template is that various module consultants are planned for two days a week. If projects are done at the client site, doesn’t this strike SAP as travel-heavy?
Further, alliance partners are required to invest in semi-constant teleconferences, site conferences, and the like in order to get training (according to these same playbooks) and to demonstrate their adherence to SAP SME standards.
3. SAP SME account management is chaotic.
Even more frustrating for alliance partners in this market is that the SAP SME cast and crew are reorganized at least every six months, resulting in helter-skelter musical chairs that requires brand new relationship networks and an enormous cost in time.
I recently spent a few years working with an SAP SME systems integration firm. In the first year, I worked with 23 different SAP people (sales, partner support, marketing, etc.). By the end of that year, fifteen of these people were either transferred or fired and the other eight held new positions. The second year was no less chaotic. I have stopped taking business cards from SAP people in the SME.
4. The answer to every knotty problem is more software.
The common dream in Walldorf is that clients can simply buy the software and that no services would ever be required. That is why, from Solution Manager to Fast Start, SAP continues to provide “solutions” in the form of software. Hey, that’s their business, right? Wrong.
Software is not an answer to a business question. It is a variable in an algorithm that can lead to an answer. SAP claims to provide business solutions but without a proper perspective regarding the services needed what you get is a pier and not a bridge.
5. SAP competes with its alliance partners.
In 2000, there were more than 200 SAP systems integration practices in North America with a healthy eco-system of majors (IBM, Accenture, Deloitte, CapGemini, Bearing Point, CSC), second tier, and boutiques. At the time, SAP Consulting had around 5,000 consultants worldwide. It has since grown to more than 25,000 while the number of other SAP systems integration practices has dwindled to the level of mere dozens and only IBM, Accenture, and (to a lesser degree) Deloitte remain major SAP players (CSC is mostly in the DoD and public sector).
While SAP claims that it does not compete with its alliance partners, SAP Consulting is, de facto, on any short list and, despite the highest hourly rates in the universe, it wins a healthy share of clients.
There is a brief chapter in The New SAP Blue Book called “Yes, You Can: SAP for Small & Medium Sized Enterprises” in which I counter many of the myths about SAP for this market. It is a sunny-side up point of view that I am determined to update in the next printing. Given the chronic lack of commitment or intelligence emanating from SAP for the SME, the chapter may have to be retitled “Yes, You Can (But You Might Not)”.