SAP: Late Bloomer

By Baselinemag  |  Posted 2005-11-08 Print this article Print

SAP was second fiddle for years in CRM, but customers say it's tuned up its software and now plays as well as any competitor.

SAP's tortoise finally caught up with the CRM hares. After lagging competitors—chiefly, Siebel Systems—for years, customers say SAP has now virtually drawn even on features. The one thing that has kept it in the race: integration with its flagship enterprise resource planning system.

In 2001, Molex, a maker of electrical connectors, needed a way to track potential deals to get a better read on revenue forecasts, says CIO Gary Matula. It considered Siebel's customer relationship management system. At the time, "SAP was well behind the curve in their development of CRM," he says. But the cost to integrate Siebel with Molex' existing SAP system would have been significant. Plus, Matula points out, "We would have had to build a whole new set of technical skills around Siebel."

Matula opted for SAP's CRM offering after the company convinced him that "SAP was in it for the long haul." Today, he's satisfied SAP has delivered what it promised: "We've seen a steady stream of improvement." For example, he says, it's now easier to set up workflows in the system (such as routing a sales prospect based on preset criteria).

For Varian Medical Systems, SAP came through just in time. In mid-2004, the medical device maker was looking for software to let service representatives track customer feedback about its products. "We'd found many things lacking in SAP's offering," says Satish Subramanian, Varian's manager of information systems. Some in the company were pushing for Siebel.

Then in October 2004, SAP released a service-industry CRM module that added many things Varian wanted, including the ability to categorize calls and handle inbound e-mail inquiries. The key advantage for Varian, as with Molex, was that the software plugged directly into the SAP enterprise resource planning system. "We didn't need any consultants to get this going," Subramanian says. "We know SAP inside and out."

Similarly, technology recruiting firm Yoh Services picked SAP's customer relationship management software because the company already had invested in SAP for back-office functions, including human resources. Plus, SAP's familiar interface helped recruiters learn the CRM system more quickly, says Jim Lanzalotto, vice president of strategy and marketing.

"We think SAP's CRM technology is as good as anyone else's on the market," Lanzalotto says. "I don't see anything that's deficient." In other words, SAP seems to have finally turned the CRM corner.

Customer Relationship Management

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Pat Bakey
Senior VP, North American CRM Business Unit
Before joining SAP in July 2004, he led Siebel Systems' federal sales team. Prior to that, he headed sales at ContentGuard, a digital-rights management software vendor.

Darc Dencker-Rasmussen
Senior VP, CRM Solution Management
Coordinates customer relationship management activities across regions.

The mySAP CRM 2005 software suite provides customer-contact and sales analysis features, including account management, lead and opportunity management, marketing-campaign management, and customer service and support tools.
Reference Checks

Gary Matula
(630) 969-4550
Project: About 1,500 employees at the electrical connector manufacturer use SAP CRM for customer contact management, analysis and call center support.

Arctic Cat
Ron Moses
Senior Project Manager
Project: Snowmobile maker in Thief River Falls, Minn., uses SAP CRM to let 130 employees in its support center handle inquiries and orders from 1,600 dealers worldwide.

Yoh Services
Jim Lanzalotto
VP, Strategy and Marketing
Project: Recruiting firm, a subsidiary of government contractor Day & Zimmermann, tracks prospects using SAP CRM software.

Varian Medical Systems
Satish Subramanian
Mgr., IS
Project: Maker of medical systems uses SAP software for service and support agents to track and resolve customers' product issues.

Avid Technology
Chad Wright
IS Applications Manager
Project: Video-editing system vendor uses SAP CRM to follow up on 1,000 leads per day from its Web sites, trade shows and other sources.

Pioneer Electronics
Michael Wang
Senior Mgr., Supply Chain Systems
Project: Consumer electronics maker gives its 100 salespeople access via SAP to information about customers in a portal view.

Executives listed here are all users of SAP's products. Their willingness to talk has been confirmed by Baseline.

2005FYTD 2004FY 2003FY
Revenue $6.94B $10.25B $8.85B
Gross margin 64.9% 65.6% 63.9%
Operating income $1.63B $2.75B $2.17B
Net income $1.06B $1.79B $1.36B
Net margin 15.2% 17.4% 15.3%
Earnings per share $3.41 $5.73 $4.36
R&D expenditure $1.02B $1.39B $1.25B

* Fiscal year ends Dec. 31; YTD reflects first nine months; Figures based on period-end exchange rates from euros to dollars

Total assets $9.72B Stockholders' equity $6.18B Cash and equivalents† $3.78B
Long-term debt None
Shares outstanding 309.79M
Market value, 10/28 $52.96B
** AS OF SEPT. 31, 2005, EXCEPT AS NOTED † includes short-term investments


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