SAP: Technical VirtuosoBy John McCormick Print
Dossier: SAP may not be perfect but this $6.4 billion seller of complex software to large corporations can put its money where its mouth is.
SAP is a relentless $6.4 billion seller of complex software to large corporations.
The company excels in one of the most technically demanding areas—enterprise resource planning (ERP) software. Its products, particularly its ERP package known as R/3, are among the smartest pieces of software designed for large corporations. The company's service offerings are solid. And, even though it was slow to adapt its enterprise software to the Web a few years ago, SAP generally senses market directions well and serves up new technologies and products when customers need them.
If customers find any fault with the company, it's that SAP doesn't always deliver the sort of clear product roadmap that customers ask for. Some CIOs, who need exact details about current products and specific knowledge about future upgrades, say that can create problems.
Don Kosanka of Owens Corning is one CIO who—although generally very happy with SAP—wishes the company was better "at giving us good, solid open advice on the capabilities of the newer products. I want to make sure we're making good decisions on when to deploy things based on the real capabilities of the tool," he says.
This issue was seconded by Doug Bates, a manager at Symbol Technologies, which makes bar codes and handheld computers. Symbol is trying to decide whether to upgrade to the current release of R/3, which is stable, or wait for a newer release, richer in features, to come out later this year. But Bates says he can't get enough detail to make his decision.
"We're having difficulty getting information out of them," Bates told Baseline a month after he said he'd made a request of his account executive.
While SAP has generally performed well during the economic downturn, it has been hit of late; overall revenue growth slowed to 7% in the most recent quarter. But SAP expects revenue growth for all of 2002 to return to 15%, which would give the company revenues of nearly $7.5 billion this year. SAP's offerings in some of the hotter markets, such as customer relation- ship management and supply chain management, now account for almost half of its revenue from software licenses. MySAP CRM accounted for 19% of software licenses in the fourth quarter; mySAP SCM accounted for 23%.
"What contributes to this is the amount of money SAP continues to invest in R&D on an annual basis"—nearly $800 million in 2001, says senior vice president Geraldine McBride. "We continue to bring new products to market every year."
In the end, SAP's products do a lot of talking for the company. Against competitive offerings, says Andrew Kindfuller, vice president of Global eBusiness at $1.8 billion International Flavors and Fragrances, "I just think they're technically superior."
SAP AG / Neurottstrasse 16, 69190 Walldorf, Germany 49-6227-74-7474
U.S.: (610) 661-1000 / www.sap.com
CEO, Co-chairman and Co-founder
An electrical engineer, Plattner founded SAP in 1972 with four other IBM co-workers.
SAP's CRM offering, mySAP Customer Relationship Management, has applications for customer engagement, including marketing; business transactions, including field sales and order acquisitions,; order fulfillment, including analytics; and customer services, including help desk and e-services.
Oracle, PeopleSoft and Siebel
VP, Finance and Administration
Project: The maker of high-end stereo and audio equipment runs its operations, with the exception of human resources, on the R/3 ERP suite.
Project: Owens Corning has a full suite of SAP products, including enterprise resource planning, and supply chain and customer relationship applications.
International Flavors and Fragrances
VP, Global E-Business
Project: The $1.8 billion dollar distributor of flavors and fragrances to the packaged goods industry implemented a global SAP enterprise resource planning system in 1998. It installed mySAP. com in 2000, and is now using SAP software to allow key customers to directly connect to IFF's internal ERP system.
Senior director of technical services in corporate IS
Director of planning and operations for corporate IS
Project: Symbol is managing its operations with an SAP R/3 enterprise resource planning suite.
Project: The company, which makes water transmission pipes for municipalities, is using R/3 to manage operations.
Business analyst, co-project manager on CRM
Project: The manufacturer of faxes and printers has deployed SAP's ERP systems and CRM applications. The executives listed here are all SAP customers. Their willingness to talk has been confirmed by Baseline.
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