CW+ a whitepaper from ComputerWeekly SAP sees web, mobile and analytics as future of ERP By Arif Mohamed Enterprise resource leader, SAP founded in 1972, is facing the slow death of traditional on-premise ERP. Customers with shrinking IT budgets are opting to outsource more of their core business systems. Meanwhile, web companies are offering to run business processes and applica- tions such as customer relationship management (CRM), human resources (HR) and business intelligence (BI) over the internet. Once the kingpin of monolithic supply chain installations, SAP now faces competition from all sides. It comes from arch-rivals like Oracle and IBM to web pure-plays offering on-de- mand computing for a massive range of business applications. SAP’s answer is to embrace cloud Software-as-a-Service (SaaS) and offer new BI and At a glance guide to SAP mobile computing technology. It is striving to improve the usability of its software and to listen harder to its customers. As part of its fight-back, SAP has overhauled its executive German business software firm SAP was team, made two big strategic acquisitions, and focused once more on its massive installed founded in 1972 by five ex-IBM employees. base of more than 100,000 customers. From the outset, the company had a vision to create business software that would help During 2009, it shed 3,000 jobs across the business, and reported an 8% drop in revenues companies to run their operations more in 2009, compared with 2008. efficiently. SAP saw its fortunes take off with the mass adoption firstly of mainframe With its fortunes inextricably linked to the performance of the application software market, computing, then client-server, and more SAP had little choice but to suffer with all the other application suppliers as IT users tight- recently web-based computing. ened their belts. Overall, its software product revenue, excluding professional services, declined by just under 7%, compared with a decline of 1.2% for the software industry as a It managed to attract big-name companies whole between Q3 2010 and Q3 2009. early on, particularly to its ERP suites SAP R/2 and R/3, and quickly expanded its user base “We had a very difficult 2008 tail-end and 2009,” says Tim Noble, SAP UK managing beyond Germany. Its users have included the director. “But, as far as this year, 2010, is concerned, all regions are growing. We are likes of Coca-Cola and Cadbury Schweppes, continuing to show double-digit growth in software, and in the UK we have continued to but leading companies in all industries use, or show very strong performance.” have used SAP’s software as part of their operations. The UK continues to be the fastest growing major market globally for SAP, with a 38% year-on-year growth for Q3 2010. Over time, SAP has expanded beyond ERP into CRM, SCM, HR and finance, and many Gartner research VP John Rizzuto says, “There is no denying that, in 2009, SAP had a other niche areas of enterprise and industry- difficult year when it came to revenue growth. However, it was able to focus on many specific operations. operational aspects of its business to maintain and, in some instances, improve its financial position.” The company has faced criticism over software usability, the lengthy time and cost of But it ended the year with an improved financial performance and a coherent growth implementations, software management strategy. Its third quarter 2010 revenues were just over €3bn, compared with €2.5bn in Q3 complexity, and customer relations. However, the previous year, with an operating profit up €716m from €619m for the same period the it is currently raising its game in these areas by previous year. Although the results were slightly lower than analysts had predicted, SAP overhauling user interfaces, introducing breathed a sigh of relief at having survived a difficult year and a half mobile and web-based application deploy- ment, and working closely with its user During 2010, SAP made about 45% in revenues from its ERP suite of applications and groups. services, 18% from BI, 16% from CRM and 11% from supply chain management (SCM). The remaining 10% of its revenues came from other application software and services. SAP has grown to become Europe’s biggest software firm, and one of the top enterprise SAP’s biggest two rivals are IBM and Oracle. The latter now owns several of the other big technology firms, competing against other ERP/CRM players including PeopleSoft, Siebel and JD Edwards. However, in the past three giants such as IBM, Oracle, Microsoft and HP. years, SAP has made several strategic acquisitions of its own. Among these was the In Q2 2010, it announced its landmark purchase of BusinessObjects in 2007, giving SAP new BI capabilities. The second was of 100,000th customer, with revenues exceed- database and BI giant Sybase in July 2010. This will give SAP users the ability to access, ing €3bn in Q3 2010. manage and analyse information on mobile devices. CW+ SAP Beyond ERP SAP’s strategy is to build on its core SAP Business Suite, a modular system that it sells Key facts across a spectrum of industries. It includes core business applications such as ERP, CRM, SCM, supplier relationship management (SRM), and product life-cycle management (PLM). • 2009 full-year Non-GAAP revenues €10.7bn, with €2.9bn operating income. On top of this infrastructure, SAP offers SAP Crystal Solutions, a family of integrated • Specialisms: ERP, BI, CRM, SCM reporting, dashboards and presentation tools, and the SAP BusinessObjects portfolio of BI • Employees: 52,921 employees in 50 applications. countries, including more than 800 UK-based staff. The SAP software suite is modular and uses service oriented architecture (SOA). This allows • Customers: 100,000 in 120 countries. it to interoperate with products from other suppliers. SAP’s applications use a middleware • History: founded in 1972 by five former IBM platform called Netweaver which unites and ‘orchestrates’ the software stack. employees, SAP is headquartered in Walldorf, Germany, and has grown to become Europe’s This SOA approach has enabled SAP customers to implement ERP and other enterprise largest software firm, and a world leader in systems much faster than was previously possible in the days of SAP R/2 and R/3, the enterprise applications and support. former ERP platforms. These sometimes took years to set up and hone, whereas today’s implementations can sometimes be completed in a matter of months. Phil Cook, general manager IS at RS Components, which is a SAP user, says that SAP sells Products a “solid traditional product offering, providing robust, scalable applications offering strong integration within the SAP product suite”. • SAP Business Suite Core applications: SAP CRM, SAP ERP, SAP SAP has a coherent technology strategy, he says, offering its technology on-premise, via the PLM, SAP SCM & SAP SRM cloud, and on mobile devices, and its software performs well in high-volume, high-perfor- Also includes: SAP solutions for sustainability, mance environments. Duet, Alloy, SAP xApps Composite Applications SAP’s two strategic acquisitions of Sybase and BusinessObjects have strengthened the SAP xApp Analytics, SAP xApps for Mobile company’s product offering, and helped it to expand into areas where it was previously Business weak. • Business Solutions “There is recognition of the need to move from the pure efficiency drivers of the past to SAP BusinessObjects BI platform providing the intelligence that allows organisations to understand changing customer SAP BusinessObjects GRC solutions demand. SAP also recognises the need to support the agility of business processes to allow SAP BusinessObjects EPM solutions organisations to respond to that changing demand,” says Cook. Service and Asset Management In-memory, on-device, on-demand • SAP solutions for SMBs The acquisitions have enabled the supplier to pursue its threefold product delivery strategy, SAP Business All-in-One making technology available on-premise, on-demand and on-device. SAP Business By Design SAP Business One SAP’s BI and analytics strategy is enhancing core applications such as CRM and HR, says SAP BusinessObjects portfolio Noble. “The strategy is to ensure that businesses can make their best informed decisions by SAP Crystal solutions providing the analytics for core systems.” SAP’s forthcoming High-Performance Analytic Appliance (HANA) technology, which uses the SAP Business Analytic Engine, is an important piece of the analytics picture. This appliance will provide in-memory data management (which SAP calls NewDB), query and calculation acceleration, as well as a multidimensional modelling environment, without impacting existing applications or systems. Noble says it will be useful, for example, in large retail organisations trying to analyse large amounts of transactional, mission-critical data. One beneficiary might be a supermarket that Top five ERP suppliers by produces many different consumer products and needs real-time analytics for its stores and ERP software revenue distribution operations. 20 The benefit of HANA over other server technologies is that databases held in-memory can 15 be accessed an order of magnitude faster than server/disc-based data. But Hannah will really start to show its power when used to interrogate ERP transactions and for business 10 online transactional processing (OLTP), say analysts. $bn SAP announced it will partner with hardware partners HP and IBM to produce HANA, which 5 will be trialled by 20 pilot customers in December 2010 at its Sapphire 2010 user confer- ence. 0 SAP Oracle Sage Infor Microsoft “Current SAP BW [business warehouse] customers should evaluate it, as it will be central to Source: 2008 financial reports CW+ SAP SAP’s BI and data warehousing strategy,” says Gartner research director Thomas Otter.