19 June 2003 SAP CEO Henning Kagermann has warned that organisations deploying enterprise application integration (EAI) software to integrate disparate enterprise applications are only putting off much-needed consolidation of their systems and applications.
“What you have created [in implementing EAI] is another layer of complexity,” said Kagermann in a key note speech at Sapphire 2003, the annual SAP user conference in Orlando, Florida.
Instead, organisations ought to consolidate around a single “ERP platform”, he said, so that they can reduce the amount they spend on keeping systems up-and-running and to enable them to spend more money on potentially innovative new projects.
“Consolidation has no business value. It’s just that you clean up the mess made in the past,” said Kagermann.
Key among the innovative new projects many companies should consider, says SAP, is radio frequency identification (RFID) technology, a low-cost way of radio tagging products that is expected to supercede bar-coding.
SAP is working with fast moving consumer goods (FMCG) maker Procter &Gamble to integrate RFID into SAP’s software so that P&G can improve the efficiency and responsiveness of its supply chain.
This mirrors the way that MySAP CRM 4.0, which will be formally released next week, has been developed — with industry-specific packages put together in partnership with customers in particular industries.
MySAP CRM 4.0 is being implemented in some 200 partner companies at the moment and will be made fully available to the rest of the market from November 2003.
However, in an interview, Kagermann admitted that up to one-third of the companies that have bought MySAP CRM software licences from SAP probably had not even touched the software — confirming similar claims from Tom Siebel, CEO of rival Siebel Systems.
“About one-third of customers that say they are using MySAP CRM probably aren’t,” admitted Kagermann, but he added that the same could probably be said of Siebel.
SAP is trying to consolidate its market leading position in the enterprise resource planning (ERP) suite market in a number of ways. First, it has released Business One, an integrated application suite aimed at small and medium-sized business, which includes financial software with elements of order management and CRM. This is aimed at organisations of just three employees and upwards.
In the mid-market, SAP has gone global with its MySAP All-in-One suite, an integrated set of applications aimed at organisations with a turnover of between $250 million and $1 billion.
Finally, the company is encouraging the development of an eco-system of independent software vendors that can extend the capabilities of its core software and customise it for specific niche markets.
The idea is that such partners will be better able to target various niche markets than a monolith like SAP. It also only has a limited number of research and development dollars and such a program will make the company better able to service a wider range of markets.
The plan should also help SAP to better combat competition from Microsoft Great Plains, a competitive threat that Kagermann takes very seriously indeed. “Microsoft is always a credible player whatever they do,” he said.
Crib Sheet: RFID (January 2003)