Who exactly are you calling a laggard?

In recent post (s) on ZDNET, amongst other things, Dennis Howlett has another go at SAP for being too conservative, brittle, wedded to the past, and so on. I disagree with him, but he is entitled to his own opinions. 

I might be mellowing; but If I commented on everything on the ZDNET blogs written about SAP and ERP that I disagree with, I wouldn’t get any day job done, talk to customers, or see my family. 

However, this statement….

…It may satisfy in the short term and absolutely plays to the laggard businesses to which SAP must be selling.

Made me fume. Calling our customers laggards is low, shallow and simply plain wrong. It is also downright rude.

 

IMG_0525

 (photo thanks to David Terrar’s Sapphire Flickr stream)

 So Dennis,  41,000 laggards? 

Customers trust us to help run their businesses. They don’t want us to experiment with their invoicing, supply chains, customer data, core banking systems and inventory systems. They don’t want us to jump from fad to fad.  If we let something new loose on 41,000 customers it had better work. This is a huge responsibility. To knock engineering is to fundamentally fail to understand the business that we are in. Our customers demand consistency, reliability and innovation. Learning from the best companies in the world is a serious competitive advantage, it is also damn hard. Sometimes we get it wrong.

When we ship product, it isn’t an experiment.  Perpetual beta is not a good model for payroll or availibility to promise. Businesses stop working when this stuff fails, as is often and rightly pointed out.  

We need to balance this operational reality with the need to innovate for the future. This is what Dan Farber missed when he talked to Denis Browne about the imagineering team. With a big chunk of the world’s economy running SAP software, healthy scepticism about this weeks’s next great thing exactly what is required. The insight to spot the real innovation in a sea of neat ideas and hyped up concepts and mobilising it in a SAP relevant context is what Denis Browne and his team does profoundly well. 

 

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14 thoughts on “Who exactly are you calling a laggard?

  1. I’m gonna side with Dennis on this one. I’m not going to put words in Dennis’ mouth but what I would think he is talking about is more around innovation. What has SAP really done innovating around application functionality, service delivery, technology, cost, etc. that has had a sustainable impact for a customer over the past 3 years? Sure you could argue GRC, but I would say SAP is using the “hey CFO you don’t want to go to jail” fear-factor to sell that solution.

    SAP is a smart company and will be around in 5 years (unlike many startups innovating around product), but the pace of innovation, not only product innovation, is what seems to be lagging.

  2. Sorry Thomas, but I am with Dennis to this extent – his point that 41,000 experiences with implementation should by now mean a VERY reduced cost … but it hasn’t. And that means that enterprises who install an ERP system (we’ve just done JDE E1, so I’m not picking on SAP specifically!) to cover what should be “commodity” processes pay a “premium” price, and have nothing left for innovation themselves. This I think is Dennis’ point – reduce the cost of implementing the commodity software so that WE can do innovation, not YOU.

  3. First off, in terms of innovation delivered in the last 3 years, off the top of my hr-centric head:

    – Adobe interactive and print form integration

    – Duet

    – GRC

    – SAP Developer Network

    – BPX

    – Web Service enablement of entire Business Suite

    – Rollout of Web Services via open wiki to facilitate collaboration and innovation among customers and with SAP
    – …

    Cost. As I’ve replied on Dennis’s post here:
    http://www.accmanpro.com/2007/09/03/perpetuating-the-erp-myth/
    if a customer wants commodity and quick, cheap implementation, we have that in the form of the Best Practices packages. That customers choose to go the customization route is indicative of the fact that software only mirrors the complexity of business.

    What gets me here is the underlying assumption that the processes are simple to model and support with software. They’re not. Humans are very good at dreaming up processes to run businesses with which are easy to communicate and put in place, but which are devilish to program and even harder to generalize to other businesses with similar processes. I personally think that we at SAP do a very good job here, your mileage apparently varies…

  4. “The I-could-do-it-better Syndrome”

    Without commenting on SAP in particular, I would strongly suggest that thinking of ERP as commoditized software that has already been amortized w.r.t. R&D is somewhat wishful thinking and arises from I-could-do-it-better syndrome. My suggestion to all the naysayers out there is to do 1 of the following:

    Option 1. Go build an ERP system that rocks, and beat the incumbents. Is it too hard? Can’t beat the sales/marketing budgets of big guys? Those are all poor excuses ‘cos if you are serious about how much cheaper it ought to be, you should be able to become #1 by word of mouth.

    Option 2. Go sell someone else’s ERP against the guys you dislike. If you really really think there are better alternatives out there (take the flavor of the month) – then you ought to be able to sign up as a channel, and become a billionaire.

    Option 3. Stop and Think. There may be a reason why very smart businessmen spend billions every year on these ERP systems.

    Disclaimer: Personal opinions expressed here. And as I said, I am defending ERP industry – not the software that runs on ABAP. I had to.🙂

  5. Anshu, every smart businessman I talk to bitches about the lockin of ERP. They tell me they were dumb, not smart, to have spent so much on ERP. And now they are busy dismantling the expensive support and maintenance costs. If you don’t believe it is coming look at the huge drop off in license revenues of just about every company your employer, Oracle, has bought.

    Thomas, may be Dennis’ original post was not that specific but check out his post below

    http://www.accmanpro.com/2007/09/03/perpetuating-the-erp-myth/#comments

    he says

    I’m referring to the new customers SAP is signing up which, as far as I can tell, not just from what I have seen but from what my colleagues say, are at the right hand side of the technology adoption curve from the risk taking early adopters. These are the companies who have waited – some might say wisely – for the bugs and problems to be ironed out and are now ready to make a move.

    In spite of his clarifcation you are still not addressing the central issue. Why are the new customers after 25 years not benefitting from end of life pricing and implementation economies?

    As I wrote below,

    http://dealarchitect.typepad.com/deal_architect/2007/09/they-cant-do-th.html#comments

    “I will tell you what is downright rude. SAP, Oracle, their partners smiling and telling such customers they are the salt of the earth, and trying to charge them economics which do not reflect the years of R&D amortization and the economies of implementation scale which should come from over 100,000 such projects.”

  6. Vinnie,
    I think Jeremiah and Anshu addressed the issue on Dennis’ blog, but we will never agree on this one.

    Personally, I’m not sure that Dennis clarified anything.

    “I’m referring to the new customers SAP is signing up which, as far as I can tell, not just from what I have seen but from what my colleagues say, are at the right hand side of the technology adoption curve from the risk taking early adopters. ”

    You and I will continue to disagree on pricing, on implementation evidence, and even on verticalization. (micro or otherwise)

    I’ll be at teched in Munich in a month or so’s time, where I’ll have the pleasure of meeting a thriving customer ecosystem. 1000’s of people who are continuing to invest and work with us.

    Things aren’t perfect, and could always be better, but you paint a picture so bleak that Royston Vasey would seem sunny in comparison

    I have no idea where Dennis got the the 25 years from and where is the evidence of end of life?

  7. yes, I am Nostradamus -)

    which tea leaves do you want to ignore?

    – New licenses as a percent of total revenues declining for years now
    – Customers upgrading to 2004 and 2005 slower than the sea turtles at the beach I was at this weekend
    – More customers each day telling you – hey don’t just offer cut rate maintenance to Oracle apps customers
    – More and more of your customers picking offshore SIs for implementation and support, treating ERP as relatively “safe” legacy apps

    as you say we could go on and on …

    I may have to be back in Munich in October and would like to come to TechEd if it dovetails…but my record for conferences I sign up for and cannot go it has been pretty bad. I am embarrassed to say yes to many events given my no show record.

  8. Vinnie,
    1.software revenue up 21% q2 2006 to q2 2007 , at constant currency.
    2. Fastest upgrade take up in SAP’s history.
    3. customer satisfaction at all time high
    4. Offshore SIs etc is goodness. Look at the SAP WIPRO alliance, co-innovation lab in India etc.
    ……………….

  9. you twisted my questions –

    1. what is new license as percent of your total revenue the last few years?
    2. fastest uptake – what percentage of customer base has upgraded?
    3. but is not each of them pestering you to lower maintenance? May be that does not count in your “satisfaction” survey index?
    4. It is also a sign that an app is long in the tooth and people consider it lower risk to offshore

    Look, if ERP vendors want to continue to be delusional that’s fine, but folks like Ric above will continue to remind your sales force every day it is overpriced and that they would rather take the savings and do innovation themselves than wait for your “innovations”

  10. Vinnie, please check the 20F report.
    Licence up, maintenance up. both double digit.

    Don’t have the latest upgrade numbers but in march it was 2500+ on ERP 6.0, and over 7,000 new productive systems on NW.

    You can knock the survey, but thousands of customers fill it in.

    All rational customers will negotiate, but the aggregate result of those negotiations is the financials, and they are in pretty good shape.

    Lower risk is goodness.

    enough, we will never agree.

    Ric’s company is on JDE…!-)

  11. Wow – look what happened while I wasn’t looking! SAP is hopefully thankful to those here who have taken up the cudgels on its behalf – and the last think I would want Thomas to think is that I don’t respect the individuals who put this stuff together – I’ve been a developer, too! One final thought – knowing the thought process that went into our decision on ERP, I wouldn’t put too much faith in “There may be a reason why very smart businessmen spend billions every year on these ERP systems” …

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