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By Dan Farber
May 12, 2004
NEW ORLEANS--At SAP's annual customer event--SAPPHIRE--CEO Henning Kagermann touted the development partnership with Microsoft and an agreement with several hardware vendors to provide virtualization services for its NetWeaver 2004 application and integration platform. SAP is the leader in market share for enterprise software, and is now pushing customers to adopt its enterprise services architecture (ESA), with lower costs and increased flexibility promoted as the marquee benefits.
There isn't much new or original in Kagermann's vision; all of SAP's competitors are building out their software stacks based on a services-oriented architecture. However, SAP's view on how to get to the promised land of enterprise services-—which is a combination of Web services and business process-—is somewhat unique in that it isn't asking customers to rip and replace their existing infrastructure and applications to gain the benefits of the technology. "[Customers] want to leverage the assets they have today-—they don't want to force rip and replace, and can take an evolutionary approach using the in-built integration services of SAP. You could transfer [to enterprise services] process by process," Kagermann said during his SAPPHIRE keynote. The evolutionary approach resonates with most enterprises, given they don't like the idea of major rip and replace initiatives and want to get more out of their current investments in IT. "I cannot cope with the revolutionary," said Andre Spatz, CIO and director of information technology at UNICEF. According to Yvonne Genovese, SAP lead analyst for Gartner, "SAP is declaring that there is no requirement to rip and replace, and will provide an evolutionary process to bring people to its enterprise services architecture. Other vendors are asking customers to replace applications with new code." While IT executives embrace the concept of an evolutionary transformation, SAP is doing what makes sense in the context of its current base of customers. A majority of customers are still on the R/3 platform, and forced migrations have never been a sure path to business success. For example, SAP customer Kohler, a manufacturer of plumbing, furniture and other goods with 29,000 employees worldwide, is only slowing migrating away from R/3. "We are just doing our first mySAP implementation, with CRM, on a limited basis," said Dennis Morrell, program manager at Kohler. "We are just getting our feet wet in the process."
Much of the code in SAP R/3, for example, was written in the 1970's. "It's forcing SAP to look at new ways to do an invoice, such as integrating with Microsoft Office applications as an internal rather than external part of the process," Genovese said. Kagermann also said that IT systems need to become more people-oriented rather transaction-oriented, as they have been in the past. He described the new mySAP ERP applications as "a transaction system built around people." "If we want to go for growth, the best we can do is make our people more knowledgeable and take the most out of your knowledgeable people," Kagermann said. "The paradigm of the future is a system that pushes relevant information to you--not management by transaction, but by exception." In Kagermann's view, the user gets the alerts, KPIs, filtered information with embedded analysis, and what he called "guided self services" to help make decisions better and take appropriate action. Again, this is the same story that SAP competitors are telling. Software has to anticipate what the user needs to know and deliver it whenever, wherever, however. Kagermann outlined a three-year roadmap for SAP that he said would culminate in 2007 with a completely enterprise services architecture-compliant version of SAP's Business Suite. Some of the benefits of a complete enterprise services architecture will be more flexibility and insight into business processes, he said: "Once a process is in place, you want immediate response to know if the process is optimized. In the future, with enterprise service architecture and the underlying NetWeaver platform, the process and all steps in process execution are known, and we can measure time between events and other data to get insight into the process. It can be adjusted with no additional cost." This year, the company is focusing on business collaboration, such as planning, forecasting, and replenishment. SAP's integration of adaptive computing capabilities (such as shared services and virtualization) into NetWeaver is expected to be available next month. The company is working with hardware vendors, including Dell, Fujitsu Siemens, Hewlett-Packard, IBM, Intel, Network Appliance, and Sun. In 2005, SAP will introduce an enterprise service version of inventory for planning and an enterprise service repository. In 2006, Kagermann said the enterprise services repository will be ready for active usage, and major cross-industry scenarios will be enabled. In addition, development efforts will focus on business process and deployment flexibility. The evolution to enterprise service architecture strategy is a huge bet for SAP, especially if Web services turn out to be more problematic to evolve in enterprises. But, Kagermann is convinced that he is making the right moves: "I am completely convinced it's the right architecture for next ten or more years. We have the architecture and application knowledge to do the granularity of enterprise services in the right way. Its not just technology--we deliver an architecture that brings flexibility but still requires that customers select one vendor of choice as a sole control. But within the [framework], you can combine with other components." The critical point for SAP and its competitors, and more importantly their customers, is the notion of a vendor of choice as sole control. Despite the promise of more interoperable components and composite software composed of elements from a multitude of vendors, customers will follow the path of least resistance and complexity. We may be moving from client/server to enterprise services, but some things don't change. The SAPs of the world will increasingly dominate the software business, and the important innovations that sprout from smaller companies could have a more difficult time getting sunlight.
You can write to me at dan.farber@cnet.com. If you're looking for my commentaries on other IT topics, check the archives. |
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