SAP aims for bigger enterprise pie slice

The more than 15,000 attendees at SAP’s annual Sapphire conference in Orlando last month heard how the German software vendor is looking to push the reach of its products deeper into the enterprise, reaching out to non-traditional users with new, more user-friendly interfaces and more dynamic tools for the power users.

SAP Americas president and CEO Bill McDermott began the event by painting the broad strokes of SAP’s business strategy and making a pitch for a bigger piece of the enterprise pie.

Noting that railways didn’t really become a success until they standardized on a common gauge, McDermott said that standardization is happening now in enterprise software.

Pointing to its NetWeaver platform as that emerging standard platform, McDermott said SAP’s brand of service-oriented architecture (SOA), enterprise services architecture (ESA), will be the glue to tie together a new world of component-based offerings, rather than hardwired solutions.

“Industry-specific solutions are now decomposed into smaller enterprise-service repositories that all applications can draw upon,” said McDermott.

In addition to highlighting a number of recent product announcements from SAP, including CRM On-Demand, SAP Analytics and Duet, jointly developed with Microsoft to help users access their SAP data from Microsoft Office applications, McDermott said the company is also signing up hundreds of independent software vendors to develop applications on the SAP platform.

Leo Apotheker, SAP’s president, customer solutions and operations, noted in his address that in the past, ERP systems didn’t give the IT department the flexibility to respond to changing business needs. However, he said that IT today is no longer a separate function and needs to be more closely aligned with business strategy.

Apotheker pointed to SAP’s ESA approach as the best way to balance the two IT imperatives of efficiency and flexibility. But, before companies start down that road, Apotheker said they should put an architecture roadmap in place first.

“It is imperative to start with a clear view of your destination…so you have the right tools to use to your competitive advantage,” said Apotheker. “You can no longer afford to sit on the sidelines.”

When he took the stage at Sapphire, SAP AG CEO Henning Kagermann used his keynote to make a case for a transition away from transaction-driven software to technology powered by Web services.

By 2010, SAP aims to have completely moved its more than 32,000 customers from the company’s proven R/3 ERP software to its Web service-based Enterprise Services Architecture (ESA), enabled by the NetWeaver integration middleware.

ESA lets companies reuse application functions and build new applications on top of existing ones without, as in the past, having to replace them.

Next year, the company plans to launch mySAP ERP 2007 with full ESA capabilities, Kagermann said. Also coming next year will be a new version of NetWeaver, which is to evolve into the firm’s new Business Process Platform.

Joe Larocque, senior director of the Integrated Finance and Material System (IFMS) program office in the Canadian government’s Treasury Board Secretariat, said from what he heard during the Sapphire keynotes, he thinks SAP is on the right track.

He did say, however, that the company has some work to do in educating the market on just what it means by enterprise service architecture, and why it’s relevant. SAP also used Sapphire to announce a new hybrid on-demand, on-premise CRM product and a new release of its core ERP product.

SAP CRM 2006, to be available in the coming weeks, will allow businesses to choose between either an on-demand subscription-based pricing model, an on-premise license model, or a combination of both. Because the software is written on a single code base, users will be able to move back and forth.

The company also announced the global availability of mySAP ERP 2005. The application suite offers more than 300 product enhancements, such as simplified configuration and administration, a new interface, improved management dashboards and new credit-management capabilities.

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