SAP to focus on operations savings, innovation

Money will be a major theme at next week’s Sapphire conference in New Orleans where customers of German business software vendor SAP AG will come from around the world to meet with company executives for their annual global powwow.

No, SAP isn’t planning to announce a bunch of big new discounts to win more business and increase its share of the global market for business applications. Instead, chairman and CEO Henning Kagermann and Co. will use the event to drive home another financial message that could be equally interesting to money-minded IT directors: SAP can help them lower IT operational costs so they can spend more on crucial innovation and ensure sustained business growth.

Growth through innovation: That is the title of the keynote speech that Kagermann plans to deliver on Wednesday, the opening day of the two-day customer event. It’s a topic the German executive touched on briefly at last year’s Sapphire in Orlando, but one he now wants to give greater focus as IT directors face ever-tighter budgets, according to SAP spokesperson Bill Wohl.

“Henning will talk about how IT departments can create new opportunities by shifting some of the costs associated with operating systems to the innovation side of their balance sheet,” Wohl said. “This means that if we can continue to help companies lower the cost of operating their IT systems by doing things better, cheaper and faster, they will be able to use these savings to fund new IT projects to drive innovation and support their growth strategies.”

Several new SAP products, particularly the NetWeaver integration platform, are designed to help companies achieve this shift in cost, according to Wohl.

One area of focus at Sapphire, he said, will be the move of many customers from a client-server R/3 environment to a services-based enterprise services architecture, whereby the company’s new NetWeaver platform “is the enabling technology that we are selling to get them there,” he said.

In March, SAP announced the latest version of its new integration platform, NetWeaver 4.0, which offers several enhancements around the business intelligence, portal and enterprise application integration portions of the software system. Although the company doesn’t plan any NetWeaver announcements at Sapphire, it will present examples of how the technology is being adopted by users, Wohl said.

Another area of focus will be the migration of SAP’s aging flagship enterprise resource planning (ERP) product R/3 to its new mySAP ERP, which incorporates NetWeaver. “The vast majority of our R/3 customers who are looking to upgrade are considering doing so primarily because of what comes with NetWeaver,” Wohl said.

That may be the case but what the spokesperson neglected to say is that the company is also offering customers a financial incentive to make the move — discounts of up to 75 per cent against the cost of their R/3 software license.

At Sapphire, SAP will announce a few new industry-based software applications targeting vertical markets, such as the public sector, according to Wohl. One of the announcements will be for a new product that deals with defence and security, he said.

The company will also have announcements targeting horizontal markets, such as customer relationship management and radio frequency identification.

The ongoing acquisition battle between SAP rivals Oracle Corp. and PeopleSoft Inc. — a topic that dominated news conferences at last’s year Sapphire — is unlikely to spark much attention at this year’s event, according to Wohl. “While these companies have been concentrating on their acquisition battle, we have remained focused on our customers,” he said. “The uncertainty created by this acquisition battle has driven customers to us. We look like a safe ship in a stormy sea.”

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