The answer is pretty simple: companies that implement ERPs save money and are more successful. It's the business change aspect that matters, and SAP enables that business change.
Totally agree with you on the UX nightmares, and this needs to be fixed. But if you look at SAP's new products, they are pretty interesting from a UX perspective. Design thinking is at the core of it. I really encourage you to take a look at for example http://www.experiencesaphana.com
SAP legal (like most large IT companies) has work to be done, and they know that. I hope they do something.
On the sales side your comments surprise me. I work with those guys on a regular basis and the vast majority are customer focussed: they have to be, or customers won't continue to buy. But this has changed a lot in the last 10 years.
SAP is rarely ripped out because it's rarely worth replacing systems of record. They are a long term investment, and most financial people are fine with SAP: it affords them control.
Can't argue - it was a reactionary response, such is the way of social media, right?
I think that the underlying discussion is an interesting one. HN readers perhaps might get some benefit from understanding SAP technologies and how they integrate into the stuff they want to hack with. I've employed some real hackers into the SAP market and it is a deeply interesting and open technology stack.
>I think that the underlying discussion is an interesting one.
That it is. Clearly SAP is doing something right.
Somewhat off topic, I'm surprised you say "open technology stack". I'm not particularly familiar with SAP tech, but I always thought they were as closed as it gets (& successfully so). Have I missed something?
Come now, I didn't say that FB is insignificant. That would be ignoring the biggest social trend in the 21st century! What I'm saying is that the consumer press community spends 99% of its time talking about FB et al., who are interesting, cool but haven't got a proven commercial model, and 1% of the time talking about (and denigrating) SAP et al., who run the real software that makes businesses run.
And in the meantime, the global economy is going down the drain and Bubble 2.0 means that investors are throwing more of our savings down the drain. Some of the latest startup IPO valuations have been ridiculous.
Yes, my primary income is SAP consulting, but that doesn't mean I am not interested in wider IT issues. Facebook is a very relevant trend, but social media is a fickle partner, and the crown has changed hands several times already. Valuing it at 19x earnings is nuts.
Please do take a look at the innovations that SAP are doing. I look at wider market trends and I think what SAP is achieving in innovation is well beyond what Oracle/IBM/Microsoft/Google are doing right now. You may be surprised.
I would like to say a few things though, especially to those people who think that it's an us and them scenario.
First, I have personally spent a lot of time on open source software, and you will for example find some of my code in the Linux Kernel, if someone hasn't removed it by now.
Second, I think that closed communities are a bad thing, and it's something I strongly believe that SAP needs to get better at. Yes, SAP has the largest community network in the world with 3 million members. But it's not good enough at opening that up to the wider tech community, which is a loss.
Third, I think that integration to the wider tech community like HN, would be a huge benefit to Enterprise IT. We can be silo'd and the expertise of this group in writing nice-to-use apps is something we really need.
I think this is definitely traditionally true, and there are people making big bucks in the SAP space - contract rates can be high for geniuses.
What's changing is that open standards mean that the wider tech community can integrate into SAP. This both commoditises the business, drives rates down and makes it more accessible. I suspect that in 10 years time we will see a very different Enterprise IT market.
Yes, Apple's iTunes store system of record runs on a custom SAP ABAP based system. It used to run SAP ERP but that could not take the load of transactions.
As I understand it, this is the reason why you get a weekly bill from Apple: the iTunes ABAP system makes financial postings to ERP, to reduce the overall number of transactions - and presumably also their credit card overhead.
I love the comments but this is exactly the stuff I was talking about in this article. I'd love to show the wider tech audience a bit more about SAP and how it works. Guess that can be my project for 2012.
1) Yes, you can download a trial version as Zalthor points out. I'm trying to work with SAP to make this more open and easy to do. It's important.
2) SAP customers vary from 1 employee (SAP BusinessOne) to 250,000+ employees (SAP ERP). But from a download perspective the interesting stuff is coming with Gateway and the Unwired Platform. With those tools - the server components of which will be available in the cloud - you can build Edge/Web Apps and Mobile apps using whatever tech you want. Ruby on Rails, iPhone, whatever. That's the sort of open integration which I hope will interest this audience, not downloading copies of SAP ERP for home.
3) Couldn't agree more, don't block social media at work. I wouldn't work for a company that did. By the way, SAP encourage social media and have 50k+ employees. But some organizations are stuck in the dark ages.
4) Streamworks integration is coming for the mainstream soon. It will be PaaS, integrated with the new Java environment and developer toolkit and supports open integration. It's had a bad press so far. Hopefully this will help.
I think you might be somewhat lonely in this good will campaign for SAP.
In my decade-long career as a lawyer for customers who buy enterprise IT, the only company that I consider more obnoxious across the table than SAP is Oracle. If you are doing business with these companies, you pretty much deserve what you get. I've seen a few CIOs lose their jobs when ERP falls apart (it almost always does, for a variety of reasons).
I'm not saying there isn't a bunch of useful technology, but these aren't technology companies – they're sales organizations, and that side of the business is not pretty. I can't understand why anyone does business with obnoxious sales organizations like these in 2011.
No, it doesn't. I understand that's a meme because it does happen, but "almost always" isn't just something you add to the conversation to try to make your point stronger.
SAP ERP systems fill a purpose, and they do so quite well.
There are definitely instances where a change to your ERP system is so large that it's under budgeted, or the consultants hired aren't any good, but ERP is a value proposition provided you don't f it up.
It might be anecdotal, but it isn't just a talking point. I told you – I've done these deals for a living for more than 10 years. It's about the difference between what was promised by the sales team, and what was delivered, and who's left holding the bag.
I don't disagree that the sales team promises a lot more than is even possible very often.
But almost all ERP systems fail? I still cannot get behind this. You're saying in 10 years the vast majority of deals you've done with ERP have failed?
If that's really true, perhaps you should do something differently. I work with many successful ERP systems. I actually haven't worked with any failures, although of course I'm aware of them because of people like you who tell me.
I trust your experience, but at the same time, it's very different than my own.
Failure is a very broad spectrum. Failed to deliver as promised is more accurate. Sometimes with spectacular results.
There's very little I can do to help, since ERP vendors are very risk averse. I can assure you that by the time you own a license, they've booked the revenue and moved on to the next sale. If anyone gets stuck holding the bag other than the customer, it's the consultant doing the implementation. I usually advise clients not to buy from these (and other) vendors, unless they accept the risks. They're free to self-insure against it.
As a matter of course, the CIO gets someone's foot up his ass for a year or two and is lucky to keep his/her job. Budgets are blown. Change orders flood in. Unforeseen costs. Missed deadlines. Contract remedies are weak because no one had the stomach to fight for them when they were on the table. Finger pointing everywhere. And so the world turns...
I think what you are saying can be true, depending on the sales exec. What can also be true is they are looking to build a long term relationship. It varies from person to person unfortunately.
What you describe is a classic large Systems Implementor problem, and that can be very true. The A-team sold the project and the B-team deliver it. They screw up the requirements gathering and the implementation. I've seen it happen many times.
Sometimes the product is to blame because it doesn't work as promised. Most of the time the consulting organisation didn't know the product well enough and made a mess of it. Totally agree on your contract point. Agree contracts, terms and conditions up front. Pay attention and take time.
Indeed, as classic a pattern as you can find in contracts. Most of the time, when a big company dangles a big contract, the suppliers fall in line and agree to objective success criteria, a reasonable acceptance procedure, and reasonable operating parameters with meaningful remedies.
The problem with ERP is institutionalized – the licensors have set themselves up to absorb almost no risk of project failure. The big consultants are also masters of shifting risk back to the client. That leaves the client to deal with a middle tier of consultants that is a mixed bag of capabilities, capitalization, etc.
The sad thing is that SAP started with all the right intentions, one model fits all - but they messed up when they bowed to the demands of ignorant IT managers and opened the pandoras box of custom built software.
The real irony is that SAP started because custom built software was the problem, and SAP's founders knew - like anyone with a bit of intelligence - that almost all companies run the same business processes.
Yes I am very lonely here, but it's interesting. I'd love to bring the tech and enterprise it crowds together and learn that we're really not that different.
Oracle is much worse from a sales/license perspective and a lot of my SAP customers are frustrated with them. Most of my customers have excellent relationships with their SAP account team.
On the ERP falling apart point - sorry but that's just not born out by fact. Project failures and system failures happen and most of the time that's caused by either using the wrong product, or by bad consulting - or poor support. I've never encountered a SAP ERP that has fallen apart.
SAP is a company with two CEOs - one sales and one technical, and they are definitely half a technology company. I really recommend you take a look at the tech they are producing. Of course they have to sell and market it - they have to turn a profit from all the R&D. Shame you have had a bad experience with the sales community.
To be clear, I don't consider it a "bad experience". It's my job to deal with the guys across the table. Let me play out for you every ERP negotiation ever:
Me: If the system fails to perform to spec within the anticipated implementation timeframe, we get our money back, or at least get to hold back part of the fee until you get it right.
ERP Licensor Finance Guy: We can't do that, for revenue recognition reasons.
Me: Why should my client care about your accounting? My client has a business to run. What happens when you're paid, and we have a box of nuts and bolts to show for millions of sunk dollars?
ERP Implementor Operations Guy: We've never had a problem in the entire history of our company. We're good guys. Trust us.
ERP Licensor Finance Guy: If you don't sign within a week, our discount comes off the table.
Don't you think that as a lawyer you are more likely to be involved in cases where ERP project don't go well? ERP projects are difficult so it's hardly surprising that some go off the rails.
There are many, probably thousands, of companies out there who are using large ERP systems pretty effectively - of course, you generally don't hear much about those.
No, I only negotiate the deal. Follow up is generally limited to answering questions, sending notice letters, change orders, etc.
You don't hear anything about them (except maybe a press release that no one reads) because they're always highly confidential. If my client has a claim, they use Unfrozen Caveman Lawyer.
For what? Glueing crummy old legacy systems together? Managing a workforce? GL? Performance metrics?
Part of the problem is monolithic, kitchen-sink software. Most people are basically using SAP/Peoplesoft as a development framework anyway – playing into more vendor lock-in. It's like the Lotus Notes of the aughts.
There are tons of targeted solutions that can play nice with intelligent use of modern, open data interchange protocols.
I'm currently taking a class in managing SAP ERP systems, and noticed how really bad it is. The user interface for end users is absolutely abysmal. Like some other people here have pointed out it doesn't scale very well.
There are a couple open source ERP products, Compiere which is technically open source but uses a service model. However, the most interesting open source ERP is by far Openbravo. If you're question about other options was serious, you should look into using Openbravo: http://www.openbravo.com/about-us/
It's true that SAP ERP could really do with a better interface (and it does, for the consumer end of the market by the way). But SAP ERP is bought by people who enjoy the business benefit (increased revenue, decreased cost) rather than by the users - that's life.
To say that SAP ERP doesn't scale on the other hand is a bit nuts. It scales easily to the biggest companies in the world. Apple iTunes Store sales billing runs on SAP.
I've not spent a lot of time looking at open source ERP in the context of large enterprise. I'd be interested in a serious comparison of the contenders and their UX, ability to scale to many countries/currencies/languages and their ROI and supportability and extensibility.
OpenBravo's demo video is a lesson in what not to do.
When I open a software demo video, I want over-the-shoulder or screencast-style video of the software in action. I do not want the Comic Book Guy narrating Wikipedia's definition of 'agility'.
Very well written article. My problem with SAP is simple. I have no idea what they actually do. None. They do a terrible job marketing their products to people who would actually use them (as opposed to the people responsible for choose which products in this category get purchased). The only product of SAP's that I know anything about is Crystal Reports, and only because it ships with Visual Studio.
For example, here's the one-liner about BusinessOne that you pointed out:
A SINGLE INTEGRATED BUSINESS MANAGEMENT APPLICATION FOR SMALL BUSINESSES
^^ I get nothing from that. The details section on their website don't do much better. I fear this is not accidental; the pitch is just enough to get you on the phone with one of their sales people.
For ERP applications (which SAP is arguably most famous for) you are basically getting all of the "standard" features that you require to run a business in one highly integrated (and usually highly modular) package. This will include, at a very basic level:
- Manufacturing (processes, bill of materials etc.)
- CRM
- Interfaces (including web portals, EDI, perhaps direct links to manufacturing systems)
- Many many others...
What arguably makes this all rather complex is providing all of this functionality in a way that can work across a large multi-national organisation - for example, the accounting and tax rules in different countries can be very different. Even the basic technical challenges of getting a Tier-1 ERP working in a global company are non-trivial.
Factor that these things are highly customisable and you can perhaps see why they have to be so complex.
For example. I read the article and think ok, this SAP HANA in-memory technology sounds interesting. I google it, go to their website and see a two minute video that supposedly explains it.
I think cool I'll watch that to get an overview of what it's all about. I watch the first twenty seconds after which I'm still actually eager to learn more. But then the video stops and they put an overlay telling me I need to register to continue watching the video. WTF!
So I still have not much idea of what it is and frankly no further inclination to find out.
I hear you. SAP suck at that stuff. The problem with SAP is it's so complicated, you can do anything you like. And so, it becomes hard to explain. Not sure what the solution to that is.
SAP has a new CMO, Jonathan Becher, who I hope will bring some improvements to this stuff. Marketing is supposed to be about making stuff easier to buy - and as you rightly point out, SAP aren't always that good at that, especially to a casual observer.
Interesting comparison and let's be fair: Facebook's EBIT (which is the real financial comparison) is pretty decent. SAP's EBIT was pretty low in 2010 - expect it to increase in 2011 based on preliminary results.
Main point is FB's financial model isn't proven medium-term. Also SAP have a lot of low-cost employees in India/China. Hard to compare with FB really.
Totally agree with you on the UX nightmares, and this needs to be fixed. But if you look at SAP's new products, they are pretty interesting from a UX perspective. Design thinking is at the core of it. I really encourage you to take a look at for example http://www.experiencesaphana.com
SAP legal (like most large IT companies) has work to be done, and they know that. I hope they do something.
On the sales side your comments surprise me. I work with those guys on a regular basis and the vast majority are customer focussed: they have to be, or customers won't continue to buy. But this has changed a lot in the last 10 years.
SAP is rarely ripped out because it's rarely worth replacing systems of record. They are a long term investment, and most financial people are fine with SAP: it affords them control.