Let me give you an example: last month, I finished doing an implementation where we upgraded BW; we did an implementation of SEM's Management Cockpit, and the consultants on site installed the Portals solution. All of this was done in ten weeks. This organization got a fantastic deal in terms of their costs and timeframe, and they're thrilled with it. They're out talking to people at ASUG, talking to other customers about how fantastic this solution is. They're a very well-established R/3 customer, but they found that just by adding those three new products, it's a whole new environment.

Reed: There's no better selling point than happy customers - especially customers who are showing some bottom line results due to those investments. We've talked about this a little bit, how companies can hold each other back in a stagnant spending environment. When no one is innovating, you comfort yourself by the fact that your competitors aren't doing anything about their issues either. But once one of your key industry competitors starts to make a move and show results, in terms of morale, performance, and bottom line results, you almost don't have a choice but to start paying attention again. I feel like that's what's going to happen, and that's how this market is going to turn itself around on the SAP side. You're going to get these thrilled customers, and other companies that have been dragging their heels and complaining about SAP as if it was the year 2000, are going to wake up and realize that those complaints aren't valid anymore.

Halley: I agree. You've got to keep spending on IT to keep your organization moving forward, regardless of what the economy is. You can't afford to wait because of your competition - if it's not stealing your customers away, it might be stealing your employees away.

Reed: Very true. Let's talk a bit more about the connection between Portals and SEM, as that's topic I haven't seen much coverage on. Is Portals basically just a more user-friendly way of accessing SEM data, or is there a deeper integration between the products besides a user-friendly presentation?

Halley: That's the extent of the connection. You're able to access SEM through the Portal, along with the other SAP modules, so it makes life easier on end-users. One interesting thing to note, though, is that a lot of the users of the SEM Portal are people who aren't really traditional R/3 users, such as "C level" executives and senior managers. Obviously, there are a tremendous number of daily users and analysts who use the Portal as well, but sometimes SEM and Portals are the first time that you get a C level executive to actually work with SAP software.

Reed: Well, hopefully the CIOs and SAP managers who read this interview will see that another great byproduct of SEM is better executive buy-in for the SAP project. Once you have your executive team using the system and getting good information out of it, they're going to be a lot more open to further enhancements.

Halley: I agree.

A Strategy for Success: How SEM is Changing the SAP Market
An In-Depth Interview with Strategic Enterprise Management Expert Paul Halley
Part Seven
January 12, 2004

A month after our initial interview, we had the opportunity to speak with Paul again and ask him some of our readers' burning questions about SEM. So in this wrap-up section of our interview, we were able to get Paul's take on the SEM analysis of other consultants, and to tie up a few loose ends of our own. The topics covered include: Paul's take on why Enterprise Portals is so integral to SEM success, how SEM stacks up with its main competitor, Hyperion, and why companies are taking a "piecemeal" approach to implementing SEM.

Jon Reed: So the SEM market is looking even more appealing than when we last talked?

Paul Halley: Yes, I'm cautiously optimistic. I'm still finding a lot of people out there who aren't educated about SEM yet, including other consulting partners who are using my SEM consultants.

Reed: At the end of our last talk, you and I were talking about Enterprise Portals and SEM. Is there anything else you would like to add to that?

Halley: The last thing I would add about Portals is the value proposition. Let me explain my reasoning as to why it's such a good investment and why it can add so much value. BW and SEM have the ability to communicate the transactional and analytical information from any SAP module or component. They can touch the folks in HR, they can touch sales, they can touch manufacturing - everyone can benefit from those tools. Using the Portal really allows each one of those groups easier access. A lot of IT people don't want to deal with the reality that end-users won't touch a product unless it's pretty, but the bottom line is that there are plenty of organizations where that's exactly the case.

Reed: So you feel that the Portals user interface is much friendlier for the typical end-user who isn't familiar with the ins and outs of navigating an SAP system?

Halley: That's right. The web-enabled versions of BW and SEM (using the Web Application Server), even without the Portals, are significantly better than anything I ever worked with on the R/3 side in the old days, but the Portal just adds so much more to it.

Reed: It makes you wonder if the expense of a Portals rollout might be offset pretty quickly by savings in end-user training, and also greater usage of the system for the purposes it was designed for.

Halley: Absolutely. When you're making such a big investment in a major product like R/3 or CRM, why not spend a little bit more to guarantee yourself that user acceptance is as high as possible? I think that the easiest way to make an SAP implementation fail is to not do everything you can to improve user acceptance.

Reed: During this interview, you've mentioned Hyperion a couple of times. Would you consider Hyperion to be the greatest best-of-breed competitor to SEM at this point?

Halley: Yes. SAP will tell you that there's one competitor even stronger than Hyperion: Microsoft Excel. :) But that's not a totally serious statement. In terms of full-fledged functionality, Hyperion is SEM's main competitor. In almost every single pre-sales situation, SEM is up against Hyperion, and I am asked to explain to the customer why they should use SEM versus Hyperion. When I worked at SAP, I spent a lot of time in pre-sales doing the same comparisons. Even now, years later, I still get asked those questions. It seems like everyone wants to compare those two products. In fact, I've done two SEM versus Hyperion evaluations since we last talked.

Reed: That's interesting. What's the short version as far as why you feel SEM is superior?

Halley: Well, I know it sounds like a cliché, but it's the integration. SEM was designed, several years ago, in order to compete head-to-head with Hyperion, and with every one of Hyperion's products. When you get down to it, SEM and Hyperion do the same functional things - they each can plan, they each can budget, they each have scorecards, they each have consolidations. I'm sure if you talk to a developer in Walldorf, he would name fifty different things that SEM does better. But in my opinion, the two pretty much do the same things. But SEM is integrated amongst all of its own components, meaning that the consolidations piece is integrated with the planning; the planning is integrated with the scorecard - they're all meshed together. With Hyperion, those are all separate applications. In Hyperion, if you make a change in your budgeting software, it doesn't automatically show up in the balanced scorecard or in your consolidated financials the way it does in SEM.

The other benefit of SEM is that you don't have to deal with all the manually maintained R/3 interfaces. For example, I just did an evaluation for a customer that was only using Hyperion consolidations. They were considering using planning, and they weren't using the balanced scorecard at all - just Hyperion consolidations. And they already had seventeen interfaces to maintain and keep in sync with their R/3 system. So imagine going to a global planning solution! They estimated that they would increase from about seventeen to sixty interfaces between Hyperion and R/3. That's just silly, because if you go with SEM, you eliminate every single one of them.

Reed: It seems to me that that "ease of integration" sell is going to create some challenges in the long-term for Hyperion with SAP clients - kind of like what Siebel is going through now on SAP sites. Now that SAP's product lines are more mature, it's really hard for customers to resist a "one vendor does it all" solution for their e-business initiatives and ERP product extensions.

Halley: That's right. Once you convince a customer that the functionality is equal, then it all comes down to price, and the price difference is usually pretty negligible.

Reed: And since SAP isn't dependent solely on analytics or CRM for its revenues, it can afford to make price concessions that the best-of-breeds can't. Moving along. Since our first round of questions, I published an SEM consultant's assessment of the product on this web site. This consultant was basically arguing that people don't understand that SEM offers the real business intelligence that BW promises. His take is that most people, including the consulting houses, think of SEM primarily as a fancy CO planning tool. This guy argues that SEM's ability to extract, manipulate, and simulate BW data, and write that data back to the BW InfoCubes, makes the product unique. He feels that SEM's data manipulation and simulation abilities, using BW as an information source, is really what sets SEM apart. What is your take on that theory?

Halley: I would agree, but just like all SAP products, you have to be a relatively informed user of the software to take advantage of those benefits. But I would agree, he's absolutely right. A lot of people are missing the boat on SEM; it is such a flexible tool. There are just thousands of different ways you can simulate the data, and there are specific benefits that no other product from SAP offers.

Reed: Then I heard from a Portals-SEM consultant who explained that SEM requires more technical knowledge than a functional consultant is used to. His point is that every system in the enterprise has input into SEM, and so a major part of SEM work is just getting the data from a wide range of SAP and non-SAP resources into the SEM system. Therefore, SEM consultants need to know how to bring different data sources together, whether it's from R/3 or any other system. Does that ring true with your experience?

Halley: Yes, I would agree to some extent. One of the main reasons why people haven't used SEM more, along with not understanding what it can do, is that they feel like they don't want to tackle the project of getting all that data into BW so that SEM can work with it. It's too bad that this is the case, because if you really believe in integration - and you should, because that's why you bought R/3 in the first place - then you should be working to get that data from all of your different legacy systems into BW. Then you put in your SEM system, and that's just icing on the cake. But what customers should also know is that they don't have to do a "big-bang" SEM implementation. So they don't have to start off with a wide range of SAP and non-SAP resources. They only have to start with one resource, and they can add more and more as time goes along. Of course, the more resources they add, the more value they'll get out of SEM.

Reed: So aspiring SEM consultants need to familiarize themselves not just with BW, but also with an understanding of the role of data integration in the overall enterprise. To say to yourself, "I'm a strategic planner" isn't going to cut it.

Halley: Correct. As I said in our last talk, the most successful SEM consultants are going to have a holistic approach to SEM. Now, those skills won't get used very often by customers, because very few customers in this economy are taking a holistic approach to how they're working with SEM. Right now, they don't feel like they have the money to use SEM and BW to run their entire organization better. But the most successful SEM consultants are still going to have that "total" approach to SEM. It's not going to be just a functional approach, but it's also not just a technical one.

Reed: And right now, companies are focusing mainly on which aspects of SEM?

Halley: Right now, they are focusing mainly on BPS (the business planning component of SEM). Most organizations are looking at SEM very narrowly, meaning that they put in SEM because they want to do financial forecasting, or they want to do headcount planning. Very few organizations are saying, "We want to do headcount planning, and financial planning, and sales planning, and IT planning, and we want to have all these plans integrated, so that when we make a change to our IT plan, it affects the cost center plan, which affects the profitability plan, which rolls up to the CEO level briefing." People aren't doing that, and they should be. The common approach is more like: "I've got this immediate need right now, and I only have the money to address this one issue." Unfortunately, to date, it's been more of a bottom-up process for customers implementing SEM. Whereas a top-down approach would allow the organization to better integrate all of it's planning.

Reed: Well, hopefully, if they get a taste of SEM, it will spur them to bigger and better things down the line. Paul, that just about covers all the bases, and then some. Do you have any last thoughts on SEM you'd like to share before we wrap this up?

Halley: No, that's about it. I look forward to hearing what other consultants and customers have to say about our discussion.