Check Jon's latest diginomica blog!

Here's Jon's diginomica blog updates
Read Ultimate SAP User Guide kindle reviews  

Advertisement
Advertisement
Advertisement

JonERP.com Podcast Feedback

"I listen to all your SAP podcasts in my car, until my kids get mad at me and make me put on music for them instead. Keep up the good work!"

- Robert Max, 2007 Solution Manager Community of Interest, and Systems Management Special Interest Group Chair for the Americas' SAP Users Group -

JonERP.com Visitor Feedback

"Jon, let me congratulate you on building a site which exclusively caters to SAP skills and careers and answers a lot of doubts young and senior SAP consultants have about what skills to have and get trained on."

More JonERP.com Site Feedback

"I have been reading your SAP newsletters for over a decade now... It's remarkable that you have now embraced the Web 2.0 delivery methods - Podcasts, Twitter etc - without sacrificing the in-depth nature of your analyses!" - Dave Sen, SAP Enterprise Architect -

JonERP.com Reader Feedback

"I visit JonERP.com almost everyday to check out whether there is something new and what the future trends hold for SAP skills and careers."

More JonERP.com Site Feedback

"I was struggling with career direction a few years ago and you provided me with some extremely valuable advise. I've been very satisfied with my career direction which was influenced in large part by your coaching. Thanks again!" - Keith

New JonERP Feedback

"You have always been there with a prompt reply when it matters the most. You have really been a mentor in true sense."

- Hussain Sehorewala -


mySAP Career Interview Classics

Starting in 2000, Jon created the online content for mySAPcareers.com. This was a time of great transition in the SAP market - the beginnings of the applications that are now called the SAP Business Suite, the emergence of the EAI market that is now heading in the web services/eSOA direction.

For mySAPcareers.com, Jon conducted a series of in-depth, landmark interviews with senior-level consultants across the SAP product line. Now, on JonERP.com, we're pleased to present the best of this content, which is available only on JonERP.com. Jon will be adding updated introductions to all the articles in this section to frame them further in today's market. Enjoy!
Jon Reed Interviews Bobby Cameron of Forrester on the Future of SAP, 1999 Print E-mail
Article Index
Page 1
Page 2
Page 3
An Historical View of the ERP Market
(and the Challenges SAP Faced with Its R/3 Product in the Late ‘90s).
Jon Reed Looks Back on His Landmark Interview with Bobby Cameron of Forrester

Jon Reed's new introduction, April 2008: In January of 1999, I had the opportunity to interview Bobby Cameron, Principal Analyst at Forrester, about SAP's position in the evolving ERP market. Things are different now, but in the mid-‘90s, Forrester really was the thought leader in the ERP marketplace in terms of analyzing trends, and also providing a cautionary tone towards some of the over-spending and over-hype that was occurring in the market at that time. Nowadays, there is no one analyst firm that has a corner on the vision for the market.

I suppose other analyst firms will disagree, but Forrester stood out to me with the boldness of their predictions, many of which were accurate. Of course, not all of Forrester’s predictions have stood the test of time. The prediction of a truly component-based, best-of-breed ERP market hasn’t really come to pass, though we could make the argument that the age of Service-Oriented Architecture represents the next attempt at such an architecture, and perhaps the one most likely to succeed.  

In this interview, Cameron may not have predicted the acquisitions that would turn the ERP market into a two horse race between SAP and Oracle, but there are still some great insights to be had in this interview – especially Cameron’s view of dynamic trade, and the vision of extending ERP to customers and suppliers – not to mention the increasing role of Business Intelligence.  

All these things have come to pass, though perhaps not in the exact form Cameron predicted. Perhaps most interesting, Cameron’s notion of why ERP consultants are well suited to the next phase in the market, due to their business process orientation – this closely resembles the push towards the Business Process Expert that SAP is encouraging via its BPX community.
 

It is great to have the opportunity to share this interview with a broader audience again. Perhaps more than any other interview I have done, this one captures the feeling of SAP in the midst of its big North American heyday, but with the warning clouds of the Internet and post-Y2K on the horizon.  

Interview with Bobby Cameron, Principal Analyst with Forrester Research’s Packaged Applications Strategies Service, part one of four.  

1998 Introduction by Jon Reed:
 In April of 1996, Forrester Research created an industry firestorm with the publication of  “The Prudent Approach to R/3,” the first installment in its “Packaged Applications Strategies” series. This controversial report set off a fierce debate on the merits of SAP and is widely credited with causing a significant drop in SAP’s stock price following its release. Although not every prediction in “The Prudent Approach” came to pass, the report did usher in an era of accountability for the ERP market. Many people still rely on SAP, but few romanticize it anymore. Forrester had something to do with this.  

The visionary behind that first report was Forrester Principal Analyst Bobby Cameron. Never shying away from bold predictions, Cameron always seems to be one step ahead of the ERP market. He balances cautionary tales of SAP excess with a compelling vision of IT-driven business change he calls “dynamic trade.” Since that first report, Cameron and the Forrester Packaged Applications Strategies Service have been putting in their two cents on the ERP market each month. Any SAP professional trying to stay a step ahead of the market would be wise to stay tuned to Forrester’s analysis. 

Recently, Forrester published a new report, “Re-evaluating SAP,” which looks ahead to the future of SAP with a fully updated market assessment. We caught up with Bobby Cameron as the report was going to press, and for a good part of an afternoon we engaged him in a dialogue about the future of SAP. Cameron’s frank approach, not to mention his willingness to rethink his own previous positions, offers ample proof of how Forrester has been able to keep the attention of ERP industry leaders. 

Forrester has often been perceived as being “too negative” on SAP. But readers of this in-depth interview will see that while Forrester is skeptical about SAP’s far-reaching attempts to dominate multiple markets and industries, they are also more than willing to grant SAP credit where credit is due. In this fascinating four part interview, Cameron traces the evolution of Forrester’s perspective on the ERP and “extended ERP” markets, and brings us up to speed with his latest predictions on what the future holds for SAP. 

Forrester has never been afraid to step out on a limb in its Packaged Apps series, and in this interview we present Cameron with a chance to tell us where Forrester’s been accurate and where it’s erred. If Forrester’s been outspoken, they’ve also been right more often than not. Cameron’s strongly worded opinions on ERP are informed by continual conversations with industry leaders in all segments of the ERP market. He has never been shy about taking the logical next step implied by the off-the-record comments he gleans from his own investigations. This “unofficial” commentary gives us a much clearer indication of SAP’s future than the official “PR” material that shows up in brochures and in conference booths.   

But the best thing about a conversation with Bobby Cameron is that his quotable “sound bites” on all things SAP are fully integrated into a well-thought picture of how the ERP market is evolving, with change as the only constant, and a fully-integrated, web-enabled supply chain as the inevitable next phase in this business evolution. In Cameron’s view, the more adaptable SAP can become, the bigger share of this extended ERP market it will get.  

In the first part of this interview [each interview section will be briefly introduced here] Cameron gives us a look back at the first Package Applications report…..etc to be added at publication time.]] 

January 10, 1999
 

Jon Reed: Bobby, what is Forrester’s take on the IT marketplace?

Bobby Cameron:
Our whole view is that things change and that change is a constant. Technology is a key factor in overall business change, and in fact our current tag-line is “Technology Changes Everything.” Our role in the overall IT market is to help people thrive on change -- so we create models to help people understand and embrace technology-driven business change. That’s really what we do, so when we write, think and work we frequently have that as our orientation. People who don’t know that’s what we’re up to -- even when we use the words in what we write and what we say -- can get misled. So you’ll find that I recommend SAP even though I’ve got a reputation for being an SAP hater. 

Reed: In your “Packaged Apps” reports, you’ve outlined several key concepts that impact the SAP marketplace. One is the trend towards component-based ERP apps, another is portfolio assembly, and another is the implications of an extended ERP/best of breed/front office market. Tell us about how SAP is faring within these areas.   

Cameron: I think SAP works where it works and it doesn’t work where it doesn’t work -- just like PeopleSoft -- same thing. So having said that, you picked up on the two, probably the three key theories that we’re working on in the Packaged Apps service. One is the component/apps theory, the other is the channel transition that’s part of the portfolio assembly model, and the final one has to do with where the user/buyer technology need is.  

The component story is a real simple one. I grew up as an IT Director in Chase Manhattan’s electronic banking business. My job was to tie about 8,000 treasurers in large corporations worldwide with about 100 bank offices worldwide to do all kinds of information transaction work, and one of the challenges that we had from that perspective -- and it’s been there forever, was change. The challenge was change, but the expectation was that this new world of client-server and objects was going to come save the day. Much later we looked around and said, “Well, what did client-server turn out to be? It’s nothing like our dreams and fantasies.” SAP, PeopleSoft, all those guys are, in effect, a class of terminal-host style applications. Now PeopleSoft’s a fat client -- it’s a stretch to say it’s terminal-host, but it behaves just like one: slap a form up in front of data and do something with it. It’s not a new class of applications, just the old form and data model.  

Reed: That brings us back to the remarkable debut of your packaged application series in April 1996, with the release of the “Prudent Approach to R/3” report -- a report which has been credited for knocking SAP stock down quite a few points after its release.  

Cameron: Actually, SAP is responsible for it (laughs), because they kept bringing that report up. Even four months later, SAP blamed bad financial performance on our report, and it may or may not have been true. 

Reed: In that first report, you said some pretty pungent things about SAP. One such example: you encouraged users to have an exit plan from R/3. 

Cameron: That’s correct. And be prepared to use it. 

Reed: You also said that R/3 was basically a legacy system going in, which definitely went counter to the buzz that the ERP packages were trying to create about being a new wave of cutting-edge applications. And you also predicted a full scale, Internet-based SAP product, possibly called R/10, which would be a complete replacement for R/3.  

Cameron: A brand new product. 

Reed: A totally re-written product... 

Cameron: Restructured new technology.

Reed: So how do those predictions look to you from this vantage point now? 

Cameron: You missed the one prediction I was wrong on, which was the revenue decline of R/3. I predicted this would be a declining revenue year. 

Reed: Right, you said SAP would level off in ‘97 and decline in ‘98. And the other thing that looks like you were wrong on -- I don’t know if you’ll agree -- is that you said SAP would not do well trying to take its product down into the mid-market. 

Cameron: Yes, that’s exactly correct. That’s another error we made. In fact, part of R/3’s success is its down-market success. Let’s start with that one, the revenue issue, which gets in most people’s craw. There are several things we missed. One is that we did miss that down-market success -- in the last two years, SAP’s biggest growth engine has been down-market. Certainly revenue-per-seat is lower; revenue-per-sale’s a lot lower. But the aggregate growth is huge. In U.S. operations alone, the down-market accounts for over fifty percent of the sales last year.  

The second thing was that I was very naive about the overall surge in the apps market. I just had no idea that we would see this unprecedented buying behavior, although it is stopping now. BaaN lost money last quarter. [ERP sales] are certainly slowing down. SAP’s miraculously kept it above 40% but they’re also slowing down. That surge we’ve seen is just far beyond anything that’s ever happened in the package industry and I don’t think we’ll see it again. There were way too many stars aligned. I misjudged that huge surge, so that was the second key piece.  

The third reason is that when we wrote that report, we were a bit careless in our wording. It wasn’t our thinking -- our thinking was on, but our wording was poor, in that when I was talking about R/3 decline, I didn’t isolate the accounting revenue and HR-related revenue and even single plant manufacturing revenue from everything else. That was a bad job we did in actually building that report. What I really believed would fall off from core R/3 revenue is those categories. The new outward-facing stuff, which is showing up as APO and New Dimensions apps, I believe will be a growth engine, and by SAP’s own estimates, will be 30% of revenues by 2001. SAP is in fact seeing a decline of accounting and HR and overall R/3 revenue, though the middle market’s propping it up so it’s nowhere near what I thought it would be.  

So you throw all that together and that estimate was off. The thinking underneath it was right on. I had talked to over a hundred CIOs to prepare that report and I was taking models for the report from the most successful R/3 sites --  SAP’s favorite accounts. Companies like a DuPont -- and even they’re not 100% R/3. They may be 60-65%, max 70%, depending on the account. In fact, DuPont has a very good program for rolling R/3 out, where they wrap the hell out of it; they pre-configure it for what they need to do, then roll it out as the tool it is. And I think they’re heavy into Manugistics around supply chain and they’re merrily going along there, and I don’t know what they’re doing for sales force automation and the like, but the point is they use R/3 as a tool that’s appropriate. So that’s where the whole exit strategy came from -- it says, “Look, you may have no choice but to put in PP or even PP-PI, but manufacturing’s changing, and the next generation of manufacturing’s going to be very different.” We believe, and it’s no news to anybody, that APS will in fact displace MRP -- that APS will generate bills and routings and work orders and schedules directly. 

Reed: Right, because it’s been understood for a long time that Enterprise Resource Planning is kind of a misnomer, that the planning functions are really underdone and undercapable -- ERP is really more of an operations program. 

Cameron: That’s right, and to supply chain’s credit, it’s been pretty young...it’s only now getting mature. But if you look at the way Red Pepper does it, when PeopleSoft sells MRP or manufacturing, it is an APS engine that’s doing the work that MRP used to do -- but it’s fully constrained. That’s my point. And if you put PP in today, tomorrow you will say “What’s SAP going to do for manufacturing?” and the answer is APO -- and don’t miss that. So that was our whole message about an exit strategy. We said: “Put PP in, it may be the best product you can get, but be ready to change later.” Of course, SAP didn’t have APO on the list at the time, but when you put APO in, it won’t be built, as you probably know, with ABAP technologies. Even though SAP swears, “Oh it’s just an extension to ABAP/4,” -- sure, and Java’s an extension to FORTRAN.

 

JonERP Feature Interview

 
Browse Jon's YouTube SAP Videos
Read Ultimate SAP User Guide Reviews

What is Jon Up to Now?

Track Jon in real-time on Twitter
See his latest diginomica blogs

Get Jon's SAP Blog + Videocast Feed (or Email Notifications)

Jon's "Get All My SAP Content" RSS Feed

or Subscribe to the Feed by Email
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

The Latest JonERP Feedback

"I have referenced your articles on JonERP.com for my internal Fujitsu colleagues on how the functional skill set is changing. It's not just theory, but real life change and the need for new SAP skills."

- Ranjan Baghel, Associate Director, Fujitsu America -

JonERP.com Site Feedback

"I can't imagine any SAP professional who is serious about their career not utilizing the JonERP.com website. I know I used it frequently when I did SAP consulting. I use it even more now and I know my colleagues go there quite frequently to increase their knowledge of the SAP market, it is a source of great information."

- David Dawson, SAP Direct Hire Consultant, Acsys -

More JonERP.com Site Feedback

"Jon, you are definitely spot on with your analysis of the SAP market. I've been using your websites for over five years now. Instead of buying all the SAP books, I use your stuff to catch up with what's new in the ever-increasing SAP market." - Mark

JonERP.com Reader Feedback

"I've kept up with your JonERP.com site for a long time and your articles via SearchSAP.com and elsewhere. I just realized a few months ago that you were also the author of the first SAP Consulting book that I read when I decided to take the leap from working at a Utility company to becoming an SAP Consultant. The SAP Consultant Handbook is a staple for any SAP consultant, new or experienced. I just wanted to thank you for the quality work."

- J. Michael Peace, Independent SAP Consultant -