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Jon Reed Interviews David Foote: Podcast Transcription Print E-mail
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SAP Skills Trends: Podcast Transcription
Jon Reed with David Foote of Foote Partners
Hosted by Demir Barlas, Site Editor, SearchSAP.com
Podcast Interview Date: May 19, 2008
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Jon Reed: Welcome to this podcast interview with our special guest, David Foote of Foote Partners. Today, we are going to focus on the SAP skills trends David has identified from the salary data he compiles at Foote Partners. We'll get the latest on which SAP skills are hot and which are not.

We are also going to ask David about the controversial issue of whether there truly is an SAP skills shortage, a hot topic at Sapphire 2008 that David was right in the middle of. This podcast is hosted by SearchSAP and was made possible by a joint collaboration between SearchSAP; my site, JonERP.com; and B2B workforce, an SAP Premier Partner.

David, thanks for joining us today. Why don't you start by telling us about Foote Partners and your unique approach to gathering SAP skills data.

David Foote: We've been well known for years now for benchmarking IT workforce things. There wasn't a lot of that going on, and yet there was huge confusion in the market going back 10-15 years ago. These jobs are changing so quickly and, as it turned out, a lot of people that do compensation and hiring were really struggling with just defining who these people are because these jobs are changing so quickly.

There came about the problem with compensation, which is traditionally tied to job titles - and people's job titles, as we all know in IT, are just stale after six months, which is a combination of vendors and products, but also just how fast IT has evolved in businesses.

So we began tracking skills, specifically the price of skills, because we became aware about 12 years ago that companies were starting to differentiate people who have the same job title by skills. For example, comparing an ABAP programmer with COBOL, with .NET, with Java, with C programmers - inherently, the problem right there is there's quite a difference in pay.

We began doing that and initially chose 10 or 15 skills, and now we're up to about 330; about half of them are certified. Half of them either have no certifications or people are willing to pay extra for them, so we call them non-certified. About 40 of the 330 that we're doing right now are specifically SAP products.

So it's been a big piece of research for us because I think we called it right on how the market's evolved.

Lastly, a lot of times you need to make an argument for people who are not technology people as to why someone should be paid more than another person, or whether they should be paid more to recruit them or promote them. If you have good hard data, not just on salary but on the overall picture of what they're worth on the market, that's important. It's been a big thing for the people that are hiring SAP professionals right now to make that argument.

Reed: David, the SAP skills shortage was a big topic of discussion at Sapphire this year, and you yourself broached the topic at the press conference that followed the keynotes. What's your take on this, and why has it become such a hot topic?

Foote: Specifically at SAP, there have been skills wars and talent wars for years. What has happened most recently with SAP is that here you've got a large - and not without precedent - a large vendor with almost 50,000 installations, 120 companies, and a very popular set of products. They have been aggressively expanding and transitioning their product lines; they haven't just been staying in one place, and they have been moving their customer base down market. Two-thirds of their installations right now are small to medium-sized companies.

An interesting thing about that is you have a very different battle for skills being fought at the small and medium-sized businesses; it's a very different set of rules and requirements. Because they have been successful - not just in transitioning their product lines, but to move to these smaller companies - it's caused skills and labor shortages that have gripped sizable segments of the employment market in North America and around the world, and created some very testy supply-and-demand fluctuations.

We do track these continuously, and we've pretty much published every three months since we started doing this in 1999. I should also say that right now this involves 21,675 IT workers whose skills we have actually been able to verify.

For SAP, it's had a cascading effect: it's not all happening at one time; it happens with certain skills and different cycles. Some of these skill spikes have been hitting closer together, and many more of them over the last couple of quarters, say three to six months. This has been a problem for SAP because usually this shows an accelerating shortage - and accelerating shortages, as you can imagine, can get out of hand quickly if you're not acknowledging them and doing something about them. At Sapphire, they have acknowledged this shortage and put a number on it of, I think, 30,000-40,000 SAP project experts. (I don't quite know what that means; I think it's a global number.)

They have also talked about a couple of initiatives they have taken, a couple of which they have been specific about, like the University Alliances program. Some they have been very vague about, like how they are supporting their channel partners, because, ultimately, a lot of vendors look at their channel partners as having the right motivation to go out and to try to create more skills and help customers because they are right on the front lines with these customers.

They have been probably a little vague on that, and what they have said to me is that they have talked about doubling their consulting workforce in Canada over the last two years, and they specifically talked to me about Latin America, where they have an initiative to add about 6,000 skilled SAP workers. They are only about a quarter of the way there.

I applaud all of that, but to answer your question, I think the four questions I would have to ask SAP's CEO if he were sitting in a room with me:

1. How many new or improved products can your customers realistically absorb, and what kind of staffing level would you suggest that they have or will need?

2. Is everybody on board that's necessary to bring these skills gaps to a manageable level? I mean that probably more in regard to channel partners, again getting back to the point of supporting them and sending them to be out there in the market helping people. And not just throwing bodies at projects, but helping them develop their projects and knowing everything about what it takes, other than manpower, to make a successful SAP implementation happen.

3. Can SAP continue to expand its base of midmarket users and keep them, and large companies that they've had for quite a number of years, equally content, recognizing that labor needs among the two bases are considerably different?

4. Lastly, can they build confidence in the marketplace that these new manpower issues that they're talking about, and probably will continue to talk about, will bear fruit - and by when?

In summary, I can say they took on a very tough skills challenge when they embarked on certain strategies, and it's going to be tense for a little while, we're seeing, because it's just not easy down there at the small and medium company level to grow internal talent. And that tends to be what you do when there are skill shortages: accelerate the learning curve for internally growing expertise. That's very hard to do, even for large companies; a lot of them do a very poor job of that -mentoring, coaching, training, stuff like that.

But for small and medium-sized companies, for those of you who are listening today, SAP workers in these environments usually wear multiple hats. They require more than one specialization. If you come in, you hit the ground running and you never stop running and you are usually too busy to train people.

These are employers with little or no bench strength: They can't just shift resources around - take some people offline, put some people online - and there are minimal requirements (that maybe we'll go into later in the conversation) for what kind of people they're looking for. I think there is going to be a lot of pressure with those people, and we'll talk about what some of the solutions might be for the small to midmarket today.

Reed: One of the aspects of the SAP skills debate that I think is important is that not all SAP skills have the same level of demand at any particular time. The great thing about your quarterly reports is that you're up to speed on what data is tied to skills trends that are happening now, so tell us your latest research findings on which SAP skills are hot.

Foote: Yeah, let me tell you how we define "hot" here. I am an ex-Gartner guy, we have some ex-Gartner people here, so I guess I am wedded somewhat to the magic quadrant. The way we built that magic quadrant here is talking about skills that are strong to weak, which is based totally on the amount of money people can earn if they have it: Are they talking about 12% of base pay or 3% of base pay? Strong would be up at the top of the range.

Then we talk about skills as cold to hot, which is the growth rate. What you want is something that is up in the upper right hand corner, which is paying a lot right now and is also on a tear, so it's going to be worth a lot more. That's how we frame this.


 

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