What SAP Said at SAPPHIRE 2007 and What They Really Meant

What SAP Said at SAPPHIRE 2007 and What They Really Meant
(And How it Will Impact Consulting)
by Jon Reed 

Another year, another SAPPHIRE in the books. One thing we can always count on: some “major” announcements from SAP. This year, there wasn’t much by way of industry-altering news, but the latest announcements showed that SAP is on the move once again.  In this look back at SAPPHIRE/ASUG 2007, I’ll analyze four of SAP’s major announcements and provide my best “translation” into what they really mean. Then I’ll take each news item one step further and speculate on how this news will affect SAP consulting. The announcements below are not exact quotes from SAP. They are my own paraphrases of the key points.

Announcement 1: “Enterprise SOA is no longer hype, it has arrived.”  

Translation: “SAP understands the needs of IT managers and executives for affordable and adaptable software solutions, so bear with us while we assemble the Web Services platform of the future.”  

In fairness, SAP has come a long way in the area of Enterprise SOA. If live customers are the best judge of functionality, then SAP is correct that SOA has arrived. SAP’s latest version of the NetWeaver Enterprise Services Repository contains more than 1,000 productized enterprise services that companies can use as “business process building blocks.” I personally sat in on live demos of companies that had assembled their own Enterprise SOA business processes and had them up and running.

One company had implemented an automated bill presentation service with two weeks total labor time. There are a couple of catches: you have to be running on mySAP ERP 2004 (or preferably mySAP ERP 2005) to leverage the full benefits of SAP’s Enterprise Services Architecture. And SAP is still “web-enabling” its product line. At SAPPHIRE, SAP committed to the service-enabling its entire mySAP ERP Business Suite by the end of 2007. (mySAP Business Suite includes the core ERP release and also the add-on CRM, SRM, SCM, and PLM applications.) 

Implications for consulting:
SOA is still evolving, but its impact on consulting demand will be felt soon. SOA is beyond the “testing” point and it is clear that SOA will help companies customize their systems and build new functionality without the costs and headaches of old-fashioned custom development projects. For this reason, anyone involved in SAP consulting needs to be aware of how these SOA trends are going to impact skill sets.

Now more than ever, technical consultants need to actively pursue the web services knowledge and tools that will allow them to make a transition from “classic client-server” consultants to web-savvy programmers and NetWeaver administrators. But Enterprise SOA is going to impact the skill set of the functional SAP consultant also. We could devote an entire article just to this point. For functional consultants who want to learn more about the process modeling tools and SOA functions that might impact their work, SAP’s own BPX (Business Process Expert) community is a great place to start.  

Announcement 2: “mySAP ERP 2005 will be the foundation release through 2012. You will not need to upgrade again.” 

Translation: “We know you’re sick of paying for expensive upgrades. If you upgrade one more time, you won’t have to go through that kind of hassle again. And you’ll get some great new functionality in this release.”

After a couple of “false starts” with the 4.7 “Enterprise Edition” release and the brief moment in the sun for mySAP ERP 2004 (often called ECC 5.0), mySAP ERP 2005 (a.k.a. ECC 6.0) does appear to have the stability and forward-thinking features to truly be a foundational release, as 4.6C was for years. How will SAP deliver new functionality in the future? By utilizing web services, companies will be able to install ‘enhancement packages’ onto the core release when they need new functionality.

Since business conditions change so rapidly, it’s unfair to hold SAP to a long-term promise, but it’s clear that the speed of business and emergence of on-demand solutions is going to require SAP (and other major vendors) to find revenues from other areas besides core upgrades. SAP is listening to its customers on this point and we expect SAP to honor this promise (though SAP will find innovative ways of charging for add-on applications and services).  

Implications for Consulting:
When you combine this announcement with the accompanying reality that as of the end of 2007, extended maintenance costs for companies running on 4.6C will jump from 2 percent to 4 percent, one thing is clear: SAP customers are going to be in heavy upgrade mode. With only a small percentage of companies running on ECC 6.0 (under ten percent from what I can tell, but growing fast), that’s a lot of upgrade work.

Although we can expect offshoring to lessen the needs for on-site SAP developers, the upgrade push is going to create work for SAP consultants in almost every other stripe, with particular demand for system administrators, BI/BW specialists, and core functional consultants in FI, HR, and to a lesser extent in SD/MM. As those upgrades take hold, the add-on “Business Suite” products will create their own set of skills demands, with CRM leading the way. Of course, this doesn’t mean that all SAP consultants will be in good shape. Without the skills in the latest releases of SAP, some very good consultants may find themselves on the outside looking in.

Announcement 3: “SAP is Building Web 2.0 Enhancements Right into Its Core Release.” 

Translation: “If we take blogging seriously, hopefully bloggers will say good things about us.”

I’m joking a little bit here. SAP may fear the implications of not being in step with Web 2.0, but SAP’s Web 2.0 projects are less about bad press and more about integrating structured and unstructured data within an enterprise. Up to this point much of SAP’s focus has been on structured information. Even BW was built to ease the analysis and reporting of structured, transactional data. But the era of leveraging unstructured information within ERP systems has arrived.

Whether it’s pulling in the information from Microsoft Office documents or taking advantage of wiki-based interactions with customers and partners, SAP is trying to realize the potential of Web 2.0. Of course, SAP is not alone. Many Fortune 100 companies are finding that they don’t have to just be the victims of the blogosphere. They are using Web 2.0 projects to engage their customers and help win PR battles. SAP has taken note.

SAP’s current Web 2.0 strategy seems to be: embed Web 2.0 functionality within a user’s daily SAP environment. One example cited during CEO Henning Kagermann’s keynote was that of an e-procurement process that easily linked to blog/wiki-type entries between a company and its business partners during a complex purchasing scenario.

Implications for consulting: SAP’s Web 2.0 push does not seem to have the same big implications for consultants as the previous announcements, but it’s an overall understanding of how the interactive Web 2.0 era is changing the rules of business is critical for consultants of all types and industry backgrounds. Technical consultants may feel the impact sooner, as projects that entail Web 2.0 unstructured data integration may soon come to the fore. For now, we’ll have to take a “wait and see” attitude towards how Web 2.0 will impact the skills demand for SAP consultants. Most SAP consultants are still responsible for the structured business transactions that are not going away, even as they are becoming more deeply integrated with analytical tools. Which brings us to our next announcement.

Announcement 4: “SAP delivers major new enhancements to their BI (Business Intelligence) and Master Data Management (MDM) products.”  

Translation: “We’re not just a transactional system anymore. All the money you paid automating your business is going to pay off through intelligent networks and decision support.”

SAP is not alone. Every major ERP vendor is trying to add more value to its core transactional system by providing easy-to-use analytical tools and executive decision support. Taken together, these tools are known as “business intelligence,” or as SAP calls its product, BI (short for SAP NetWeaver BI). In truth, this was not the most-hyped announcement of the conference. However, it was included in one of SAP’s major press releases, and throughout SAPPHIRE/ASUG 2007, you heard constant references to SAP BI innovation. We’re also seeing a big push with SAP’s Master Data Management (MDM) product. MDM is not formally part of BI, though the integration between MDM and BI is getting tighter.

MDM is considered an add-on to NetWeaver that customers have to pay extra for, so we’re not seeing the prevalence of adoption as we are for BI. In the age of integration, having solid Master Data across regions and systems is crucial. SAP is poised to capitalize on that demand. Its latest MDM release, version 5.5, delivers the functionality many customers have been waiting for, so we should see an uptick in MDM installations in the coming year.  

Implications for Consulting:  The market for BW consulting has been strong for a while and we can expect that to continue. Now that BW is built right into the NetWeaver platform, it is shipping with every SAP upgrade. Many companies are in the process of upgrading from BW 3.5 to BI 7.0. The big change that we’re seeing now with BW consulting is that in addition to BW specialists, BW (or now BI) touches on almost every functional and technical area in SAP. That means that BI skills are going to be a part of every consultant’s skill set in one way or the other.

Those consultants who have the opportunity to obtain BI certifications are going to add another level of marketability to their existing skill set. Even better, those who have rolled up sleeves and obtained project experience during the BI upgrade cycle will see their opportunities increase. As for MDM, I talked to one systems integrator on the floor of SAPPHIRE who said that MDM consulting demand is gradual, but still slow. SAP is picking up most of that demand internally, but that will change as MDM installations become more prevalent.  

Conclusion
This year’s SAPPHIRE announcements were not earthshaking, but taken together, they point to a market that has really found its legs after some sluggish post-Y2K years. We can credit that market growth to the victory of SAP and Oracle over the best-of-breed approach to enterprise software, along with the alignment of SAP to the era of Internet business through the use of Enterprise Web Services.

 Closer ties to its own ASUG user group and the creation of online development communities are also helping SAP a great deal in terms of anticipating its own customers’ needs and building out the right functionality. It will take a good strategy to navigate this market, but for those of us with a stake in SAP in the years to come, the opportunities will be there.