SAP crystal ball gazing favours an ERP centric world   24th April 2006 In a speech to more than 1,500 technology leaders at the annual Software 2006 event in California earlier this month, Shai Agassi, an executive board member of SAP, explained the technology trends he sees in the marketplace. Unsurprisingly, Agasi sees a single, unified platform that provides a repository of coherent services as critical to meeting organisations' needs in the future - it just so happens that SAP has one! But is it in an organisation's best interests to coalesce all systems needs around a super-vendor? Gary Simon, FSN's managing editor discusses the implications. At first sight, the idea that all business applications should be served by a single technology platform sounds logical and appealing. Clearly, SAP's dominance of large scale enterprise transaction systems gives them a head start and their publicly declared intention to open up the SAP platform to other technologies and developers makes the proposition even more attractive. But is it wise to ‘put all of the eggs' in one basket? Can a single organisation competently meet business needs as diverse as ERP, customer relationship management, human resources, business intelligence and performance management? William Wohl, SAP's spokesman recognises the concern and is keen to allay fears that SAP is intent on locking customers into some sort of proprietary environment. “We fully understand that we are not going to have the customer's complete technology footprint. What we are trying to do is provide an agile ERP platform that has rich functionality yet provides good integration possibilities so that customers and SAP partners can build on the central capability we provide. This is why we have opened up the platform to the .NET and Java worlds and encouraged what we call an ecosystem of partners that can provide specialist functionality or industry expertise,” he told FSN. Michael Coveney a product strategist at Extensity, (formerly GEAC) is scathing about the idea. “Why do organisations need a single, unified platform that provides a repository of coherent services? For the past 30 years we have had single platforms – in the 1980s it was IBM MVS, for the mid-market it could be argued it was VAX VMS and today it is web services which for the first time frees users from hardware and operating system. It's also a platform that allows multiple applications to share metadata and interact with each other – providing it has been developed correctly to take advantage of the platform. The real trend is that software developers are starting to wake up to the realisation that their applications are part of a continuous, integrated business process and must be developed with that in mind. The last thing users want is yet another proprietary or ‘standard' platform. They just need developers to write for the one they already have, in a way that makes business sense,” he told FSN. Dave Turner , global marketing director of CODA, a financials software house, also questions the SAP-centric approach. “The advantage of a single platform approach is that there is only one backside to kick if something goes wrong, but it also represents a serious risk because there is only one place to go to resolve any difficulties. Regardless of the openness of their platform, customers will still find themselves locked in to elements of middleware and infrastructure that are effectively proprietary,” he told FSN. But Wohl hits back at the criticism that SAP uses proprietary technology pointing out that almost every vendor relies on some proprietary technology and that 30,000 customers willingly use and develop applications based on SAP's platform. “We must be doing something right,” he remarks. “Competitors like to say that we use proprietary technology but we are more open than we have ever been before,” he told FSN. There is also the question of whether concentrating effort around a single platform is strictly necessary. With the increasing emphasis on web services and a Systems Oriented Architecture (SOA), Turner argues it should be easier to integrate different systems in the future without committing to a single platform. But SAP is signalling the demise of the best of breed applications market. SAP's Agassi says “The days of buying point products are long behind us. Five years from now, customers will only buy suites. You won't purchase individual point products such as ERP, CRM, supply chain management or HR applications that will ship to you as separate entities and that will end up as a collection of services that you need to manage.” Turner believes Agassi is right to say that the best of breed model is under threat but cautions that it won't disappear altogether. “The reality is that not every organisation can buy into a completely new suite of applications in one go,” he told FSN. Wohl concedes that SOA provides flexibility and allows customers and SAP partners to develop composite applications but is keen to put the SOA concept in perspective. “You still need deep core functionality,” he told FSN. “Best of breed applications worked well in isolation but it was left to the customer to fashion the integration between them. Similarly, SOA provides the conceptual framework for integration but one still wants to limit the need for integration. We will provide rich applications that people want to use but if they want to add on other applications we are furnishing the technology to do it and the supplier ‘ecosystem' to provide the broadest capability and choice.” Whilst Turner agrees that the market has shifted from best of breed solutions to industry-flavoured suites of applications he considers that presenting and delivering such a broad assembly of applications poses significant challenges for SAP. “It's not easy to straddle the ERP transaction world at the same time as business intelligence and business performance management. SAP will either have to learn new skills or buy them in. But the more significant challenge is how to deliver this range of competencies to a customer in a coherent and co-ordinated fashion. For example, do you put pre- and post sales BI experts in front of the customer at the same time as an ERP consultant and business performance business analyst?” Wohl accepts that delivering an even broader portfolio of applications is challenging but considers that SAP is in a much better position to do it than competitors that have followed the acquisition path to growing their product portfolio. “Our distinct advantage is our longstanding track record in delivering applications and best practice processes into around thirty industry sectors. It's a widely recognised capability and we offer our competencies through that industry model. We are able to recruit the best minds in the industry and for example we have outstanding people in CRM and customers know that we can provide this expertise in their sector.” The arguments seem evenly weighted. There are clearly advantages and disadvantages to a single platform approach. These days, most customers have embedded their core functionality so the debate is increasingly about leveraging this capability and extending the life of the investment. By adopting a more open architecture SAP has stolen the central ground in the debate and better aligned itself with developments in the rest of the software industry. So, if you are a dedicated SAP user you can have your cake and eat it – but if you're not a SAP user you can also have your cake an eat it!! You pays your money and takes your choice. Related FSN articles Is SAP a mid-market ‘gorilla' in waiting?
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