SAP Wrestles with ERP Complexity
Updated · Oct 14, 2011
SAP (NYSE: SAP) is the 800-pound gorilla in the enterprise resource planning (ERP) space, with a quarter of the market, twice that of Oracle, its nearest competitor. And it comes in for regular criticism for being too complicated to install and maintain. While there may be some validity to these complaints, they have to be understood within the context of its operation.
SAP wraps its tentacles around just about every aspect of a business – it reaches onto the manufacturing floor, up and down the supply chain, and into financials, human resources (HR), and customer relationship management (CRM) – and hence into sales and marketing too. And SAP doesn’t pander to the mom and pop sector either. It takes on the largest, most globally active and most complex enterprises to be found anywhere, across the complete range of industries.
So is SAP ERP complicated? Of course it is.
That said, there has been an ongoing effort for a decade or more to add a greater level of simplicity to SAP deployments. SAP Business All-In-One, for example, is one such initiative. The company turned to its massive partner channel to harness their expertise to create prepackaged combinations of SAP Business ERP and other software modules that are pre-customized for different use cases. CRM, supplier relationship management (SRM) and ERP can all be combined into one ready-to-install package, for example.
“SAP Business All-In-One is one of the broadest and deepest solutions in the market, and its best practices and fast-start program reduce the effort needed for the early phase of an implementation,” said Christian Hestermann, an analyst at Gartner. “From the perspective of global penetration, ability to scale, market share and SAP’s commitment to the solution, SAP Business All-in-One is one of the strongest solutions in the market.”
Accordingly, Gartner placed SAP in its Leaders category in a recent ERP Magic Quadrant (MQ). It graded the company as number two on completeness of vision and number three on ability to execute. That said, Gartner does have some gripes with SAP Business All-in-One.
“Challenges with solution complexity and cost continue to be an issue, which makes the solution a best fit for companies that are in the upper midmarket, or by rapid growth, intend to be there in a few years,” said Hestermann.
He also brought up a point about it having a higher TCO for the same number of users, increased end-user complexity and less flexibility to adapt to changing business requirements compared to some of its competitors. As for the fast start program, while it has value early on, Gartner found its helpfulness diminished during later phases of an implementation.
Speaking of complexity, James Fisher, vice president of marketing for SAP’s Line of Business Finance solutions, is in charge of a healthy bit of SAP real estate. In the financial space alone, SAP delivers a full line of enterprise applications and services to manage: enterprise risk and compliance; accounting and financial close; treasury and related financial risk; financial performance; receivables, collections, invoice-to-pay processes, travel management and other financial administrative functions, including support for finance shared service centers.
That’s a lot of areas to maintain, never mind innovate. Yet SAP is active on new (or improved) product development on several fronts. This includes cash position analysis enabled by High Performance Analytics Appliance (HANA) in-memory computing, on-demand solutions for travel and expense management, extensions for payment approvals and point-of-sale customer financial information fact sheets from mobile devices, advanced collections, credit and other analysis via embedded analytics, commodity management including risk mitigation, enhanced lease accounting, enhanced IFRS support including disclosure management and XBRL capabilities, and industry accelerators for tailored performance management.
But the company is aware of persistent user requests for ease of use and smoother implementation.
“We have been working on a unified user interface and single technology platform which enable more efficient implementation, training and maintenance of the full suite of financial and other ERP applications, both from the user as well as system support perspective,” said Fisher. “We’ve further developed complementary rapid deployment packaging which combines this technical simplicity with fixed-scope services and best-practice configurations to ensure predictable, reliable implementation outcomes with lowered risk and higher returns on investment.”
He also calls attention to investments in role-based process improvements that help the productivity of users. This encompasses areas like dedicated collections workbenches, treasury trading environments and process views that can be configured to suit specific workflow needs. Additionally, the company has compiled a library of best practices learned through successful implementations at customer sites. These are made available to new customers to streamline their implementations and help them get the most out of their investments, said Fisher.
Look, too, he added, for another rash of rapid deployment options, mobile extensions and embedded analytics, all of which are aimed at improving usability and lowering cost of ownership.
“We’re rolling out our rapid deployment library of software, services and business practice configurations that customers [can use] to build a tailored enterprise software environment out of interlocking and modular parts,” said Fisher. “The baseline rapid deployment solution for Financial and Managerial Accounting makes a perfect foundation, over which we are delivering both extended financial infrastructure technology involving everything from shared services call centers to sophisticated treasury management, as well as industry-tuned extensions that contain the manufacturing, service, or other industry functions for which we are well known.”
Compared to a decade ago, then, the company has clearly made progress. Part of the reason is its “switch framework” that enables SAP to develop additional functions without disrupting the basic platform.
“This helps us to develop more quickly, and it also helps our customers preserve investments in existing infrastructure without requiring upgrades to acquire new functionality,” said Fisher. “There is also great synergy developing between the various technical innovations centered upon business processes.”
In financials, for instance, the base ERP transaction processing capabilities are now complemented by embedded cash analytics, mobile extensions for things like payment approvals, and “in-memory” data stores that enable better deeper financial analysis.
Just this week, SAP said it will provide customers with more frequent quarterly updates, including user interface (UI) enhancements, and the company extended support for ERP 6.0 and Business Suite 7 until 2020 to give customers better long-term stability.
The move, SAP said, “demonstrates our commitment to enduring, mutually beneficial customer partnerships.”