SAP Now Sets Its Sights on Integration

CEO Kemna outlines new middleware role, vertical-arena changes.

German enterprise software company SAP AG finally succumbed to U.S. economic pressures early this month when it said it would lay off 300 employees, or about 7 percent of its U.S. work force. The company is paring its U.S. focus from 21 vertical markets down to 12. Wolfgang Kemna, CEO of SAP America Inc., said his company is committed not only to enriching its CRM (customer relationship management), supply chain management and ERP (enterprise resource planning) software but also to delivering middleware that enables customers to integrate those applications with software from competitors. eWeek Department Editor John S. McCright and Senior Writer Renee Boucher Ferguson recently met with Kemna at SAP America headquarters in Newtown Square, Pa., to discuss the companys direction.

eWeek: What effect will SAP Americas move to reduce the number of vertical markets addressed have on customers?

Kemna: The change will affect our sales and marketing efforts in 2002. It will not affect service to our existing customers, regardless of the industry. SAP will continue to support 21 vertical industries on a global basis, and all of our products will continue to be available to customers in the U.S.

eWeek: Which verticals will SAP America target, and which will it de-emphasize?

Kemna: The 12 industry clusters will be high tech; aerospace and defense/ engineering and construction; automotive; chemical/pharmaceutical; mill products; oil/gas; consumer; retail; apparel and footwear; service provider; media communications; and insurance.

We also will focus on three areas in the public sector: federal, state/municipal governments, utilities. Areas which will be supported globally but where there will be less of a proactive sales focus in the U.S. include mining, health care and higher education.

eWeek: SAP executives talked about maintaining a 15 percent revenue increase in their most recent earnings call. Is that still attainable?

Kemna: Our guidance for the full year has not changed.

eWeek: What specific areas are you going to be steaming ahead on?

Kemna: CRM—big time. Supply chain—big time—and ERP. For example, in the [human resources] space, its all about employee self-service and portals. Thats a hot, hot, hot ticket.

eWeek: SAP bought portal maker Top Tier Software last spring. How important are portals to SAP?

Kemna: Portals alone can be a business, but its a niche business. What we are going after big time is the portal offering as part of a holistic solution, which is the portal, the Web application server and the collaborative middleware.

[Portals are] where we extend the footprint into customer-facing solutions—e-selling or e-procurement or virtual supply chain solutions.

eWeek: How is the integration with Top Tier going?

Kemna: Its a work in progress. Once in a while, you need fresh blood that challenges the organization. Yes, there are sometimes, lets say, fruitful controversial discussions. But thats sometimes what you need.

eWeek: How will the mySAP Exchange middleware announced last month enable SAP customers to move into the Web services era?

Kemna: Integration is now big time back as a value. [mySAP Exchange] was the missing piece.

We have to play in middleware big time because there will be something else in, I dont know, five years from now. And we have to make sure we have those [application integration] stacks.

Our current customers want to understand how they can leverage their current investment, so its not SAP or nothing. This is what we want to avoid. We did this in the 90s, and we basically left companies with the impression "Its either SAP or nothing." We understand that with the superlarge corporations, the large corporations, we cannot continue like this and say "OK, its one-stop shopping." There might be PeopleSoft [Inc. applications], there might be Oracle [Corp. applications running in our customers IT shops]. And they have legacy systems.

So what we want to do is we want to give them an opportunity to embrace all of this with collaborative middleware solutions in that stack thats not limited to SAP. And also into the machine-to-user interface with the portal.

eWeek: SAP is expected to join the Liberty Alliance effort let by Sun Microsystems Inc. to develop a network authorization standard that competes with Microsoft Corp.s Passport technology. Why is Liberty interesting?

Kemna: Security is on everybodys mind. It has been prioritized big time. We are a young industry, and everybody tries to impose [security standards] on each company. Thats why its so important.

eWeek: Are customers saying you should consider Liberty because its not Microsoft, because so many of these viruses are hitting Microsoft technology?

Kemna: Sure. Corporate clients of ours have [given] a lot of scrutiny to Microsoft products because they are all over the place.