SAP Sees Integrating Processes as Key to Future

In the face of competition from Oracle and Microsoft, SAP lays out its corporate strategy, with an emphasis on supporting customer growth through process innovation.

During an investment symposium Wednesday at its North American headquarters in Newtown Square, Penn., SAP AG executives talked about the companys success to date—particularly in the Americas, where it is facing heavy competition from rival Oracle Corp.—and laid out its corporate strategy moving forward.

Bill McDermott, CEO of SAP America Inc., the U.S. division of A.G, said the company is the clear leader in the industry, with 44 percent of market share in the United States, and plans to extend that with a focus on its customers customer.

He pointed out that SAP has seen 12 consecutive quarters of double-digit growth, and during its past quarter the go live number on SAP implementations went up 30 percent.

McDermott also said that the company has a "near zero" voluntary leave from the executive staff.

"Theres been not one executive turnover on my team—everyone is in the game," said McDermott, referring to the executive shuffle thats been occurring at Oracle that includes three chief financial officers in less than two years.

/zimages/1/28571.gifSAP looks to keep Oracle at bay. Click here to read more.

The last CFO, Greg Maffei, left office earlier this month after only four months on the job.

During a Q&A session with press and analysts, McDermott revealed, however, that SAP America quietly underwent an internal restructuring in July, breaking out the mid-market to a separate division.

"Most companies, when they reorganize, there is split milk, some even blow a quarter, but when we made the mid-market a separate unit, we had one of our best quarters ever," said McDermott.

"In retail, we are growing faster than any other vertical. In public services, weve made some very important investments. Our vertical strategy, segmented strategy, team, execution are right now at a better state than ever before."

Shai Agassi, head of software development at SAP, mirrored McDermotts thoughts that the company is spot-on in terms of strategy.

He referred to the scrum methodology in play with the software development team, whereby teams of 100 developers are organized and broken down into groups of 10 that work as a tightly knit team.

The idea with scrum—the same term used in rugby—is that the team huddles for strategy then breaks to tackle issues. They reconvene on a daily basis and at times sprint to tackle tasks.

Agassi laid out, in broad strokes, the companys current development efforts and plans moving forward, based on providing different areas of usage around core processes and the information around those processes.

SAPs work with Microsoft Corp. to integrate SAP processes with Microsofts Windows in a project code named Mendocino is a good example of this type of work, according to Agassi.

Another example is the companys work around SAP Analytics, announced at its Sapphire users conference this spring.

"That took a fundamental shift, first by building a fast engine to provide fast responses, and then [building] tooling for modeling that is effectively a factory for analytics," said Agassi.

/zimages/1/28571.gifSAP melds business process tools. Click here to read more.

To this end, SAP has brought in its product groups to build and launch analytics applications around specific functional areas. Similarly, SAP is developing a number of "composite factories" from applications that are targeted at various areas, like mobility or self service.

"Youll see us building over the next couple of years form-based applications," said Agassi.

"Theyre all built on a collection of enterprise services … when we build these composite applications, instead of hard coding directly into the SAP backbones, we identify what are the points of flexibility, of demand needs of Web services from our applications, and we build them, document them and expose them in a way that can be reused not just in our composite applications," but with ISVs as well.

The set of APIs that result from the composite factory work are available through SAPs Enterprise Services Repository.

Agassi said that with the launch of mySAP ERP, CRM and SCM 2005 suite, expected some time next year, it becomes the first services-enabled suite on the market today.

"This is not something we talk about as a future term anymore. Its now available," said Agassi. "Web services are documented, available by industry and available for consumption by ISVs."

While there are some other initiatives on the table—on demand software, open source, making the whole process of deploying SAPs software much easier—the company is primarily focused on supporting its customers growth through process innovation.

No surprise there, so is every other vendor in the IT industry—particularly Oracle and Microsoft.

Both companies are in the midst of reworking their ERP (enterprise resource planning) suites and underlying infrastructure to be more services oriented, with expected delivery dates between 2007 and 2008.

Likewise, based on its Enterprise Services Architecture initiative, SAP is service-enabling its mySAP suite of software, and working on building out the underlying platform, NetWeaver (which will evolve into SAPs Business Process Platform), with a similar delivery date of 2007.

For the moment, its a wait-and-see game.

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