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Did SAP drop the ERP ball by chasing SOA?

SearchSAP.com site expert Axel Angeli has strong views on ERP, SOA and other topics that often generate equally strong reaction. His thoughts on what's ahead for SAP in 2007 were no exception.

Veteran SearchSAP.com site expert Axel Angeli is known for not holding back on his views of the ERP market. His...

recent guest editorial, "SAP under fire: Axel Angeli on why 2007 will be tough for SAP," on the SearchSAP.com editorial blog was no exception, triggering a massive outpouring of reader feedback.

"For SAP, the year 2007 will be the most critical one in the recent history," Angeli wrote. "While the company is still working on revamping its product line, the competitors are preparing to attack. While the ABAP engine makes slight progress, the ERP components still wait for many enhancements requested by customers. This negligence will play well into the hands of SAP challengers, mainly Microsoft with its Dynamics AX."

Rob Ericsson, president of L10 Systems of Roanoke, Va., agrees that Microsoft is set to give SAP trouble in the small and midsized market. He concedes that SAP's offerings are more robust, but Dynamics will probably be "good enough" for many smaller companies that don't have millions to spend on IT.

"[Microsoft Dynamics] has a very nice user interface and probably lower TCO," Ericsson said. "I've worked with SAP in medium-sized businesses [less than $20 million in revenue], and it was a struggle for the internal IT department to maintain the SAP environment and keep it moving forward. Small companies have a difficult time attracting and retaining skilled SAP administrators and developers."

Another common complaint seems to be that SAP has a tin ear for user input and slow turnaround once the company does get the message, according to some readers.

More Alex Angeli on SAP
SAP under fire: Axel Angeli on why 2007 will be tough for SAP

SAP under fire: Axel responds

SAP under fire: Axel speaks out on what SAP should do next

"I agree with Axel's analysis that SAP has been neglecting enhancement requests from customers, including our own client who is a gold partner," said Touseefuddin Syed, senior SAP BI consultant at LSI Consulting in Waltham, Mass. "We ourselves have filed two production issues, HR extractor customization and BEx query character limitations. These are simple enough requests, but they have been neglected for three months."

Others are more optimistic about SAP's outlook. Sobhan Annepu, a senior programming analyst at Coca-Cola Bottling Co. in Birmingham, Ala., thinks SAP is on the right track. The company is up to date in all key areas of ERP, he argues, pointing to the fact that SAP is all set with ECC 6.0 and won't have any major new releases until 2010. This sets the stage for enterprise SOA and all its blessings for next-gen businesses.

"[Microsoft] is still far away from SAP's level," Annepu said. "Microsoft enters every niche market. That doesn't mean they can compete with SAP in the ERP market."

In a follow-up statement to his column, Angeli clarified his stance on the SAP vs. Microsoft issue.

"When it comes to the midsized markets, SAP ERP won't win the beauty contest," he said. "ECC is strong in features but weak when it comes to agility. For small and diversified production sites, the Microsoft AX 'Hub and Spoke' concept appears to be more convincing."

But Microsoft is not without flaws either, Angeli points out. One weakness is that AX still falls out of the Office licensing scheme and another is the frighteningly low number of developers who are familiar with the software. But the latest release of AX sports a virtual machine and a script-like programming language that speaks to a serious effort to attack SAP's markets, Angeli warns.

On the bright side, Exchange Infrastructure (XI) experts may be in for happy days. Angeli predicts a strong surge in XI implementations but emphasizes that XI is not an out-of-the-box solution quite yet. The kernel is stable, he wrote, but there's almost always some measure of tinkering involved. Middleware XI projects are likely to be mission critical, meaning those with the right skills will be in high demand.

"I fully agree that SOA is a concept whose time has come," Ericsson said. "Unfortunately, XI is not quite there. Because of this, customers will be spending more than they would like to get their XI solutions up and running. It is a good time to be an XI consultant, but SAP needs to come through on the product development side to make the party last."

Jawahar Rajan, senior systems consultant at Bowe, Bell + Howell of Durham, N.C., is one of those looking at a move to XI as part of a general SAP upgrade. XI will be key to communicating with the old, mostly Windows-based applications, but Rajan foresees high costs for training or hiring new XI talent.

"With the implementation of XI, we will have no choice but to move toward an SOA for any rewrite of existing applications," Rajan said. "As XI is still not an out-of-the-box implementation, we will have to look at the cost of implementation vs. customization. For a midsized company, this can be quite expensive to implement and customize."

Could this sudden demand for XI skills create another vulnerability? Angeli thinks so. If SAP can't support an XI surge, other players will surely step up and fill the void. Rajan agrees, saying, "If Microsoft comes up with a slimmer, out-of-the-box solution -- which they are good at -- their product will make a dent in the SAP application interfacing market."

Still, for all the doom and gloom, Angeli remains optimistic about the long-term prospects for SAP.

"I stand firm to my belief that SAP has not yet reached [the point of] practical SOA," he said, "although I am certain that they are on track and will take over leadership in less than three years from now."

Read more in SAP under fire: Axel responds and SAP under fire: Axel speaks out on what SAP should do next.

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