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SAP CEO: Customers can speed economic recovery

SAP CEO Henning Kagermann takes center stage at the company's annual U.S. user event, and tells customers they must invest in their own economic recovery.

ORLANDO, Fla. -- SAP wants its customers to know that now is not the time to scale back IT investments.

Making his first public keynote address in the U.S. since being named the sole CEO of SAP, Henning Kagermann told attendees of SAP's annual Sapphire conference that, even amid worldwide economic uncertainty, businesses should take the opportunity to invest in reshaping their business processes in order to become more competitive.

"We should not wait and say, 'There will be a recovery,'" Kagermann said. "We should do the opposite. We should adjust to it.

"If we want to have success, we need to have growth, and if we want to have growth, we need innovation. Today, nearly every innovation is enabled by IT."

However, Kagermann warned against putting a heavy emphasis on IT consolidation and even expressed concern that a number of SAP's partner companies at the conference are focusing too narrowly on it.

"Consolidation should not become an objective by itself," Kagermann said. "It has no value, and [consolidation] is just cleaning up the messes we've made in the past. We have to get rid of these cycles of consolidation."

In the end, he said, many consolidation efforts result in an additional layer of infrastructure complexity, thwarting the very goal companies are trying to achieve.

During his 70-minute address, Kagermann used several video presentations to illustrate how SAP is investing in nascent technologies, including radio frequency identification (RFID) technology, which tags individual products with radio tags and miniature antennas, enabling a company to, for example, add an entire pallet's worth of inventory instantly, rather than scanning a bar code on each product.

In the video, the chief information officer of Proctor & Gamble, an SAP customer, demonstrated how the company is beginning to use RFID technology to create a more adaptive supply chain and cut costs.

Kagermann said the technology lowers a company's total cost of ownership (TCO) because it allows a company to avoid using a large number of people to manually input large amounts of data. "I think we'll be earlier than anybody else, giving you this technology to give you a competitive advantage," said Kagermann.

Steven Jennings, an account director of information technology with Roche Diagnostics Corp., in Indianapolis, said he found the RFID technology interesting because he wasn't aware that SAP was active in the field. He said RFID could potentially be a boon for his company, which makes medical devices, if it can be easily integrated with his 4.6C SAP implementation.

Kagermann also touted the capabilities of a service-based enterprise architecture centered around the company's NetWeaver platform. He said a company can reduce TCO and increase its adaptability by building customized applications on top of NetWeaver, which can be integrated with mySAP Business Suite as well as with other platforms, such as IBM Corp.'s WebSphere and Microsoft Corp.'s .NET Framework.

Despite appearing somewhat nervous while on stage, Kagermann delivered an upbeat address, reflecting what has been an upbeat year so far for SAP. The company's stock price has risen steadily in recent months, and many analysts and users believe that SAP will eventually benefit from the recent acquisition tumult between PeopleSoft Inc., J.D. Edwards & Co. and Oracle Corp.

Kagermann became the company's only chief executive earlier this year, after co-founder and former co-CEO Hasso Plattner stepped away from the role to become chairman of the SAP supervisory board, similar to an American board of directors.

Yves Garcia, vice president of architecture at Innovapost Inc., in Ottawa, said he hoped Kagermann would discuss SAP's NetWeaver development platform, because his company is interested in using it to integrate SAP with legacy ERP systems.

"It eliminates the barriers between SAP and non-SAP systems," Garcia said. "You don't need to worry about both sides of the integration."

Garcia said his company is using version 4.6D but expects to upgrade in about a year. SAP is pushing customers to upgrade to version 4.7, code-named Enterprise, and has issued a 2004 support deadline for any R/3 versions that predate 4.6C.

Another keynote attendee, Lynn Morgan, a human resources manager with Florida Power & Light in Juno Beach, Fla., said she wasn't as interested in what Kagermann had to say, but is more interested in checking out the newest product demos.

Morgan, whose company is running HR, financials, supply chain management and materials using version 4.6C, said she is getting ready to upgrade to 4.7 in order to implement e-learning and e-tailing functionality. She said she is upgrading not only to avoid support headaches related to SAP's looming deadline but also to try to get her entire company using SAP products.

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