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Making sense of SAP SRM confusion

SAP's many products and small acquisitions have led to confusion among some customers as to which SAP SRM modules to purchase; one analyst had some suggestions.

An expanding supplier relationship management (SRM) market and SAP's many acquisitions have led to confusion about SAP's SRM products, according to an analyst. But there are steps customers can take to use this uncertainty to their advantage.

Part of the confusion comes from an industry-wide trend of ERP vendors offering more and more options for those customers in need of SRM, according to Deborah Wilson, a research director for Gartner Inc., of Stamford, Conn.

"Ten years ago, when we looked at an ERP company, most of them had one procurement module, if they had any," she said. "Now we see a proliferation of applications in this space."

Wilson noticed that many SAP customers, or companies considering SAP SRM, were confused about the products, what went together, what was sold as a suite, and what was included in an upgrade.

"We had to agree with them," Wilson said.

While many software companies -- including Oracle, SAP and Infor -- are expanding their SRM product offerings, she said, SAP's approach to acquisitions has added to customer confusion.

Whereas Oracle has bought larger software suites, SAP generally buys smaller companies with specific offerings.

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"Oracle has bought entire ERP suites -- PeopleSoft, JD Edwards -- so there really isn't the expectation as much with Oracle customers that they're going to get functionality from a new acquisition, because it's really a full separate product line," Wilson explained. "[Oracle has] not bought a sourcing tool like SAP bought from Frictionless and [tried] to blend it into their product line."

This is in line with SAP's "tuck-in" model of buying smaller companies and using their products to plug holes in its NetWeaver functionality. Although SAP recently shelled out $6.8 billion for San Jose, Calif.- and Paris-based Business Objects, SAP executives said the acquisition did not represent a change in strategy.

"I think [SAP is] trying to do the right thing in terms of getting all this functionality in their portfolio so they can make it available to customers," Wilson said. "But I think the way that they've put it together and are selling it at structured prices shows that they have some opportunity for learning."

This confusion has actually made some customers reconsider SAP SRM, according to Wilson. While some have decided on third-party products, others have considered SAP E-Sourcing.

Wilson did have some suggestions for customers considering buying SRM. The first was to consider only current products.

"Don't buy promises," she explained. "Buy what is in the software today, and then hopefully you'll be pleasantly surprised in the future."

Wilson also urged customers to have realistic expectations about maintenance costs. The market is at a point where companies such as SAP and Oracle have developed patterns in the way they make acquired products available to customers.

"When [SAP] gets [SRM] functionality, lately it's come in the form of separate modules available for purchase, not a part of the upgrade path," Wilson said.

Perhaps the biggest positive to come from this confusion is that customers actually have the chance to help SAP define its offerings, she said. For example, based on the products customers have bought, there is the opportunity to discuss functionality that should be included in future upgrades.

"As SAP pointed out to us, they have what they say is the most deep and broad functionality in terms of procurement," Wilson said. "[SAP has] a point, and their point is that with this number of solutions, it's going to be a bit challenging [to integrate them]. It's a fairly new issue, and customers have the opportunity to shape some of the policies and expectations."

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