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SAP seeks to overcome skills shortage

SAP needs another 30,000 IT professionals to manage its product line, but as the company ramps up a new university program, businesses will need to get creative.

A shortage of workers with SAP NetWeaver BI and XI skills, among others, is sending salaries skyrocketing for consultants and in-house IT workers, according to recent research.

It's a shortage SAP itself is trying to address.

Salaries for certain SAP skills have spiked as much as $40,000 in the past few years because the release of new applications outpaced the skills needed to manage them, according to Justin Burmeister, an independent Basis consultant. For certain hot skill sets, such as SAP BI and Basis, in-house IT job applicants with the latest NetWeaver skills are now demanding between $120,000 and $140,000 a year. Consultants with hot SAP skills are billing between $135 and $200 an hour.

Companies willing to pay a premium are snatching up that talent. Burmeister, who's currently working for a small customer in Vermont, said that many companies are turning to costly recruiters or cold-calling already employed professionals and poaching them.

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"There's five open jobs for every one qualified person with the latest NetWeaver skills," he said. "The bar has been raised."

Burmeister's assessment supports SAP's announcement last week that it needs at least another 30,000 skilled professionals to manage its products.

Don Bulmer, SAP's vice president of industry and influencer relations, provided that estimate based in part on last week's release of an SAP-commissioned, Economist Intelligence Unit (EIU) survey that said executives thought it would be harder to find IT talent in general over the next three years. EIU surveyed 944 CIOs, CFOs, CEOs, senior vice presidents and senior managers. More than 60% of that group was from the United States, United Kingdom, France, Germany and Japan.

According to the survey, though, executives are not only afraid they won't find qualified people. They're afraid they're not going to be able to pay them.

Nearly half of the executives said an inability to meet salary expectations will hinder the company's recruitment of talented employees over the next three years. A total of 38% of respondents said the lack of appropriate skills and qualifications would make filling open positions tougher.

And while executives are worried about finding people with information systems skills, they're more concerned about finding people with softer skills. Almost half of those surveyed are concerned they won't find employees with the ability to deal with and manage change, as well as the ability to think strategically, compared with one-fifth who are worried about finding people with the right IT skills.

Some are worried that this skills shortage will cause companies -- specifically the small and midsized ones at which SAP's new applications have been targeted -- to delay implementations.

MDM, ERP, NetWeaver in demand

David Foote, of Foote Partners LLC, an IT skills staffing consultancy based in Vero Beach, Fla., said his research shows that SAP's skills shortage is worse than that of any other vendor. Increased pay is the best indicator of increased demand, and pay has increased by more than 10% over the past year for eight SAP skills, among them SAP MDM, SAP ERP, NetWeaver BI, and SAP HCM.

Foote said that IT salaries in general are increasing anywhere from zero to 5% a year.

"There's a certain amount of trepidation out there that has to do with staffing," he said.

But not everyone thinks the situation is so dire. Jon Reed, an analyst with Northampton, Mass.-based, said this skills shortage isn't nearly as bad as that of the 1990s, when there simply weren't enough people to fill everyone's IT needs.

"It's a situation where companies, if they're willing to pay a premium, can often get the subject-matter expertise they need," Reed said. "I don't really see it getting to the point of implementation horror stories."

SAP's main plan to solve this problem is to pour $545 million into a program that will train college students in SAP skills. The goal is to make this University Alliances program available to 4,000 colleges and universities over the next several years, Bulmer said. It's currently available in 900.

It's a good start, according to Simha Magal, a professor of management at Grand Valley State University in Michigan, which is already a member of the program. Companies in western Michigan are looking to hire at least 1,000 graduates to run their enterprise applications, Magal said. He is aiming to turn out at least that many every year from Grand Valley State's Seidman College of Business.

But the program doesn't address the need for experienced SAP professionals now, analysts say.

A case in point -- Magal said he can't turn out enough graduates with SAP skills because he can't find enough professors to teach them. Of the 80 professors at the school's Seidman College, just 12 are capable of teaching SAP.

"As soon as we have enough teaching materials and access to training, the program will explode," Magal said.

In the meantime, companies struggling to find certain SAP skills may take a lead from Buffalo, N.Y.-based New Era Cap. The headwear manufacturer is in the middle of transitioning from PeopleSoft to an SAP ERP system. The company hired five recent college graduates last year to work alongside more experienced IT professionals, according to Human Resources Director Siobhan Smith. So far, the implementation has gone smoothly.

"It's been an exciting project," she said.

Partnerships like this mean that eventually the end of the salary spike will be in sight -- good for employers, bad for IT professionals.

"I think this is a temporary spike, probably for the next couple of years," Burmeister said. "I don't think this will last forever."

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