Some SAP customers are resolving to do something that seems unlikely for 2009 -- spend on new SAP projects.
When asked about their SAP application resolutions and SAP strategy for 2009, a handful of SAP customers surveyed indicated that they expected their IT budgets to remain the same as they were in 2008. That said, they'll still go ahead with some new projects that they hope will bring greater SAP ROI in the new year.
For instance, Joerns Healthcare, a Wisconsin-based manufacturer of high-end beds and other medical products for long-term care facilities, will focus on implementing business intelligence tools, CRM and portal, and SAP product lifecycle management (PLM) and document management. Joerns wants to get more information into the hands of its business users and has a long-term goal of bringing online purchasing to its customers, according to CIO Partha Biswas.
"We may need to scale back some of these investments, but we will continue to leverage technology to come out stronger at the end of this economic cycle," said Biswas, whose company completed its implementation of SAP All-in-One in May 2007. "If you don't invest in some of the strategic plans, you may think that you are riding this out, but are you creating a foundation that will help you emerge as a strong player at the end of this downturn?"
Companies seem more willing to spend on SAP products than those of other vendors, according to a recent UBS survey of the spending priorities of 100 CIOs. CIOs expected IT spending in general to decline about 2% over the previous year, according to the report. But when asked about demand for products from specific vendors, the CIOs expected to see spending increases in 2009 for SAP products but not for products from IBM, Oracle and Microsoft.
Biswas expects Joerns' IT budget to remain about the same as last year. But he doesn't think it will stop him from delivering some business intelligence tools to his end users. In the long term, the company will implement Business Objects business intelligence, and has started that process. But for the short run, he has asked his staff instead to find or develop tools to get the information into the hands of business users more quickly and cheaply.
"What is our end goal? We need to empower our salespeople," Biswas said. "For that, they don't really care what kind of extracting tools are in place. They just want the information. And there are different ways of getting that information."
The County of Sacramento, Calif., having recently completed an upgrade to SAP ERP 6.0, will now focus on an enhancement and countywide rollout of Employee Self Service for human resources, as well as developing a standard time interface for all of the county's applications, according to CIO Michael Connelly. The county, which has 15,000 employees and a $2.7 billion annual budget, is SAP's oldest public sector customer, having gone live with ERP in 1998.
Saladino's, a foodservice distributor based in Fresno, Calif., will finish its SAP All-in-One implementation this coming year. But the company, which has 475 employees and annual revenue of about $385 million, is also looking to implement and integrate a warehouse management system. They are now completely manual in the warehouse and want to automate processes as quickly as possible, CIO Craig Urrizola said.
"I wouldn't say that's where we wanted to end," he said of the ERP project. "We really want to get the warehouse management system in place."
Making application environments more efficient can free up money for innovation. Analysts advise SAP customers to focus on wringing as much cost as possible out of their current environments.
"I think there's a lot of finger-pointing at the vendor, but one of the problems I see is there is a tremendous amount of waste in IT," said Joshua Greenbaum of Berkeley, Calif.-based Enterprise Applications Consulting. "It's as much a barrier to innovation as anything else."
Streamlining the procurement processes simply to make new software purchases is a huge opportunity to reduce costs, Greenbaum said. With some companies going through as many as five review cycles to purchase a new piece of technology, the lengthy process tends to force companies to look at the incumbent products, and the incumbent vendor, as the path of least resistance, he said.
But more and more companies are opting for third-party software and Software as a Service (SaaS) products to address needs more effectively, according to Paul Hamerman, vice president and principal analyst with Cambridge, Mass.-based Forrester Research.
"This runs counter to SAP's efforts to increase the number of users in each account," he said.Improving application lifecycle management of SAP products is another opportunity to reduce costs, Greenbaum said. Particularly when it comes time to change something, he said, the lack of good lifecycle management really impairs customers' success.
Using some third-party tools like IntelliCorp or Acresso can help, particularly with upgrades, Greenbaum said, because they give a deeper understanding of what is and isn't being used.
"Let's make sure we understand what we're trying to change before we go and change it," he said.
In turn, SAP customers should also look to consolidate instances and optimize IT staffing levels, Hamerman suggests.
For those launching new projects, every project should have its own ROI analysis in order to make a better case overall for software purchases, Greenbaum said. "The onus is on the user to make sure they're doing the right kind of measuring."