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SAP focusing on delivering SAP best practices in a bad economy

SAP is working with a group of its largest customers -- dubbed the Premier Customer Network -- to deliver best practices to the smaller ones.

SAP is working with a group of its largest customers to develop a set of best practices that will be extended to smaller customers down the line, according to SAP executive Bill McDermott.

Assembled earlier this year, the Premier Customer Network is composed of 390 of SAP's largest customers, divided evenly among the Americas, EMEA, and the Asia-Pacific and Japan regions. The group has prime access to development, infrastructure, sales, consulting, and global support resources at no additional charge. The customers also provide direction on the vendor's product roadmap.

Within that group, SAP is working closely with 13 of its key customers – BMW and Apple among them -- to develop a set of best practices and lessons learned to pass to the others in the network and, eventually, to its customers outside the group.

"We ensure that the company is managing strategy and IT enablement in a very positive way, to create shareholder value," McDermott said.

SAP is also offering this group new ways of buying software. Some customers are being offered access to new software on a subscription basis – whether the software is deployed on-premise or on-demand. They sign up for a five-year term that gives them access to all of SAP's software and software-related services, he said.

Asked whether SAP was considering extending this subscription model to more customers down the line, McDermott said, "At the end of the day, we can't do that for every single customer. But we have to be agile and flexible with customers' business models and goals."

The group was mentioned on SAP's second quarter earnings call yesterday as one of the ways SAP is adapting its go-to-market strategy to the troubled economy. SAP announced yesterday that despite lower sales, tight operating cost enabled higher net profits than the first quarter.

The areas where SAP is seeing the highest growth include consumer product goods, the public sector, financial services, healthcare and higher education. Recently, SAP signed a deal with Boston University, which will replace homegrown legacy applications with SAP ERP financials, HCM, product development, procurement, project management, logistics, NetWeaver Portal and SAP Education Services applications.

"2009 will remain a difficult environment, but I am cautiously optimistic," SAP CEO Leo Apotheker said on the conference call.

SAP has also ramped up its efforts to make its value-engineering services more available to smaller customers -- something that used to be available to only the biggest of the bunch. In this exercise, SAP sends business process experts into a company to figure out how the business performs relative to similar companies -- for instance, whether its inventory levels are significantly higher. SAP estimates the amount of payback that can be had by making changes in certain areas.

It costs a lot less than a consulting firm would charge for the same activity, according to AMR Research senior vice president Jim Shepherd, and not many SAP customers know about the service.

"For a company that knows it wants to buy new applications or has some SAP apps and is considering turning on additional functionality, this is a really good, disciplined thing to go through," Shepherd said.

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