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Gartner: Winning back North America will be tough for SAP

LAKE BUENA VISTA, Fla. -- SAP's biggest challenge has become a quest to reinvent itself in an effort to meet the demands of the ERP market, according Yvonne Genovese, Gartner analyst and research director.

Confusion permeates the SAP customer set, Genovese said, even as the German software behemoth works to re-establish its North American sales efforts with its xApps, R/3 Enterprise and mySAP products. Genovese, who delivered a session at Gartner's Symposium ITxpo titled "SAP: Transformation or Adaption?" sat down with to talk about what she called the tangled web that SAP weaves.

Do people understand the R/3 Enterprise platform?
No. SAP did not market this very well. It's almost been a hushed event. Is there an obvious potential problem for users?
Yes. Life is going to get very complicated for those users. OK, you have these extensions, [then] there's a supply-chain extension and an HR extension, for example. Now those extensions will have release levels. So you could potentially be at HR release 1 and SCM release 3.

If users are looking at SAP strategies today, their biggest question is 'Which way do I go?' They say: 'Do I do go and buy all of mySAP? Do I buy R/3 and add mySAP components, or do I just stick with extensions and then use the technology that SAP is going to provide with R/3?' The R/3 users are at this crossroads: what do they do next? What can SAP do about it?
Well, they're working on it. SAP is not known for its marketing prowess. That's an issue. They've got to get much better at this. The North American sales channel, which is the contact for the North American customer set, is virtually broken. They are trying to break it and fix it. They haven't had a consistent sales leader who can help them break through the monotony, and figure: 'How do we really sell this product -- and what are we selling?' How do you explain it to users?
R/3 Enterprise [is] the next release of R3. After this, there will be no more big upgrades. It's not just a name change. It's an actual freeze of the code. What they have done is they have one big center, what I would call an object, so users can attach things to the outside of it without upsetting code. They have some things they are going to call 'extensions,' and these extensions are going to be attached to the object. That's how they are going to get functionality improvements to the R/3 product. Does SAP still have a reputation for being too cumbersome?
In the mid-market they certainly do. And it's very true... because what you have is the most flexible application to implement up through the point that you go live. If SAP handed the product to you and I today, when we came to the go-live date, you would have a very different product than I would have. Whereas if you are looking at a J.D. Edwards [application], the chances of you and I weaving the same way on a clearly defined path through the application are very great.

What happens to a mid-market user is that it seems easer, and less costly, to take the defined path than it is to try to build something that is almost custom for them. What do you think of SAP's cross-application initiative, xApps?
It's not the concept that is a problem; it's the go-to-market strategy. xApps is the application of portals, workflow and business functionality. One example is for mergers and acquisitions. Let's say across a company, at a strategic level, it's required for you to pull the process and the data from throughout the company and apply strategy to it.

The issue is there are very few people who understand everything that goes on with a merger and acquisition. Right now, the biggest [rift] is between the business people and the technology people in enterprises. In order to get to the level of creating xApps, like they want you to, you have to have a meeting of those two minds. And there are very few people in the world that can do that. Is the company up for it?
I think they'll do the functionality piece of it. I think the technology changes are longer [in] coming. Because of their sheer size, it can hurt them, but it's not going to kill them.


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