The flipside of SAPs recent success and a surprise

Summary:Congratulations to SAP for a great quarter as reported by Larry Dignan. Having seen Henning Kagermann's restrained performance at TechEd, I wondered whether the company had blown up for this reporting period.

Congratulations to SAP for a great quarter as reported by Larry Dignan. Having seen Henning Kagermann's restrained performance at TechEd, I wondered whether the company had blown up for this reporting period. Several of us noticed Kagermann's haircut and  I recall thinking 'I hope that's the only thing that gets a haircut this week.'

In recent weeks, I've spoken with a couple of SAPpers who are part of the Enterprise Irregulars, checking the pulse of different parts of the business and specifically GRC and HR. Both appear to be going gang busters. In HR, Thomas Otter told me the company is doing well across the board - at least in EMEA. Mark Crofton, who is on the GRC beat says much the same.

It turns out that success creates strain in the implementation market. There just ain't enough people to go around. One person told me he had been approached by a head hunter to lead an HR engagement in the UK where the remuneration package amounts to around $360,000 for a year's work. The laws of supply and demand seem immutable.

Even so, I believe SAP (and Oracle) could do more to ensure customers get a better deal all the way around. A good start would be helping their customers in the implementation stakes. Unfortunately, this is not a part of the market the vendors can easily tame. Only last month, Vinnie Mirchandani noted:

As I wrote earlier this week and several times in the last couple of years, SAP TCO is a mountain which casts a shadow on so many IT budgets

Firms like Accenture, KPMG and Deloitte all earn handsome revenues from enterprise implementations. Accenture for example turned $19.6 billion for the year to 31st August, 2007. By comparison, SAP is a $13 billion business. Vendor leverage is limited. Even so, after thousands of similar implementations, you would have thought the enterprise vendors would be driving implementation costs down to utility pricing. It doesn't seem to be happening.

In the announcement, SAP talked about briefly its deal with Wal-Mart. This is a surprise. Wal-Mart (along with other big retail) has traditionally been wedded to its own systems development. Wal-Mart is careful in its financial stewardship and cost control. I can only presume the maturity of ERP solutions has reached a point where the packaged application vendors can realistically compete against home grown. It will be interesting to see how much headway is made in this segment over the coming quarters.

Topics: IT Employment, CXO, SAP

About

Dennis Howlett has been providing comment and analysis on enterprise software since 1991 in a variety of European trade and professional journals including CFO Magazine, The Economist and Information Week. Today, apart from being a full time blogger on innovation for professional services organisations, he is a founding member of Enterpri... Full Bio

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