Weighing in on SAP's architectural shift

AMR Research listened carefully when SAP Henning Kagermann said that 2005 would be a year of significant R&D investment, with major attention to transforming NetWeaver into a "Business Process Platform" from an Integration and Application Platform." In his description of the software giants strategy, analyst Jim Shepherd said "SAP may have finally reached the point where it has the technology, resources, and market conditions to take the leap." The leap he is talking about is the company's architectural revamp which will break the enterprise application suite into a portfolio of configurable process components. Below is Shepherd's assessment of the shift in SAP's product strategy:

="">SAP is a company at the top of its game, but it is about to take a remarkable gamble. The hardest thing to do as a market leader is introduce a product or concept that directly challenges the paradigm that led to your success. There is no guarantee (or even strong indication) that the idea of buying a configurable set of process components or Web services will appeal to buyers that are used to buying predefined application suites. Even if the concept succeeds, there is no guarantee that anyone will choose to buy these components from SAP, or be willing to pay prices that approach today's Enterprise Resource Planning (ERP) license fees.

Unlike most multibillion-dollar companies, SAP continues to be run by engineers who are genuinely committed to the spirit of innovation and dont seem to worry much about job security. Today's announcement by Kagermann indicates that SAP is about to take its flagship product through a profound architectural change; SAP customers need to spend the time to really understand what this will mean for them.

With a new bigger and bolder Oracle presence in thebusiness applicationsmarket SAPhas responded,and this gamblemakes sense given the direction the industry is taking toward Web services and SOAs.