Leo the ring master

Leo Apotheker from Dennis Howlett on Vimeo.

I spent the last day – yes day – poring over the SAP keynote and subsequent press/analyst/blogger session from last week’s TechEd. I was at both but wanted to be doubly certain I’d heard certain statements correctly. There are many nuggets in co-CEO Leo Apotheker’s tightly packed and entertaining keynote but for this post I want to concentrate on a single issue: the price rise in maintenance and support costs.

The video runs 9 minutes and is my mix of material posted to the SAP website. The first part is where Leo talks about enhancement packages, the solution manager and the reduction in need for testing as a value proposition. That runs about 3 minutes. The remaining 5 minutes cover two questions raised in the Q&A on the price rise topic.

The immediate reaction from some of my developer colleagues was that while the argument sounds convincing, they would never apply patches or upgrades without full regression testing. These developers are from the ‘old school’ where much of what they have implemented has included customizations. My sense from many years following SAP is that these are representative of the vast majority of Business Suite (R/3) customers who followed SAP’s lead in taking what is a vast toolkit of business processes and then stitched them together for their own purposes.

Anything that involves customizations demands support because you never know what you’re going to break when you apply a patch/upgrade. It is therefore hard to see how SAP can remain confident that the included solution analyzer will accurately and predictably capture everything that might need retesting.

While Leo may believe that dovetailing the new offering to specific value add may be the panacea for those resisting the price hike, the proof will be in the eating.

As a general principle, SAP is encouraging its customers to move away from customizations. That makes sense in the back end. As I’ve said before: where is the differentiation in the way you keep a set of books? There isn’t any. However, there are differentiations to be had from the way you manage customers and goods/services in the supply chain. Those often require customizations or elaborate configurations. What I think we all want to see though is much simpler ways of rolling out, patching and upgrading of software. That was the essential promise in Leo’s keynote.

The more worrying statement is in Leo’s linking a what appears to be a claimed full survey of all customers to ‘the majority’ who he also claims understand the value of the new offering. By implication, these same customers are willing to pay the price increase. Despite Leo’s masterly handling of the topic, I just don’t see that. I find no shortage of customers willing to discuss dis-satisfaction on this point. My challenge to SAP therefore is simple: release the research.

Despite these comments I am grateful that Leo graciously gave me time for conversation just a few moments before making his maiden TechEd keynote. I am also mindful that despite its perception of rigidity and ‘not invented here’ mindset, change is happening inside the company. How deep that goes remains to be seen.

PS – I agonised over whether to make this public because it is unclear whether the material is fully copyright. Even so, I am pretty certain I am not mis-representing the company or its public statements and the recordings I have used are in the public domain for all to see.

The full keynote

The full Q&A

Tagged as: ERP, Leo Apotheker, SAP, SAP AG