A recent academic paper–Chan and Lui, “Rescuing Troubled Software Projects by Team Transformation…”–discussed the components of ERP failure. The paper presented a handy checklist for what to do to help ensure a successful ERP project. Here it is, in no particular order of importance:

• Top management support.
• Realistic project objective.
• Right ERP strategy.
• Suitable ERP software and hardware.
• Stable requirements or business processes during implementation.
• Alignment with specific requirements.
• Relatively rapid implementations.
• Remaining within budget and scheduling constraints.
• Good technical support from the vendor.
• Good project management.
• No task conflicts among team members.
• Lack of culture clash.
• Non-bureaucratic project organization.
• Correct estimation of staff learning curve.
• Positive user characteristics.
• User involvement.
• Honest information policy (no circulation of unfounded rumors).
• Timely data migration.
• Adequate technical know-how.
• Non-problematic technology base.

At a very high level, this serves as a checklist of ways to avoid ERP failure, which has become a hot topic again, thanks to the SAP-Waste Management imbroglio.

Demir Barlas, Site Editor

In India, many IT newcomers, known there as “freshers,” are more eager than ever to break into the SAP market, and often turn to third-party SAP certification as a way of doing so.

Typical of the expectation that certification leads to SAP work was a post on SAP’s SDN that read, “I have a friend of mine…[who] has a functional expereince [sic] of 10 years in sales with L.I.C and he has done SAP SD Certification in the month of November, from Genovate Mumbai he has still not got placed and he is lookin for his first SAP Break.”

Anyone who follows SAP forums or mail groups will be intimately acquainted with variations on this message: Which certification will get me an SAP job? The question gets asked over and over because the answer is too unpleasant for people to accept: Only actual SAP experience is a valid qualification. For people who can’t get on an SAP team in their current position, or endure the prospect of waiting five years or more to transition to a company implementing SAP, this is a traumatic answer. Psychically, it is easier to believe that an SAP foothold can be bought instead.

This irrational optimism is part of the reason that third-party SAP training and certification companies like Genovate prosper. Genovate, which does most of its business in India, routinely charges $3,142 for single SAP courses lasting about ten days. That’s more money than the average Indian makes in a year, and the ten days of simulations are a far cry from the three years of actual experience that employers are seeking.

It’s important to note that, at least on the surface, Genovate doesn’t market itself as an SAP job placement service. Many Genovate trainees are working professionals who come for job-relevant training, a perfectly legitimate and value-added service. But many Genovate trainees are also “freshers” who think that certification will get them an SAP job. These people clearly haven’t done their research, or else they’d know that, in the SAP job market, Genovate certification (unlike actual project experience) doesn’t count for anything special.

This raises a question I’d like to ask our readers: In the end, does the SAP certification market function as a kind of tax on ignorance? Is there something shady about it, or does the fault lie entirely with the gullible freshers?

Demir Barlas, Site Editor

Waste Management, which spent $100 million on SAP software and characterized the project as a “complete failure” in a lawsuit filed March 20, is out for blood. The company seeks damages, including punitive damages, from SAP, whose Waste and Recycling Software software was excoriated by Waste Management in the text of the lawsuit. In part, the lawsuit alleges that, “Unknown to Waste Management, this ‘United States’ version of the Waste and Recycling Software was undeveloped, untested and defective.”

Waste Management came to SAP via the “Safe Passage” program that was supposed to entice PeopleSoft users to SAP during Oracle’s drawn-out bid for PeopleSoft. At the time, Waste Management was a company in crisis. SEC Administrative Proceeding No. 3-10513 had found the following: “As early as 1988, members of Andersen’s audit engagement tram recognized that Waste Management employed ‘aggressive’ accounting practices to enhance its earnings.” In the brouhaha that followed, Waste Management’s board fired the company’s management.

Waste Management’s executive suite attained their current positions in 2004. As such, it seems that the company had a lot on its plate at once: overcoming an crisis, appointing new leadership, and launching a major ERP project.

This is not to say that Waste Management’s lawsuit is mistaken. No one can know for sure until after the wheels of justice turn. However, as it is, something seems lost in the telling. How could a company spend $100 million on software that is “undeveloped, untested and defective”? More pertinently, how could these facts about the software be “unknown” to management? ERP implementations can take years, and are accompanied by rigorous testing and planning. If SAP’s software is indeed a “complete failure,” Waste Management’s executives might well have been asleep at the wheel; no one should pay $100 million and wait two years to find out they’ve bought a defective product. If SAP’s software turns out not to have been to blame, Waste Management will still have done damage to SAP’s share price and reputation — for how long, no one can tell.

Demir Barlas, Site Editor

SAP will establish an R&D center in Seoul, South Korea, according to Korea.net. The deal, brokered by the Ministry of Knowledge Economy and the Korea Trade-Investment Promotion Agency (KOTRA), will see SAP hire 53 employees and invest $21 million over the coming three years.

SAP Korea will be the third R&D center of note in Asia, joining SAP Labs India and SAP Labs China. Korea.net reports that SAP Korea will be dedicated to business intelligence (BI) and database management.

In addition to establishing the R&D center, SAP has signed a partnership with South Korean company Samsung SDS aimed at growing SAP’s share of the Asian ERP pie while expanding the IT service opportunities available to Samsung SDS in the region. Samsung SDS CEO Kim In mentioned China as a big target of the alliance: “The mutual and comprehensive partnership will help us sustain the domestic ERP market of 10 percent annual growth and lay a solid foundation for the rapidly expanding Chinese ERP market.” Analyst David Mitchell of Ovum is bullish on the Chinese opportunity, but sees challenges ahead: “The Chinese ERP consulting, implementation and management services market is going to be an extremely contested ground. Korean companies will attack it.”

Demir Barlas, Site Editor

An article published recently by editor Michael Kanellos on CNET described SAP as playing “second fiddle to Oracle.” The phrase is buried in a post about why green technology can provide a boost to European IT, and isn’t backed up by any kind of market share numbers. It’ll be interesting to see how SAP responds to this, as the company typically gets its hackles up when portrayed as anything but the leading (by revenue) company in enterprise applications.

Kanellos isn’t necessarily interested in market share, as the first part of his article is more about the weakness of European brands. In this regard, he’s the second media figure today to opine that the SAP brand is weak. Earlier, in an interview with SAP executive Bill McDermott, the Philadelphia Inquirer noted that, “Many people see SAP’s signs in train stations and airports, but don’t know what you do.”

The counterargument is that people who make technology buying decisions do know what SAP does, even if the person on the street doesn’t. If you’re interested in the strength of the SAP and Oracle brands, try canvassing the executive suite rather than the airport.

Kanellos’ article might be more of an attempt to wrangle up some free controversy and page views, reminiscent of when he claimed that the iPhone (currently doing $2 billion of business per quarter) would “largely fail.” That comment generated a lot of heat in the blogosphere and in the Apple community, and this one might in the SAP world, but in both cases it may be best to take the commentary as entertainment rather than news.

Demir Barlas, Site Editor

A recent article in Crain’s Detroit Business disclosed that DTE Energy Co. of Michigan posted a $120 million overrun in the cost of its SAP project. DTE, which had budgeted $263 million towards its SAP project in 2003, finished the migration in 2007 at a total cost of $383 million.

While only insiders know exactly why the project finished with such a large cost overrun, it’s possible that DTE could have paid more attention to preparation and training, which studies have revealed to be the most important factors in a successful ERP implementation. For example, DTE apparently elected to upgrade to a newer version of SAP in 2005. Leap-frogging its own original implementation plan suggests that DTE didn’t think hard enough about the project at its inception. Floating intentions can doom otherwise efficient projects.

That said, one shouldn’t minimize the difficulty that DTE faced during its SAP project. David Meador, the company’s CFO, explained on a conference call last month that, “We had systems that we’re replacing that were over 30 years old. In total, we replaced over 160 systems, and it caused some disruption in our operations.”

DTE’s overrun should be a warning to companies facing an SAP migration or upgrade that anything less than optimal training and preparation can result in a tough implementation experience. Educate yourself further by reading this tip on 10 things to watch out for during an SAP implementation and this explanation of the respective roles of SAP service and third-party consulting before and after an upgrade. Also feel free to browse our SAP upgrades and integration topic center for other tips and tricks. The more you know, the less chance you’ll have of becoming the next SAP overrun story.

Demir Barlas, Site Editor

At BrainShare 2008 SAP and Novell announced that they are taking their relationship to the next level and are making SAP enterprise applications compatible with Linux Enterprise in an attempt to satisfy the open source crowd. The companies intend to:

• Optimize SUSE Linux Enterprise for SAP’s data center infrastructure requirements.
• Further promote SAP Business All-in-One solutions based on SUSE Linux Enterprise.
• Collaborate within the SAP Enterprise Services Community program to help strengthen customers related to the SAP governance, risk and compliance (GRC) practices.

In theory, this will simplify SAP deployments for companies by allowing mission-critical operations to be run on Linux and effectively reduce TCO. The need for this initiative was explained briefly by Léo Apotheker, deputy CEO, of SAP, who pointed to customer demand for Linux as a core platform.

SAP also mentioned the importance of Linux Enterprise in conjunction with SAP All-In-One and Business ByDesign, thus clearly stressing that the midmarket is a target.

Eric Samuels, Assistant Editor

According to Germany’s Boersen-Zeitung newspaper, SAP is considering the elevation of current Deputy Chief Executive Leo Apotheker to co-CEO alongside Henning Kagermann.

If it pans out, it won’t be the first time SAP has had a co-CEO; Kagermann was once co-CEO along with Hasso Plattner. Co-CEOs aren’t unheard of in business; companies ranging from Schwab to Verizon have had them. For some reason, though, the phenomenon is much rarer in the technology industry. Can you imagine Larry Ellison or Marc Benioff having co-CEOs?

Apotheker is supposed to become co-CEO next month, according to Boersen-Zeitung’s anonymous sources. Keep your eyes peeled.

Demir Barlas, Site Editor

According to Marc Benioff, CEO of Salesforce.com, SAP has “not seen innovation in the last 10 years.” Those comments were made in a recent interview with ZDNet, in which Benioff twice claimed that SAP has not been responsible for creating anything “unique to the industry or value-added technology.” This comment was particularly provocative because Benioff seems to believe that Salesforce.com has been responsible for e-business innovation in a way that SAP has not. The logical response to that assertion is that, whatever the case with SAP may be, Salesforce.com is not an innovator either. Siebel tried hosted CRM before Salesforce.com, and the Salesforce.com AppExchange is manifestly indebted to the iTunes and eBay B2C models.

Salesforce.com’s key innovation has actually been its marketing strategy, which has caused Salesforce.com to become the company most commonly associated with the hosted/on demand paradigms despite the fact that other companies got there first. Sure, Salesforce.com got the execution and marketing right, but this still doesn’t constitute the kind of disruptive innovation that Benioff wants to claim for himself and deny to SAP.

SAP, meanwhile, pursues innovation through not only its regional labs, which may commit as much of 10-15 percent of their resources to investigating emergent technologies, but also through the SAP Innovation Institute, which reaches out to universities and executives to collaborate on emerging technology and business trends. Much of SAP’s innovation is on the business process front, as the company assimilates process flows into the core platform. Business process change is not as sexy as the debut of a fancy Web 2.0 tool, and the daily grind of development represents more of an incremental than a game-changing innovation, but it’s none the less important for all that.

Benioff states, “I have a hard time thinking about what SAP is going to be known for at the end of the day.” This comment demonstrates the Salesforce.com guerrilla marketing culture in action; it signals the importance Benioff places on an e-business company to be “known” for something rather than, for example, to do something quietly well.

To read what SAP thinks about Salesforce.com’s model, read our interview with SAP’s Zia Yusuf.

Demir Barlas, Site Editor

It’s important for SAP to succeed in growing its partner ecosystem. In any battle with Microsoft, for example, SAP will need to muster a credible challenge to Redmond’s vast partner channel.

We recently spoke to Zia Yusuf, EVP of SAP’s Global Ecosystem and Partner Group, to get a status check on SAP’s collaborative efforts. We ended up learning more about SAP’s equity investment strategy, the importance of SDN, and even an opinion on why the kind of Web 2.0 embedded in Salesforce.com’s AppExchange won’t work in a B2B context.

Read our writeup of the conversation with Yusuf here.

Demir Barlas, Site Editor