There is a growing number of failed SAP public sector deployments, ranging in scope from the Los Angeles Unified School District (LAUSD) megadeal to the smaller Burnaby, B.C. project. Now the city of Portland, Oregon can be added to that list. A city analyst has revealed to the media that Portland’s SAP project, budgeted at $31 million in 2006 for a 2007 go-live date, is now estimated to be nearly $50 million and won’t be complete until 2009. Portland has fired its systems integrator, Ariston Technologies and Consulting, and is working directly with SAP services to get the system up and running.

It isn’t clear who’s to blame for the cost overrun and project delay, but Portland and Ariston will no doubt implicate each other in time. The soundness of the underlying SAP software itself has not been questioned by either party.

One of the interesting features of Portland’s SAP implementation is the claim, made in a budget document back in 2004, that:

“Users are aware of the many recent developments in ERP software that they feel would better serve their needs. Staff specifically cited on-line real time queries as a high priority as well as the ability to drill down or summarize data. Most said that the staff time spent compiling financial information from various sources in different formats outweighs the cost of a new system.”

While it’s impossible to argue over the merits of the business case without access to all the numbers, it seems highly unlikely that improved data reporting capabilities justify a $50 million expense (to say nothing of maintenance costs for years to come). Of course, there’s also the benefit of getting rid of Portland’s old legacy systems, but how expensive can these be? In the case of Washoe County, Nevada, another SAP ERP customer working with Ariston, 23 interfaces costing between $15,000 and $20,000 each were ditched after implementing SAP. Call it a half million in savings.

Granted, enterprise applications investments are not always about immediate hard cost savings. For many companies, the investment is strategic: for example, it enables them to remain competitive, keep pace with the data demands of their ecosystem, or achieve long-term efficiencies in front and/or back office processes. But the public sector is not the private sector. Portland isn’t in competition with other city governments, and its main job is to provide basic services that governments have successfully provided for thousands of years before the advent of software. It’s very easy to understand why blue-chip private companies such as Coca-Cola or Bank of America would go with SAP and related applications investments, because the investment allows them to do things they couldn’t even contemplate before (such as smart picking in Coca-Cola warehouses). It’s no so easy to understand why city governments are eagerly disbursing tens of millions of dollars for software for enterprise software.

There’s a reason it’s called enterprise software.

Demir Barlas, Site Editor

There’s a major shortage of SAP skills in the marketplace, thanks to the inevitable lag time between SAP’s aggressive debut of new products and IT workers’ ability to master the associated skills.

That’s the message from Foote Partners’ upcoming report on IT skills and compensation. The report is massive, encompassing hundreds of skills, cities, and vendors, but its relevance to the SAP world is focused on the following takeaways:

Hot SAP Skills: SAP MDM, SAP ERP, NetWeaver BI (formerly SAP BW) and SAP HCM are seeing double-digit growth in compensation over the past several months.

Fading SAP Skills: ABAP, Basis, Payroll, SAP SD.

This isn’t meant to service as an index of importance. In other words, the “fading” skills aren’t less vital or widespread; they’re just not seeing compensation growth at the same pace as the hot skills. Similarly, the hot skills are not necessarily the high-volume skills; if you’re an SAP HCM expert, you can command an increasing premium, but you might have fewer opportunities to apply those skills. There are many such factors involved in maximizing your marketability. However, based on Foote Partners’ insights, it’s a safe bet to say that techies with experience in any of the “hot” categories should be talking to recruiters immediately.

In terms of the “fading” categories, it’s worth wondering whether, in time, these could be yesterday’s skills.

Demir Barlas, Site Editor

The show floor was electric this year at Sapphire 2008 in Orlando. With over 15,000 attendees, the vendors had their work cut out for them. I saw booths that featured magicians, Guitar Hero, and a 2008 Porsche. A handful took the sex appeal approach. With all these distractions, people were wandering around aimlessly everywhere. Upon noticing the clear behavioral differences I got the urge to ask these people what their original goal was en route to Sapphire.

Mike - UK based oil company
Mike said that he was doing board research on SAP for his “own personal learning experience.” He described his experience at Sapphire thus far as a net cast over everything SAP. His company is not currently using SAP as an ERP solution, but he seemed to think that they will in the future.

Deon - Australasian forest products company
Deon was focused on upgrading SAP, since his company had not upgraded in quite some time. He seemed almost angry in asking,”How does SAP justify the cost of an SAP upgrade?” and “Can it be quicker, with less disruption to the business?” Deon also said his company was very interested in Duet and that Outlook integration is very important.

Nancy - North American computer technology and consulting corporation
Nancy was at Sapphire to gather info about HCM and to “learn more about Cognos.”

Lynn - North American agricultural biotechnology corporation
A “secret agent” for her rapidly growing company — no time to spare! Lynn is researching new capabilities to be unlocked within SAP in order to leverage it properly. She was completely on task, admitting that she has “several meetings with SAP to understand, from a strategy and execution standpoint, where we can go from here.”

Does Sapphire help the average corporation? You tell me… what did you set out to accomplish at Sapphire this year? If you didn’t make it this year, what would you do in a sea of vendors and unlimited enthusiasm?

I’ll be going around next year, so be sure to look for me… I’m sure looking for you.

Eric Samuels
Assistant Editor

For most industry watchers, ‘SAP’ and ‘BPM’ go together in the context of ProcessWorld, SAP partner IDS Scheer’s annual Business Process Management (BPM) shindig. But at Sapphire 2008, SAP showed signs of wanting to address more BPM capabilities via NetWeaver BPM.

NetWeaver BPM, codenamed ‘Galaxy’ when it began in 2006, is not a full-fledged BPM system relevant to heterogeneous environments, but a way of adding human intelligence to SAP applications: What Wolfgang Hilpert, senior vice president of NetWeaver BPM, calls “intelligence in assigning and finding the right roles and rules.”

At a small panel at Sapphire 2008, Hilpert talked at length about NetWeaver BPM. He faced the same challenge faced by everyone who discusses BPM, which can simultaneously function as a technology, a business practice and a way of coordinating the activities of enterprise applications in a human-centric way. In the SAP context, NetWeaver BPM is best understood in the final context. Hilpert offered some helpful examples:

1. In a hiring situation, there are several steps (job postings, pipeline management, candidate evaluation, etc.) that can be orchestrated into a repeatable (but still tweakable) process so that participants need not worry about filling out forms and collecting administrative data related to the process.

2. In a transactional situation, there could be what Hilpert calls “complex conditional expressions” that govern behavior in composite scenarios. Imagine, for example, that some of your customers or suppliers get preferential treatment in certain circumstances, triggering other actions on your part. This could impact how your accounting or shipping systems treat these stakeholders. Using NetWeaver BPM, you could write as many special rules as you wanted in order to deal with preferential situations, and the BPM tool would orchestrate the underlying SAP applications, notify the proper employees in case of exception, and take other steps accordingly. This is one of the true strengths of BPM, as it takes what would ordinarily be a fire drill and turns it into an orderly process.

BPM scales in value as it touches an increasing number of enterprise applications, systems, and employees. The examples Hilpert gave are compelling, but not outside the SAP context. In other words, don’t expect NetWeaver BPM to function as a BPM system that can touch non-SAP objects.

Hilbert concluding by saying that, “Long-term, BPM will be the only process designer in SAP.” That should be of interest to those looking to develop hot SAP skills.

Demir Barlas, Site Editor

The city of Burnaby, British Columbia (B.C.) is a small Canadian town that could furnish the next big SAP cost overrun story. In 2005, Burnaby committed $10 million (in Canadian currency, which is currently close to even with the U.S. dollar) to an SAP financials system. Now, in 2008, an article (SAP costs buried?) in BurnabyNow reveals that the cost estimate is up to $26 million, and that it isn’t clear when the system will go live. New costs keep springing up, including $1.4 million for servers, heating and cooling units, and single sign-on software at least partially necessitated by the SAP project. Apparently, Burnaby had retained Telus for SAP integration, but Telus dropped out of the project in 2006, so the history of problems predates the current dispute over costs.

The Burnaby case doesn’t necessarily say as much about SAP as it does about the customer. As in the Waste Management case, there are clearly customers who are wrong for SAP–companies going through a major executive suite shuffle, for example, or, as in Burnaby’s case, customers who buy the Mercedes when all they need is the Toyota. Consider that the politicians in charge of selecting SAP at Burnaby believe that the small city’s alleged accounting complexity requires the installation of a $10 million accounting system, which costs three times as much as the politicians are willing to spend on improving local neighborhoods. It will be interesting to see whether Burnaby’s citizen stakeholders are at peace with this kind of allocation of their tax money.

Demir Barlas, Site Editor

SAP’s Q1 results just came in at the lower range of SAP’s guidance. The Americas software and services business was down 13 percent from Q1 2007, indicating that the U.S. recession is registering a meaningful impact on software spending across the board (since Oracle’s and Microsoft’s numbers were similarly hit). The bad news in the U.S. market may be just beginning. In December of last year, the Institute for Supply Management reported that “Purchasing and supply executives predict that capital expenditures will increase by a meager 0.7 percent in 2008, compared to a 18.2 percent increase reported for 2007.” There’s little new money in the U.S. for capital expenditures on such things as software, and the average lead time for capital expenditures in manufacturing is now up to 118 days, meaning that manufacturers are delaying whatever projects they have on hand.

The ISM surveys touch tens of thousands of respondents who are, in many cases, closer to the enterprise’s day-to-day budgeting decisions than the CIO function, so the data should be taken more seriously than CIO surveys that purport to give a picture of true IT spending realities and intentions.

The interesting thing about SAP’s software and services results is that they were much stronger in other geographies, such as EMEA (up 23 percent) and Asia-Pacific (up 47 percent). APAC is probably the safest long-term geography for SAP, given the vast numbers of East Asian manufacturers and other companies who are only semi-automated. Europe is strong for now, but Germany and France are feeling the pinch in macroeconomic terms, as consumer confidence and purchasing power are dipping there, causing a drag that will be felt across the EU. The New York Times recently reported on a middle-class French family who could no longer afford store-bought baguettes; that’s the new Europe for you. Meanwhile, wealth is increasingly flowing to China and India. If the trends evinced in SAP ’s Q1 results hold up, this will shortly be the promised land for SAP.

Demir Barlas, Site Editor

Business Objects works… right? That seems to be the general consensus from its customers. Frank Dravis, back in 2005, wrote about categorizing data quality problems. In this blog he referenced what Professor Richard Wang, TDQM Co-Chair at MIT, calls the 15 dimensions of data quality problems (listed below).

Recently, DMreview.com reported that Business Objects sent “an apology to customers for issues related to poor service including delayed deliveries of the company’s technology.” When the technologies aren’t even available to its customers then these data quality dimensions are taken out of the equation… or maybe it adds one, “availability”; to be fair this is a problem and the business intelligence business is a business and customers are expected to receive what is promised to them.

After reading around a bit, it seems as though people thought the Business Object’s apology to its customers was a bit odd and unexpected but if we simplify the core of what is going on here, using a common metaphor as an example, it becomes clearer. Lets pretend you are a movie buff living in New York City. You have chosen the largest media provider available in Times Square as the place you always reserve your movies before they are released, specifically because they guarantee that you will get a copy. What happens when you show up to purchase that movie and the store doesn’t have it? You have an internal debate on whether or not to reserve movies from that particular store again while the manager gives you a formal apology.

In the end, unless I missed something, this boils down to a matter of credibility. Did this skew your view of Business Objects? Maybe. Maybe not. What I’m interested in now is figuring out how Business Objects ranks on the 15 dimensions of data quality. How would you rank Business Objects on the 15 points above?

Eric Samuels
Assistant Editor

This is the second SAPPHIRE in which SAP and ASUG will present together. For attendees, this means a wealth of sessions, networking opportunities, and demos in the same location, but at the possible cost of creating some scheduling complexities. How do you decide which of the hundreds of sessions to attend?

I asked that question to Cyndi Leamon, chief learning officer with ASUG, this morning, and she reminded attendees to make use of the automated scheduling features on the SAPPHIRE and ASUG registration sites. This feature allows you to pull up sessions based on your corporate role, the functionality or topics in which you are interested, or the community of which you’re a part. I also asked Cyndi to give our readers a heads-up on key ASUG sessions at SAPPHIRE and got the following tips:

1. There will be two pre-conference sessions devoted to Business Objects, the business intelligence vendor acquired by SAP. Attendees will have a chance to learn about the Business Objects roadmap, understand its role in enterprise performance management, and access working Business Objects software in dedicated kiosks.

2. There are also two pre-conference sessions on the subject of enterprise service-oriented architecture (SOA), which few people know anything about but which is transforming the architecture and infrastructure of enterprise applications. One session will be a basic information session (completing the in-conference SOA 101 session) and the other will be a boot camp for architects to understand SOA integration, value tips, and best practices.

3 . Check out Session 5604 to learn about the value proposition for upgrading to SAP. This is always a red-hot topic, and anyone even remotely interested in an upgrade should be at this session.

See you all at SAPPHIRE next week!

Demir Barlas, Site Editor

With SAPPHIRE ten days away, this is a good time to list the top ten sessions–not by any objective quality, but by how I see them based on what’s hot

1 . Today’s Business Process Expert–What You Need to Know. This daylong event aggregates a whole posse of consultants, executives, and SAP users who will address what I consider the most overlooked topic in enterprise applications today: business process management (BPM). BPM is increasingly becoming a native part of SAP applications, so this could be a glimpse into the future of modeling, workflow, re-engineering, and continuous change, SAP style.

2. Workflow and BPM Open Forum. This session offers a drill-down into what some people consider the core of BPM. Thus, it complements session #1 above.

3. BMW MC: The Roadmap to a Successful ERP Upgrade. ERP upgrades are almost as difficult as ERP implementations. This session offers a firsthand look at an upgrade that went well, suggesting best practices to other enterprises thinking about upgrading.

4. Strategy and Challenges for Global Rollout of SAP Software. This is a bread-and-butter sessions for SAP prospects.

5. SAP and Business Objects: Understanding the New BI Platform in Detail. Business Intelligence isn’t an easy sell these days, but there’s a lot of value in BI if you get it right. This session will provide visibility into the Business Objects platform in a way that might convince potential BI adopters to get aboard.

6. Strategic IT: Getting the Most Value from Your IT Investment. Enterprises spend hundreds of millions of dollars on IT. This session brings together some heavy hitters from Pepsi, the U.S. Postal Services, and Harvard Business School to help enterprises get the most bang for their IT bucks.

7. RFID and Serialization Strategy and Road Map. If physical goods move through your supply chain, RFID should interest you. If you have SAP anywhere in your stack (not just as SCM), you’ll want to know how SAP plans to handle RFID, since RFID data can touch many SAP applications.

8. Leveraging SAP ERP to Drive Success for Midsize Manufacturers. There are hundreds of thousands of midsize global manufacturers who are behind their North American peers in terms of IT adoption. It’ll be interesting to learn SAP’s value proposition for this segment in more detail, because it might somehow inform SAP’s Asia-facing strategy in the years to come.

9. SAP for Utilities at CenterPoint Energy, Inc. Smart Grid is going to turn the utilities industry upside-down. Imagine being able to monitor your meter the same way you monitor your Vonage phone, and you get an idea of what’s waiting. We recently talked to Bob Frazier of CenterPoint recently, and he’s got a great story to tell about what’s going on in this space.

10. Security Open Forum: Security is at the top of CIO agendas year after year, and this session taps Halliburton, Coca-Cola, and The Home Depot to share risk management ideas and strategies with the community.

Demir Barlas, Site Editor

SAP’s Business Objects unit suffered a black eye recently. DMReview.com was forwarded a copy of an email from Business Objects to some of its customers that read, in part:

“As we look back the past several weeks, it is painfully obvious that our internal system issues have brought challenges and unwanted distractions to your ongoing operation of Business Objects software solutions…many customers have not been able to receive our technologies in a timely manner. You have our most sincere apology…”

The email was signed by Pascal Clement, SAP/Business Objects’ VP of Enterprise Information Management. After the email came out, Business Objects went into damage control mode with DMReview by issuing a statement to the effect that only a few (they didn’t say how many) Business Objects customers had been impacted. There was also no clarification on what had caused the service delivery problems.

Combined with the fact that “the Business Objects sales organization may have missed its Q1 targets by a wide margin in North America,” according to analyst Patrick Walravens of JMP Securities, the service failures are bad news for both SAP and Business Objects–especially when you consider how well Business Objects’ old rival, Cognos, seems to be doing at IBM after Big Blue snapped it up earlier this year. IBM’s software revenue is up $4.8 billion, or 14 percent, year-over-year, and IBM executives named Cognos as a big part of that success.

Demir Barlas, Site Editor