You've probably read Axel Angeli's guest editorial SAP under fire: Axel Angeli on why 2007 will be tough for SAP. Not surprisingly, there was an avalanche of reader responses. Some agreed and applauded the honesty, while some jeered and argued Dynamics was nowhere near ready for prime time. Axel answered two questions in depth yesterday; today he concludes his stint on the soap box by going to the heart of the matter:
What exactly did SAP do to fumble the ERP ball, and what can/should they do about it?

Axel: The SAP ERP is still the flagship of SAP, despite all efforts to gain market shares in areas where competitors seem to be strong. While FI/CO seems to be stable and has set the European way of accounting as IT standard all over the world, the SD/MM and PP areas are still areas where the customers ask for significant enhancements. Let us pick SD for instance… Currently, we still find a hybrid of functionality, powerful but extremely difficult to make any enhancements. And it is the latter that is more and more required by companies, especially if SAP wants to conquer the markets of the SMB. The classical areas of concern are variant donfiguration, pricing, special shipping & handling scenarios, intercompany invoices … all topics the experienced SAP consultant can be caught with a cheshire grimace on her/his face. 

Don't let me be misunderstood: the functionality is powerful and covers many, many areas. But if you need to do something special, the SAP approach with user-exits (aka customer enhancements, BADIs) has its severe limitations. 

To cope with the challenges of agility, a more object-oriented approach, one that has been rightly drawn and begun with the BAPI concept, is required. And again, one has to regret that SAP lost the completion of the BAPI concept out of sight. The SD-BAPIs are far from complete: e.g. the "order read" and "order create" modules have different interfaces, isolated pricing modules are still missing, variant configuration is still dug far down in the inside belly of the SD core modules. Modern ERP systems would break down an SD component into small, self-contained objects that inter-operate through message pipes. That would even allow to run a SAP SD fully decentralized, maybe the order creation on one instance, the delivery on a second and invoicing on a third one. Revamping the BAPI concept might already bring a high degree of progress and eventually a convincing argument to upgrade a newer SAP release, one based on ROI instead of simply falling out of maintenance. 

SAP did well in the MM sector when succeeding in rewriting procurement in the form of the SRM component. SRM has all that the purchaser needs and it integrates with ease many external offers, like life vendor catalogue access, auctions or goods tracking via slim or sometimes not so slim Web interfaces. Although SRM might well be broken down in smaller atomic units, it is a step into the right direction of an object oriented componentization. However, the drink may be poisoned here as well: while SAP admits the necessity of integration, they are still reluctant in releasing interface specifications to the public and offering demo hubs against which developers can test their development. 

The peril is ante portas, not mainly and only in the shape of Microsoft Dynamics, whose principle power lies in the marketing strength or through Oracle where we observe - I admit: to my surprise - an increasing number of new "Peoplesoft" installation, mainly in countries where SAP traditionally had a bad standing, like France for instance. There is also the open source community that seems to increasingly enjoy the ERP worlds after they worked the CMS fields to exhaustion.  

Momentarily the importance of open source ERP is low due to the fact that although open source (SAP is also "open source&quo they are mostly not "free software" sporting a pretty amusing variety of "licensing models". I have seen licensing constraints where software is free but consulting must be purchased by the owner of the code and others that keep the software free for developers but require substantial licensing fees for productive use. Both models cannot work, as it is too obvious that the makers want cheap labor from the community but are pretty selfish when it comes to give anything back.

But there are also good examples of open source and free ERP approaches, like Adempiere that - after divorcing from Compiere on arguments about licensing philosophy - became number three in the charts of the most attended projects at SourceForge. Until now the ERP has not yet reached the PHP or Python community that would allow to run distributed ERP on cheap Web hosted platforms, giving the notion of EDI (Electronic Data Exchange) a completely new flavor.

Editor's comment:
This is the last (?) part of Axel's take on the "SAP under fire" issue. As always, we'd love to hear your thoughts on the matter. Reply to this post or send your thoughts to mdanielsson@techtarget.com.

Matt Danielsson
Editor 

We received a tremendous amount of reader feedback on veteran site expert Axel Angeli's recent guest editorial SAP under fire: Axel Angeli on why 2007 will be tough for SAP. Here are some of the reader comments and Axel's responses.

"I agree with Axel's assessment that Microsoft Sharepoint will give SAP KM and EP a run for its money. I, with a group of other 'pioneers', have started an ASUG Special Interest Group to investigate and influence the interoperability of Sharepoint and the SAP Enterprise Portal. Many SAP customers will license the Sharepoint MOSS solution over the next few years because it certainly wins the 'beauty contest' and gives SAP a run for its money on robust search functionality.

Where Sharepoint is falling short is tying document management to business process via workflow and transactions. This is where you use Sharepoint for the user interface and document repository, but you run SAP workflow to handle the business processes, like approving documents based on document type and user hierarchies from HR organizational structures. I do not tout myself an expert in this area as we have just begun our journey down the path of interoperability, but I do see this being a relevant space within the SAP-Microsoft ecosystem.

– Name withheld, SAP Business Analyst, Longmont, Colo."

Axel: I am happy to read this comment. I am convinced that something needed to be done in this areas. SAP has all the necessary features including a basic WEBDAV support, allowing one to map any SAP repository data source as a network drive. One should maybe make clear to the Sharepoint newcomers that Sharepoint stands for two completely different elements: the Sharepoint Services and Sharepoint Portal Server. The Sharepoint Services allow reading and writing back documents to a Sharepoint enabled server, while the Sharepoint Portal is a content management system that makes use of Sharepoint Services but otherwise is just another "Portal" and competes with SAP EP in this respect. We integrated Sharepoint Services successfully to open source CMS like Joomla or DRUPAL, hence I don't see a reason why it should not comply with EP as well.

I would love to eventually read more on the progress of your ASUG SIG project and maybe participate on a blog on this.

"First of all, I think SAP didn't drop the ball. I think SAP is doing very good job. SAP has already released its major version ECC 6.0 in 2006. No major releases are due until 2010. So SAP is up to date in all areas of ERP. SAP is ready to complete enterprise SOA technology. More enterprise SOA implementation projects and SAP upgrade projects will be implemented in 2007. As a result, more XI projects will be implemented in 2007 and demand for XI skills increases. Microsoft cannot compete with SAP in the ERP marketplace. They are still far away from SAP's level. Microsoft enters every niche market. That doesn't mean they can compete with SAP in the ERP market.

– Sobhan Annepu, Sr. Programming Analyst at Coca-Cola Bottling Co., Birmingham, Ala."

Axel: Saying that SAP didn't drop the ball may certainly be a matter of how you interpret the situation. I would say that SAP exactly DID drop the ball by putting a moratorium on release upgrades for four years and hence leaving ERP in the current state. It feels like leaving the dish in the kitchen sink after an opulent dinner. A moratorium will exactly be the kind of advantage that the competition is waiting for to dash into the gap.

When it comes to the mid-sized markets, SAP ERP won't win the beauty contest. ECC is strong in features but weak when it comes to agility. For small and diversified production sites, the Microsoft AX "Hub and Spoke" concept appears to be more convincing. If I am asked to give a proper advice in strategy to SAP product life cycle management, I would opt for efforts to break down the SD/MM/PP complex into small objects that can be decorated by the customer at discretion if production is concerned that might be done on the basis of an "APO light".

The weakness of Microsoft is currently the fact that AX (formerly: Axapta) still falls out of the Office licensing scheme and the frightening low number of developers that are familiar with the software. However, the latest release of AX sports a virtual machine and a script-like programming language that speaks for a serious effort to attack the markets of SAP. It might be a correct perception that Microsoft is ready to enter every niche market, but so does SAP.

I acknowledge that there will be an XI boom in 2007 and I already have predicted a shortage in skilled XI technical people. However, I stand firm to my belief that SAP has not yet reached a practical SOA, although I am certain that they are on track and will take over leadership in less than three years from now.

Editor's comment:
As always, we welcome your input. Reply to this post or send your thoughts to mdanielsson@techtarget.com.

Matt Danielsson
Editor

Our recent article about how SAP has slipped in Forrester's rankings for the integration-centric BPM market generated some pretty good feedback. One particularly interesting question that came up was:

"Do you think it is a better plan for SAP to create another EDI interface for NetWeaver rather than leveraging the SAP ecosystem and its proven technology and partners? Oracle typically builds or buys this type of solution because they are notoriously bad at managing their own ecosystem. Do you have high volume references for the Oracle 'hotpluggable' option and fusion middleware?"

We took this question to Ken Vollmer, principal analyst at Forrester and an author of the study. His response:

"The issue of SAP's approach to supporting EDI is one of cost and convenience for its customers. Most IC-BPMS providers offer native support for EDI in their core integration server and do not charge an additional fee for this capability. And since the EDI component is internally integrated, the customer does not have to worry about issues when upgrades are applied. That is not the case with most third party products, though we would expect the SAP/Seeburger partnership to be more integrated than most. Still one has to question why SAP provides native RosettaNet support, but does not provide direct support for the much more prevalent EDI standards. Microsoft has also been a long time holdout to providing native EDI support, but has now seen the light and will be including this capability in the next release of BizTalk Server. We believe SAP should do the same.

As far as high-volume references for XI is concerned, we have received a couple of references recently that have provided some indication that XI can perform in some high-volume situations when combined with clustering, load balancing and separation of synchronous and asynchronous messaging. However, it is accurate to say that we do not have a large number for references for either SAP or Oracle covering high-volume processing scenarios."

It will be interesting to track each company's rating in the IC-BPMS market if they are able to provide more high-volume references in the near future.

Jon Franke
News Editor

Like everyone else, we at SearchSAP.com curious about what the new year will bring for SAP and the ERP market in general. To find out, we decided to check in with some prominent SAP experts on their predictions for the big trends in 2007 and beyond. First out is veteran site expert Axel Angeli.

SearchSAP: Let's kick things off with the obvious question — what will be the biggest SAP trend this year?

Angeli: 2007 will be a year of consolidation for SAP. Major SAP customers will start real XI project implementations, which will lead to a tremendous shortage in XI skilled personnel.

SearchSAP: Do you see any additional developments that readers should keep an eye on?

Angeli: The new xMII - a kind of universal data adapter for SAP - will become a major point of interest for industry firms that need to attach laboratory and production machines to SAP. There will be a number of appliances around, set to deliver a great additional benefit for SAP users. Google gave it a start with the search engine for everybody, Castironsys, ActiveBit and National Instruments follow similar strategies. EDI will also experience a renaissance, once in combination with XI and Seeburger for SAP, but also in dropping EDIFACT and X.12 in favor of fashionable and easy XMLEDI. And SRM will gain in importance replacing BW and CRM as main business concerns.

SearchSAP: What do you expect from SAP's ERP competitors?

Angeli: This is the year when SAP will pay the price for neglecting the further development of the core ERP elements. While SAP will fuel its marketing offensive for small and mid-sized businesses (SMBs), they will lose market share against Microsoft Dynamics, which is more dynamic in addressing SMB customers. We will also see the first examples of open source public license ERP suites entering this business area — that's definitely an area to keep an eye on.

Also check SAP trends 2007, part two, where we pick the brains of Ventana Research CEO Mark Smith!

Matt Danielsson
Editor

We are pleased to bring to you the SAP Exchange Infrastructure (XI) All-In-One guide. SAP XI is one of the mandatory four components that make up the NetWeaver platform. SAP XI is used for B2B and application-to-application integration. Consider it a superhighway for all enterprise advanced communications. Not only does SAP XI connect systems within an organization and among third-party vendors, but it also houses SAP's Business Process Management (BPM) unit and is a launching point for the service-oriented architecture. Check out some examples:

My version of 'XI 3.0 for Dummies'
What is the future of ALE/EDI and IDocs, in light of XI
Why BPM is good for you

This SAP XI All-In-One guide is your one-stop reference for all things SAP XI. Bookmark this guide because as NetWeaver and XI continue to grow, so will this guide.

Enjoy!
Juli Austin
Assistant Editor