Could SAP DP or BW Survive as Independent Products from SAP?

What This Article Covers

  • Effectiveness Issues with SAP BW or SAP BI and SAP DP
  • Background on the Enterprise Software Market.
  • How is SAP’s Integration Argument Similar to the Windows and Internet Explorer Argument Presented to Consumers when Browsers Began to Become Popular?
  • What are the Necessary Ground Rules for a Freely Competitive Market?

Introduction

From a fair competition perspective, the basic concept of an efficient software market is that a company makes a product which it then sells to other companies that find the product of value. The enterprise software market is different from most other markets, including the consumer software market in that the capabilities and performance of the product are not immediately apparent at the time of purchase.

In fact, companies that buy enterprise software don’t typically understand fully what they have until far after the time of purchase, past the design phase of the implementation and close to and sometimes after go-live. The enterprise software market is marked by a great deal of lock-in. That is once a purchase decision has been made, the company will typically not move away from the system for 5 or 6 years. The actual price paid for the license and support is a small component of the overall costs of implementing and supporting enterprise software (called total cost of ownership) and is enumerated in the post.

What The Successful Sales of SAP DP and SAP BW or SAP BI Prove in the Larger Context

Both SAP DP and SAP BW or SAP BI cause many issues with the companies that buy them. These products exist and thrive because they are tied to other products within a software conglomerate called SAP. These are not the only SAP products that have these issues. SAP Solution Manager, XI, SPP, the list is quite lengthy.

Both SAP DP and SAP BW or SAP BI use the same Data Workbench. However, the efficiency of these twin products is extremely poor. Both SAP DP and SAP BW or SAP BI have tremendous overhead, and when one looks at what is done in each application, the same activities can be performed in other applications much more easily.

  • SAP DP is covered at Brightwork at this link.
  • SAP BW or SAP BI is covered at Brightwork at this link. 

Both of these applications are rated as the worst in class. They are the top applications recommended by the major IT consulting companies. Does this have anything to do with SAP DP and SAP BW or SAP BI taking the longest to implement and therefore driving the most consulting dollars to the largest consulting companies? TCO calculators for SAP DP and SAP BW or SAP BI are also available at the Brightwork site, and once again SAP DP and SAP BW or SAP BI have the highest TCO in each of their software categories.

Integration Based Competition in the Consumer Software Market

This is very similar to Microsoft gaining market share for its Internet Explorer (IE) browser, which was not a competitive product. At One time had over 90% market share because Microsoft had a monopoly in the operating system area, and bundled the browser with the operating system, and has made, it impossible to uninstall. For the longest time, Microsoft’s IE held a very high market share of the browser market and proposed to the Department of Justice that they were not engaging in monopoly behavior. However, one of the greatest proofs is the success of a product when restrictions are removed or reduced. People have come to know there are other and better browsers and have responded by moving away from IE.

I would be curious to hear what Microsoft’s argument would be now, that they never behaved like a monopoly software vendor. Microsoft has repeatedly used a monopoly in a bad operating system to bring out other software which would never have obtained the success that it did, such as SharePoint and SQL Server, without being connected to Microsoft.

A Pointless Anti-Trust Case?

The DOJ won its case against Microsoft, but not very much came from it. In fact so little came from it, aside from embarrassing Microsoft, that one wonders if the attorneys from the DOJ took high paid internal legal positions within Microsoft after the case. This has been done before and is the primary reason that aspartame was approved by the FDA.

Because of the DOJ’s inaction in forcing Microsoft to implement changes in how it does business, IE still has an enormous advantage as it ships with new PCs. When people know they have a choice they take better alternatives, and this is evidenced by the fact IE is now below 50% of the overall browser market.  However, the market is still not a level playing field.

If we were serious about enforcing competition laws, we would make the browser installed by the PC OEMs an option to be selected by the consumer. Right now, IE still benefits from being the installed browser, and less technically savvy users will tend to use the default product that comes loaded with the computer rather than download something better.

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References

http://www.justice.gov/atr/cases/f3800/msjudgex.htm