- SAP has very low accuracy, and other vendors are not able to understand how to manage this inaccuracy.
- How vendors can bring this inaccuracy into play.
SAP has enormous credibility with many companies. What they say, what they propose changes the purchasing behavior at many companies internationally.
- SAP’s messaging is the most repeated, and repeated without alteration, of any vendor in all of the enterprise software.
- SAP has a constellation of entities that while they appear as independent, are nothing more than repeaters of this messaging. This is because, for many SAP partners, there is no more profitable business line than SAP. And of course, money talks – meaning the repeaters can be relied upon to be on message.
This is curious if one thinks of SAP’s real accuracy, something that we have been tracking for some time. When I say “prediction”, I mean what they say will happen regarding their applications. The list of things that SAP has been wrong in predicting is lengthy. If we take say what SAP has proposed on the future of the SAP user interface — that alone requires a lengthy exposition and travel down memory lane of things that never panned out.
SAP rarely receives negative commentary for its poor track record in following through on its announcements and predictions. In politics, being consistently wrong, but not paying the consequences regarding credibility is called being “Teflon.”
How SAP Owns The Worlds Greatest Enterprise Software Marketing Machine
SAP’s marketing is so effective that it borders on hypnotism. SAP creates a tremendous amount of information in terms of white papers, and other official documented publications. I have often heard of Steve Jobs’ reality distortion field. This is an effect that anyone around Steve Jobs eventually is influenced by his vision. However, I have always felt that Apple set high expectations in customers, but generally met them.
SAP, on the other hand, creates many expectations that it cannot meet. I know because I visit clients all the time that ask me why this or that functionality does not work, and that
Someone elsewhere must be getting this functionality to work.
Technical Advice from SAP and SAP Consultants
Other areas of misinformation include technical advice. Clients typically rate technical advice from consultants that work at SAP very highly. However, while consultants from SAP tend to be more knowledgeable about SAP products than consultants, they also lack objectivity and defend the products with completely ridiculous logic. SAP once told a client of mine that the reason they were having forecasting problems is that they have 60,000 SKU-Locations. That is interesting because 60,000 SKU-Locations is quite low, and SAP DP is currently being implemented at several clients with over 400,000 SKU-Locations.
Other forecasting vendors I am aware of have over a million SKU-Location clients currently live. Another favourite strategy when they don’t have an answer is to declare that either it is proprietary or its client-specific and they can’t say.
Furthermore, misleading technical advice extends to things like release notes. Release notes are supposed to be the horse’s mouth as to functionality with applications. They are legal documents, however, not with SAP. SAP now habitually releases upgrades to software with functionality that is entirely non-operational. I found this with shelf life in SAP SNP, and Leading Indicator Forecasting in SPP.
These are just a few examples. Running into non-functioning parts of SAP is common, and something I always receive push back from my clients on. And, in case those reading think that SAP’s misinformation is limited to advanced planning (which is my main area), it isn’t. I have found major areas of non-advanced planning functionality that either doesn’t exist or are barely functional.
What is SAP’s Accuracy Level?
More than any other vendor we cover, SAP has more announcements of applications that end up amounting to nothing. There is not a close second, and I have included 53 vendors at Brightwork Research & Analysis. This research can be found in this article.
I have recently begun to see this track record as an opportunity for vendors that we consult with that compete against SAP.
Vendors that compete against SAP can use this as ammunition against SAP, but first, two things have to happen.
- Know the History: The vendor has to know this history or have access to history. We work with software vendors of various levels of familiarity with SAP’s history and antics. Some of these vendors have ex-SAP employees working for them. Other vendors have no one who has ever even worked on an SAP project. For the last vendor, they need to be apprised of what the SAP history is, as most will not know. For the first type of vendor, they most likely see the past, particularly in the space where they compete… However, it takes more than understanding. It means using this information as part of a joint marketing and sales campaign against SAP.
- Be Prepared to Use This History: Many software vendors are unwilling to confront SAP. This topic gets into some different subject areas. As many companies partner with SAP, they lose their ability/appetite for marketing against SAP. This partnership arrangement gives some benefits to the “partner,” and in some cases, it is viewed as mandatory as it is a first question asked by purchasing executives. But the partnership has the unfortunate consequence of frequently neutering the vendor. It takes their instincts to differentiate itself from SAP and converts them over to showing themselves as complementary. We cover the contractual terms of SAP’s partnership agreement in the article The Control on Display in SAP’s Partnership Agreement. I have discussed this with many heads of marketing at various vendors that compete against SAP. I find most heads of marketing too focused on what I call the complimentary strategy. As soon as the vendor takes that pathway, it is my view that another vendor is now playing SAP’s game. SAP uses its partnership ecosystem actually to limit competition, as well as to pull intellectual property out of the vendor. I covered this years ago in an article titled Which Software Vendors are Afraid of SAP.
Let us take a fertile example. Netweaver.
Example: The Illusion That was Netweaver
Netweaver was the primary marketing tentpole that preceded HANA (SAP’s new database). For a while, you could not read about an SAP announcement without some reference being made to Netweaver.
We have spent enough time analyzing Netweaver over the years to state with confidence that Netweaver was never actually anything.
NetWeaver was a name that was appended to pre-existing products.
- XI became “NetWeaver XI”
- MDM became “Netweaver MDM.”
If you went to your SAP account manager and said: “Sell me just Netweaver.” There was nothing to sell you. Did I cover this five years ago in the article titled Did SAP Netweaver Ever Actually Exist?
This is instead an astounding revelation. After discussing this with a wide variety of people, I don’t see how the story can be different than this conclusion.
Netweaver came and went, having no positive impact on companies.
It did have an enormous impact on PowerPoint slides. It pumped up the SAP client base for years, serving to block out vendors who had real things to offer. By the time the age of Netweaver had passed, SAP had introduced HANA and moved away from Netweaver in marketing focus. Not Gartner, not Accenture, not CIO magazine nor countless of other outlets that pumped up people on Netweaver ever apologized for getting it so wrong.
And Netweaver sounded great. It was going to create an integrated platform for all SAP applications. All items were “Netweaver compliant.” On SAP projects no one discusses what happened to Netweaver.
Customers can’t remember.
Bringing History into Play
Vendors that want to compete with SAP need to bring this history into play. What is necessary to communicate the story that SAP creates a series of mirages to keep its customers under a spell. Then transitions from the old (and played out) illusion to the new illusion. SAP does this to not only sell applications. But to justify charging for its support at 22%+ per year by giving the impression there is more value in that 22%+ then there is.
The more “new” there appears to be, the more customers will pay to be kept up with the latest. And SAP’s support is a very higher-margin business.
- To compete with a mirage, vendors must dissipate the illusion.
- Vendors should not seek to be-be complementary with things that will never come to pass. Many software vendors helped SAP sell the illusion by stating that they too were “Netweaver compliant.” I sometimes offer advice to those on the topic of debate. I propose that one should never sacrifice what is true. Never defend the indefensible, or engage in sophistry, even if you can get away with it — to win a short-term victory.
How Do Vendors Get Outlet Exposure Versus SAP?
If vendors are looking for a voice in the market to serve as an independent source, they can stop waiting. The cavalry is not coming.
- SAP has bought every information source that is of any consequence.
- They pay we estimate $100 million to Gartner (which Gartner does not declare and refuses to discuss).
- They in effect own the marketing apparatus of all of the major consulting companies, and the smaller consulting companies (that work in SAP) as well. These companies don’t have a single solitary, independent thought in their heads. They will reinforce everything that SAP says no matter how bananas it may seem.
SAP advertises and influences CIO, InfoWorld; the list goes on and on.
How Much of Many Articles is Written by SAP?
Much of the articles about SAP are glorified press releases from SAP. We have dissected one article after another – highlighting the portions that are most likely written by SAP. Then the parts where the author provided a segue, where SAP PR/Marketing picks up again, etc.. I did this in my article How Gartner Got Fiori so Wrong.
It is easy for me to do because I know the SAP reality, and I am a professional writer myself. However, most people who read this article don’t know that SAP wrote most of it, or how the IT media system works.
The number of authors that write objectively about SAP is a tiny circle indeed. Vinnie Mirchandani is one. I am another. Lora Cecere is another. I did not research every author who might qualify in preparation for this article.
It gets harder to name people as you start to pass five. None of us can scratch the reach of an entity like ComputerWeekly or Forbes.
Keep Modest at All Costs, Show your Application as “Complimentary”
To be attractive to prospects, the best of breed vendors tend to downplay (to clients) the degree to which their applications can replace the functionality within the ERP systems.
This means that companies often get inadequate information about where specialized applications should be used versus where ERP functionality should be applied. These best of breed vendors prominently display logos on their websites that show they are compatible or have adapters with the significant ERP based software vendors.
My View on This Strategy
I don’t like this strategy for several reasons. First, it does not accurately communicate that the best of breed vendor a superior application to the application that is offered by the ERP-based vendor. I call this strategy playing the big ERP based vendor’s game. While it seems justified on the surface, it will never lead to anywhere close to the proper amount of sales that the best of breed software vendor deserves based upon the functionality of their application. It results in the ERP vendor having its system used for all types of things it is unsuitable for. It essentially sets a mental framework which puts the tier 1 ERP vendor in the driver’s seat.
The Evidence for the Benefits of the ERP-Centric Approach?
I have had this debate several times with several best of breed vendors — and while discretion is often considered the better part of valour, I think best of breed vendors should instead frontally attack the logic of the ERP. The reason for this is that the thesis of the ERP is not supported by research in this area. I have a game plan for doing this. This game plan is based upon the meta-research (that is a review of all the available research into the ROI of ERP systems) that I have performed into tier 1 ERP applications. The inaccurate presentation of the benefits to companies of tier 1 ERP systems is one of the most interesting stories in enterprise software. Still, it is also a mostly untold story with close to no one covering the story in its entirety.
The ERP vendors won’t tell it, nor will the major consulting companies, nor will IT publications, nor will the big IT analyst firms — so it falls on the best of breed vendors to get the word out, as they stand to gain the most by doing so. I will describe this story in a future post. However, the short version is that companies that implement tier 1 ERP systems do not receive a productivity boost, and pay a heavy price concerning higher software costs.
The Truth on the Decline of Integration Costs?
Almost unknown to everyone is that integration costs — which were projected to decline with ERP system adoption — have increased as a percentage of the IT budget.
This is because while Tier 1 ERP systems are integrated to themselves, they make integration to other systems more complicated — and companies cannot live by ERP alone.
A Different Strategy
I propose that instead of following the strategy of accepting all of the assumptions of the ERP benefits, the best of breed vendors should focus on a policy which calls into the question the benefits of following this approach.
This approach was also questioned in a recent article by Lora Cecere, which has been a quite popular article and generated an excellent discussion.
Lora picked up on something through a survey and her personal experience that is verified by my meta-research and ERP TCO calculators at Software Decisions. Now, it should be noted that Lora has a more moderate viewpoint on ERP that I do. I also had a more moderate position as well before I performed extensive research on the history of ERP benefits for my book The Real Story Behind ERP: Separating Fiction from Reality on this topic.
A Modern Incarnation of Sun Tzu’s Wisdom for Enterprise Software
SAP follows Sun Tzu’s teachings for positioning weak products.
- If your application is uncompetitive, discuss the integrative aspects of the application.
- If your software has a poor user interface, do not let the user community see it before obtaining the software contract. Also, restrict the number of screenshots of your application on your website.
- If your application has little practical use, infuse presentations with big words and big concepts. (good examples of this would be the use of the terms “data governance” and “taxonomy” to cover up inadequate MDM solutions)
- Turn your weakness into a strength by discussing things in the future you never intend to do (this relates to SAP’s discussion of their plans for SOA and SaaS – something that would reduce the power of their ability to lock in clients to their solutions)
- When a previous message and product has failed to gain tracking, introduce a reboot of the product. Pay off the necessary analysts to write uncritical articles on you that won’t hold the lack of performance in the software area against you.
- If you are significant, but uncompetitive in an area, partner with a smaller company commingles the separate solutions to confuse customers from understanding that most of the functionality is coming from your software partner. After you have co-opted the space, and taken some of your partner’s intellectual property, end the partnership and introduce a competing product.
Anyone can read this article, but this article is targeted at vendors that compete with SAP. What I have described above are some specific things I have learned as a person who analyzes SAP’s messaging and has seen many vendors struggle to compete effectively against SAP. I can say that the traditional “book” on how to compete with them is deeply flawed. SAP is running circles the marketing and sales apparatus of the majority of competing software vendors.
SAP has picked the lock on how executives make decisions, and even know how to time product announcements and PR releases to have a maximal effect on blocking out vendors. I have not worked in SAP in marketing, but I believe there is some very long time horizon calendar where all of these things are planned. They rely on the poor memory of executive decision-makers to continually get excited about the “new” idea.
We increasingly live in the time of now.
- Did you get my text?
- I just tweeted…and then tweeted again.
- Are you up to date on the latest iOS update?
- How about the latest Gartner Magic Quadrant?
What happened six years ago? Who can remember?
- Some things can be done to counter how SAP markets. Vendors must get savvy to what I am starting to call counter SAP marketing.
- A complementary strategy is an opposite of what works in counter SAP marketing.
Best of breed vendors will benefit by not playing the ERP-centric game — as they can never obtain the sales they deserve by following this complementary strategy. To follow this strategy, best of breed vendors should instead clearly communicate the evidence for why the tier 1 ERP-centric strategy does not deliver the proposed benefits. This is not as challenging as it might first appear. I have all the research — both in the form of meta-research — which synthesizes all of the academic research on Tier 1 ERP systems performed since ERP was first introduced in the mid-1980s. In but also regarding specific TCOs and the combined functionality ratings specific solution architectures ranging from 100% best of breed to ERP-centric, to ERP + best of breed.
Financial Bias Disclosure
Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.