Age Discrimination As Yet Another Way to Reduce IT Labor Costs

Executive Summary

  • SAP has essentially announced they practice age discrimination.
  • How a major media outlet incorrectly covered SAP and served to support their spin.

Introduction

This article covers how a cover story created by SAP (and other tech companies) is being used to engage in age discrimination. The article will provide evidence that the reason for this discrimination is like other employment initiatives in tech companies, too reduce labor costs.

Age Discrimination 2.0: Hiring Those Millenials and Younger

It has become quite common to emphasize hiring Millenials, and younger. SAP has a program called SAP Young Professionals Program targeted towards hiring youth.

The SAP Young Professionals program was launched by the SAP Training and Development Institute in the Middle East-North Africa (MENA), a region with a high level of youth unemployment, where it can be very difficult for young people to find suitable work despite having excellent educational credentials. The program now runs in 22 countries across the globe, with 2,132 graduates to date. The SAP certifications that the graduates attain are suited to the demand in the local markets for SAP-related skills. Graduates of the program almost always stay within the SAP ecosystem, where they have a competitive edge with their certifications and training on the latest SAP innovations. – SAP

Something that SAP does not mention, is that you can bet that SAP got this employee cheap! And this is a big part of the youth movements (and corresponding age discrimination) in tech companies.

Interestingly, I could not find a single program focused on hiring older employees.

In an article published by Bloomberg that reads like it was paid for by SAP, SAP again makes their interest in hiring younger employees apparent.

Instead, Plattner, 75, wants to shake up SAP once more and make it the employer of choice for the young and hungry. And with just a few years until he hits self-imposed retirement, Plattner is showing no sign of slow-walking the rejuvenation in his quest to protect a legacy of disruptive software mogul.

Surprisingly, there is actually some pushback quoted in the article.

The Union Voice on SAP from Germany

Labor representatives are complaining that SAP is trying to squeeze out expensive, older employees who helped drive SAP’s early success. “Hiring more young people is good and right,” said Eberhard Schick, a member of SAP‘s workers’ council, who joined the company in 1997. “But you shouldn’t forget about the seasoned employees — they deserve a career perspective and training opportunities.”

Interestingly, there is a labor representative in Germany. If this were the US, this quote would not exist, because there is no labor representative for SAP in the US. Most Americans that work in IT don’t have any idea what the history of labor and labor versus corporations actually is. Unions, not corporations fought for a 40-hour work week (corporations opposed it). Unions, not corporations fought against child factory labor (again corporation supported child labor). Child labor is still a huge problem internationally. It is only not much less of a problem in the US, Canada, Western Europe, Australia/NZ because corporations were fought against to make the practice illegal.

*While researching this article I was shocked to find that child labor has crept back into the US through migrant farm labor. 

But child labor doesn’t happen only abroad. In the United States, labor laws allow children to work in agriculture at much younger ages, for longer hours, and under more hazardous conditions than children in other industries. This means that a 12-year old can work 50 or 60 hours a week in fields, exposed to toxic pesticides and extreme heat, and it’s legal. – Human Rights Watch

The US prefers if employees have no voice, with only 12% of the population belonging to a union.

There is a direct relationship between the unionization in society and the income equality in that society. In the US, executives have taken the money that would have gone to workers if the unionization were higher, and have paid much of it out in executive compensation. For those that think unions lead to communism, the US was a capitalist society back in 1960, at the heights of unions. And it was a far more equal and more sustainable society. Furthermore, nearly every national health statistics (health care outcomes, % of people in prison, infant mortality rates, etc.. was better in 1960 than it is today. Wealthy executives prefer that people focus on education rather than on unions.

Why is this?

Because unions are effective in raising wages overall, while education is not.

Need evidence?

In the US, wages stopped growing in roughly 1970, even though productivity continued a rapid increase. Why? Each year the population became more educated. However, education could not counteract the effect of the decline in unionization, greatly reducing the bargaining power of workers. If the US had the same education level as in 1970 (far lower) but had maintained its unions, it appears that as wages were tracking productivity up until 1970, US wages could be twice what they are now. Instead, all of that productivity was placed into the pockets of the wealthy. Major financial interests do not want this graphic seen or understood — which is why they focus on ancillary issues as we cover in the article Why the Gender Pay Gap is Discussed But Not Overall Pay.

Returning to the quote from the labor representative from Germany, Bloomberg had no comment and simply moved on to the next topic.
Plattner’s alma mater, IBM, demonstrates that change is arguably less painful than failure to act. IBM faces several lawsuits accusing it of firing older workers, with one former vice president putting the number of employees let go in the last few years at 100,000, a figure that IBM disputes.

What is this confused paragraph supposed to imply? IBM, as we covered in How IBM Became a Hollowed Out Company is not a company that anyone should be emulating.

It is a company that is constantly shedding its domestic employees to hire in India and has a horrible internal culture. The message boards around IBM illustrate great anger from former employees and disgust at what IBM has become. IBM, once one a truly innovative company is now just a fleecing operation that pretends it can do things it can’t do. IBM has been shedding experience employees for at least two decades, but how has this improved IBM? If anything, this is at least partial evidence to not do this, rather than evidence that it should be done. The entire paragraph quote from Bloomberg above is illogical. The only evidence presented by the Bloomberg author that IBM has benefited from shedding more experienced workers is that they have received lawsuits for age discrimination. Is that a good thing? Is that a reason to do something, because you get sued for doing it?

Secondly, how many employees has IBM let go in the past few years? If IBM disputes the 100,000 figure, then they should provide the figure they have let go. Years ago, IBM stopped reporting its number of employees per country for the precise reason that they could hide how much they are now increasingly a company based in India.

SAP’s Moving to the Cloud and Needs Different (Read: Younger) Employees?

The hard choices facing SAP are emblematic of the industry’s shift toward selling products in the cloud, which allows companies to implement new software faster and cheaper than products that need to be installed at a customer’s own data center. It’s a move that will require fewer people, and with different skill sets than many of those now at SAP.

The idea that SAP is moving to the cloud is simply false. SAP is actually moving to simply mark up the cloud services of other cloud providers as we covered in the article How to Understand SAP’s Upcharge as a Service Cloud, and massively up charging the customer for “going through SAP.” Therefore, the rest of the paragraph is also false. SAP is not moving to younger employees because their delivery mechanism is changing. SAP has an 85% margin on its support, and in fact, most of the margins are in support as covered in the article The Giant Margins for SAP and Oracle Support, and SAP has outsourced most of its support staff to India, precisely to obtain these margins. The fact is that SAP’s margins have virtually nothing to do with the cloud discussions, it is the overseas workers that allow SAP to have the margins that it does.

Notice that there is none of this analysis in the article. The Bloomberg author simply repeats whatever SAP tells him. This perpetuates several falsehoods:

  • a.) that SAP gets significant revenue from the cloud it operates (untrue as it marks up other cloud service providers) and…
  • b.) that it is warranted in shedding older workers because it needs to improve its margin to what it was in the 2011 time period.
“Transitions like these cause disruption and take time,’’ said Anurag Rana, an analyst at Bloomberg Intelligence. “But SAP has a portfolio of good products that should help the company stay relevant in the long term.”

Has Anurag every used an SAP product? If so, he would know this statement is not true. SAP has a very well known ERP system, but the system is quite aged at this point and SAP’s new S/4HANA application follow on to ECC is a regression in many ways. Secondly, companies that purchased ECC faced enormous costs and often ended up purchasing other SAP products like APO, BW, PLM, SRM, that is products that are truly horrible. But again, Anurag works for Bloomberg, and so he has a specific script he needs to read if he intends to keep working there. Most IT analysts have never touched an SAP application in their lives, but this does not stop them from making highly confident statements about these topics.

Age Discrimination as Necessary Because of German Eating Non-Innovative Pretzel Eaters?

Hasso makes a curious observation about German culture.

German complacency has long been one of Plattner’s pet peeves. As far back as 2006, Plattner vented his anger by lamenting how Germans lack the drive to be successful and risk being eclipsed by more innovative countries including the U.S., India and China. “We’re happy sitting in front of a television, munching on pretzels,” Plattner said at the time. “Some things in this country are beyond fossil.”
Eating pretzels and watching televisions has not seemed to limit Germany’s ability to be innovative and historically innovative in areas ranging from chemicals to automobiles to specialty manufacturing. I wonder if Hasso thinks innovation only occurs in software. If we measure Germany’s innovation in software, it is weak — but this is primarily because of SAP’s lack of innovation, as outside of SAP Germany’s software industry is small, so SAP is the cause of the innovation problem in the German software industry.
This is expressed also by Ahmed Azmi.
Just because SAP is lacking innovation does not mean Germany is the same. Germany has been leading the world in so many fields for so long. The fact is that Germany is trailing in software BECAUSE of SAP.

The Logical and Profit Basis in Age Discrimination

Ageism has an entirely logical basis. Companies are looking for passive employees who will go along with whatever the company wants. Older employees are less likely to go with the program. As companies in the US have become more hierarchical, and the compensation paid by US companies to executives has greatly exceeded the compensation paid to workers, there is less of interest on the part of companies to accept any critical thinking on the part of employees.

Looking past what amounts to a bunch of false information, it is quite apparent where the money that is wrung out of employees goes. This money is shifted upwards. 

In past days I thought that ageism, at least in technology, was primarily based upon skills. That is generally the presentation by companies, and I was influenced by this presentation. However, I have since learned to question anything proposed by billionaires as it typically is entirely backward engineered for what makes them the most money.

Seeing how companies function, it is clearly about finding people who will tow the line. It’s actually disturbing how much work is done by the under 30 set in companies. They are super motivated, but it is also inefficient, because younger people make a lot of errors, and it is difficult to know what is true at that age. It took me a lot of time to develop certain skills, and I did not have them when I was 30. I was a lot easier to trick at 30 — I have been a skeptic most my life, I keep figuring out new things all the time (as I quickly approach 50 this September). There are pathways I would have followed just five years ago, that I would never follow now.

There is another bias in that more senior positions are often really just sales positions. SAP has a ton of VPs, and most of these VPs are just doing sales or engaging in some type of Game of Thrones political intrigue. And if you don’t want to do sales, most of the senior positions are not available. You can work on the basis of your skills when you are younger, but as a person ages, it becomes more about being a political animal. You can’t be simply a technical problem solver — that is there are a few positions for this, but most have a political component.

Unsurprisingly, companies do not discuss the logic for hiring passive and servile workers, even though this is clearly at least part of the motivation for hiring not only younger workers, but also workers that lack citizenship, such as the enormously abused H1-B program. Again, there is not a single company that will discuss their motivation for hiring H1-B workers are based upon lowering wages, even though it is firmly established that H1-B workers not only work for lower wages, but they also lower the wages of the US domestic IT workers. Here again, the media is complicit in expressing every single H1-B visa holder as “highly skilled” even though most H1-B visa holders do not meet the description. Most are moderately skilled, not highly skilled. The Indian media, much like the US media is continually referring to H1-B visa holders as highly skilled without any thinking or debate on the topic.

The Bait and Switch in Later Career Employment

There is a highly dishonest aspect to shedding older or more seasoned workers. A primary reason that younger workers make an effort to get ahead and to get skills is that they believe they will be able to have a long career from doing so. However, by shedding them as they become more expensive and less compliant, this creates a bait and switch on the young employees. That is companies that shed these workers once they reach their “used by date” don’t deserve the motivation of the younger workers they are hiring the first place. For this reason, it should be better publicized that these firms view their employees as disposable parts, to be discarded long before their effectiveness begins to wane. And as unionization has declined so much in the US, companies can get away with just borrowing workers, and discarding them, and they can count on media entities — owned by other billionaires to talk up how this supports “real innovation.”

And for younger workers who are hired because of age discrimination, they should remember something, people have a tendency to age.

Conclusion

Age discrimination is popular in IT because IT companies believe that it is profit-maximizing.

Age discrimination replaces workers who will be far more likely to question authority and how have the experience to contradict the false information provided to them by the company with those that lack the experience to do so. The graphics presented in this article clearly demonstrate that companies have little interest in increasing the standards of living for workers and are on a constant quest to bring in non-citizen workers, shed older workers, and shed workers in the developed world and exchange them for workers the undeveloped world (while still having access to the same customers in the developed world). In order for this to be effective, companies need complicit media entities, which nearly all major media outlets are. This prevents these questions from being asked and allows their propaganda to be repeated through their coverage. IT media not only does not discuss what is actually occurring the serve as a megaphone for the exact programs that help reduce wages for workers.

The major media entities don’t even have to be convinced by enormous companies like SAP to repeat false information to their readers. Those that own major media outlets are themselves elite entities. Bloomberg is owned by Michael Bloomberg, who has a net worth of $55 billion, making him the 6th most wealthy person in the US. Hasso Plattner is worth $14 billion. They already agree on hiding the information about how companies manipulate labor even if they have never met in person. By the time Trump leaves office, the US will have unprecedented levels of media consolidation as his FCC is repealing the restrictions on vertical integration in media.  

The 2016 US Democratic Primary which pitted Hillary Clinton against Bernie Sanders was rigged by both the DNC and by the opinion-shaping media. This is happening again as the 2020 race heats up. Why? The media is owned by billionaires who will lose if Bernie Sanders is elected. Therefore, they use their control over media in the political sphere the same way they use their control over media in the business sphere — to present only what they want to be true, and what they want to be discussed and the options they want to be selected. In fact, this topic was barely covered in the DNC friendly networks (CNN, MSNBC) and could primarily be found on the opposition network (Fox News) and RT (funded by Russia), and this video is by Tulsi Gabbart, who stepped down from the DNC in opposition to this rigging.

This is the outcome of media consolidation.

There is no difference between the US media that covers politics and the US media that covers IT and business, it is controlled by the same entities and reflects the same elite opinion.

The Overal Trend

This article has focused on SAP, but this is only because Brightwork focuses on SAP and we easily happened to find sources and articles for SAP. In reality, Oracle, Deloitte and many other companies in IT are doing the same thing as SAP. This is an industry-wide movement to help these companies decrease their cost of labor, and to produce a cover story to distract from what they are actually doing and the reasons they are doing it.

Accessing Honest Information on SAP

  • Questions About This Area?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

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    • If this type of accuracy interests you, tell us your question below.

References

https://www.linkedin.com/pulse/millennials-track-majority-workforce-2025-accenture-van-t-noordende/

https://www.bloomberg.com/news/articles/2019-08-09/a-billionaire-software-mogul-doesn-t-want-his-company-to-grow-up

https://www.hrw.org/topic/childrens-rights/child-labor

https://neweconomics.org/search/issue/banking-and-finance

https://www.trekearth.com/gallery/Europe/Austria/East/Vienna/photo1072852.htm

https://www.forbes.com/sites/dianahembree/2018/05/22/ceo-pay-skyrockets-to-361-times-that-of-the-average-worker/

https://www.hrw.org/news/2019/06/12/what-congress-can-do-end-child-labor-us

https://theintercept.com/2017/10/25/fcc-media-ownership-repeal-local-stations/

https://news.sap.com/2019/01/sap-young-professionals-program-career-shifts-high-gear/

https://en.wikipedia.org/wiki/Concentration_of_media_ownership

https://medium.com/@MattTurner4L/essay-media-concentration-and-the-market-model-has-turned-the-press-into-lapdogs-not-watchdogs-c7969550689

When assessing media ownership and consolidation in both the United Kingdom and United States, it becomes clear that while there are hundreds of different publications and broadcasters, there is only an illusion of choice, and that freedom from government control and the competitive nature of the free market have failed to truly allow diverse media content and regulate media conglomerates, who now possess an extraordinary amount of power and influence. In the United Kingdom, 70% of national newspaper circulation is controlled by three different companies, leading the Media Reform Coalition (2014: 1) to claim that concentration has “reached endemic levels and is undermining the quality and diversity of output on which citizens rely.” Meanwhile, in the United States, just six companies control 90% of the media: a stark difference from 1983, when fifty companies controlled 90% of the media (Lutz 2012).

The Curran et al. (2009) study found that Americans were less informed about hard news than countries such as Denmark and Finland, where public sector broadcasters had a larger share of the audience.

Moreover, it found that public service models “minimize the knowledge gap between the advantage and disadvantaged” in comparison with an American-style private ownership model, and therefore “contributes to a more egalitarian pattern of citizenship”

While one cannot establish causation, it is possible that one of the factors that has contributed to low voter turnout in the United States and high voter turnout in Denmark is the differing media coverage of hard news in the private and public led media spheres. This insinuates that private media ownership has a negative impact on media content overall, as the content is increasingly failing to fulfil its function of promoting informed citizenship and democratising information to the public at large.

A further criticism of the privately owned media models is that they are often beholden to big business, due to their reliance on advertising to maintain a profitable venture (Herman and Chomsky 1998). The implications this has for media content stems from the “corresponding influence of advertising values on the news production processes” (Mullen and Klaehn 2010: 218), namely, a conflict of interest could easily arise due to potential discrepancies committed by advertisers. It is entirely plausible that the private media’s reliance on advertising could mean that negative content about the advertisers are omitted from public debate, and that “the probability of an event/issue becoming news is: inversely proportional to harm the information might cause investors or sponsors” (McManus 1995, cited in Rolland 2006: 942). This theory is supported by a scandal that rocked The Telegraph newspaper after it was alleged by a former employee (who resigned over the issue) that The Telegraph contrived to omit damaging reports about HSBC’s banking practices out of fear of losing out on lucrative advertising deals. According to Peter Oborne (2015), “you needed a microscope to find the Telegraph coverage” of reports that HSBC had been participants in a global tax evasion scheme — an issue that was perceived by most other national broadcasters and newspapers as hugely important. Therefore, this illustrates that the reliance of private media outlets on advertising revenue can have a damaging impact on media content through omission of stories that are clearly in the public interest.

Intimidating SAP Trainers With Fake Threats to Fair Use Law

What This Article Covers

  • What is Fair Use Law?
  • SAP’s Long View
  • What SAP Expects to Gain from Writing Legally Unsupported Letters That Contradict Fair Use
  • SAP’s One Way View on This Topic

Introduction

This article describes has SAP has been using legal letters which misrepresent what is called fair use laws in order to intimidate people into paying them to show SAP Business Objects screenshots.

https://kenhamady.com/cru/archives/369

What is Fair Use Law

Before we go into the details of what SAP does, let use take a brief detour into Fair Use.

“Fair use is a doctrine that permits limited use of copyrighted material without acquiring permission from the rights holders. Examples of fair use include commentary, criticism, news reporting, research, teaching, library archiving and scholarship.” – Wikipedia

Fair Use has a number of factors which make up how a work is determined to be covered by the doctrine, however, generally, the new work cannot simply reproduce old work. Therefore, an author could not copy 1/2 of a copyrighted work in a new publication and declare protection under Fair Use. Fair User is strongly protected by US law because of several logical reasons. First, in order to properly comment upon and critique other original work, it is necessary to use samples of the work. Quotations are of course extremely important to be able to use, but depending upon the subject matter, graphics or video or recordings are also quite important. For instance, Fox News is routinely lampooned by a variety of media outlets. News Corp, the parent company to Fox News would not, if it had its druthers, allow any of its video to be used without approving the commentary beforehand. If Fair Use were not in effect, it would allow Fox News, and any other media outlet to effectively silence criticism. Secondly, Fair Use is strongly inherited from the free speech portion of the 1st Amendment which reads..

“The First Amendment (Amendment I) to the United States Constitution is part of the Bill of Rights. The amendment prohibits the making of any law respecting an establishment of religion, impeding the free exercise of religion, abridging the freedom of speech, infringing on the freedom of the press, interfering with the right to peaceably assemble or prohibiting the petitioning for a governmental redress of grievances.” – Wikipedia

Most all institutions seek to restrict speech to the speech that they agree with, which is not really speech at all but what was openly referred to before being associated with the Nazis as propaganda (propaganda is alive and well, but the word isn’t). Companies would prefer if US law were changed so that all commentary or independent writing on the product of private companies, or on companies themselves had to be cleared through that company’s PR department.

What SAP Expects to Gain from Writing Legally Unsupported Letters That Contradict Fair Use

The US legal systems allow lawyers to threaten pretty much whatever they like in letters. It’s a very strange aspect to our legal system, but it is pervasive. Anyone familiar with legal letters knows that they are designed to break the moral of the letter recipient. Each side continues to posture moving back and forth between outrageous threats until a settlement is reached or the case goes to trial. The long the charade goes on, the more the costs spiral upwards, if a case goes to trial, then the expense level goes up another few notches.

It is extremely easy to get lawyers to write letters with impossible legal threats in them because there is no enforcement of fake legal statements. Therefore, while SAP’s attorneys while knowing that they have no legal claim, hope that they will reach some people with the letters who do not know that the legal claim is false. This can have a chilling effect on the use of SAP material, which is worth the price of sending the letters. Lawsuits are exorbitantly expensive, a fact which gives attorneys, even more, power and ability to push their weight around. Only the wealthy can actually afford a legal dispute (unless they are suing and the attorney picks up the fees on contingency). Some attorneys make their living simply sending extortionist letters which have not a legal basis to businesses. They can send 100s of letters on a topic, by simply using a mail merge program, and even if a low number of people pay out, it is still a worthwhile endeavor. The people who do pay have no knowledge that the attorney in question never planned to actually follow through on the letter.

SAP’s Long View

SAP has two objectives when making false claims about US Fair Use law. First, they want to restrict the ability of others to provide training without paying SAP. Second, they would simply deny the right to show SAP screen shots to anyone who is critical of the software. Under SAP’s interpretation of copyright law, display could only be allowed if the software company felt that the writing and coverage were sufficiently positive. Indeed, they would then be able to ask for written material to be changed or rewritten by SAP until it was sufficient to their liking. Therefore, SAP desires to not only publish false information through its own marketing and influence with publishers, but also any independent author.

SAP’s One Way View on This Topic

Interestingly I was contacted by SAP prior to my book, “Inventory Optimization and Multi-Echelon Planning Software,” being published and was asked by them if they could receive an advanced copy. I denied the request, and SAP proceeded to tell me that since they were partners with another software vendor that did have access to the book, they would simply go around my will and contact that vendor. SAP claims the right to access to material which is not even published yet, and yet they claim that people should pay for the right to display screen shots that of SAP that is in the public domain. I think the word hypocritical comes to mind.

Conclusion

I will be waiting for SAP to send me a fake legal letter. If and when I receive it, I will immediately publish it, along with the law firm on this blog. I will then critique the letter so that others can see the faux arguments that SAP uses. I am quite interested in getting my hands on this letter.

Accessing Honest Information on SAP

  • Questions About This Area?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, tell us your question below.

References

https://kenhamady.com/cru/archives/369

https://en.wikipedia.org/wiki/Fair_use

How to Best Understand the Control of SAP on IT Media

Executive Summary

  • How the SAP IT Media System Works
  • The Main Entities in the SAP IT Media Model
  • Related Media Models for Other Industries
  • Previous Research into Media Control

Introduction

I recently wrote an article that is a critique of our IT media system in the article The IT Media and the Fake News Debate.

Increasingly what I notice is a system that has no independent thought, a system not based upon what is true, and a system there what we think is true is controlled by the major media entities. The major media entities, all in some way that takes money from SAP, declare what is the right thing to do, that thing is done, and the major media entities then reinforced what was done. As in self-reported benefits to say ABC Orange Juice Co was a 25% increase in sales order processing time from implementing SAP XYZ so you should also think about SAP XYZ.

As in self-reported benefits to say ABC Orange Juice Co was a 25% increase in sales order processing time from implementing SAP XYZ so you should also think about SAP XYZ.

I read the books SAP Nation 1 and SAP Nation 2 and follow any analyst who writes the truth about SAP, which is easy because it’s so few, but what I have recently begun to realize is Brightwork Research & Analysis is the only source taking the particular approach or thinking pattern to the material. It seems every other writer or media entity even from that small set is somehow respectful to some powerful entity, be it Gartner or SAP or even generally accepted, but often false principles.

The SAP Media Model

After years of analyzing how SAP releases information to the market, and how other entities write about SAP, a model developed that explains how the system works. The concept is to build an echo chamber so that SAP says seems likely to be true. The SAP media model or more generally the IT media model applies to other large software vendors, Microsoft and Oracle being good examples, but no software vendor uses the IT media system as effectively as SAP. And an important reason for this is that while SAP is only the 4rth largest worldwide software vendor (after Microsoft, Oracle and IBM) SAP’s overall economic activity is actually larger. This is because SAP outsources almost all of its consulting (where most of the money on SAP is actually spent) so that it has hundreds of thousands of SAP consultants that work for other companies. These consulting companies, like Deloitte, Accenture and IBM among a host of others, serve as message repeaters for SAP. These entities repeat SAP’s messaging not because it is true (none of those entities has historically cared what was true), but because it is profit maximizing for them to do so.

The SAP/IT media model is all about influencing action. It has four main components:

  • The Message Promoters
  • The Media Entities
  • The Messaging
  • The Message Consumers

Once you trace the money through the entities that release information about SAP to the market, SAP’s control over the media system can be viewed as very close to complete. 

*We have estimated that Gartner receives roughly $100 million per year from Gartner, 1/8 of Gartner’s total revenue from vendors. This payment is rather obvious when reading Gartner output. 

The Focus of the Model

The SAP/IT media model is unconcerned with what is true. What is true does not factor into any part of the media model. In fact, if the objective were to simply communicate what is true, there would be no reason to have the media model in the first place. The media model is primarily opposed to truthful information and in favor of inaccurate information that can be used to meet the objectives of the message promoters. It is also the foundational element to the SAP/IT Corporate Media Model that message consumers don’t actually have any right to accurate information on SAP. In this way, it is identical to advertising. There is never a point where an advertiser asks whether their advertisement is providing accurate information. But while SAP advertises also, the point of SAP’s media model is to produce messaging and have that messaging repeated that is advertising “accurate” in nature but is not interpreted as advertising by the message consumer.

The Real Estate Media Model

This media model is actually applied to powerful entities outside of SAP and outside of IT. For example, the same media model exists in real estate for the purposes of promoting home purchases.

Here the intent is to promote house buying by underestimating the costs of owning a house and overestimate the benefits. Therefore, house appreciation and mortgage deductions of interest are emphasized, but the long-term cost of maintaining a house are undiscussed. Realtor fees, housing taxes, homeowner association fees, loss of geographic flexibility are simply not discussed.

The promoters of buying homes is promoted by the message promoters that make money from house purchases. For these entities, home purchases are universally positive as they drive fees and purchases. If the message promoters can influence renters to become purchasers of houses, then their revenues increase. Therefore it is in their financial interests to promote a one-sided view of the benefits of home ownership.

The Investment Media Model

The same model is applied by the investment industry. Here, entities that make fees for promoting people to invest in various instruments, influence the media apparatus to uncritically accept their assumptions.

Media entities are major factors in promoting bubbles. Important issues regarding the investment instruments are left out. For example, the gains that are mentioned are pre-tax gains. Secondly, in the stock market, while insider trading allows those with the most assets to take returns from lower asset investors, the average return is quoted as if that return is available to everyone. Because of yield disparity, where the insiders take most the gains, this is inaccurate. 

Previous Research into Media Control

In effect, this can be seen as simply an extension of the research performed by Noam Chomsky and Edward Herman and encapsulated in the book Manufacturing Consent.

These videos discuss manufacturing consent in pseudo-democracies (that is counties where the population thinks they are democratic, but in fact, they are anything but. This video is very good at explaining how advertising works to control media coverage. 

When media outlets offer you content, the question should arise, how is this coverage being paid for? Even if you buy a magazine off of the newsstand, it still only covers a fraction of the revenue obtained by that media outlet. Even in that case at least 1/2 of the media outlet’s funding comes from advertisers.

In the case of many online publications, the reader contributes no money to the media outlet. The media outlet is entirely funded by advertizers. In fact, some of the articles are themselves advertisements (without being declared as such).

What type of media output can one expect when 100% of the revenues come from the vendors? And what type of disclosure requirements do media outlets face who rent out the website for vendors to get their message out?

The answer to that question, in the US at least is easy. There are no disclosure requirements. This is a completely unregulated part of the economy.

In IT, the agenda-setting media is not the New York Time or Washington Post (as they don’t cover IT for the large part). Instead, they can be replaced by Gartner, Forbes, ComputerWorld, IDG, etc.. 

On the IDG website, for example, they are very clear that they can delivery buyers, and that they essentially know how to manipulate buyers on behalf of advertisers. See this quotation. 

“Our customers know they can rely on IDG to deliver the right buyers at scale exactly when they are most receptive to a marketer’s message….”

Notice that IDG has no concern here about accuracy. The orientation is to deliver an audience that is receptive to purchasing.

Let us ask a question. How do articles that cover IT realistically fit into “delivering buyers….when they are most receptive to a marketer’s message”?

Does this orientation, to maximize advertising revenues, impact IDG’s media output? Interestingly, in reviewing many IDG publications, including ComputerWorld, Brightwork has found that IDG publishes entirely inaccurate articles for SAP. Furthermore that these articles are in fact paid placements from SAP.

This brings up the question of what is IDG. Is IDG an advertising platform, or is IDG interesting in publishing truthful inf0rmation?

Conclusion

  • SAP uses a media model that is used by other industries.
  • The intent of the media model is to control behavior and to use the release of selective information and in many cases false information to influence behavior. There are very few independent sources of information on SAP or IT generally, and therefore it is a simple matter to influence media entities.
  • In the case of SAP, it has very large multinationals called consulting companies that serve as reliable message repeaters.

The combination of SAP’s control over IT media, combined with the multinational consulting companies that are little more than consulting arms of SAP (for the percentage of their practices that focus on SAP) allow SAP is able to create an echo chamber at will.

This media control by SAP is greater than that displayed by any other software vendor and is a primary foundation of their success.

References

Why the Success of IT Projects is the Great Unknown

What This Article Covers

  • Background on the Measurement of the Success of IT Projects
  • How This Relates to the Purchase of Major Brands in Software and Consulting
  • Do Implementing Companies Want their Projects Evaluated for Success?

Project Success

Background on Enterprise Risk Management and Performance Management

One of the most interesting results of evaluating the success metrics that are applied to enterprise software projects post go live is that the only success metrics turn out to be related to hitting project management goals — that is the success metrics are not tied to actual performance of the system.

“I say “may,” because the research is clear that companies often have no way of validating whether their project was a success because they have no formal measurements in place. The following quotation from research into the project success determination explains this fact – and a fact, which is frequently and easily glossed over when failure statistics are quoted, quite well. “According to Parr and Shanks (2000) “ERP project success simply means bringing the project in on time and on budget.” So, most ERP projects start with a basic management drive to target faster implementation and a more cost-effective project… Summarizing, the project may seem successful if the time/budget constraints have been met, but the system may still be an overall failure or vice versa. So these conventional measures of project success are only partial and possibly misleading measures when taken in isolation (Shenhar and Levy, 1997)” ” – Measures of Success in Project Implementing Enterprise Resource Planning

This quotation is only one example – all of the research in the area of success measurement for IT projects points in the same direction.

How Enterprise Risk Management Relates to the Purchase of Major Enterprise Software and Consulting Brands

Because companies do not measure the success of their projects, they will frequently simply purchase software and services from major brands. The logic is the following:

“We purchased software from SAP, and we chose our consulting partner as Accenture – therefore what could go wrong.”

It turns out a lot can go wrong. At our companion site Software Decisions, we add a larger multiple for implementation cost because software, which is implemented by a major consulting company, will in every instance that we have analyzed, cost more and take longer to implement than if no major software company is involved. This is why the implementation durations of best of breed applications is so much faster – they are not brought in by major consulting companies and are no obligated to hand their consulting over to them or to accept the consulting company’s “methodology,” which is not a methodology, but a method, and is centered around maximizing the billing hours that are pulled from the client.

Do Implementing Companies Want their Projects Evaluated for Success?

The research shows that companies don’t perform enterprise risk management and don’t know if their projects are a success. At first blush the answer might seem to be “absolutely.” However, do the executives actually want to find out? If you are an executive at a company and have made a purchase decision, clearly, you want the project deemed a success. If you actually measure for success, you may find out it is not actually a success in that the system does not provide the quality of output expected, and or it does not improve the company’s condition beyond the system that was replaced. So what do companies do? Well they essentially measure success based upon whether the project met its implementation deadlines. As stated in the SCM Focus Press book Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making.

“It is in fact quite easy to bring up an application so that it is “live.” All that has to be done is client specific master data setup, integration performed to other systems and a generic configuration used. I refer to this as an IT implementation – the system is working and all the server lights are blinking. Implementing the software in a way that adds significant value is the actual goal not simply hitting a deadline. However, in multiple studies it has been found that companies have no other way of objectively determining project success beyond the meeting of project deadlines.”

Lets us an analogy which everyone can related to. If we look at the wars in Iraq and Afghanistan, were they a success? The bill for this wars is estimated to be roughly $6 trillion.

“The decade-long American wars in Afghanistan and Iraq would end up costing as much as $6 trillion, the equivalent of $75,000 for every American household, calculates the prestigious Harvard University’s Kennedy School of Government.

“The Iraq and Afghanistan conflicts, taken together, will be the most expensive wars in US history—totaling somewhere between $4 trillion and $6 trillion. This includes long-term medical care and disability compensation for service members, veterans and families, military replenishment and social and economic costs. The largest portion of that bill is yet to be paid.”- Global Research

There were great sacrifices on the parts of Americans — both in terms of those that funded it, and those that fought in these wars. Lets remove from the equation any innocent Iraqis and Afghanis who were injured or killed and the loss of their national independence — or the final impact of these wars on their future. Rather, let us restrict the analysis of the wars as to whether these wars were a success or failure for the US. How does on determine if these wars were a success?

  1. Is it defeating the militaries of these countries?
  2. Is it the elimination or reduction of terrorism?
  3. Is it the possession of the natural resources of these countries?
  4. Is it the long term political control of these countries?
  5. Is it whether both countries begin to operate as great democracies?

There is a strong tendency to declare the wars a success because of the sacrifice rather than the benefit — however that for obvious reasons can never be a correct measurement. The question that should be asked is not were there sacrifices made — but were the sacrifices worth the cost?

Of the $4 to 6 trillion spent, were there other things that could have been done to help the US meet its objectives? As with IT implementations, the output of initiatives seems quite frequently to be analyzed. It also brings up the question of, if the analysis is performed and the initiative was a poor investment of resources, does anyone want to know?

Conclusion

The repetitive purchase of products from major monopoly vendors like Oracle and SAP that have the highest total cost of ownership (TCO) along with the lowest performing functionality when compared to best of breed applications. This is what passes for  This allows companies to declare IT projects a success – not based upon any evidence, but based upon the use of name brands. They do not practice enterprise risk management by analyzing the enterprise risk before the implementation — including it in their software selection. This means that there is little impetus to choose the best solutions, to actually perform thorough software selections, or to measure the results of IT implementations.

References

Shahin, Dezdar. Sulaiman, Ainin. Measures of Success in Project Implementing Enterprise Resource Planning. International Journal of Business Performance Management, Jan 1 2011

Iraq and Afghanistan War Cost

US Wars in Afghanistan, Iraq to Cost $6 trillion

How to Understand The Software Vendor SAP

What Does This Article Cover? 

  • This definition will be from the perspective of an SAP implementor.
  • How does SAP break down in terms of its software strengths?
  • What early decision was instrumental in SAP’s growth to become the largest enterprise software vendor in the world?
  • What is SAP’s relationship to IT departments?

Introduction

SAP is a German software company, and the largest enterprise software company in the world. While German, the higher use of enterprise software in the US market versus anywhere else in the world, has made US the number one market for SAP. SAP started as an ERP (Enterprise Resource Planning) vendor, which had 4 major modules. These are:

  • Sales and Distribution
  • Materials Management
  • Financial & Controlling
  • Production Planning

ERP offered an integrated solution which combined very rudimentary supply chain and operational functionality with more advanced financial and sales order and pricing functionality. ERP systems also subsumed MRP functionality, which prior to ERP was sold as a separate application. SAP became the most successful ERP vendor in the world, and used this revenue stream, relationship with partners, and relationship with customers in order to move into a very large areas of enterprise software. This includes..

  • BI/BW – Data Warehousing / Analysts
  • PI – Application Integration
  • CRM – Customer Relationship Management
  • APO – Advanced Planning (supply chain)
  • Solution Manager – Document repository and landscape management

These are just some examples. A more useful question might be what enterprise software does SAP not compete in. SAP has mostly grown through internal development, however, there is quite a bit of evidence that SAP copied some of its intellectual property from other vendors. This comes to us from court cases where vendors allege SAP of doing this, from my personal experience of seeing functionality appear in SAP after it was already in software of a vendor that SAP had a partnership with. In fact, there is a great deal of question in my mind as to whether the xApps program, was simply a giant competitive intelligence gathering exercise by SAP. For companies that signed up to the higher level of xApps partnership with SAP, SAP reputedly offered them a contract that the smaller vendor should declare all of its intellectual property to SAP, and that if SAP found anything that was undeclared, that essentially SAP could use it.

SAP’s Growth

SAP is now a massive company, but its growth into so many areas have also lead to many quality problems with their applications. SAP and the major consulting companies deny this. However, this point cannot be refuted, as I see this first hand as I troubleshoot APO systems, and am exposed to the extremely limited capabilities in the BI/BW Data Warehouse. I have written previously that several of SAP products are so weak, that I doubt they could survive if they were not part of SAP. While not generally discussed, because of the general unwillingness to write uncomplimentary things about SAP, a number of their products are actually disabling to the businesses that buy them.

IT

Two major departments or divisions are part of enterprise software implementations, the business and information technology. Information technology does things like maintain the applications, database and infrastructure for the software that the business uses. For reasons that are not entirely clear, but are at least somewhat related to personal career incentives or the incentives within the IT department, SAP is very attractive to IT departments. This is interesting because SAP is one of the most, if not the most difficult enterprise software application(s) to maintain. This is highlighted in this article related to total cost of ownership. Cases where uncompetitive SAP offerings are selected over much better competitive offerings, it is almost always IT that has cast the deciding vote. SAP’s sway with IT departments is so powerful, and in many cases resulting in such bad choices for the business that on many occasions it appears that the IT decision makers actually work for SAP, and look out more for SAP’s interests than that of their own company.

SAP’s Technology

SAP can be broken down into three basic areas, the user interface, the business logic, and the data backend. Of these three, SAP is only differentiated from competitors in the business logic layer. SAP’ lags other vendors in the technology aspect of its applications, in many cases using very dated approaches. An example of this is included in this link. SAP’s development approach with respect to business logic is to offer so much functionality in so many areas that the company can hypothetically meet any business requirement.

Partnerships

SAP made an important decision early in its life to essentially outsource it is consulting to large consulting companies. It is unclear if SAP understood at the time how important this would be to their later success, but it is one of the most important factors, easily more important than SAP’s actual software. This is because once large consulting companies are able to make more money on SAP, than on competing applications, the consulting company has an incentive to recommend SAP.  SAP makes so much money for the large consulting companies that they in a way remotely control them. The loyalty is so strong that the consulting partners will cover up or make excuses for functionality in SAP. Consulting companies have also helped SAP steal intellectual property from other vendors as is discussed in this article:

The SAP Ecosystem

Therefore, SAP is best understood as an ecosystem rather than a distinct company. There are the numbers of people who actually work for SAP, but then there is the larger grouping of individuals outside of SAP who make their living based upon SAP software, and this includes many people in the large consulting companies, and independent consultants (such as myself). SAP puts so much money into so many people’s pockets that there is for most intents an purposes a media black-out about how SAP actually works or often does not work on projects.

Conclusion

A definition of SAP could go on and on, as there are so many aspects to cover. However, the list above are some important considerations in order to understand what SAP is.

Accessing Honest Information on SAP

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