- The reality of the SAP Partnership Program is far different than what is usually presented.
- The SAP Consulting partners act as arms of SAP, rig software selections, and help with SAP account control.
Introduction to the SAP Partnership Program
SAP has the most extensive vendor partnership program of any software vendor in the world. This program attempts to present the following characteristics to SAP customers and the outside world.
- A Collaborative Affair? : SAP presents this partner network to customers as a highly collaborative affair.
- A Vibrant Vendor Ecosystem?: The partnership program is used as evidence that SAP has a vendor ecosystem and that it allows other software vendors to participate in this ecosystem to mutual benefit.
- How Many Partners? : SAP often talks up how many vendor partners it has, without revealing much about how the vendor partner program works.
- Partner’s Freedom of Expression?: Not a single word is uttered regarding what happens to the rights of expression in the partner vendors.
- A Pro-Competitive Tool? : Appearances to the contrary, SAP uses the vendor partner program as an anti-competitive tool, something for which it is close to impossible to find published material.
- One Big Happy Family? : Vendor partners talk up the SAP vendor program to prospects and do not critique it publicly or to customers or prospects. In private, they often bitterly condemn SAP as a partner.
SAP has some of the tightest control over the information that is published on them of any software vendor. I would argue that SAP’s censorship of information is higher than any other software vendor in the world. Part of the control is exercised through providing sources of income to those that publish. Other forms of control are through the SAP partnership agreements.
This article will explain a disturbing feature of the SAP partnership system, and its impact on the objectivity of information that is available generally on SAP. That is information both in a published form and communicated orally. We will cover some of the little-published issues regarding SAP’s vendor partnership program.
How the SAP Consulting Model Works
SAP has a unique business model. Since the beginnings of enterprise software, most software vendors implemented their software with their own consulting. SAP does it the opposite. Since they began to become a popular software vendor in the 1980s, SAP outsourced its consulting to other consulting firms.
SAP did not do this (which is giving away revenue) because they thought that these consulting companies could do a better job in implementation. Or because they believed that the consulting companies could implement faster (they can’t) or because they thought it was better for their customers (it isn’t). It is because SAP knew that if they gave consulting companies their consulting revenue and “socked it to their pockets,” then SAP would recommend their software. It is because SAP knew that if they gave consulting companies their consulting revenue and “socked it to their pockets,” then SAP would recommend their software...as often as humanly possible. Some features of this relationship are the following:
- Profit Based Recommendations
- Rigged Software Selections
- Serving as Message Repeaters
- Excusing Overspending and SAP Implementation Failures
Profit Based Recommendations
SAP’s consulting partners recommend SAP regardless of the fit between the SAP application is evaluated and the capabilities of the competitive applications. Consulting companies never point out that their recommendation of SAP applications is entirely based on their quotas. Consulting companies can only meet their quotas by recommending SAP (as they have an SAP practice) or Oracle (as they have an Oracle practice). As soon as they recommend some other software, they would not be able to staff the project.
Rigged Software Selections
As explained in the book Rethinking Enterprise Software Risk, SAP consulting partners go through the motions of looking into other software vendors (which they also bill the client for), but always tilt the playing field in favor of SAP or Oracle. Therefore SAP consulting companies lie to their clients when they propose that the software selection will be open and fair.
Serving as Message Repeaters
SAP’s consulting partners repeat whatever SAP marketing states without questioning whether or not it is true. Whether it be SAP’s Run Simple Program, or SAP’s Netweaver program – which never actually existed or SAP HANA, consulting companies have demonstrated a history of repeating things that SAP marketing say, that end up being wrong.
Excusing Overspending and SAP Implementation Failures
SAP’s consulting partners excuse problems with SAP software and help SAP to place any blame for failed implementations onto the buyer or customer. SAP has a specific method for blaming the client for project failures, as is covered in The Art of Blaming the Client for Implementation Failures. These articles excusing failure are published in media entities that take money from SAP.
For example, SAP always lies to customers about what its software can do, how quickly it implements, how sophisticated its software is, how many places it is running. You can see my article on SAP’s brazen exaggerations of customers numbers for S/4HANA on that particular topic.
And their consulting partners, which are mainly consulting arms of SAP, both do not contradict SAP, but most frequently add on their lies on top of SAP’s lies. Many members of IT organizations owe their allegiance to SAP over the companies they work for. Their current employer only being their temporary employer. This leads to the question of whether IT decision makers should sign a fiduciary agreement that they will put their employer’s interests above the interests of their favored vendor.
What is SAP Certification?
SAP certification is a process that software vendors go through to declare that their solutions are “certified by SAP.” The software vendor then displays a badge on their website and uses the symbol in PowerPoint presentations and so on. An example of one of these certification badges is listed below.
The Reality of the SAP Partnership Program
To the outside world and SAP customers, the SAP vendor partnership program seems like something legitimate and even beneficial to SAP customers.
After many years of discussing the partnership program with many software vendors, a very different picture appears of the SAP vendor partnership program. In many cases, the SAP vendor partnership program may be viewed as not a partnership program at all, but as yet another anti-competitive tool that is used by SAP to restrict competition in the marketplace.
This is the type of certification graphic that graces many SAP partner websites, as well as presentations. It is non-sensical because NetWeaver never actually existed.
While valued by customers, and in fact, many customers will not buy without it. SAP puts minimal effort into the certification process. The requirements are very watered down, typically only a tiny amount of data is transferred between systems, and only a very limited grouping of fields. A SAP certified solution does not mean that the company has a working adapter. Not at all.
However, what the SAP certification does mean is that the vendor will follow SAP’s rules regarding the information it provides. The SAP certification is a bit of a bait and a switch. The software vendor often thinks they are getting access to a new market, but they soon learn this is an incorrect assumption. But they are left with the legacy of no longer being able to control their marketing message.
One reason that this graphic is so valuable is that SAP is known as such a complicated system to integrate into.
- Through difficulty in integration, SAP keeps and anti-competitive advantage against other vendors. This is because SAP has the core system or the ERP system at virtually all of its customers.
- Every other system must connect to the ERP system. No other software vendor uses difficulty in integration to such an advantage, as does SAP.
The SAP Gold Partner Designation
SAP certification is for companies that have a software or hardware product. However, many consulting companies are SAP partners, although they don’t have to go through certification as they have no “product.” But SAP consulting partners face the same limitations to their marketing and advisory messages regarding SAP as soon as they become SAP partners. SAP has different levels of partners. For instance, a SAP Gold Partner is very high in the hierarchy. Being a SAP Gold Partner supposedly means meeting a higher standard, having more people within the company pass certification tests, etc. However, I have worked with SAP Gold Partners that never have to pass any certifications because they are connected through personal relationships at high levels to SAP. Furthermore, in small market countries, there are SAP Gold Partners that are utterly unqualified, but SAP has some other reason for wanting that company to have the designation. In some small market companies, there just are not very many choices.
However, I have worked with SAP Gold Partners that never have to pass any certifications because they are connected through personal relationships at high levels to SAP. Furthermore, in small market countries, there are SAP Gold Partners that are utterly unqualified, but SAP has some other reason for wanting that company to have the designation. In some small market companies, there just are not very many choices.
How SAP Abuses its Control Over the ERP System
Customers that first purchased SAP never had any idea that they were giving this power over to SAP. Something no one predicted when ERP systems first began to be sold in the 1980s is how some software vendors would use the sale of the ERP system as a form of account control, directly purchases into often low value “accessory applications.” And no one drives their customers to buy more of its applications based upon the control of the ERP system than SAP.
Many an SAP partner has contacted me and tell me stories of how SAP threatens to take their partnership away if they don’t follow the SAP partner rules. And they explain precisely how the control by SAP works.
Interestingly, almost all of the arguments initially used to sell ERP systems ended up not being true. The misleading information about ERP systems provided by SAP, Gartner, and SAP’s consulting partners in the book The Real Story Behind ERP: Separating Fiction from Reality.
Background into The Relationship Between SAP and the Major Consulting Companies
The major consulting companies have a very binary way of dealing with software vendors. If the company is colossal like SAP or Oracle, the company does pretty much what they want. If the vendor proposes something, the primary consulting company repeats the marketing message uncritically. Many people talk about SAP software or imply that the software is why SAP is so lucky. However, SAP’s ability to gain market share in areas where has no useful product (BW, PP/DS, XI/PI, SPP, etc..) demonstrates that like Microsoft, it’s not the actual product that has put SAP where it is today. One of the most important and probably the one most responsible for its success has been its relationship with the major consulting companies. SAP does not attempt to implement its software, but merely has some specialist consultants that work on SAP projects in very few numbers.
This maximizes the income for the major consulting companies, and this means that the major consulting companies tell clients that SAP is the best software for their needs. SAP is the best software for the major consulting company’s needs. The answer is clear; no vendor can make as much money for a consulting company like SAP or Oracle. Therefore, they get the consulting company’s recommendation. SAP developed this strategy decades ago, and it has been remarkably successful at getting them recommended in accounts. This strategy is so critical to SAP that if SAP were to reverse this strategy and begin to implement their software, they would no longer be recommended by the major consulting firms. More on how SAP corrupted the advisory function of the major consulting companies can be read about in this article.
Does SAP Rein in its Bad Implementation Partners?
SAP has given awards to consulting companies like WiPro that are known to be horrible for customers. This problem is covered in the following quotation from the book SAP Nation 2.0.
“SAP has a tendency to write code and then hand it over to its partners. It fails to think enough about customer deployment issues. Worse, it lets customers fend for themselves in dealing with its partners. Many SAP customers have not done well negotiating with or monitoring hardware vendors, hosting firms, telco carriers, offshore application management vendors etc. In fact, it has been suggested that unlike Ford, for SAP, “Partners are Job #1.” Partner interests, it would appear, trump those of its customers. The sum total of partners’ inefficiencies explain much of the excess in the SAP economy.”
Faux SAP Vendor Certifications
SAP emphasizes vendor certification and SAP customers like seeing them. In many cases, they will exclude vendors that don’t have a certification from the selection process.
- Vendor certification logos are prominently displayed on many vendor websites.
- They ostensibly serve as a signal to customers that the solution works with SAP. SAP puts minimal effort into the certification process.
- In many cases, we have observed different software vendors have become certified by only passing a single field from sap to their system and back.
- SAP has shockingly little quality control on the vendors that it certifies.
These bullet points demonstrate how little substance there is to SAP’s certification process and how little it uses the overall partnership system for anything beyond perception management and controlling competing software vendors with their faux partnership.
Does SAP Care if its Partners Improve Integration with SAP?
In our view, the answer is no.
This is because it is the customer’s problem. Regardless of how effective or ineffective the integration adapter that the partner vendors create, behind closed doors, SAP will always tell the customer that integration is a major problem and a reason to steer clear of non-SAP applications. All non-SAP applications are presented to customers as “a risk.” While SAP applications are offered to customers as a “sure thing.” This greatly over-simplifies all implementation risk down to a single factor, which is the risk of integration complications.
SAP wants the partnership with the software vendors so they can begin controlling them and making them less able to compete with SAP. For this reason, there is almost no vendor SAP won’t allow into the partnership program. For the same reason bear trappers
… let just about any bear into their traps. SAP is not too particular who it lets into the SAP partnership program.
The integration adapters provided by software vendors are always far beyond whatever SAP tests.
Secondly, any application can be made to work with SAP, and the fact that SAP does not put work into testing interfaces means that the integration certification has no genuine meaning. And in most cases, there is some customization required in the interface, so few integrations are “out of the box,” as is often stated during the sales stage.
SAP’s partnership contracts hold out the carrot of more business. But they come with very high limitations and control given to SAP, particularly over the partner’s control over their messaging vis a vis SAP.
Why Software Partnerships with SAP Tend to Sour
SAP will often use partnerships to gain entry into areas where it lacks an offering. It uses the connection to co-opt the area and then set upon utilizing the understanding of the area, often obtained from the unwitting software partner, to develop a solution that then completes with its software partner. SAP is complimentary and friendly with the software partner when they want to pull information from them, but then switch to a different mode when SAP feels as if they have gotten what they needed from the relationship.
SAP is very well known for doing its best to prevent customers from buying applications from software vendors that are SAP partners. Therefore, we describe the dynamic of being a software partner with SAP as a bit like that of an abusive relationship. SAP would not hit you so hard if they simply did not love you so much.
The Case Study of the Teradata – SAP Partnership
After years of partnership, Teradata filed a lawsuit against SAP accusing SAP of both anti-competitive tactics and IP theft. We analyzed this lawsuit in the article How True is SAP’s Motion to Dismiss Teradata’s Complaint.
But let us review both SAP and Teradata.
Both are monopolistic commercial vendors that have both captured public domain IP and spun it as if they invented everything that they own. SAP and Teradata were involved in a partnership for the express purpose of extending their monopoly power. In my view, these partnership agreements should be illegal, as they form an anti-competitive barrier in the marketplace. Teradata is complaining about SAP’s anti-competitive behavior, but Teradata itself was supporting SAP’s hegemonic position by partnering with them.
These partnership arrangements are, by their nature, corrupt. And SAP has 14,000+ of them. Why are these partnerships between the entities necessary?
In the consulting space, it produces large quantities of false information as the consulting companies becoming little more than bobbleheads and parroting whatever SAP says. The ostensible purpose of partnerships among software vendors is to increase integration — but this could be better facilitated by directly publishing APIs. There is no reason for vendors to be scheming with each other and engaging in speech limiting agreements called partnership agreements. Teradata was silent for years, and could not speak because of their partnership agreement. I have not seen this commented on a single time that Teradata was bound from talking about what amounted to commercial abuse due to a partnership agreement.
IBM and Oracle have also restricted their criticisms of SAP’s false statements around HANA because of their partnership agreement.
Maybe this is an excellent time to evaluate what these partnership agreements do for the common good. Partnerships impinge on the freedom of speech of the smaller partner, and they allow one entity to control another entity, but without actually acquiring that entity. Companies in a partnership agreement can agree to things that aren’t actually in the partnership agreement.
History Repeating Itself – Wellogix
This article describes how they mostly did the same thing to another vendor, called Wellogix. The entire report on this case is available in this article. The quotations from this article are eerily similar to what has come to be a distinct pattern with SAP. Some quotes include the following:
“While SAP already had an SRM (supplier relationship management module) that could handle some procurement tasks, it was inadequate for “complex services,” according to the complaint. “Wellogix had a working version of this software, and SAP was aware that it worked in a large client environment such as BP.”
After the deal was signed, a number of SAP employees visited Wellogix’s offices for a few days in order to “kick-off the NetWeaver Partner Agreement and perform [SAP’s] due diligence on Wellogix for the purpose of either investment in or the acquisition of Wellogix,” it adds. “During the workshop, employees of SAP went through Wellogix’s P2P software code in person with Wellogix personnel disclosing parts of the code structure.”
But instead of following through with the partnership, SAP used Wellogix’s trade secrets to “replicate the capabilities” of its software and incorporated them into its own SRM products, according to the lawsuit.”
This is all very standard. In fact, after seeing SAP work this way for years, I feel I could have written this script without having actually read the article. However, the next part of the allegation becomes even more interesting. This is because SAP did not act alone to steal Wellogix’s IP:
“In 1999, BP America hired Accenture to help it “create a paperless (i.e. electronic) process in oil field services,” it adds. “After a thorough review of over twenty vendors, including SAP, Accenture recommended Wellogix.”
In January 2002, Wellogix and BP signed a software and services agreement, it adds. But Accenture then obtained confidential trade secrets from Wellogix and passed them along to SAP, according to the complaint.
Wellogix also sued Accenture in 2008, and won a $94 million jury award against the company earlier this year. Last month, a judge lowered the award $50 million and told Wellogix it could either accept the new amount or hold a new trial.”
And this is also not surprising. I have been writing for some time that SAP is far too powerful with the major consulting firms. In most cases, the major firms simply recommend SAP, no matter how poor the fit. In fact, for most clients I work with, the most appropriate software from requirements and functionality perspective is not selected. There are several reasons for this, but one primary reason is that major firms like Oracle and SAP distort the market, making it far less efficient — as an economist would consider it, than the consumer software market. There is a great misunderstanding regarding the nature of market efficiency. Markets do not automatically become efficient through competition. Markets must be kept fair for an efficient market to exist as companies desire to build monopolies. This is poorly understood generally, as even some economists (many who take money from monopolies themselves) do not emphasize it. This is the entire reason for anti-trust regulations, regulations which are generally unknown to the public.
Regulation performs the same function performed by referees at any game. A fair match can only be ensured by an impartial intermediary that enforces the civil rules of the game. Those who use the term “free markets” or competition without understanding this feature of markets fundamentally do not understand the entirety of the history of economics. The efficiency of the enterprise software market is vital for the efficiency of the overall economy, as is discussed in this article.
Major consulting companies maximize their revenues by recommending SAP, and this is why software selections performed by the major consulting companies are essentially rigged, as I described in this article.
In this case, Accenture (which is not only accused but has been found guilty) conspired with SAP to help SAP steal intellectual property from a smaller vendor. This must-have caught Wellogix entirely by surprise.
However, it shouldn’t have.
First of all, Accenture has a terrible reputation for unethical behavior, but also because the major consulting firms like Accenture receive so much of their consulting revenue from SAP that they are almost an arm of SAP. The best terminology I can use to describe the relationship is that they are remotely controlled.
The Dreaded SAP Partnership Contract
When a software vendor engages in an SAP partnership, it signs a partnership contract that is highly tilted in SAP’s favor. The software vendor does not have the option of adjusting the contract. The software vendor must sign the contract that SAP provides or not be part of the sap partnership ecosystem.
One of the significant concessions that a software vendor gives to SAP is in its messaging and its marketing. As part of the partnership agreement, software vendors may not message or otherwise market their software in a way that is competitive against SAP. This is a rather astounding concession. What other areas of business where this would be acceptable?
This is true regardless of how the software vendors application stacks up against SAP.
In various articles, we have explained how SAP controls its software partners through its partnership program. In this article, we will delve into the partnership documents to explain the documented evidence for this. The text we will rely upon is the following:
- SAP PartnerEdge, General Terms, and Conditions for Distribution (Distribution GTSC)
Important Areas Related to SAP’s Ability to Control its Partner
This first clause appears to be bi-lateral but is, in reality, a way for SAP to control its software partner.
“Neither Party will use the name of the other Party in publicity, advertising, or similar activity, without the prior written consent of the other Party.”
It seems straightforward, right?
Well, watch what happens as the clause continues. The “SAP Group” is just SAP. Every single one of the following sentences lay out SAP’s rights versus the partner.
“However, any member of the SAP Group may use Distributor’s name in customer and partner listings (including, without limitation, showing Distributor’s name, address, contact details, partner engagements, areas of expertise and/or offerings on SAP’s websites or online marketplaces) or, at times mutually agreeable to the Parties, as part of the SAP Group’s marketing efforts (including without limitation reference calls and stories, press testimonials, site visits, SAPPHIRE participation). The SAP Group will make reasonable efforts to avoid having the reference activities unreasonably interfere with Distributor’s business. Distributor agrees that SAP may share information on Distributor with any other member of the SAP Group for marketing and other business purposes and that Distributor has secured permission from its employees to allow SAP to share business contact information with any other member of the SAP Group.”
The use of the term SAP Group is misleading. The SAP Group is “SAP’s parent or any of its associated companies. So SAP.
The distributor is the partner to SAP.
The Basic Inequality of the Partnership Agreement
Notice how unequal the status of SAP versus its partner is. The partner is forbidden from mentioning SAP in any marketing material without SAP’s approval. Here the use of the term “SAP Group, has more powers than SAP. However, the SAP Group is just SAP. The latter part of the clause fundamentally contradicts the implied equality of the first sentence of the clause.
With this single clause, I would immediately call into question the ethics of the company that would set forth such a clause.
We have repeatedly been told that SAP must approval all mentions of SAP by the partner. The partner is provided with strong negative reinforcement when they market in any way that positions their product as competitive to SAP’s products. And this is done to even the largest software vendors.
Observe, this is the clause that, along with the next, that is used to enforce this control.
SAP Logo and Other Mentions of SAP
The following clause is very similar to the one just reviewed.
“SAP reserves the right to review the use of the SAP Logo in Distributor’s marketing, advertising and other promotional materials.”
This first part is fine. But look how the next sentence takes a left turn. It does not speak to the SAP logo but is as broad as possible.
“Distributor must make no representations regarding the SAP Products except as consistent with SAP’s Documentation or as SAP may otherwise approve in writing.”
This is the second clause where it changed right after the first sentence. In the first case, SAP introduces an entity called “SAP Group,” which changes the meaning of the first sentence. Now here, what begins with a statement about the approval of the SAP Logo, which seems innocuous enough, is followed by the broadest possible restriction. SAP’s documentation could be interpreted to mean either technical documentation or marketing documentation. It is entirely open-ended.
The issue that while this sounds like SAP is ensuring that the presentation of its products is consistent with its documentation, this clause can be used to enforce any conformity with SAP’s desires.
Termination for Good Cause
SAP has an enormous number of clauses or provisions in its partnership agreement. They cover a seemingly unending number of scenarios. And if any of them are not met, then SAP can terminate the partnership as is described by this clause.
b) Breach of other provisions. A Party does not comply with any provision of any part of this Agreement other than those referred to in this Article 9 no. 1a) (Non-Payment), 2a) (Repeated Non-Payment) and 2b) (Breach of material provisions) unless the non-compliance is capable of remedy and is remedied within thirty days of the other Party giving notice.
There are so many provisions that meeting all of them would impose a significant overhead upon the software vendor. This is something that is very little discussed in any published form.
The Overhead of SAP Partnership
What should be remembered is that vendors frequently only become partners with SAP to gain the marketing/sales benefit. This partnership agreement imposes a significant overhead on the software vendor (the partner) to do this.
Unbalanced Rights and Liabilities
- Virtually all of the clauses layout the responsibilities and liabilities to the software vendor. SAP seemingly has and responsibilities. Virtually every clause lays out what the partner must do. The rules the partner must follow, not rules that SAP must follow.
- Therefore, this partnership agreement can be seen as imposing a much higher degree of effort and cost on the partner vendor than it does on SAP.
It is extremely clear from reading the partnership agreement, which has the power in the relationship.
How Partnerships with SAP Help Restrict Competition with SAP
While before having a relationship with SAP, vendors could be directly critical of SAP, after they have a relationship with SAP, they cannot take this approach. They must pitch their products not as competitive but as “complementary.” This comes across very clearly in the marketing documentation that is produced by vendors. I have noticed this for some time among many of the inventory optimization multi-echelon vendors, and I found it again at the website of a company that integrates with SAP. I have taken an example from a company’s website. I will leave the specific company out because I don’t mean to single them out, and it is SAP that is to blame for creating an environment that requires companies to write in such a docile manner.
When organizations integrate SAP with non-SAP systems it typically happens because the non-SAP application requires data that is managed within SAP® in order to deliver the expected value. Integrating to SAP is unfortunately not an easy task for a couple of reasons:
SAP’s data structures are deeply normalized. While this is a great strength for SAP as an ERP system it also means that data most people would consider basic objects ends up being scattered over numerous tables. Retrieving the data required by the external application therefore requires deep knowledge of the SAP data-model. Many organizations and 3rd party system providers do not have that knowledge.
The problem with the statement is that this does not fully explain SAP has such a big data overhead. Normalization is the following
“The process of organization data to minimize redundancy. The goal of normalization is to decompose relations in order to produce smaller, well structured relations. Normalization usually involves dividing large tables into smaller and less redundant tables.” – Wikipedia
This means that there are more tables, but each table is more efficient because it has fewer relationships within the table and more between various tables. This speeds searching through tables. However, many vendors normalize their application database. The real issue with SAP’s data layer is not that it is normalized, but that:
- It is poorly documented. SAP does not publish its database schema.
- SAP’s transactions for dealing with tables, such as SE16 and SE16n, are just single table views, and make understanding the now data relates to other tables a major problem.
- Unlike the vast majority of vendors, SAP’s tables and fields have unintelligible names. Several well-known tables are the MARC and VBAK. The fields are named in the same way.
- Any field in SAP can be interrogated by selecting technical help. However, the many fields point not to actual tables, but to virtual tables or what SAP calls “structures.” Finding a field in a structure is essentially a dead-end.
- SAP cannot be connected to any standard relational database tool such as TOAD or Navicat. This means that only SAP transactions can be used to get to the SAP data. However, SAP’s tools are extremely weak and inefficient for even experienced data resources to use. All other vendors in the supply chain space do not require the use of proprietary tools and therefore are much efficient when it comes to data management.
False Statements Made to Protect SAP
Therefore, the statement made by the vendor regarding normalization being the reason why SAP’s data backend is challenging to deal with has genuinely nothing to do with anything. SAP has problems with any data backend that it creates, regardless of whether it is ERP (which the vendor here is referring to), or APO or BW. This is described in this article and has nothing to do with the normalization of data. It has to do with poor software design.
The next quote briefly touches on SAP’s enormously inefficient integration approach. As SAP is the only vendor to wrap its data backend in such opaque complexity, it is the most challenging application to integrate into. The most popular way to integrate into it has been for SAP to push out and IDOC, which is a hierarchical file format that must be parsed with a transformation language such as UNIX’s Awk. Another way is to use a remote function call (RFC), which has to be coded, and in my experience, has demonstrated several performance problems. Let us see how this compliant vendor soft peddles SAP’s integration weaknesses.
“To control access to the SAP® database SAP® has developed several proprietary integration technologies. These technologies do provide a more streamlined view of the underlying data complexities, but they also introduce new technology barriers that typically require costly development and 3rd party integration tools to overcome. The objects exposed by these integration technologies often don’t provide access to all the data required to resolve an integration challenge. Many solutions therefore end up looking like a mix of technologies and approaches resulting in long-term sustainability issues.”
Notice the phrasing here has to pay homage to what is, in fact, a terrible design. None of the “proprietary integration technologies” that SAP has created work very well. The section highlighted in blue builds on a point that does not exist. The proprietary integration technologies don’t work well, so the following sentence is, therefore, a problem because its assumption is not true. The problem with one of the major SAP integration technologies is covered here.
Secondly, SAP does not want them to work very well because they do not want clients connecting the best of breed applications to their ERP system. Instead, they want companies to buy other SAP products that compete with the best of breed vendors, that cannot compete with best of breed vendors. A primary strategy of SAP for several decades has been to direct clients to SAP products on the basis that integration is complicated. Integration can be difficult, but nowhere is it more complicated than with SAP.
As for the rest of the paragraph, there is some definite beating around the bush, although there are some negative comments made, which is listed in blue. Essentially SAP’s preferred integration is no integration. However, I guess some excuse has to be made up. It’s hard to get a partnership with SAP if you declare their data approach an unmitigated design disaster that may have been put in place to prevent integration to best of breed vendors. And is probably a violation the spirit if not the letter of US Anti Trust law (SAP’s relationship with vendors where vendors pay them 70% and are on the SAP pricing list seems to harken back to Standard Oil’s business practices.).
A Culture of False Information
The vendor information that is being provided on their website concerning SAP is false and incredibly deferential to SAP. Why does this vendor have to write in this way? This because every word on this page had to be approved by SAP. As soon as a vendor develops a partnership with SAP, freedom of speech is out the window. However, many vendors need certifications to put prospective clients at ease. Interestingly, all the SAP certifications mean very little on a project and are primarily marketing hyperbole. They don’t do much testing at all. SAP
Why is this “®” required every time the term SAP is mentioned? This is not part of copyright law. A company name does not need to have “®” associated with it. Can you imagine what this would look like if every time a company was mentioned, it were necessary to add the “®” it would be ludicrous? This quote is at the bottom of the page.
SAP® is a registered trademark of SAP AG, Germany
That is nice. Every company registers are trademark; therefore, the fact that SAP did so is not surprising and not particularly relevant. However, it does not follow that “®” has to be used. This is again more slavish to SAP. This is no doubt at the command of SAP. What is amazing is there are companies like Plan4Demand that have used material from this site without providing any reference of where they obtained it. But SAP gets unnecessary “®”‘s added in this way. But let us move to the content of the quotation.
How SAP Retaliates Against Vendor Partners that Tell SAP Customers the Truth
Vendors that message that their products are not merely complementary will typically result in SAP will threaten the software vendor with their partnership being revoked. SAP likes for the partner software vendor to present their applications as if they are complementary to SAP; this is true even if the software is a direct replacement for SAP’s functionality. The partnership is the first step to adjusting and diluting the competing vendor’s messaging so that the software vendor is subordinated to SAP.
Vendor partnership with SAP is often interpreted as a slam dunk for the competing software vendor. SAP sets about undermining its partner as soon as it has the partner contract signed. SAP slowly encroaches on the software vendor, reducing its ability to go to market as it would typically see fit without SAP’s interference.
The Two Faces of SAP on Vendor Partnership
SAP is duplicitous in how it manages the partnership program. It presents one face to its partner software vendors and a very different look to its customers.
- SAP does all that it can to dissuade SAP customers from using non SAP applications.
- Since its inception, SAP has made its software extremely difficult to integrate two other non SAP applications. Once it captures the ERP system, it uses it to block out other software vendors through the argument that other systems are complicated to integrate — directing the customer more and more SAP products.
- SAP, along with its partner consulting companies, do all that they can to downplay non SAP applications to their customers.
The argument of integration and integrated functionality has been used for decades by SAP and by SAP consulting companies. This is to keep SAP customers away from using applications that are not SAP even when that application is a far better fit for the customer’s requirements and a far more capable application.
SAP does not want any of its vendor partners to succeed. The way SAP thinks about it, the money given to a vendor partner, is money taken from SAP. SAP thinks this way even if they don’t have a viable product in the space occupied by the vendor partner. As a result, SAP will often announce products that are designed to stall the purchase of partner SAP vendor applications.
Taking Ideas and Ways of Operating from Other Software Vendors through Partnership
Overall, SAP does not respect the creation and intellectual property of other software vendors. I have been in some meetings with SAP where at some point during the discussion with our client regarding using other vendors to meet functionality requirements that SAP could not comply, the SAP resource stated that SAP was
“…always scanning the horizon for functionality, and eventually will put any functionality into its own applications.”
Because of this, there was never any reason to look outside of SAP, as anything outside of SAP, would eventually reside inside of SAP, and you could simply buy it from SAP.
And in fact, this is how it works. If a new area of enterprise software becomes, “hot” SAP will generally extend a “partnership” agreement to a vendor in that space. This allows SAP to pretend that they are somehow related to the software category (even though they don’t have an offering), and they then go about attempting to reverse engineer the software vendor’s product so they can offer their competitive product.
Indirect Access as a Way to Block Vendor Partners
The most recent trick employed is called indirect access. SAP’s version of indirect access which has nothing to do with the previous definition of indirect access. We call SAP’s indirect access, Type 2 indirect access, to differentiate it from Type 1 indirect access. And SAP “loves” its vendor partners so much that it uses the faux construct of Type 2 indirect access to scare companies away from purchasing any non SAP system and connecting it to SAP.
- “No Matter What, Don’t Use Our Partners”: SAP often brings up indirect access implications to the customer after they have lost the software selection to the partner vendor.
- “Oh, By The Way, You Owe us Millions”: In other cases, SAP waits until the implementation of the competing vendor is complete, with its consultants working on the implementation and SAP account management fully aware of the implementation, and then brings an indirect access claim after the fact. This is what happened with Diageo.
Conclusion for the Software Vendor
The SAP partnership program is a misnomer. SAP partnership program consists of an abusive relationship that is anti-competitive and seeks to co-opt vendors while duplicitously blocking them out of SAP customers.
What salespeople in vendors that compete with SAP should know, and often do know, is that even if your company is a partner with SAP, that only counts for something as long as SAP sees it in its best interests to keep a civil relationship. SAP does not like other software vendors and usually is looking for a way to compete in their area. That means that partnerships with SAP tend to be amicable only over short periods. And our service applies to every software vendor that competes with SAP, whether they are a partner with SAP or not.
SAP is very well known for doing its best to prevent customers from buying applications from software vendors that are SAP partners. Therefore, we describe the dynamic of being a software partner with SAP as a bit like that of an abusive relationship. SAP would not hit you so hard if they simply did not love you so much.
This is why, in many cases, we have advised software vendors not to become SAP partners. One might argue that SAP needs not to have a partnership program at all. However, if it did not have one, customers would not see the logos, and would gradually come to accept that any application can be connected to SAP. In this way, the SAP partnership is much like a racket. It creates a need that did not exist before the partnership program, and the resolution is becoming an SAP partner, which allows SAP to exert its will over competitive vendors.
- By becoming a SAP partner, the software vendor falls under the influence and the rules and regulations of SAP which are entirely designed to the benefit of SAP and the liability of the
software vendor partner.
- SAP interference into vendor partners has even gone to the extreme where SAP has reached out to software vendors and asked them to discontinue their product. If that software vendor complies with SAP’s request, then SAP offers them in compensation referrals to specialize in consulting in SAP product, which of course, is a direct competitor to the product that SAP would like to see removed from the marketplace. In many cases, “killing” an application requires purchasing the software vendor. However, in this case, SAP was able to attempt to do it (it did not work) through the partnership program.
- SAP has used partnership programs in the past. Notably, the xApp program which Brightwork covered in the article, It’s Time for the xApp Program to be Terminated, to take IP from partner software vendors.
There is more detail to the partnership program, but hopefully, this provides a flavor of the types of shenanigans that are engaged in by SAP in its partnership program continually.
All vendors, regardless of their size, deserve protections from predacious companies like SAP. Theoretically, companies are supposed to have similar intellectual property rights. However, that is now how it is in practice. SAP claims and has superior intellectual property rights over other vendors, and routinely violates the intellectual property rights of other vendors. This has been demonstrated in multiple lawsuits, as well as my observation of new SAP modules that have copied much of the functionality of best of breed vendors that they were once “partners” with. This is why it is time to regulate SAP, and not merely leave individual lawsuits as the only defense that best of breed vendors have against a company with $12.5 billion in annual revenues, and that doesn’t seem to think that rules of fair play apply to them.
Our Conclusion for the SAP Consulting Partner
A bobblehead SAP consulting partner covers most of the SAP consulting companies. They refused to challenge SAP and compete on how much they can ingratiate themselves to SAP. What this means is that SAP consulting partners cannot be trusted to provide an objective analysis of SAP’s software or anything that SAP proposes. Through the partnership agreement with SAP, they are required to serve as repeaters of messaging. All of this is done while each of these consulting companies pretends to be advisors to their clients.
Conclusion on the Partnership Agreement
SAP’s partnership agreements are created in bad faith. It is quite likely that the internal legal department for companies asked the question, “is this something we want to do?” This is because the agreement opens up so many liabilities for the SAP partner.
This is a perfect example of how SAP has simply accumulated far too cozy a relationship and far too much influence over other actors in the enterprise market. I am not sure what more evidence the Federal Trade Commission (the body that polices anti-competitive behavior) has to see before they step in to limit SAP’s clear and distinct monopoly power in enterprise software. It has gone from major consulting firms overwhelmingly recommending SAP, even when the solution barely exists. It is now a consulting company (and I would tend to doubt Accenture is the only one) assisting SAP in stealing IP from a vendor which the vendor freely shared with Accenture. If the FTC or other body does not eventually stop the behavior, it will get worse because SAP grows bigger every year, and very simply, power corrupts.
Continuing to try to address SAP’s abuses of power with smaller parties litigating against it is insufficient for the task. The litigation undertaken by Wellogix must have been costly, and a distraction for them, and is not something they should have had to bear. I wish I could have spoken with them before they partnered with SAP to explain how SAP operates. I have been fortunate enough to warn several vendors, and I think to keep them out of SAP’s lair.
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.
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