How to Use Information Provided by SAP for Software Selection

Executive Summary

  • Vendors provide information that is used during the software selection process.
  • How should this information be used?

Introduction

Software sales is known as one of the more aggressive types of sales. Good software salesmen are highly compensated and are given every incentive to sell as much as possible. In some cases, such as a software company for whom I worked called i2 Technologies, the salespeople were so out of control in their lust to sell that they actually derailed the company. This orientation began at the very top of the company. The head of sales for i2 Technologies was famously to have remarked in a highly-charged sales meeting (all i2 sales gatherings tended to be highly-charged affairs): “I never want to hear the excuse that software does not exist as a reason to not sell.” Information about software comes from either sales or marketing. Marketing includes the development of collateral materials, both printed materials, and the website copy, which are designed to put the company’s products in the best possible light. Both sales and marketing are under a great deal of pressure to compete with statements and literature provided by other companies. A big part of sales and marketing is about creating a vision, which has nothing to do with communicating real features in software.

Claims Made in Marketing Literature

Software vendor marketing literature can take the form of pamphlets or website copy and can be quite easy to get hold of. This literature is very influential in software selection but, depending upon the vendor, often contains false information and is unreliable. For example, I have read numerous marketing documents that explain how a product performed “inventory optimization” (a particular set of mathematics for supply planning), when the software discussed did not actually possess this functionality.

To provide further examples and explain what I mean, I have extracted quotes from some marketing literature. Below are some lines from SAP’s marketing literature on their product NetWeaver, called SAP NetWeaver, interspersed with my critique on their statements. My critiques appear so frequently because the falsehoods are so prevalent throughout the document.

SAP Netweaver Reduces TCO?

“The SAP NetWeaver technology platform is a comprehensive integration and application platform that helps reduce your total cost of ownership (TCO).”

NetWeaver is not actually a product (outside of a little used application server which is inferior to the free Apache) but a marketing construct; it is simply nomenclature added on to existing, mostly IT infrastructure, products thus making this statement untrue. In our TCO calculations we estimated SAP to have the highest total cost of ownership in any software category in which it offers a product.

Netweaver Facilitiates Integration and Alignment?

“It facilitates the integration and alignment of people, information, and business processes across organizational and technological boundaries.”

No, it does not. NetWeaver only relates to infrastructure, and does not help out a client in areas outside of infrastructure, and not to belabor the point, but NetWeaver is itself not a distinct product.

Netweaver Integrates Informations from Any Source?

“SAP NetWeaver easily integrates information and applications from virtually any source.”

No, it does not. None of the products that were placed within the “NetWeaver umbrella,” which relate to integration, the most prominent being SAP PI, enables integration any easier than other integration products. In fact, SAP PI is not even competitive with other applications in the same category. Companies primarily buy SAP PI because they either can’t differentiate good integration software from bad integration software, or they think that they will be able to leverage SAP-to-SAP integration capabilities. Those individuals familiar with both applications would not support the idea that SAP PI is competitive with enterprise integration products such as Informatica. In fact, SAP misrepresents application integration completely with this sentence. Integration is always work—files must be transformed and converted to match with the data requirements of the receiving system. Jobs must be set up to carry the data from one application to another, and it must be scheduled in a way to run automatically. No application has been developed that makes integration “easy” any more than a battery has been developed to easily store power. In fact, SAP PI makes application integration more difficult than other vendors.

This should not be surprising, because ERP vendors have no special knowledge or ability to develop superior applications in this area. Application integration, like power storage, is always complex, and both have proven immune to magical promises about how transformative they would be. Vendors, not just SAP, have been pitching easy integration for decades now, and integration still is problematic, and still consumes a consistent percentage of the IT budget of buying companies.

Netweaver Operates with Everything?

“It interoperates with and can be extended using the primary market technologies—Microsoft .NET, Sun’s J2EE, and IBM WebSphere. SAP NetWeaver is the technical foundation for mySAP™ Business Suite and SAP® xApps™ and ensures maximum reliability, security, and scalability, so your mission-critical business processes run smoothly.”

This is the technical gobblygook portion of the document. The intent here is to throw so many terms at the reader (who is typically an executive and is not familiar with these technologies) so that they will be impressed. It is also very unspecific about how this would all work, so the reader has to take the author’s word for it. Many of the terms that are used in this quotation are already no longer relevant. I have already addressed the fact that NetWeaver is a meaningless term. The term “mySAP Business Suite” is no longer used, but it never was anything beyond a collection of other SAP products. The xApp program was a “brand” that held out the potential to smaller vendors of getting into SAP projects. In fact, the xApp program was a giant competitive intelligence operation, which allowed SAP to take intellectual property from other vendors in order to bring out competing products.

SAP Reduces the Needs for Custom Integration?

“This Web services-based platform offers a comprehensive, tightly integrated set of capabilities. And by providing preconfigured business content, SAP helps reduce the need for custom integration and lowers your TCO.”

I work on SAP projects for a living, and this document is a few years old now, but I have never seen any of these “products” used on a project. I never saw any “preconfigured business content” and have never heard of this term used by anyone on any project at any time. SAP still has some of the highest integration costs of any application vendor because of the nature of their data backend, which does not allow the underlying relational database to be directly addressed. As I stated several paragraphs ago, SAP has always had the highest TCO (total cost of ownership) of any application I have reviewed and continues to have the highest TCO.

Netweaver is a Blueprint for Complete Business Integration?

“Enterprise Services Architecture is also a blueprint for complete business integration. Regardless of the functional or technical barriers and isolated applications that may have grown up over time in your company, Enterprise Services Architecture brings back flexibility, allowing you to design complete solutions that span all people who participate in your value chain, all information that is relevant to you, and all systems that are involved for each business process or problem. This means that you can now respond to workers’ needs for business processes that are driven by collaborative, knowledge-based, and team-based processes rather than by isolated applications.”

No, it isn’t. Not only do the products that pre-existed “NetWeaver” and were then added under the NetWeaver umbrella, not have the magical properties described in this quotation, they are not even competitive products. Workers in companies where SAP has been implemented do not have more responsive systems than other environments; they have decidedly less responsive systems. The last part of the quotation is pure hyperbole. In one part of the document, SAP breaks down the benefits of NetWeaver by the different areas:

“Portal infrastructure—Gives workers unified, personalized, and role-based access to heterogeneous IT environments. Increases the efficiency of business processes spanning customers, suppliers, partners, and employees.”

SAP has been trying to get its portals used for more than a decade now, and they are still not used. SAP has a portal, but the potential that companies will benefit from it is low if they don’t use it. Now I almost never hear about portals on projects.

Solution Manager is Knowledge Management?

“Knowledge management—Manages and makes accessible unstructured information such as text files, slide shows, or audio files. Includes integrated search, content management, publishing, classification, and workflow capabilities, as well as an open framework for third-party repositories.”

SAP has a product called Solution Manager, which has a few advantages in terms of documenting the implementation and allows Solution Manager to take you directly to configuration within the application. I analyze Solution Manager in the article.  However, these other things described in this quote either do not exist or are so overstated that they do not communicate what SAP’s knowledge management products use. Furthermore, Solution Manager is really only used (and lightly used at that) by configurators like me. Solution Manager is not used in the way described above and no other portal, which SAP may offer to clients, works in that way.

Business Intelligence Offered by SAP is Robust?

“Business intelligence—Enables organizations to integrate, analyze, and disseminate business-critical information. Includes a robust suite of tools for creating and publishing customized, interactive reports and applications, which supports your decision making at every level.”

Business intelligence, which is covered by SAP’s BI and Business Objects products, is not any more robust than any other reporting platform. In fact, according to the research firm Gartner; SAP has the lowest scores for both software quality and customer support of any application vendor in the space. I rarely see SAP BW add value for clients; in fact, in most cases, BI reports are missing in action.

SAP is About Master Data Management?

“Master data management—Promotes information integrity across the business network in heterogeneous IT environments. Provides services to consolidate, harmonize, and centrally manage your master data, including business partner information, product master and structures, and technical-asset information.”

SAP brought out a master data management product called MDM. However, it never gained much of a following and had many implementation problems. It was not competitive with other master data solutions in the marketplace. I could go on and on about SAP’s marketing documentation, but hopefully you get the point. And while SAP takes enormous liberties with the truth, most vendor marketing documentation is in some way misleading. In fact, aside from entertainment value, there is little reason to read SAP’s marketing literature. However, this is not always the case with all vendors.

How Arena Solutions Differs from SAP in Information Accuracy

For instance, a vendor whose marketing documentation is quite accurate is Arena Solutions, a vendor that makes bill of material management software and for which I wrote a book that featured their software. I have never read any documentation from Arena that seems “off” or misrepresentative, and in fact a very good amount of Arena’s documentation is quite educational. This is in fact what marketing documentation should be, but is very rarely the case because most companies cannot resist embellishing in order to make their case and to persuade in the hopes of selling more software. Let’s review some of Arena’s statements from their marketing literature to see how it differs from SAP.

“Item management is easy when part data, assemblies and documents—including drawings and data sheets—are all in one place. Give your team and designated suppliers controlled access to all the information they need to design and manufacture your product. A centralized product record allows your team to make faster and more efficient design decisions—like reusing part specifications from old designs—and save time and money.”

This is all true. When all information is in one place it’s easier to find, and in fact, Arena’s software does just this. Arena’s product also significantly increases the reuse of old designs. Observe that the hyperbole of these statements is minimal, and when contrasted to the highly-generalized statements that SAP made in their marketing literature for NetWeaver, these statements are quite specific. Arena is not saying their software will do everything, but that it will do something specific, and then explains how it will do that thing.

“Create a unique record for every part in your item master with customizable part numbering schemes and categories. Customizable categories can be used to determine the layout and sequence of fields in your part record. With up to 250 customizable attributes per category, BOMControl allows you to record and track the data you need, at big-picture and granular levels.”

Again, more specifics are provided by Arena of what they can do. Arena’s application can hold up to 250 customizable attributes per category. A person who works in this area should have no problem understanding exactly what this means.

“Immediately see what’s changed in any version of your bill of materials with a simple toggle to Redline mode. Stop wasting time with phone calls or notes explaining every small change you’ve made to your BOM. When you grant supplier access to your contract manufacturers, they can see for themselves exactly what you’ve modified and how it impacts the overall product. Quickly compare multiple BOMs to see what has changed, or what is different. Optimize procurement and production with side-by-side bill of materials comparisons that reveal component needs across multiple product lines.”

These statements tell the reader quite a bit. They explain how a company can stop wasting time by leveraging Arena’s functionality with regard to managing revisions. The BOM can be compared to see what has changed and procurement and production can be managed by component need across multiple product lines. This is just a sampling of Arena’s marketing literature of course, but all of Arena’s literature reads this way. One can learn a lot from reading Arena’s literature because they describe a reality, not only of their software, but also of the environment in which their software is implemented. On the other hand, it is very difficult to learn by reading SAP’s marketing literature (and the marketing literature of many other vendors) because they are so busy selling, that they have no time or space to educate. SAP’s explanations are absolutely overwhelming as if they are attempting to include as many accolades as they can. They attempt to sell the reader in every possibly sentence instead of selling the reader on the overall paper. In fact, SAP’s marketing literature is insulting to one’s intelligence and to one’s time. SAP marketing literature is not much read as it is “parsed.”

How to Read and Differentiate Vendor Marketing Literature

In addition to learning from vendor marketing literature, there are more benefits. For example, more often than not, vendors who engage in extreme exaggerations and hyperbole are problematic vendors who are selling “pie in the sky.” The marketing literature is telling you something about the company. The company who is ready and willing to sell you a bunch of baloney and has no standards for truth in their documentation will have a strong tendency to behave that way in other parts of the company and in their dealings with you. By reading between the lines of their literature, you can learn to steer clear of these vendors. In addition, misleading marketing literature impacts the sales and presales groups of software vendors. Individuals who work in sales and presales rarely get first- hand experience with the application. Much of what they know about products comes from the marketing literature. They don’t spend the time to talk with consultants who implement the software to determine what is true and what is not, and learn to be as accurate as possible. Most individuals simply don’t care. If the marketing literature says that the vendor has developed a time machine, the sales group is going to go out and sell time machines. And of course, as a buyer, it’s your job to steer clear of companies selling time machines.

The SAAS/Cloud Vendors Versus On-premises Vendors for Long-term Software Evaluation

Most enterprise software that is sold is called “on-premises,” meaning that the software is installed on the servers of the buyer and is managed by the buyer. With SaaS/Cloud, the buyer does not actually install any software. Instead, the buyer receives the right to use the software that is installed at the vendor’s location. There are a number of advantages and disadvantages to this approach; however one of the major advantages is that companies that offer their software as a SaaS/ Cloud solution are in a very good position to offer trials of their software. However, only around 4% of all enterprise software is delivered as SaaS at the time of this publication. Some companies like Arena Solutions allow companies to test drive their software for thirty days by logging into their demo environment. However, other SaaS vendors do not offer this service. For instance Data Alliance, an SaaS vendor that I was analyzing recently, chooses to follow the on-premises model of presenting demos to potential clients, even though they could easily provide an SaaS demo environment for companies to test drive at their leisure.

Conclusion

It should not be news to anyone that information that comes out of sales in any area is often not reliable. This of course also extends to marketing literature. However, there is also an enormous continuum of accuracy along which any vendor can reside. For instance, I have found that when a marketing message comes from SAP it will be either outright false, an exaggeration or a misrepresentation of the facts. Because of this, I have to verify the statement through my own research. However, on the other end of the continuum is the example of Arena Solutions, where I have yet to find something inaccurate in their marketing documentation. However, I can say these things with confidence about both of these software vendors because I have worked with these software vendors for years and read a very large amount of documentation by both companies and have firsthand experience with their applications. When one is new to a software vendor it makes sense to take a skeptical approach to their marketing documentation and statements. When the topic turns to the software demo, there are all types of simple ways to improve the accuracy of information that is received from a demo that buyers do not take advantage of. The first principle on which the demo should be based is that the demo is entirely for the benefit of the buying company. This means that the buyer has the right to control the demo as they see fit, and to have his or her own people participate in using the application during the demo.

Luckily this is an easy matter with modern web conferencing applications where various people can take control of the computers that are presenting. Demos have well-known limitations, the easiest to understand is that demos provide a small amount of time to the evaluators to actually get exposure to the application. Companies with the weakest applications have the greatest incentives to limit the buyer interaction with the application and have the software selection made on more strategic and abstract grounds. The converse is also true. The vendors with the best software want you to spend more time with their application. One example of this is Arena Solutions. Arena Solutions offers a 30 day free trial of their software and is happy to sell a single license to a company for roughly $80 per month for one user. They know, that once in the door, their application has a high likelihood of being used, and for more users to ask their management for a license. Software vendors like SAP want a major commitment up front. Once the commitment is made, the buyer’s flexibility is greatly limited. I have performed software recovery analysis for many companies for applications that never should have been purchased. However, after so much money has been spent on the software license, as well as the implementation, there is a very strong disincentive to move away from the sunk cost of a bad decision. This is actually a major difference between on-premises versus SaaS vendors.

With SaaS vendors, there is a much greater incentive to keep their customers satisfied because a SaaS customer can more easily terminate their software subscription. Integration is a major area of overemphasis in software selections. First, any application can be made to integrate with any other application, and many pre-built adapters that are marketed by software vendors are often much less than they appear during the sales process. Some software vendors, because of their desire to control the purchases of their clients toward their products have deliberately exaggerated the costs of application integration to clients. In fact, ERP purchases have been greatly justified by the desire to reduce integration costs. However, as is explained in the book The Real Story Behind ERP: Separating Fact from Fiction, the percentage of integration costs that make up IT budgets has not declined after the introduction of ERP systems so the concept of ERP reducing integration costs has been all marketing hyperbole. The primary objective of any software selection should be to get the best application, which can meet the business requirements, not to attempt to save money, for which there is no evidence will be saved, by trying to minimize integration costs with other applications. Client references sound like an easy way to find out information about how effective the software has been in other accounts. However, in practice client references are tricky. It would be more useful to actually speak to the system’s users than the executives, but those resources are generally not made available during a client reference check.

Software Selection

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References

Software Selection Book

SELECTION

Enterprise Software Selection: How to Pinpoint the Perfect Software Solution Using Multiple Sources of Information

What the Book Covers

Essential reading for success in your next software selection and implementation.

Software selection is the most important task in a software implementation project, as it is your best (if not only) opportunity to make sure that the right software—the software that matches the business requirements—is being implemented. Choosing the software that is the best fit clears the way for a successful implementation, yet software selection is often fraught with issues and many companies do not end up with the best software for their needs. However, the process can be greatly simplified by addressing the information sources that influence software selection. This book can be used for any enterprise software selection, including ERP software selection.

This book is a how-to guide for improving the software selection process and is formulated around the idea that—much like purchasing decisions for consumer products—the end user and those with the domain expertise must be included. In addition to providing hints for refining the software selection process, this book delves into the often-overlooked topic of how consulting and IT analyst firms influence the purchasing decision, and gives the reader an insider’s understanding of the enterprise software market.

This book is connected to several other SCM Focus Press books including Enterprise Software TCO and The Real Story Behind ERP.

By reading this book you will:

  • Learn how to apply a scientific approach to the software selection process.
  • Interpret vendor-supplied information to your best advantage. This is generally left out of books on software selection. However, consulting companies and IT analysts like Gartner have very specific biases. Gartner is paid directly by software vendors — a fact they make every attempt not to disclose while consulting companies only recommend software for vendors that give them the consulting business. Consulting companies all have an enormous financial bias that prevents them from offering honest advice — and this is part of their business model.
  • Understand what motivates a software vendor.
  • Learn how the institutional structure and biases of consulting firms affect the advice they give you, and understand how to properly interpret information from consulting companies.
  • Make vendor demos work to your benefit.
  • Know the right questions to ask on topics such as integration with existing software, cloud versus on-premise vendors, and client references.
  • Differentiate what is important to know about software for improved “implement-ability” versus what the vendor thinks is important for improved “sell-ability.”
  • Better manage your software selection projects to ensure smoother implementations.

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Chapters

  • Chapter 1: Introduction to Software Selection
  • Chapter 2: Understanding the Enterprise Software Market
  • Chapter 3: Software Sell-ability versus Implement-ability
  • Chapter 4: How to Use Consulting Advice on Software Selection
  • Chapter 5: How to Use the Reports of Analyst Firms Like Gartner
  • Chapter 6: How to Use Information Provided by Vendors
  • Chapter 7: How to Manage the Software Selection Process