SAP unsuitable for some firms, Gartner head tells Sapphire

Big ERP (enterprise resource planning) packages like SAP aren't practical for small to medium-sized businesses, says Gartner Group Asia-Pacific Centre vice-president Bob Hayward. Speaking at an SAP conference in Brisbane last week, Hayward said many small to medium-sized companies come to Gartner about to select products like SAP. "And we kind of recoil - not in horror - but we say: 'Are you absolutely sure you know what you're doing, because this is not software designed to be used in small to medium enterprises'."

Big ERP (enterprise resource planning) packages like SAP aren’t practical for small to medium-sized businesses, says Gartner Group Asia-Pacific Centre vice-president Bob Hayward.

Speaking at an SAP conference — Sapphire 97 — in Brisbane last week, Hayward said many small to medium-sized companies come to Gartner about to select products like SAP.

“And we kind of recoil — not in horror — but we say: ‘Are you absolutely sure you know what you’re doing, because this is not software designed to be used in small to medium enterprises’.”

He says there’s still work to be done by large vendors to understand smaller organisations’ requirements. “We don’t believe that they’re there yet. There’s still a number of alternative suppliers that are doing very well in the mid-range market.”

But SAP Australia-New Zealand marketing director Don Cooper-Williams says R/3 was designed “from the ground up”, for the mid-range market. The functionality was so rich that large companies liked it.

He says 50% of R/3 implementations world-wide are in mid-range companies, which in Australia-New Zealand equates to those with $A50 million to $A600 million turnover a year. In the US mid-range is defined as below $A1 billion.

He says most SAP installations are installed in under nine months, and recently a local council in Australia implemented R/3 in just 10 weeks.

“We have won 47 government agencies (in Australia and New Zealand). Every one of them contested against mid-range competitors, and all of them are small agencies.”

Although Cooper-Williams says Gartner is a very important organisation and is highly respected, it sometimes makes statements without having up-to-date or correct data.

Hayward also says that SAP has two growth scenarios — slow growth at 30% a year or less, or aggressive growth of 35% or more.

“(It is) unlikely that SAP can continue to grow as aggressively as it has in the past unless it is prepared to make reasonably radical choices.”

Hayward says that could include consulting, which would bring SAP into conflict with its partners.

“There is a tremendous amount of angst within SAP corporate headquarters on that issue, I can assure you.” Hayward believes slower growth is more pragmatic, and better for SAP in the long term.

Cooper-Williams says SAP says expanding its consulting would be out of character with its model, and would take away “bread and butter” from its partners.

“Gartner assumes the only way for us to maintain growth is by taking back what we’ve given away.”

He says there is a belief that SAP has commanded such a huge section of the marketplace that there is nowhere else for it to go.

“But in Australia an New Zealand we have 150 customers. That would represent under 20% of our top-end target market. I would suggest there’s a large amount of growth there and we haven’t taken on board all of the processes within those organisations.”

He says any company that is number one has to fight perceptions about itself.

“It’s a constant thing that we have to be standing up and breaking down the myths which are set by people who sometimes think they are the watchdogs of the marketplace.”

He denied a claim that SAP had given software licences free to smaller organisations.

“We’ve had one sponsorship in the entire Australia-New Zealand area and that was purely on the grounds of a sponsorship that was needed at a zoological gardens.”

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