Wednesday, November 19, 2008

SAP Automotive Symposium 2008: Shorter Time to Market with PLM Solutions

On the occasion of the SAP Automotive Symposium on November 4-5th, 2008 in Stuttgart, Germany, SAP, along with its partners, introduced innovative solutions for the automotive industry. I attended the event for insight into SAP’s efforts to support the automotive industry in meeting future IT challenges.

Various client speeches, such as those of Mercedes-Benz, Claas, Knorr-Bremse, Ford, Daimler, Robert Bosch, Mahle, BMW, and Porsche, delivered solid examples of how IT cannot only support the automotive business but also yield added value with the latter becoming more and more a prerequisite for gaining a competitive edge in the long run: long before the outbreak of the financial crisis, the automotive industry has faced massive challenges.

The automotive sector is characterized through its strong globalization of markets with accompanying risks through currency fluctuations, and increasing pressure of innovation and prices. Simultaneously, there are increased quality requirements on the customer side as well as proliferation of variants. All of this set against the background of product development and production that must be environmentally sustainable. "On one hand, IT can meet these requirements by reducing IT costs—through the standardization of systems, processes, and applications, by consolidation and virtualization, as well as through intelligently using near-/offshore sites." “On the other hand, IT can also contribute remarkably to meeting the automotive industry’s core requirements. In this context, an essential factor is the shortening of time to market. One topic continuously gaining in importance is the integration and usage of PLM solutions.”

In my opinion, the main goal of PLM solutions is to shorten the entire product development time, namely through the synchronization of all processes involved, as well as through the integration of product designers and developers, external suppliers and production schedulers via one joint platform.

I think that the data integration between business processes and production processes will play a central role. “SAP is well aware of this central role, which is not only evident by the takeover of Visiprise in the area of MES, but also by SAP’s investment in the further development of its PLM solution SAP PLM.” As a result, there will be an extension to the SAP PLM solution from November on, which, among other things, will include a new authorization concept. This will accommodate the requirements of an increasing number of customers who are willing to cooperate with external development partners and give them role-based access to a joint database.

Apart from the further development of the SAP PLM suite, I also observes the necessity for additional investment on SAP’s part, especially when it comes to covering the product developers’ needs: “Product developers traditionally work with graphic or geometric information and are familiar with a Computer-Aided Design (CAD) environment. SAP addresses the CAD world by integrating the CAD viewer of Right Hemisphere. However, in my opinion, the weaknesses of SAP PLM in the developers’ world have not yet been fully eliminated.”

Furthermore, a path breaking market decision is still outstanding with regard to the Product Data Management (PDM) system, the core of each product development cycle where the parts lists relevant to production are generated. Here, SAP offers an appropriate solution, SAP PDM, but also classic CAD providers, such as Dassault Systèmes, PTC, or Siemens PLM (formerly UGS) claim the PDM responsibility. I am eager to learn if and how SAP is going to further integrate the CAD world, and who is going to dominate the PLM/ PDM market: the PLM providers from the CAD world, or a supplier like SAP from the ERP world?

Since it is the ultimate ambition of PLM solutions to shorten time to market, the integration of additional systems plays an important role: end-of-warranty dates of customers can be reflected to production and accelerate the development process of new products accordingly (integration of CRM systems). Furthermore, global networks of production sites with various production capabilities can be involved in the production scheduling process quite early (integration of SCM systems).

In the automotive industry there are comprehensive possibilities to create real added value by using IT. When it comes to shortening time to market though, the integration of various systems is gaining an ever-high significance. As demonstrated at the Automotive Symposium, SAP is certainly well positioned with its solutions offer around PLM, SCM, CRM, MES, etc.

Tuesday, November 18, 2008

What is the Place of Mid-sized Players on the French SAP Services Market?

SAP Services is a very competitive market where the leaders are the largest IT providers. We can say that the competitive environment is composed of four sets of players. The first is composed of the largest IT services providers, with more than 1,000 people, generally having an SAP practice; these are often global players. The second includes smaller independent companies with skills on core ERP as well as on the various modules of SAP. These can be considered SAP generalists. The third set includes very small companies with a small SAP team specialized on one SAP module (BI, CRM, SCM, etc.). Finally, the fourth set is composed of providers targeting mid-sized customers.

The race for critical size is strategic on this market, especially since most large SAP customers want to reduce IT costs by narrowing down their IT procurement, reducing the number of providers, referencing them and pushing broader fixed price projects to these larger providers.

The configuration of the top 20 in terms of local vs. global players clearly shows a domination of global companies. The top 10 represent 70.5% of the overall market as the top 20 reach 82.3% of this market, which illustrates the strong concentration of the French market for SAP-related consulting services.

Thus, most of the players of the top 10 largely over-performed the overall market growth (+10.3%) with growth rates going from 9.2% to 26.3%. The three front runners (Accenture, Capgemini and Logica) are global players as the other companies of the top 10 cover the worldwide market (IBM, CSC) or the European area (Sopra Group, Atos Origin, Steria).

The largest players have stabilized their SAP business in France. The small ones remain the victims of drastic procurement policies and are therefore found in the position of subcontractors.

Without this critical size, these companies have no choice but to differentiate their offerings, becoming specialists on niches and bringing their customers a profound expertise. This is the case for Alti and SQLi, for example, which have developed rare skills on fast-growing SAP modules. The main asset of these companies is their ability to innovate and react easily to market signals thanks to their size and swiftness. Their clients also appreciate their proximity and customer care as they feel that large providers don’t pay the same attention to all clients. The main challenge that small players have to address is to leave the time and materials business model, where they often start. To achieve this objective and thereby win market share, they have to implement tough project management methodologies and prove their ability to manage a complete project.

Alti, the youngest company belonging to the top 10, is gradually becoming a serious contender, thanks to its SAP consulting team. The company has skills on core ERP completed by a strong expertise in BI, CRM, and HR offerings. It also focuses on topics such as Netweaver and interoperability between SAP and Microsoft software.

On the same model, SQLi has developed a strong expertise with the acquisition of two companies: Clearvalue in 2006 and Eozen in 2007. The company has skills on BI, CRM and SRM and focuses on SOAs through Netweaver.

Procurement strategies have fostered large IT companies for many years, often leaving out some smaller but very talented companies. The financial crisis has amplified this phenomenon, reducing the opportunities for smaller companies to sell SAP technical assistance on a time and materials basis.

Monday, November 3, 2008

How Is NetWeaver BI/BO Faring During the Downturn?

We’re in a strange period when it comes to analyzing SAP market trends. It’s getting tedious to continue to dwell on the downturn, but impossible to ignore its significance. Anyone who makes trends assessments is in the prediction business to some degree, but now more than ever, we’re in uncharted waters. Even those who take the temperature of the IT spending market are coming back with different answers. Unfortunately, the majority view seems to fall in line with the rather grim view of decreases in tech spending noted by the Wall Street Journal “Business Technology” blog recently.

But we’re not going to talk about the downturn in this blog entry. Instead, we’re going to turn our attention to a happier subject: an area of SAP that continues to get spending action despite the cutbacks. That product area is NetWeaver BI. Not only is BI a definite area of investment for SAP customers, but there is continued interest in making sense of the Business Objects product line and how it might benefit the SAP install base.

When SAP first acquired Business Objects, there was some initial hesitancy from SAP customers around how the BO acquisition would affect the long term roadmap. The hesitancy was perfectly reasonable since it seemed logical to assume that some of BO’s top-of-the-line reporting products would eventually replace some of SAP’s reporting tools, such as the BEx Analyzer, which many SAP customers are heavily invested in despite some limitations in user presentation and customization costs.

I’m not going to spend a lot of time on the roadmap in this blog entry, but SAP has been kind enough to grant me permission to share a couple of their recent roadmap slides, so if you’d like to take a closer look at them, this PDF (52K) is a view of SAP’s Business Intelligence roadmap prior to the BO acquisition. This next PDF (54K) shows the roadmap of the combined BI/BO portfolio. Both of these are higher-level roadmaps; SAP has more detailed roadmaps it will provide upon request.

We have to be careful about fussing too much over roadmaps, the reason being that emerging needs for new ways of slicing and dicing data, such as harvesting unstructured data from the “Internet Cloud,” has all BI vendors scrambling to keep up. We may find that the most popular reporting tools three years from now aren’t even on the BI roadmap yet. Today’s roadmaps are tomorrow’s recycled paper.

What is more relevant to those that read this blog is: where is the action now? Where are the pain points for customers, and what kinds of skills needs are created in the short term by this combined portfolio? Let’s take EPM as an example. EPM, or “Enterprise Performance Management,” represents a combined portfolio of SAP and Business Objects products.

The official combined EPM portfolio currently contains five products:

  • Strategy - SAP Strategy Management (formally Pilot Software, an SAP acquisition)'
  • Planning - SAP Business Planning and Consolidation (formerly OutlookSoft, an SAP acquisition)
  • Consolidation - SAP Business Planning and Consolidation (formerly OutlookSoft)
  • Financial Consolidation - Business Objects Financial Consolidation (formerly Cartesis)
  • Profitability - Business Objects Profitability and Cost Management (formerly ALG Software)

This EPM summary is a bit of an oversimplification. Some combined functionality may exist side by side in BI and BO for some time, and of course those SAP customers invested in SEM products like BI-IP and BI-BPS may be concerned to see that those products are no longer listed. This is part of the challenge SAP and its “BobJ” division is facing: to provide customers with a compelling way forward without giving them the impression that their current investments are being phased into oblivion. In fact, BI-IP and BPS functionality is also incorporated into the new suite. But for now, the new EPM suite is not really a suite, per se, but a collection of stand-alone products. We can expect them to resemble more of an integrated suite soon, with “Financial Performance Management 2008” being the name I have heard used for the next incarnation of EPM.

So for EPM, we can expect SAP to do what it does best, which is to bundle related products into comprehensive suites. This approach makes sense. At the Business Objects Influencers’ Summit in Boston 2008, Doug Merritt, EVP and GM of Business User Sales, said that most ERP customers have between 5 and 15 different BI products running. There is clearly a need for standardization around BI tools, and that is where SAP excels. But for now, those SAP customers interested in a particular EPM product are not going to wait for the combined product offerings of the future. They are going to invest in the singular products they need now. In the case of EPM, the biggest pain point seems to center around OutlookSoft’s Business Planning and Consolidation functionality, so we’re seeing more action in the BPC product than elsewhere in the EPM suite.

When you consider that EPM is a small part of the combined BI/BO product line, we can expect SAP customers to look for guidance around the complexities of the roadmap, so those firms and consultants who understand the map well enough to provide wise and unbiased counsel can expect to be in demand. Other than that, what I think we will see in the short term is two separate product lines that operate a bit more in conjunction with one another.

One of the real strengths of BO is that its EIM (Enterprise Integration Management) integration hub was already best-in-class in terms of third party integration. Well before the BO acquisition took place, the BO team was already working hard to provide integration protocols for SAP in particular. However, at this point, we’re not talking about the seamless integration of the two products. The BO sales team is reporting that they are having success with SAP customers who want to replace other third party tools with BO. This would make sense: if you’re going to replace your third party reporting system anyway, why not purchase a set of tools that promise to be more closely integrated with SAP from here on out?

For now, however, the best way to describe the SAP customer base is: curious about BO, but seriously involved with NetWeaver BI. Much of the action in the BI market has to do with the upgrades from BW 3.5 to BI 7.0. It goes without saying that those firms and freelancers who are well-versed in 3.5 to 7.0 scenarios are the best positioned to take advantage of the current marketplace. What would make BI 7.0 compelling enough to upgrade even during the downturn? BI is a major new release that boasts tighter integration with NetWeaver, closer ties with NetWeaver Portals, and a better platform for developing real-time dashboards that give users the performance monitoring data they need on a day-in/day-out basis.

People can talk about cool new ad-hoc tools all they want, or even “mining the cloud,” but at Sapphire 2008, the customers I heard from were sold on dashboards and better user presentation of data. Of all the BO products, “Xcelsius 2008” is perhaps the BO product SAP customers mention most frequently in terms of their short-term, bottom-line needs. No surprise then, than BO bills this product as “The first and only dynamic and customizable data visualization software that enables users of different skill levels to create insightful and engaging dashboards from any data source with point-and-click ease.” Tomorrow may be about the cloud, today is about dashboards.

We can also expect to see short-term SAP customer interest in Crystal Reports, but primarily from SAP customers who are not finding their current SAP reporting options sufficient. Otherwise, we can expect to wait until 2010 for a big SAP-Crystal Reports push. At that time, a fully integrated “Crystal Light” for SAP is expected to be in full release mode.

One more big upgrade factor is BIA, the Business Intelligence Accelerator driven by in-memory database technology. Not all SAP customers are sold on BIA yet, but we’ve heard enough testimonials to know that BIA is another big incentive to upgrade. We also know that the BO team is salivating at the prospect of harnessing some of their state of the art ad-hoc reporting tools to BIA. We heard a lot about Polestar at Sapphire 2008, and again at TechEd 2008. Polestar is a true open-query tool that can process millions of lines of data and generate fast query responses. I was a little disappointed when I learned that this much-demoed product, which got attention during several keynotes, does not yet exist on the SAP side. But a “Polestar for BI” product, powered at hyperspeeds by BIA, should come out in the next calendar year, and we can expect to see some customer interest as soon as that is released.

So how can we reconcile these BI upgrade needs with the reality that few companies are in active upgrade mode right now? This can be answered in several ways. First, SAP has its own dashboard capabilities that can be utilized in a 3.5 BW system as well. I expect companies that have pulled back on a major ERP 6.0 upgrade to look into a better use of their 3.5 system, and dashboards will be high on their list. Next, some SAP customers already budgeted for their BI 7.0 upgrades and, as money “already spent,” those BI upgrades may well continue. Finally, a reasonable segment of customers are running on ERP 6.0 and NetWeaver BI 7.0, and those folks will be on the lookout for all kinds of reporting efficiencies. Anything that can aid in performance or reduce the need for costly customization will be on the table.

Speaking of those customers who are already on the other side of an ERP 6.0 upgrade, we are also seeing some action right now on the SAP Master Data Management (MDM) side. For those companies heavily invested in SAP, MDM provides some real potential to sharpen the customer focus by eliminating duplicate records and better identifying the most profitable customer segments. Eventually, some of BO’s MDM capabilities will be integrated into SAP, but for now, SAP MDM is certainly appealing for companies who are tired of reconciling master records across departments.

I’ve run out of space long before I ran out of information to share on BO, but I’ll be glad to return to this topic down the line. I hope I’ve provided a better sense of how the BI/BO future relates to the realities of the present.

(If you’re looking for even more info, the keynotes from the SAP BO Influencers Summit of August 2008 are available online. There is also a comprehensive SAP for Business Objects FAQ posted on the SAP Developer Network. Finally, if BW related skills is more your interest, I did a piece for my SAP BPX Skills blog on whether BI/BO will soon be a relevant skill area for all functional consultants. This piece generated some interesting reader commentary that hones in on some of the skills issues we are facing during the BI/BO product merger.)

Thursday, October 30, 2008

The Credit Crisis: a Threat or an Opportunity?

SAP has been performing well this year having made some significant in-roads (e.g. UK core banking business). However, like many other firms, the German vendor has begun to feel the effects of the financial turmoil in Q3 2008. Earlier this week, SAP reported its third-quarter results, posting a 5% decline in earnings and withholding its revenue forecast for the year due to the uncertainty of the economic climate.

The collapse and bailout of banks have snapped businesses out of the denial and the optimistic views they held on the UK economy earlier this year. This has resulted in frozen IT budgets in Q4 2008 in a state of panic, and many expect this not to change until the new year when we expect a clearer picture of where the economy is heading.

This will inevitably impact SAP's pursuit in winning new business in the short-term, particularly as software products tend to be one of the first areas to be effected by tightened IT budgets in certain parts of the business where organisations feel they can "make do" with existing solutions for a little while longer. In addition, SAP's pursuit in reaching out beyond its traditional customer base, namely the financial services sector and the SMB segment, will see slower progress. Nevertheless, PAC holds its expectation that the SAP project services market will continue to see good growth rates, primarily stemming from its existing customer base in the enterprise segment, as initiatives such as ERP upgrades continue, and as large customers look to optimize IT systems and gain more value from existing investments.

As mentioned in my earlier post, SAP has made some good progress in the banking sector prior to the events surrounding the bail out / nationalisation of some major banks. With more regulatory changes expected in this industry, and with SAP's increasing vertical expertise, there will no doubt be some opportunities that will arise from this ordeal. Although, competition will be intense as this is an obvious market opportunity identified by a number of software and IT services players, including both the Indian offshore vendors and the "Western Incs". SAP's strong ecosystem will play a crucial role in this area.

On the other hand, the current state of the market will be most challenging for SMBs that will face financial difficulties as they do not usually have access to a large pool of resources as do the larger enterprises. Hence, sharp cuts in IT budgets will hinder SAP's growth strategy in this market for at least the next 12 months. The challenges being encountered by SMBs do not limit themselves to end-user organisations, but will also include the smaller specialist and niche IT vendors, that are at risk of being squeezed out the the marketplace during the economic downturn.

SAP and its ecosystem have the choice to actively take advantage of the downturn to grab new opportunities, in financial services for instance, or to simply focus on riding out the wave and focus on core competencies in the large enterprise segment, or both! While the core competency route is a safe bet, some cannot help but think that the financial services route would be hard to miss - although being a more risky path!

Wednesday, October 22, 2008

PAC Featured in SAP Business ByDesign Release

SAP just announced some new content partners around the SAP Business ByDesign solution, most notably, ADP for payroll and some HR functionality.

Here is a quote from Hassan Hosseini part of PAC's SAP Services Research team in Germany:

"By continuously expanding its partner network with solutions that not only deliver added value for medium-sized companies but also enable them to run their business more cost-effectively, the SAP Business ByDesign offering is becoming more and more attractive. SAP is sticking to its strategy of adding complementary content partners such as ADP, which is not only important for its long-term success, but essential."

Tuesday, October 21, 2008

SAP Remains the Hot Spot in the German Project Services Market

Despite a worsening economic climate, we expect German organizations to increase their project services investment during the next few years, with business around SAP applications as a major growth driver due to the change to the new SAP ERP release as well as to the increasing significance of Enterprise SOA.

We recently scaled down our growth forecast for the overall project services market in Germany, due to the increasingly harsh economic environment. Taking into account the banking sector crisis, rising energy costs and the impact of the strong Euro on export-oriented German manufacturers, so we expect the project services market in Germany to grow at a CAGR of 5.2% between 2008-2012 (based on mid-September 2008 estimates (1)).

However, we believe that it is unlikely to see the sort of slowdown that occurred following the last IT industry crisis at the start of the decade due to fundamental changes in the market. The crash of 2001 dealt a particularly hard blow to the IT world, as end users had previously shown an almost blind, uncoordinated propensity to invest within a heterogeneous IT landscape, supported by successive one-time situations (Euro introduction, millennium change and finally the dreams of the e-business hype). Following the market decline, IT budgets were cut substantially and as a consequence, the companies’ investment behavior was curbed. Since 2004, numerous projects have been launched again. However, these are much more constructive, pragmatic and well-coordinated projects. At the same time, the process of awarding contracts to external service providers has developed away from a time and material basis towards a fixed-price basis. Users can therefore shift risk to the provider; IT service providers prefer this type of project due to the long-term contracts, which reduces market volatility.

The SAP environment in Germany has benefited in the last two years from the exceptional demand arising from SAP ERP upgrade projects. According to our estimation, more than 60% of SAP customers in Germany have already undertaken an upgrade. However, most of the SAP user companies have so far only implemented a purely technical upgrade to the new SAP release. Only in a second step do these companies focus on the far more complex and more cost-intensive functional and/or strategic upgrade projects. We believe that this dynamism in the market cannot be maintained at the current pace due to the lackluster economy. I expect that a part of the planned large-volume strategic SAP projects will only be implemented to a reduced scope or be further deferred.

A further major growth driver in the SAP environment is the rising importance of Enterprise SOA. As the current SOA projects are often merely running as prototypes or test projects, they still have a relatively low project volume in Germany. We are confident that in the near future the need for SOA projects also on the basis of NetWeaver will further increase and that the present low-volume projects will give way to large projects with the corresponding project volumes.

Besides upgrade and SOA projects, I expect horizontal topics like portals, financials and HCM as well as verticals such as the health care sector, retail or discrete manufacturing to be able to realize very attractive growth rates in the SAP consulting market.

According to PAC, SAP services will remain among the most important growth drivers for the German project services market. It is therefore still worthwhile for service companies to invest in the market. However, the companies will focus their investments on certain segments, among others, or on the extension of expertise and on the general qualification of the SAP consultants.

(1) During the past four weeks, the economic situation has strongly worsened, which will have a considerable impact on the IT market. However, the current situation is so instable and volatile that we prefer to wait to set up a new, serious scenario. But it is becoming apparent that some sub-segments will plummet in the coming year.

Monday, October 20, 2008

A View on the State of the SAP Freelancers Market

Later this month, PAC will be releasing a brand new report entitled “The Worldwide SAP Skills Market.” In this post, I wanted to give my view on the state of the SAP freelancer, which in many ways will show market weakness well before IT services suppliers. While some of these themes may be included when the final report is issued, loyal “Feeding the SAP Ecosystem” readers will get a sneak preview into a few highlights from my findings in this blog entry.

I have been analyzing the SAP freelancing market in the United States since 1995. But the economic shifts we are all enduring have called into question all market assumptions, whether it be about freelancers or the largest SAP customers or even SAP itself. So I began my research with a number of fresh inquiries to determine how freelancers were faring in this uncertain marketplace.

Here’s a few key things I learned:
- Even in today’s unpredictable economy, senior SAP freelancers who combine deep SAP project experience with ERP 6.0/NetWeaver skills exposure are still in demand.
- Those consultants who are “junior” level in experience (less than three years) are having a difficult time finding new projects - unless they have special experience in an ERP 6.0 capability.
- Consultants who are rolling off projects on older versions of SAP (4.6c) are having trouble finding new engagements.
- Aspiring SAP consultants who do not have project experience but who may be certified in SAP are having a very difficult time finding a project opportunity.

These seem to be fairly straightforward conclusions. So what are the market forces that created this circumstance?
First, there are fewer new SAP projects being green-lighted. This is putting a damper on the overall demand for SAP talent. The result is less “trickle down” opportunities for junior consultants.
Second, the need for freelancers is currently coming from existing SAP projects who need a subject matter expert to proceed with a key project that is already underway. Some projects are indeed continuing, perhaps because the funding is from a budget that has already been allocated, or the industry in question is less impacted by the downturn. This type of consulting need often comes from more mature SAP shops that have plenty of employees with solid SAP skills, but who lack the bells and whistles of newer NetWeaver and ERP 6.0 experience. This is driving the continuing need for senior SAP freelancing talent, which I often call the “SAP Subject Matter Expert.”

You’ll also notice when I mentioned skills in demand that I didn’t mention Enterprise SOA, and there’s no mention of NetWeaver BPM or Business Process Expert skills either. That’s because we can expect a temporary slowdown in actual project ramp-ups involving these emerging skills and technologies.

Of course, the tricky thing for the SAP freelancer is that holding off on innovation can backfire. Just because companies are in a cautious mood does not mean that SAP freelancers themselves should be cautious. I tell freelancers that in times like these, you need to balance ruthless practicality with a visionary approach. Be ruthless about acquiring the skills that SAP projects need now, but be visionary enough to realize that the business drivers that dictated a need for a BPM-driven strategy are not going away.

Momentum for eSOA is going to pick up again, and companies are going to need freelancers with those skills. SAP services firms who are smart enough to provide their consultants with both practical SAP upgrade experience and business process training are going to be the big winners when SAP consulting activity kicks into higher gear again. Firms that focus only on meeting present day SAP needs are going to miss the bus when eSOA-related activity picks up again.

In the meantime, I am always telling SAP freelancers to move to the edges of the enterprise, in “value added” roles that allow companies to better serve their customers and suppliers. That’s one piece of advice that all of us in the SAP services market can adhere to, and it will pay off, in good times and in these times.

Monday, October 13, 2008

PAC's Tobias Ortwein Featured in SAP Insider

PAC's own Tobias Ortwein, who is a SVP and a regular contributor to our SAP Services research, has just been featured in a special edition of SAP Insider for SAP Services EMEA, including his article entitled "The EMEA Market for IT Services — Is There Really Only One?"

Here is an excerpt:

"To successfully address a client’s unique
IT needs, a service provider must recognize the nuances
that the client’s location and IT maturity level bring to
bear. Otherwise, they’ll lack the expertise to
identify the kinds of IT services their clients need."

Tobias goes on the compare and contrast the mature IT markets of Western Europe with the emerging, more dynamic ones within Eastern Europe. Very interesting insights, I strongly recommend subscribing and/or checking out the recent issue!

Thursday, October 9, 2008

SAP Webinar now Posted Online

Just a quick note:

Our SAP Services Webinar is now available for download (slides + voice) on:

Registration on the PAC website is required...

Monday, October 6, 2008

SAP Business Process Experts: A Harder Look at the “BPX Skills Revolution”

In my first PAC blog entry, I posted a review of SAP TechEd 2008 in Las Vegas. One of the main things I noted was SAP’s emphasis on BPM (Business Process Management), and NetWeaver BPM specifically. I also wrote the following: “A ‘business process centric approach,’ complete with new modeling tools, is going to require a different kind of SAP professional.” So what does that really mean?

The “SAP Business Process Expert” is an important topic in the SAP ecosystem. However, it’s fair to ask some sharp questions. First: what is the exact nature of this skill set? Second: how soon will this skill set be needed? Third, and perhaps most importantly, does the Business Process Expert (BPX) skill set still carry some traction in a down economy?

Let’s start with the last question since we’re all somewhat distracted by the ticker tape of bad economic news that’s interrupting our workdays. It’s undeniable that economic slowdowns of this magnitude slow down the rate of innovation on ERP projects. We could make the argument that this type of market is fertile ground for innovative business models, but common sense tells us most companies will not go that route. Certainly when it comes to major new ERP projects, we shouldn’t expect many big announcements in the weeks to come.

But for those who have a stake in SAP project excellence, it’s never too early to identify and cultivate BPX skills. For consultants, these skills can make the difference between landing projects and sitting on the pine. For service firms, cultivation of BPX skills means a well-rounded team that is highly adept at bringing the business and IT agendas of its clients together.

Returning to our first question on what skills constitute a BPXer, that too is a question that is open to a healthy, ongoing debate. With SAP announcing its “BPM for BPXers” certification and laying out the other four tracks of the eventual five track BPX certification, some consensus is building around what a “true BPXer” is. But we are right to ask which of these skills have the most relevance to our clients or organizations. On Tuesday, September 30th, I presented a webcast for ASUG’s Business Process Expert series where I reviewed my own definition of a BPXer and explained why I thought the skill set had relevance.

My own research has solidified into these characteristics of the “SAP Business Process Expert”:

  • - Mastery of modeling tools (IDS’ Aris/Enterprise Modeling applications, NetWeaver BPM, Visual Composer, Intalio (open source BPM), even Visio (currently very common, though not a next-generation modeling tool)
  • - "Web 2.0” skills (collaborative process definition and development)
  • - Focused industry know-how (as opposed hopping from industry to industry)
  •  - Knowledge of the end-to-end business processes that rely upon your IT/SAP skills to be properly enabled
  • - Ability to work as the “liaison” or “missing link” with functional and/or technical teams from the opposite side of the aisle
  • - Change management skills (process-driven approach usually means organizational changes)
  • - Project management skills and methodology know-how (lean manufacturing methodologies, Six Sigma, project management certifications, SAP implementation methods, including new business process methodologies)
If you explore SAP’s official BPX certification wiki, you’ll see that SAP’s definition of a BPXer is a bit different than mine. That’s largely because my definition assumes a high level of SAP application competency. SAP, on the other hand, cannot assume SAP competency during the certification process, so that must be accounted for and evaluated. My list consists of skills that are not really SAP specific. Indeed, you could wrap the same skills around an Oracle consultant and achieve a similar end.

“Web 2.0 skills” may eventually mean mastery of SAP’s own Web 2.0 applications, but since the only Web 2.0 advancements in actual SAP applications are on the CRM side, for now, what we’re talking about when we say “Web 2.0” on this list is not how to kill time on Facebook, but how to help companies with real “Enterprise 2.0” projects with bottom line benefits, such as the creation and management of a project-based wiki that significantly reduces the tedious email loops of the participants.

Most of the skills on this list overlap into the admittedly maddening “soft skills” landscape. We are seeing the emergence of talent management systems that are providing better ways of evaluating and tracking the development of such skills, but admittedly, it can be a little fuzzy to talk in terms of soft skills competencies. We know that consultants who can “get along” on project sites have better careers, but getting someone from “soft skills point A” to “soft skills point B” is not always so simple. The BPXer needs to take soft skills to another level beyond schmoozing. It’s also clear that the skills I just listed currently mean nothing to SAP hiring managers unless they are built around core SAP competencies.

So that brings us back to our second question: how long will it take for these skills to be a factor on project sites? The first hurdle any SAP professional must overcome is still the technical skills hurdle. BPX skills have done nothing to change that, at least not yet. Most times, the “first pass” evaluating an SAP consultant happens on paper, via the resume, and currently, BPX skills do not come across all that effectively on paper.

Yes, there are ways to quantify change management or team building experience, but for the most part, a resume does not get across a true BPX skill set. The only real exception is depth of industry experience, something that does flow nicely from position to position on a resume. But aside from “Enterprise Architect,” very few BPX-oriented job titles have gained enough legitimacy inside organizations to be noted as formal job titles on resumes.

Where BPX skills come more into play is during the interview phase of the placement process. Whether it’s a personal interview or a more routine phone screen, BPX skills matter. However vague they might seem, “soft skills” can make the difference between the consultant that lands the project and the one that stays at home. After all, with companies being able to outsource many positions to cheaper labor globally, why bother with premium rates for an on-site consultant that is not a good cultural and personal fit with the project? This is where BPXers of all nationalities currently excel.

But we’re not yet in a phase where BPX skills can stand on their own merits. The SAP skills in greatest demand today are those pertaining to ERP 6.0 upgrade work, as well as the NetWeaver stack that drives those upgrades. Core NetWeaver components like BI, Portals, and increasingly, MDM and PI, are also in demand. Unless a consultant can tie their “BPX” skills to these sought after SAP skill sets, they aren’t going to be in the game.

An SAP consultant who only has 4.6c experience, for example, can certainly work on their BPX skills and increase their marketability, but they aren’t going to get ahead of those with ERP 6.0 experience just because they have white board skills. When NetWeaver BPM hits general release next year, this old version/new version experience will become even more dramatic, as you won’t be able to get actual project experience in NetWeaver BPM without being on an upgraded SAP installation.

I remain convinced that BPX is a skills evolution rather than the dramatic overnight shift some have foretold. The economic slowdown simply reinforces my sentiment that these changes will happen gradually and in line with the adoption and success of BPM in general, and NetWeaver BPM in particular.

Perhaps someday, BPX job titles like “SAP Process Expert” will be prevalent on job boards and on resumes as well. But I just searched 82,000 jobs on for the “SAP Process Expert” job title and got seven hits. That’s not enough openings for any of us to conscientiously cheerlead aspiring BPXers to drop what they are currently doing to pay the bills. Compare those Dice results with 90 dedicated openings for something as new as SAP MDM, and that gives you some idea of the acceptance curve BPX job titles still have to move through.

SAP BPX is much more than one job role. I’d go further: BPX skills can benefit all SAP professionals, regardless of role. That said, I do believe the ultimate success of the SAP BPX skill set depends upon widespread adoption of next-generation modeling tools like NetWeaver BPM. That should eventually happen, but in this early adoption phase, there is plenty of time to put the hype aside and remember that the best SAP skills approach is a practical one: acquire the skills your next client is looking for.