News Analysis: SAP Launches Business Suite 7 – Transformational Change Or Expensive Repackaging?

Published on February 4, 2009 by R "Ray" Wang

From SAP’s Morton Street New York City marketing HQ, SAP publicly launched Business Suite 7 on February 4th, 2009.  At first, the suite offering of SAP PLM, SAP SRM, SAP SCM, SAP CRM, SAP ERP, and industry applications may seem like a repackaging exercise.  But on deeper analysis, there is a bit more than “harmonized” UI updates and a bundling of previous products with 3 letter acronyms.  In fact, the movement to a synchronized release structure for 5 of the key flagship products onto the common “switch framework” in SAP NetWeaver is no small technical feat.  Key highlights from this morning’s announcement include:

  • Synchronized release strategy improves upgrade experience. Product families in the Business Suite now use the same “Switch Framework”, which allows clients to upgrade 4 categories of enhancements that include usability, horizontal features, vertical features, and composite apps/web services.  This provides one upgrade strategy for all products and brings all the releases into synch.  Some clients have stated that this helped with reducing the pain of some upgrades.

    POV: The movement to synchronize all releases is a good start.   System integrators have traditionally bore the burden of integrating and synchronizing the various product families.  Going forward, customers will expect usage of a common data model via a revamped MDM approach.  With all products on the switch framework, customers can take advantage of the SAP Enhancement Pack technology, which makes SAP upgrades a tad bit easier, though mature SAP customers with a ton of user exits and customizations may beg to defer.  One key concern – will my EhP 27 be dependent on uptake of EhP3?  Also, SAP’s shift from 6 to 8 months for each enhancement package to 1 year may need to be reexamined in light of the quarterly pace of innovation found with the SaaS vendors.

  • Renewed focus on end to end business processes ties “Value Scenarios” to business drivers.  SAP focuses improvements by bringing together traditional functional fiefdoms across various roles.  One example of a value scenarios is collaborative demand and supply planning where SAP takes a process view across fiefdoms like sales, supply chain, operations: manufacturing, operations: procurement, and finance.  The goal: timely, profitable response to stakeholder demand.  Other examples include financial close processes, HR- recruiting and talent, sales-reporting, shared-services, etc.

    POV: Customers will find the Value Scenarios compelling as they align with the key business drivers facing today’s organizations (e.g operational efficiency, regulatory compliance, growth, and strategy).  The initial list covers a basic range of cross-functional processes.  Albeit limited in the initial launch, one can expect more to come from SAP in future enhancement packs (EhP).  As with all best practices, SAP will need to make it easy for customers to modify those scenarios.  SAP customers would want a library of business processes that are not based on the past but designed to change for the future. Partners and customers in the SAP ecosystem will also want an easy way to extend these processes so that they are supported in future upgrades.  This dependency on SAP Visual Composer and other SAP NetWeaver components may prove a learning and training hurdle for some customers.

  • Pay by module pricing  lessens the burden of buying a monolithic suite. SAP states that the new suite offering will now include options for customers to purchase by module.  Prospects do not have to buy the whole suite to activate each module and modules are at a more granular unit than an application family. In fact, SAP claims new customers can start one process at a time.

    POV: Enterprises could always just buy a functional module. However, users will most likely question what the dependencies are on other SAP infrastructure products.  If the footprint is too big, then this module to module approach may not pan out.  There may be hope if SAP manages to resurrect lessons learned from Business By Design (ByD) and serve up the modules in an on Demand fashion.  Hybrid deployment options may be the best approach for existing SAP customers and prospects who want to pipe in innovation or take advantage of new functionality.  Interesting to note that SAP did not focus more on other cost saving programs such as vendor financing and hosting to combat any SaaS vendor marketing pitches.

  • Usability improvements incorporate role based analytics.  Demo watchers were treated to new dashboards and visualization technology. Many of these scenarios focused on role based analytics which are an important part of the progression towards Web 2.0 Enterprise Apps.  These analytics deliver role based and process based information for actionable insight.

    POV: In the demo during the event, SAP showcased more integration of BOBJ with heavy usage of SAP NetWeaver Business Client (NWBC) and SAP’s BPM componentry.  What’s interesting is not the lack of usage of SAP GUI but the improved integration with BOBJ components such as Xcelsius, which of course were vendor agnostic to begin with. Users will still want to know what UI strategy should they move forward with as BS 7 progresses.

The bottom line – more than repackaging but will clients find this compelling enough to upgrade?

Available May 21st, 2009, Business Suite 7 provides much needed change to SAP customers and is another carrot to incentivize customers to upgrade. The challenge will be to make this compelling enough to prospects and existing customers in the midst of the downturn.  Conversations with over 800 SAP clients in the past 5 months indicate that SAP can do more by emphasizing financing options and potentially lowering maintenance fees.  As clients look to recession proof their apps strategy, we hope SAP continues to find new ways to lower the cost of ownership and speed up the delivery of innovation.  Announcements of the adoption of RunSAP methodology by Atos Origin, CapGemini, EDS, Hyperformix, IBM and Wipro show good alignment in the partner ecosystem.  However, more effort should be invested in concert with other solution providers such as Acresso, GuiXT, Hayes Technology, IBM Optim, IntelliCorp, VMWare, and West Trax who focus on reducing the overall cost of owning SAP.  Moreover, SAP could take the opportunity during this launch to restore  vendor-client trust by lowering the overall cost of ownership, delivering more choices in deployment options, increasing the investment and pace of innovation, supporting greater heterogeneity, and orchestrating more value in its partner ecosystems.

Your POV.

As a prospect, are you now more or less compelled to buy an SAP solution?  As an existing customer, do you feel this is a good use of your maintenance dollar?  Will this push you over the edge to move to the next upgrade?  Post your thoughts or send me a private email to rwang0@gmail.com.

Check out my esteemed colleague Paul D. Hamerman’s view on Business Suite 7 on the Forrester Business Process And Applications Blog

Related posts and blogs worth checking out on SAP’s Business Suite 7 (#BS7)
(Updated February 6th 00:46 PST -8:00)

Copyright © 2009 R Wang. All rights reserved.

  • We’ve run SAP for over 15 years. The past 5 years SAP keeps coming up with new names for old products. I can’t tell how this is different other than we will probably pay more for maintenance and the list prices will go up. SAP needs to win back the trust of its customers. They no longer have credibility with customers in Western Europe.

    Rinaldo Tachivini

  • R — Thanks for breaking down all the specific tech considerations. You raise some great questions, but the one I think is most important is: Will SAP customers find BS7 compelling enough to upgrade? In this economic environment, it seems a lot to ask — especially after what the CIOs at the event were saying about how they’ve agonized over “non-value-adding” upgrade costs in the past. And BS7 isn’t going to lessen customers’ outrage over increased maintenance fees. It will be interesting to watch how this plays out.

  • Hi Ray; Question on “another carrot to incentivize customers to upgrade.” I talk to at least one big company a month who wants the latest release of SAP apps but is told by IT that it will be 5, 7, or 10 years (it is always one of those three) before they upgrade the infrastructure beyond R3 to take advantage of the new apps. Do you know what percent of SAP customers are using anything released in the last decade? I suspect it is very low.

  • Mr. Wang. This is what we need. Better integration from the suite. We spent over 1M NT$ on integration with SAP. we can’t afford this with all the modules. suite integration is key. when do you think saas option will be here?

    Kelvin
    Taipei

  • I’m still fuming about my maintenance increase. If this is all they can show for what I’ve paid 12 years for, then it’s time to leave SAP. This looks like marketing fluff. A total waste of my money. I don’t care for enhancment modules. they haven’t built functionality we’ve asked for for years!!!

    Very upset,

    Felicia
    SAP CPG customer

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