The German software giant announced yesterday a number of initiatives to make its enterprise resource software system a more easy to use, easy to implement, and easy to pay for application package.
"We have to get more user-centric," said Hasso Plattner, SAP chairman and chief executive. "We said this a year ago, but it takes some time to get the giant moving and this is now the core of our development."
The announcements were made on the eve of SAP's annual user group conference in Los Angeles.
SAP's core R/3 system handles such core business processes as financials like general ledger, human resources, and manufacturing. But the past 18 months the firm has spread its system to handle nearly every corporate computing function including sales, marketing and customer service, supply chain planning and execution, procurement, and specialty functions for specific industry needs.
To reign in those new functions and organize them in such a way that makes sense for clients, SAP began grouping the various functions into "business scenarios," or job descriptions within a company. Along with the new scenarios has come easier to user interfaces for new types of users previously untouched by R/3.
SAP has also drawn up blueprints called Industry Solution Maps that guide clients through their software needs depending on their industry. The maps describe not only SAP's current offerings but also future plans and functionality that users can get from SAP's partner software companies. SAP executives also announced a new pricing structure designed to let users pay for only what they use and not have to buy the entire scope of R/3 software.
"SAP is continuing to expand the footprint in the enterprise and they are acknowledging that the system better look good too because they are now touching all these users they never did before," said Joshua Greenbaum, analyst at the Hurwitz Group in Framingham, Massachusetts. "They have to sell at a lot of levels now. It's not enough anymore to just sell to the CIO."
And SAP is selling products that users have traditionally gotten through third party applications from vendors who focus only on niche products like sales force automation or supply chain planning. Plattner said SAP is shooting to take over these markets where it can and sell its products as just as good alternatives to best-of-breed systems now leading the niche markets.
"There is no chance SAP will be in any contract if we are not simply better than the best of breed offerings on the market today," Plattner said, adding that SAP needs to be one of the top three players in these niche software markets. He also said that if SAP cannot be a top player or if a venture is not profitable, SAP would consider decommissioning some of its new offerings.
But being a top player doesn't just mean having the functionality of the niche players, it also means being priced at a level that is attractive. Enter SAP's new pricing structure. SAP is designing custom contracts for clients in which a per user fee is created for each individual user based on the job function of that user and how much of SAP's software the user touches.
For example, a company with a sales clerk who only uses the sales force automation software would not be charged a full R/3 user license, which can reach upward of $10,000 per user. Instead a formula would be created to figure out a price based on sales person's job and what components of the software system they use.
"We have to give up the idea that a product is code and that we ship that product and that a customer buys it," Plattner said. "We had to come up with different business scenarios" to decide pricing fees.
SAP will be taking this message to the 15,000 users and partner companies attending this week's conference. Plattner is expected to detail the plans for users today during his keynote speech.