Innovation on Display

“SAP is more than a safe haven, we are a trusted innovator,” said Henning Kagermann, chief executive and chairman of the SAP Executive Board, in a rousing keynote. He highlighted SAP’s 30-year history and its strength in the face of a tough economic climate. He urged executives to avoid a “sit and wait attitude,” and instead focus on innovation as a key for financial growth. “Every business transformation is enabled by IT,” he said.
With the market unlikely to go through a dot-com-type boom again anytime soon, those firms like SAP that continue to invest in new ideas will be the ones who continue to grow. “Uncertainty is here to stay,” said Kagermann. He suggested that a shift to a new IT spending model is a smart move in the face of economic uncertainty. Most companies spend 10 percent on innovation, 30 percent on consolidation and 60 percent on operations, he says. They should shift that formula to 40 percent on innovation, 20 percent on consolidation and 40 percent on operations to give themselves the best chance for success, he says.
Kagermann also spoke about the growing use of new technologies, including radio frequency identification (RFID) and Web services. And he asserted that companies that use SAP software can cut 20 to 30 percent from corporations’ overall IT budgets. “We have to make sure integration is not the next budget killer,” he said.

“SAP remains a singular strong company”

In addition to Kagermann, Hasso Plattner, cofounder of the company and chairman of the SAP Supervisory Board gave a keynote and took audience questions. SAP Executive Board members Shai Agassi and Peter Zencke spoke to the crowd, as did Carly Fiorina, chief executive of Hewlett-Packard (HP).
In Plattner’s day-three speech, he took a moment to comment on Oracle’s hostile bid to purchase CRM software rival PeopleSoft. “Our major two U.S. competitors must have missed something,” he said, because while they are consolidating, SAP remains a singular, strong company. He scoffed at the recent trend at U.S. companies to hire outsiders for top executive positions, rather than promoting from within. That shows “weakness and confusion,” he said. SAP, on the other hand, promoted Kagermann after 21 years to replace Plattner at the helm. That shows SAP’s consistency and strength, he said.
Plattner noted that SAP holds 17 percent of the world software market, behind only Microsoft, which holds 29 percent. He also said that creating collaborative and easy-to-use user-interfaces are the No. 1 challenge for most technology firms. SAP, he says, is dedicated to continued improvements to user interfaces in all products.
Carly Fiorina closed the show with a talk focused on the importance of innovating and adapting to changes in the market. Like other speakers, she emphasized the vital role of IT. She discounted a recent Harvard Business Review article that proclaimed IT is no longer key to business. “In the businesses that will succeed in the marketplace, there is no separation between IT and business,” she said. Companies such as HP and SAP, which she called “world-class,” will thrive because they will manage change best and be most adaptive in the face of new challenges.

Expanded alliance with IBM targets the SMB market

Several pieces of corporate news came from SAPPHIRE, including an announcement from SAP and IBM. The two companies will expand an existing joint-marketing arrangement. For its part, SAP plans to develop a version of its software specifically for small companies and custom-designed to run on a smaller version of IBM’s database software.
Michael Borman, general manager in IBM’s global business partners unit, took the stage on June 18 to talk about its synergistic relationship with SAP. He talked about IBM’s status as the SAP Services Partner of Excellence award-winner and credited SAP software with helping IBM stay on the forefront of its industry. “Much of it is centered around our implementation of SAP,” he said. He also underlined the news of the expanded relationship with SAP, targeting the small- and mid-size business market. “I’d advise you to pick plays like IBM and SAP to meet your needs,” he told the crowd.
Another special speaker at SAPPHIRE focused more on politics than technology. John McLaughlin, creator and executive producer of The McLaughlin Group, a popular U.S. television news show, moderated a roundtable political discussion at the June 16 event opener, which included opening remarks from SAP America chief executive Bill McDermott.

The SAP customers were the stars

But the real stars of SAPPHIRE were the many customers that presented compelling success stories about SAP implementations. There were 165 educational sessions going on throughout the huge SAPPHIRE meeting hall. The topics ranged from customer relationship management (CRM) to supply chain management (SCM) and included privately held firms and global multinationals. SAP customers such as Lockheed Martin, National Aeronautics and Space Administration (NASA) and Brothers International presented stunning IT success stories with detailed, quantifiable returns.
For example, Brother International executives gave a presentation about a mySAP Customer Relationship Management (mySAP CRM) implementation, with a staggering array of performance benchmarks. The company, a Japanese firm with a U.S. presence since 1954, has $1 billion in sales of printers, facsimile and other machines. It’s been an SAP customer since 1994.
Chief executive Terry Koike and chief technology officer Dennis Upton spoke at length about productivity gains and cost savings from mySAP CRM. For example, Brother has seen product returns drop from 6.7 percent in 2001 to 6.1 percent in 2002, at the same time as the number of units shipped increased. The cost of marketing campaigns has dropped $4,400. Call center calls are down to 1.57 million in 2002 from 1.84 million in 2001, leading to a savings of $621,000.
Another SAP customer, chip giant Texas Instruments (TI), had executive Jim Shultz on hand to discuss the company’s supplier relationship management (SRM) implementation. He said when choosing a vendor for the company’s e-procurement system, SAP got the job because it had “better overall strategy and vision” than rivals. The system has handled some 50,000 line items so far. Plus it’s allowed TI to automate 70 percent of its worldwide invoices, a huge time and cost savings.

Presentation of Waters Corp.
Presentation of Waters Corp.

Yet another success story came from Waters, a Milford, Mass.-based manufacturer of high-performance liquid chromatographers and other sophisticated products for the pharmaceutical industry and other sectors. It spent $5.1 million on its mySAP CRM system. At SAPPHIRE its executives reported that it’s seen a $2 million internal rate of return (IRR) over four and half years. That’s a whopping 35 percent. Specific examples of improvements at Waters include a $750,000 jump in telesales, $800,000 in additional revenue from better lead qualification, and a 50 percent improvement to its direct mail response rate.
Other similar testimonials came from Villeroy & Boch, Millennium Chemicals, American Express Tax and Business Services and many more others. Plus plenty of SAP executives were on hand to discuss the design and benefits of SAP’s products and systems. SAP NetWeaver, xApps, Enterprise Services Architecture (ESA) and how to use SAP applications on Blackberry handheld devices were just a few of the key sessions.

No more waiting in checkout lines with RFID

One of the hottest topics of SAPPHIRE 2003 was RFID. Accenture partner Jeff Smith took the keynote stage to explain why RFID is set to become a crucial part of many companies. As an example, he pointed to Star City Casino in Sydney, Australia, which did a broad deployment of RFID. Star City’s 20,000 employees have uniforms with RFID tags, so that the company can track their use and cost. Also, he cited Benetton, the clothing company, which plans to RFID tag all store-branded apparel.
The future of retail, says Smith, is in “checkoutless” checkout at stores. Customers, who hate waiting in checkout lines, will be able to simply walk out of the store when they are done shopping. RFID tags on products will be scanned and billed automatically.

Sarah Z. Sleeper
Sarah Z. Sleeper