Future of SAP - My Thoughts

Change is the only permanent thing in life - and so is our means of earning livelihood .Its been a long and eventful journey from R/2 to R/3 ECC . History tells us every downturn brings in opportunities .They also say the way business is done, while we go down the trough, changes dramatically when we come out of it .


This makes me think how's SAP going to be perhaps five / ten years down the line. Definitely the standard R/3 is here to stay but the way SAP works may change a lot .With software as a service (SaaS) and platform as a service (PaaS) increasingly becoming poplular its just a matter of time when we see SAP on the "Cloud". If the last decade belonged to expensive ERP suits, the next decade can well see a shift of power towards inexpensive SaaS offerings in enterprise solutions .

The next wave of ERP solutions is going to be more affordable and focused towards small and medium scale industries . SAPs Business One , SAP by design ,CRM on demand are some of the products that's trying hard to enter that segment . In fact, SAP by design is a kind of SaaS where SAP maintains and manages the database and the user-company pays $149/month for each of its users . No headache of upgrades, support or maintenance or even investments on costly servers and networks - just pay as you go . But still these models couldn't cut much ice in the industry . Though cost of hosting and maintenance has come down drastically, but still its not enough to call everyone to the party . Perhaps once the hosting platform becomes a shared service platform for many customers,the transaction costs would come down and it would be an incentive for small enterprises to jump the bandwagon .

SAP has recently acquired the a start up firm called Coghead that specializes on SaaS offering in e-commerce. Surprisingly, SAP disengaged from all SaaS offerings of Coghead and made it clear to customers to look out for alternatives . However, SAP retained all the engineers of Cohead and might be working on their competency to develop a platform which so far has been an underdeveloped strategy.

As the cloud grows and IT heavy weights like Google, Microsoft , Salesforce.com ,Oracle jostle for space , and the industry still waits patiently for a clarity, SAPs sudden entry in the cloud may be like the arrival of a new beautiful girl in campus . I am sure many would like to date her and some may burn fingers . There is a huge pent up demand for freedom - freedom from the hegemony of the proprietary
ERP solutions that's known for their expensive upgrades, potential for high cost overruns and in some cases even unjustifiable ROIs.

There are some fundamental risks in enterprise solutions being offered on the cloud . Some of them are data security, disaster recovery, business discontinuity in case of the service or vendor fizzling out, regulatory compliance , sense of selling yourself to the idea of one size fits all etc . I am sure the product and service providers are preparing to address these concerns and have a thought process in place which will crystallize as time progresses. Not all clouds are public , there are private and hybrid clouds too which can address some of these fundamental questions .

As of now, Bill McDermott of SAP and Larry Ellison of Oracle publicly says SaaS for ERP is a pure disillusionment. Though it may be a road full of mines, everyone in backroom has a strategy and ambition to take a stroll down the road. If the current recession transforms into a L shaped deflation then this trip down the road may be taken sooner than expected .

Whether it would be another growing bubble waiting to burst or a huge leap of faith ...no one knows , but its true that hope and faith is with which the earth moves . Watch out for this space !

Sources : Informationweek, Zednet,Opsource