For more than a decade customers have picked SAP as their ERP system, starting with core business process implementation including procurement, sales, Logistics, A/P & A/R. Having stabilized these core areas, they ventured into advanced planning tools (APO), SCM & business information warehousing products to take advantage of the propriety information collected by using core SAP. After this came the upgrade phenomenon. The SAP market has now reached a matured stage in the life-cycle, when one might claim that there will be less new SAP implementations in the near future. The SAP post implementation maintenance business is also in advanced stages of getting commoditized with established players facing very high price pressure. So what next?
Recently one can visibly see a trend developing in the SAP customer market. By and large organizations, after having lived with SAP for over decade or more are moving towards SAP Re-implementation as their next big strategic investment.
The fundamental reasons for this endeavour are cystal clear.
At macro level
- Globalization and related business landscape has changed remarkably making their old business processes obsolete
- Given the rate of changes, implementation of SOA based or any other flexible & dynamic IT architecture is slowly becoming a necessity rather than optional
- Old business process configurations, tools that were developed over a decade or more ago, have become unduly inflexible or cumbersome to further develop and maintain, even though such entities have been going through consistent updates as per business needs.
- SAP’s introduction of the concept of enhancement packages has really made it possible the post re-implementation life of the package is a cost effective affair. By this I mean no-more forced upgrades, migrations etc. Also new developments done by SAP is just switch-on away.
- ERP market has become bi-polar with SAP & Oracle as the pillars, so switching cost has become high for ERP customers.
- Even after decade long IT application rationalization activities, there are lot of SAP customers saddled with hunders of applications which are potential candidates for retirement. Re-implementation is the right way to carry out these retirements.
At micro level
- These old systems put lot of pressure on employee management. Over a decade these systems have become complex behemoths with no track on changes and have little or no documentation. Maintenance of these systems carry the huge risk of total dependance on the professionals who build it. This is a big risk from an organizational perspective.
- Given the maximum downsizing, big departments have been transformed into one or two resource teams. The highly customized decade old systems cannot be an efficiently maintained & managed by such small teams.