SAP E-Sourcing Watch: The Rumors of Frictionless' Death May be Exaggerated

There has been much chatter in the market of late about the eventual migration away from Frictionless (also described internally at SAP and with partners as the "bridge" platform). I recently had the chance to catch up with Marko Navala, who not long ago took ownership of the solution for SAP, and Paige Leidig, a long-time product and marketing veteran of the SAP procurement suite. They told me that "there are no plans to re-platform the e-sourcing" solution set. A few weeks ago, David Marchand, who used to focus on SAP's e-Sourcing product before changing his role within the company, also suggested the same thing. Moreover, the current SAP party line appears to be that there are "no plans to force e-sourcing [customers] to another platform." Moreover, while the age of the Frictionless design (over ten years) implies an eventual migration to a more modern SaaS platform at some point in the coming years, according to SAP, "re-platforming" will "not happen in 2010 or 2011."

In the meantime, SAP is maintaining its vision of being "the On-Demand provider of choice for SAP large enterprise customers," by continuing to focus on a subscription business model, delivering e-sourcing, contract management, supplier management, and related capabilities hosted by itself and BPO partners (e.g., Hubwoo, IBX/Capgemeni, Quadrem, etc.). In other words, the strategy SAP recently articulated is identical to the one it's been pushing for years with the Frictionless model.

Still, even though SAP is stalwart in its claims that the "e-sourcing product will be built on Frictionless for the [foreseeable] future," I suspect that we'll begin to see SAP release e-sourcing and contract management capability in the coming years (perhaps 2012, perhaps later) on an additional, new, SaaS platform, even if it keeps Frictionless around for some time. There are a number of reasons for this. For one, the Frictionless platform does not take advantage of the latest functional and architectural capabilities that SAP will build into its next-generation solutions. For example: an in-memory database model (like Workday) that allows significantly greater flexibility in how users access and interact with information, while also limiting any potential for Oracle to gain DB license revenue from SAP application deals.

Moreover, even though Frictionless now offers tight integration into back-end SAP systems, it is built off of a different data model entirely. Competitors, including Emptoris, have been successful at penetrating SAP accounts with an essential message of "we integrate more tightly into SAP than SAP's own products" in the sourcing and contract realm. Granted, SAP has new integration capabilities that it has built into the most recent e-sourcing release, but I suspect that a perception will remain in the market (perhaps true, perhaps not, depending on the integration scenario) that third-party sourcing and contracting solutions can integrate more tightly into SAP than SAP's own On-Demand offerings.

Perhaps the largest indictment of Frictionless as a company standard is not entirely fair, owing to company politics, but in SAP's home market of Germany, the product is rarely sold. SAP instead positions the limited capabilities of SRM sourcing in the German market. I find it hard to believe that given the unwillingness of SAP to push Frictionless in its own backyard that it will remain any more than a "bridge" platform (SAP's words, not mine) until SAP has something of its own design available. Perhaps this won't happen until 2012 or later, but to evaluate the current instantiation of SAP e-Sourcing as anything but an interim solution at this point would be unfair, even as new development and enhancements continue. Fortunately for customers, SAP is willing to do shorter-term deals, so companies can hedge their bets if they're worried that SAP's next SaaS-based e-Sourcing solution, available whenever it emerges (perhaps 2012, perhaps later), will not be up to current functional standards. And almost certainly without question, if you do sign up for a longer-term deal on the Frictionless platform, SAP will honor its commitments to it.

In terms of current deliver options, companies can either purchase the platform in a license model or they can go with the On-Demand offering (with a range of hosting and tenancy options). SAP is currently on the Wave 6 release for On-Demand customers, and plans to release two additional major releases (Waves 7 and 8) in 2010. CD customers will need to make do with versions that trail by a minimum of a quarter, and in some cases (depending on timing and schedules), more than a year. (For example, before the planned Q310 release of Version 7 of the licensed version, the most recent version available to licensees will be version 5.1, previously released in Q408).

So with apologies to a certain author -- the same one who also once proclaimed "I can understand German as well as the maniac that invented it, but I talk it best through an interpreter" -- it would appear that the market rumors of Frictionless' death may be greatly exaggerated. For now. Still, despite the current defense of the Frictionless platform, I suspect something might get lost in translation at some point along the way, just as Samuel Clemens (i.e., Mark Twain) so complained about the German tongue at every opportunity. Hence, even with this new information, I'd still bet that if parallel development efforts on another e-sourcing platform on a different architecture (in addition to SRM) are not going on right now, that they soon will be. I'd also suggest, given SAP's propensity to make strategic acquisitions -- rather than just financial ones -- that other M&A deals are not out of the question in this and related areas.

Jason Busch

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