SAP's Procurement Road Show — An Initial Take

Last week, I had the chance to attend an SAP procurement road show as it swung through Chicago. While the focus was on E-Sourcing and Spend Analysis products, there were many questions from the audience -- as well as a breakout session -- on SRM 7.0, SAP's long awaited follow-up release to SRM 5.0. By my count, around 50 people attended, representing a good cross section of Fortune 1000 companies in the Chicago and Midwest region. While participants came from many industries, nearly all shared something in common -- a desire to get to the bottom of exactly what SAP was offering and when it would become available. In fact, one of the first questions from the audience to an SAP representative was how SAP planned to explain what solutions were currently available and which were planned (and when). Following this question and my own discussions with a number of attendees, it became crystal clear that SAP's marketing has created nothing but confusion among practitioners -- IT and business users alike.

AMR's Mickey North Rizza, who gave an excellent keynote address to kick off the event, shared this concern. I asked Mickey after the event about her thoughts on SAP's direction and procurement marketing. In her words, "SAP has done a great job responding to market demand with their sourcing, spend analytics, contracts, and SRM products. It is a great strategy against the best of breed companies that have done well in the supply management market. However, customers are confused as they don't see the migration or integration path of the four products. SAP needs to clarify this for their current customers and prospects to guarantee sales." In my view, Mickey was being polite. In truth, SAP has utterly failed their customers by not articulating what they're selling and their planned migration paths. Fortunately, this is easily remedied. SAP should not waste any time in explaining what's on offer today and where they plan to go.

On another note, many of the attendees were curious about SRM 7.0, although I could not find one that was committed to participating in the ramp-up program (which is slated to begin in late November with G/A planned for 6 months later). It seemed that many customers were concerned, after the failure of 6.0 to go G/A, to become an early adopter for the new platform (not to mention the fact that to gain all of the advantages of the release, that they would have to be on SAP ERP 6.0). So what are these customers doing? Are they turning to Ariba or others? Not the ones that I spoke with. They're going with SAP hosting partners like Hubwoo that provide outsourced instances of SRM 4.0 and 5.0. One company I talked to is in the process of outsourcing part of its indirect procurement function to an outsourcing provider that plans to work with Hubwoo. These interactions confirm some of the marketing claims that a friend who works at Hubwoo has been pushing my way over the past couple of months -- that the company is, in fact, extremely busy.

Stay tuned for more analysis of this event later in the week, including coverage of SAP’s new spend analysis product capabilities, SRM 7.0 and highlights from Mickey North Rizza's presentation.

- Jason Busch

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