In English Romantic poet Percy Bysshe Shelley’s 1818 poem Ozymandias, we hear an account of how a traveler from an antique land has discovered a great ruined statue in the desert, on the pedestal of which is carved a haughty challenge from its ancient builder: My name is Ozymandias, King of Kings/ Look on my works, ye mighty, and despair! Yet of all that ancient power, nothing beside remains than the shattered remnants of the statue, around whose colossal wreck… The lone and levels sands stretch far away. One is reminded of this haunting image of vanished omnipotence at this week’s megaconference for SAP AG customers, Sapphire, this year held in rain-sodden Orlando, Florida.
By Gary Flood
For right now SAP is truly the King of Kings of business software. One could draw up a matrix of the computer industry’s top dogs that would go Microsoft Corp (desktop, maybe soon server, operating systems); Intel Corp (chips); Oracle Corp (database); Cisco Systems Inc (networking); Hewlett-Packard Co (printers); and SAP (accounting software). This is particularly noteworthy a list to those of us who remember when SAP was almost wholly a German-speaking-market-only behemoth, seemingly constitutionally unable to break into the Anglo-American world with its awesome mainframe R/2 software system. In 1992, in Walldorf, near Munich, we remember SAP co-founder and executive board spokesman Hasso Plattner, who these days rather speciously rejoices in being addressed as Dr (he has a honorary doctorate from a German technical university though only himself has a Master’s), on the day of the formal launch of R/3, lamenting that he had ten times as many Dutch customers as UK ones, in a market five times smaller. It was R/3, of course, that changed all that.
Irresistible double whammy
A number of things came together very auspiciously for the German company with that July roll out five years ago. R/3 – originally envisaged as a small company little sister product to R/2 – came on stream at just the right moment for its two messages, integration and distributed, to hit the American market buyer with an irresistible double whammy. SAP software has always been integrated (its strength comes from the fact that one doesn’t buy simply a general ledger or accounts payable module, but a gigantic inter-linked whole, with almost certainly more functionality than you will need); for companies about to embark on ambitious business process re-engineering projects, as many of the large US corporates were about to do in the mid 1990s, the idea of uniting atomized divisions around a central business process seemed so much easier to do with software that helped link apparently different parts of the organization anyway. Then there was the fact that R/3 was on Unix and Windows, not the mainframe, and not one of SAP’s ostensible competitors – Oracle, the then Dun & Bradstreet Software, Walker Interactive – had a Unix business software product worth a damn at the time, or at least one that offered R/3’s level of functionality. And then there was the fact that, hey, these guys were German – with all that halo effect of superior engineering and reliability Americans carry over from the world of the automobile. SAP America grew like Topsy, and then some – in fact, it hasn’t stopped growing. Klaus Besier – the man who tried to take all the credit for SAP America’s explosion of growth – made sure all the press releases used to point out under his stewardship SAP in the US went from less than $10m in 1992 to $710m in 1995. In 1996 SAP worldwide saw net profit of the equivalent in DM of $346m (up 40% year on year), on revenue up the equivalent of 38% to $2.27bn, of which R/3 made up $1.44bn and consulting fees $448m. And in July it announced half year figures showing pre-tax profit up 56% to $317.7m, on sales up 51% to $1.31bn, with sales in the American (North and South) up 85%.
Headed off rivals’ attacks
SAP is in the position, unprecedented for a European IT company, of seeing 78% of its sales com
ing from outside its home country, for that period at least. It now has 11,084 staff globally, up 43% from June 1996 to June 1997, and in America alone it now has 3,000 staff, a growth rate of 100% in twelve months, mirroring its 663% growth rate in sales these past 12 months. SAP is now so strong that it is hard to see how to compete with it effectively. For the company has met the challenge of objects and components with an ambitious 18 month so far re-org of its software development team, meaning it has neatly headed off the attack of rivals and commentators that it is too monolithic. It has split sales and consulting into 15 different industry areas, including its latest, Aerospace and Defense, so that it is no longer selling a one-size-fits-all generic package for all businesses. It has expanded its implementation consulting program, ASAP and now TeamSAP to the stage where it is claiming 61% of all R/3 implementations are bedded down in less than nine months, which heads off the old joke – How many consultants does it take to implement R/3? Six hundred, 12 months at least, and no fixed price – now what was the question again? – that to take on R/3 was to commit two years of your life (and that of your organization). Even if SAP went bust tomorrow morning its installed base – 11,000 sites for R/3, 1,600 still hanging in there on R/2 – and the amount of intellectual effort poured into making R/3 fit companies and indeed companies fit R/3 would make it overnight a more pressing, if maybe slightly smaller, maintenance problem than the Year 2000. So right now SAP is the Ozymandias of business software. Yet the poem’s point is that even the greatest of empires eventually collapse. Tomorrow we will hear how SAP is trying to fend off any challenge to its dominance, and thus possible downfall. And one must also bear in mind that the culture that produced Shelley’s ‘Ozymandias’ – actually Rameses II, Pharaoh of Ancient Egypt – existed in uninterrupted continuity for some three thousand years. Will SAP last that long? In software terms, almost certainly yes, as time will tell.
