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November 26, 2014

5 lessons from SAP customers in UK and Ireland

SAP and its customers have a long year ahead of them, with plenty to improve on.

By Jimmy Nicholls

SAP’s user group conferences are a chance for the customers of the software vendor to get together and discuss technology. As IT infiltrates more areas of business the demands of enterprise software have only grown, leading to greater possibilities and problems for companies making use of IT.

This year’s event in Birmingham saw a number of controversial announcements from both the group and SAP itself, represented by the recently appointed UK&I managing director, Cormac Watters, among others. Here are the takeaways from the conference:

1) SAP must work on vertical relationships

Analysts have been wondering for some time how software vendors will respond to the rising amount of connected industrial devices being brought into play through the Internet of Things (IoT). While many firms have broad requirements, specific needs for vertical industry are becoming a greater concern to many.

In a survey of SAP users half said they felt their representative from the company had an insufficient understanding of their business needs, while a similar amount expressed an interest in industry-specific experts, should the company consider offering them in the future.

2) Analytics will become more important

"Real-time analytics" has become a buzzphrase in the IT industry of late, with some making it sound like a treatment to cure all ills. It should be no surprise that SAP is interested in the potential for data to inform, as Guy Armstrong, chief operating officer, SAP UK&I puts it, "fact-based decisions".

Connectivity across devices is likely to bring a great deal of complexity to enterprises, but it will also bring data. This will create a lot of headaches for firms rolling out software and devices, but the result will be lots of numbers to crunch and business intelligence to be gathered.

3) Customers must be kept close

In his keynote to the conference Watters was challenged to outline his plans for SAP, just over a month after he was appointed as managing director for the UK and Ireland. As a former customer Watters has been at the other end of the exchange, and pulled no punches in his response.

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"We’ve got to get closer to the customers and we’ve got to get closer to the partners," he said. "I’ve been a customer, and you’d usually see the account executive at this time of the year, and if we didn’t have anything to talk about we’d usually see him this time of the year next year. So we’ve got to find a way to change that."

4) Licensing costs are still an issue

Pricing costs are an issue for anybody looking to buy enterprise IT, with departments always looking for more cash and boards always reluctant to give it to them. Yet SAP in particular has made noises about its licensing model, which its customers have said in the past is difficult to understand.

SAP licensing costs were a barrier to new technology adoption for 15% more of the firm’s customers than other vendor’s costs for the same group. "Clearly SAP, as with any software company, is not going to give this away for free," said Philip Adams, chairman of the UK&I user group. "That’s why the business case is so important."

5) Innovation is a response to problems mostly

The Googles of the world have the option to fund expensive innovation with no end in mind, a process known as 20% time which led to Gmail and AdSense in the past. But this is not the way most companies work, according to Mark Darbyshire, SAP chief technology adviser for UK&I.

"I think most people tend to justify why they’re doing the innovation," he said, adding that many projects are responses to problems the company has been having. "A lot of innovation is about bringing together things which haven’t been brought together before."

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