SAP Announces New Direction and Tech Architecture
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San Diego, CA -- As Jeff Moad reported for PC Week, Hasso Plattner, SAP's co-chairman recently outlined a major new direction and technology architecture for SAP. Rather than continuing to build tightly integrated, transaction-oriented applications around a single database, SAP by the end of this year will begin to link R/3 with a series of loosely coupled, decision-support-oriented applications that users can run as stand-alone modules.

SAP calls this its SCOPE (Supply Chain Optimization, Planning and Execution) strategy. It kicks off later this year with the delivery of SAP's advanced planning and optimization application. That will be followed by new sales force automation, data warehousing, and business-to-business electronic-commerce modules. All of them will run outside R/3 and communicate with the ERP suite via a combination of distributed object and semantic messaging technologies.

Plattner now allows that his prior insistence on ultra-tight integration was only "half" correct. That alone is noteworthy, coming from probably the most self-confident and successful software executive not currently facing antitrust charges.

But for IT managers, the significance of SAP's shift goes well beyond Plattner's change of heart. It means that SAP is making a big push to break out of the relatively confined ERP domain it has come to dominate in recent years. Although R/3 has become a critical product to many large manufacturing users-- and propelled SAP into a $3.4 billion vendor--at most companies the product is used by a relative handful of employees in core operations such as finance, manufacturing planning and logistics.

SCOPE will change all that. In fact, by ringing R/3 with a series of loosely coupled applications that target new areas such as sales and marketing, planning, even the executive suite, SAP is making a bid to just about every user in the company. That would mean tens of thousands of seat licenses and SAP desktops in companies where hundreds exist today. In fact, Bruce Richardson, vice president of research at Advanced Manufacturing Research, jokes that soon SAP will come out with a home version for people who didn't get enough screen time at work.

Of course, this all changes the competitive landscape in the enterprise software market. It also means that IT managers will have some major decisions to make. For vendors such as Manugistics, i2 and Siebel Systems that are in markets targeted by the SCOPE initiative, it's not good news. That's because SAP has decided to develop its new applications on its own rather than partner with outside vendors in the way ERP competitors like Oracle are doing. So Manugistics, i2 and Siebel will soon be competing directly with SAP.

As a result, you can expect to see continuing consolidation among such vendors. Siebel's recent combination with Scopus Systems is just the beginning. Just this week, in fact, customer asset management vendor Vantive signed a joint marketing deal with sales configuration ISV Trilogy.

IT managers will have to decide if the basic value proposition that sold them on R/3 in the first place applies to the new strategy. R/3 was a success because it offered IT managers a way to integrate major functions without having to actually do the integration themselves. The question now is whether SAP's broader vision will still deliver on that functional integration.

There's also a serious question about whether SAP can deliver advanced planning, sales force automation, data warehousing and e-commerce applications that are world-class. So far, the vendor hasn't delivered on any of those promises.