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Posted by John R. Rymer on July 7, 2010
The "smart money" seems to be betting against SAP. I hear all the time about the company's bleak prospects for the future. A client conversation last week reminded me of how strong SAP’s position is, despite its many issues.
This client, a worldwide manufacturer, is investing hundreds of millions of dollars in SAP software for its worldwide supply chain, financial management and reporting, inventory and order management, etc. The new SAP environment will replace hundreds of disparate applications and, ideally, result in far more efficient operations, far better visibility into operations, and far more uniform products around the world. The members of this client’s SAP implementation team have finished SAP implementation marathons before (at other employers). They know the good, the bad, the ugly.
In this manufacturer, SAP is sticky for four reasons.
I don't think this firm is a unique data point. Multiply its situation by thousands of organizations, and SAP finds itself with a strong base of business that is locked in for many years. SAP's ability to acquire new revenue streams and products adds to its market strength. (Oracle has similar strength: No matter what people think of Oracle's various business applications, that software will stick around and generate loads of revenue for a long, long time.)
Those who are ready to write off SAP -- or already have written the company off -- are overly dramatic. SAP is by no means assured a thriving future, but its strong position gives the vendor time to stabilize itself and find new sources of growth. The obvious place to find growth is by selling more stuff to existing customers. The question for customers heavily invested in SAP software: When SAP comes calling with a great new extension to your investment in apps, why should you buy? Hopefully, not only because it is easier that way.
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