Executive Summary

• This is the Honest Vendor Rating for SAP.
• SAP ranks as one of our lowest-rated vendors in topics ranging from SAP’s sales tactics to their value.

Introduction

SAP is the world’s largest enterprise software company. However, as a company, like the most significant consumer software company in the world, Microsoft, SAP lives in a bubble. In SAP’s world, they make the best software it contains all of the best practices. Best practices is a circular concept which is applied by many vendors, but which has become a marketing fixation on the part of SAP and SAP is adamant that if any business process is not covered by SAP, it is not a best practice.

Those at SAP believe very strongly that they have earned their position as the world’s largest software vendor through hard work and great software. The truth is quite the opposite. In our rating, SAP does not have the best application in a single category – and without an association with SAP’s flagship ERP system, many of SAP’s other products could not survive as independent products. If SAP’s applications were that good, they would not need to pay off the major consulting companies by giving them most of the SAP consulting business for their applications to be continually recommended.

In terms of its technology layers, SAP lags in terms of user interface design, their database and infrastructure and is only competitive not in the quality, but the quantity of its business logic. SAP has the broadest business logic in most of the software categories in which it has a product.

Value

SAP value argument is weak because our TCO Estimator shows that their TCO is always the highest in any software category that we cover. Interestingly SAP writes white papers on the importance of TCO, while consistently having the highest TCO of any vendor. The fact that many consulting companies have built their revenues around SAP software – which is the main reason why the story about SAP has not gotten out.

Quality of Information Provided

The Sales information that is received from SAP is of a shallow quality. SAP salespeople say what they need to say to close deals. We have numerous first-hand experiences with SAP misrepresenting the capabilities of its software. And then continuing to mislead the client for months about “looking into” how to make a promised functionality work, that we have tested and shown did not work, that should never have been guaranteed in the first place.

SAP consulting has a minimal ability to break the bad news to the client. This is that the information published by SAP, including in its release notes, is unreliable. Of all the software vendors we cover, SAP has the highest percentage of its functionality that does not work – and that never seems to get fixed. There are aspects of this that skirt with illegality, as the release notes are the statement to customers of what the product is capable of.  As SAP knows to place false information in release notes – saying it has functionality when it does not, it is engaging, if sold to consumers is the definition of consumer fraud. This is the same as if a bank stated that it had one interest rate on your account when in fact it had another. SAP is too powerful to be affected by US regulatory bodies (i.e. it can make political contributions that prevent regulatory inquiries from even beginning). So what this means that unless one has personal experience in implementing the functionality, for any functionality to be relied upon, it must be tested – because there is some good likelihood it will not work. This means companies cannot project what portion of the published functionality that they are targeting to activate will work properly — a perfect example of how SAP distributes false information can be found in HANA.

The major IT consulting companies have all built part of their practices around SAP software, and it has been a significant revenue generator for them for some time. SAP is also a substantial funder of Gartner, and they are consistently overrated by Gartner both because of this funding, as well as the fact that most of Gartner’s Magic Quadrant methodology is directed toward vendor size. SAP applications that are some of the worst in a software category, with the highest TCO of any application, routinely end up in Gartner’s Leader Quadrant.

Therefore when any a buyer attempts to triangulate and listen to the advice of either their consulting company or Gartner and other IT analysts, SAP has effectively manipulated these sources of information so that buyers do not receive objective information about SAP.

SAP can and does say pretty much anything it likes knowing that the vast majority of information outlets on the Internet will line up and support them and its vision. SAP can also bring out a limited-function solution and face no negative media attention. When we search for articles on the Internet about SAP, the only negative comments I can find are comments left on articles, not within the articles themselves. That is power.

Consulting and Support

SAP’s consultants have a good talent level, although they are quite often pressured to not tell the client the truth by account management. However, the problem with evaluating SAP is that they staff only a small percentage of the overall number of consultants that implement their software. SAP has no interest in staffing most of its projects, or at least it has not historically. This is because they have outsourced their consulting to the major consulting companies in the “great compromise,” which was performed to get the significant consulting companies to recommend their products. If SAP were to build up its consulting practice, it would be competing with the consulting companies who would cease to recommend them. This partnership is critical because, without continual recommendations from consulting companies, we predict SAP’s market share would swiftly decline, as SAP cannot compete based on its product on a level playing field.

Implementations by major consulting companies are always longer and more expensive than if the software vendor’s consultants are used. This is one of the primary reasons for the overwhelmingly higher implementation costs to both SAP and Oracle. Implementation success also declines with the major consulting companies. Our estimates for the SAP and Oracle consulting capabilities, which are generally of good quality. This is at least partially because SAP and Oracle consultants receive a premium in pay over other vendors. However, both companies have a hard time managing projects because they generally only provide technical consulting resources. However, this rating does not apply if significant consulting companies staff the project. Companies looking for a risk estimate when the software is implemented with a consulting company as the prime contractor should contact us, and this is a paid service.

SAP has poor quality support. All of its support is primarily outsourced. It’s to low-cost regions and subject to the standard problems with Outsourced IT. English language skills are weak, and one must repeatedly go around with support personnel, and it seems to take ages until an appropriate skill level support resource is assigned to your problem. Much of SAP’s functionality is broken or does not work as advertised, so support has the unhappy role of slowly giving out this information. SAP support understands the political ramifications the information it gives out, and so it is given out quite slowly, and the intent is to make it appear that SAP’s functionality is not to blame but the client is to blame. SAP has a deceptive practice in that they will pretend the functionality should be working considering the configuration steps that have been taken. Still, they don’t take any responsibility to make it work. This is because SAP is hiding the fact that the functionality does not work. Their strategy is to lengthen out the discovery process on non-functioning applications with the hope that the customer tires of following up.

Internal Efficiency

SAP’s internal efficiency is suitable for its size. Still, of course, because it is so big, its comparative internal efficiency is lagging many of the companies it competes against which are smaller.

Innovation

The only slight innovation that we can find to SAP thought its history has been when it effectively combined a wide variety of functionality into a single application. This was not a new idea at the time as all of the companies in the ERP space were doing it, however, because of SAP’s steadfast adherence to rules, they were able to build what was considered the most well-integrated ERP system. All subsequent developments have been copied from other vendors or textbooks. Some of SAP’s software is taken and unaccredited to other software vendors such as APO which is partially based on their partnership with i2 Technologies. Their SPP application is primarily based upon their partnership with MCA Solutions.

The problem with this copy and paste approach to software development is it means that much of SAP’s software has been developed without any authentic knowledge or experience in subject matter or clients. This explains why so much of SAP’s overall functionality works in just a limited way or does not work at all. SAP is continually on the lookout for functionality they can copy from other vendors and incorporate into their products because they are not able to innovate internally. They access this information by developing a “partnership” with the software vendor, and then cancel the partnership when they have the information that they need.

Other software vendors must be cautious in “partnering” with SAP as SAP has historically shown no respect for the intellectual property of others. This was we think well demonstrated in the Tomorrow Now court case where SAP was caught downloading enormous quantities of Oracle’s intellectual property. However, that case is just the tip of the iceberg. We have multiple other examples that reinforce this as a standard operating procedure.

How to Understand SAP

SAP started as an ERP (Enterprise Resource Planning) vendor, which had four major modules. These are:

• Sales and Distribution
• Materials Management
• Financial & Controlling
• Production Planning

ERP offered an integrated solution that combined very rudimentary supply chain and operational functionality with more advanced financial and sales order and pricing functionality. ERP systems also subsumed MRP functionality, which before ERP was sold as a separate application. SAP became the most successful ERP vendor in the world and used this revenue stream, relationship with partners, and relationship with customers to move into an extensive area of enterprise software. This includes..

• BI/BW – Data Warehousing / Analysts
• PI – Application Integration
• CRM – Customer Relationship Management
• APO – Advanced Planning (supply chain)
• Solution Manager – Document repository and landscape management

These are just some examples. A more useful question might be what enterprise software does SAP not compete in. SAP has mostly grown through internal development. However, there is quite a bit of evidence that SAP copied some of its intellectual property from other vendors. This comes to us from court cases where vendors allege SAP of doing this, from my personal experience of seeing functionality appear in SAP after it was already in the software of a vendor that SAP had a partnership with.

There are a lot of questions in my mind as to whether the xApps program, was simply a giant competitive intelligence gathering exercise by SAP. For companies that signed up to the higher level of xApps partnership with SAP, SAP reputedly offered them a contract that the smaller vendor should declare all of its intellectual property to SAP. And that if SAP found anything that was undeclared, that necessarily SAP could use it.

SAP’s Growth

SAP is now a massive company, but its growth into so many areas. This has also lead to many quality problems with their applications. SAP and significant consulting companies deny this. However, this point cannot be refuted, as I see this first hand as I troubleshoot APO systems, and am exposed to the minimal capabilities in the BI/BW Data Warehouse. I have written previously that several of SAP products are so weak, that I doubt they could survive if they were not part of SAP. While not generally discussed, because of the general unwillingness to write uncomplimentary things about SAP, a number of their products are disabling to the businesses that buy them.

IT

Two significant departments or divisions are part of enterprise software implementations, the business and information technology. Information technology does things like maintain the applications, databases, and infrastructure for the software that the business uses. For reasons that are not entirely clear, but are at least somewhat related to personal career incentives or the incentives within the IT department, SAP is very attractive to IT departments. This is interesting because SAP is one of the most, if not the most challenging enterprise software application(s) to maintain. This is highlighted in this article related to the total cost of ownership. Cases where uncompetitive SAP offerings are selected over much better competitive offerings, it is almost always IT that has cast the deciding vote. SAP’s sway with IT departments is so powerful, and in many cases resulting in such bad choices for the business that on many occasions it appears that the IT decision-makers work for SAP, and look out more for SAP’s interests than that of their own company.

SAP’s Technology

SAP can be broken down into three primary areas, the user interface, the business logic, and the data backend. Of these three, SAP is only differentiated from competitors in the business logic layer. SAP” lags other vendors in the technology aspect of its applications, in many cases using very dated approaches. An example of this is included in this link. SAP’s development approach concerning business logic is to offer so much functionality in so many areas that the company can hypothetically meet any business requirement.

Partnerships

SAP made an important decision early in its life to outsource it is consulting to large consulting companies necessarily. It is unclear if SAP understood at the time how important this would be to their later success, but it is one of the most critical factors, easily more critical than SAP’s actual software. This is because once large consulting companies can make more money on SAP, than on competing applications, the consulting company has an incentive to recommend SAP.  SAP makes so much money for the large consulting companies that they, in a way, remotely control them. The loyalty is so strong that the consulting partners will cover up or make excuses for functionality in SAP. Consulting companies have also helped SAP steal intellectual property from other vendors, as is discussed in this article.

The SAP Ecosystem

SAP is best understood as an ecosystem rather than a distinct company. There are numbers of people who work for SAP. Still, then there is the larger grouping of individuals outside of SAP who make their living based upon SAP software, and this includes many people in the large consulting companies, and independent consultants (such as myself). SAP puts so much money into so many people’s pockets that there is for most intents and purposes a media black-out about how SAP actually works or often does not work on projects.

A Review of Information Providing Entities

Just about every single entity in the SAP space and that provides information about SAP is connected to SAP through a financial relationship.

These include the following.

• SAP Consulting Partners: SAP consulting partners have no independence from SAP and repeat whatever SAP says. SAP consulting partners compete with each other to get in SAP’s good graces.
• ASUG: ASUG is not a user group. They are a faux user group that functions as a marketing arm of SAP. Nothing on ASUG’s’sASUG’s’s website is reliable.
• Gartner and Forrester: These two entities do not follow any research rules; both take money from SAP and routinely get things wrong on SAP. One example being Forrester on S/4HANA’s’sS/4HANA’s’s TCO/ROI which we covered in our article How to Understand Forrester’s’sForrester’s’s Fake S/4HANA TCO Study.
• IT Media: IT media entities like ComputerWeekly and Forbes accept paid placements and advertising from SAP. This means that in many cases, they serve as repeaters for SAP’s messaging. This has become far worse in the past 15 years as these publications have lost subscription revenue. Few above board IT media entities like The Register and E3Zine continue to publish anything but SAP marketing type material.

Vendor Scores

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Software Selection Package for Big ERP

Software Selection Package for Small to Medium ERP

Software Selection Package for BI Heavy

Software Selection Package for BI Light

Software Selection Package for Demand Planning

Software Selection Package for Supply Planning

Software Selection Package for Production Planning

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