Users mixed on SAP services technology push

Users are offering mixed opinions on SAP AG's continued revving of its NetWeaver technology platform.

At its Sapphire 2005 user event in Boston Wednesday, the ERP and business applications vendor touted its Web-based Enterprise Services Architecture (ESA), saying the architecture is a way for customers to easily craft end-to-end workflows over multiple applications. Central to that initiative is the NetWeaver middleware platform, which company officials said will allow customers to integrate their mySAP Business Suite software with third-party or homegrown applications.

The process of adapting this platform will be gradual, said Henning Kagermann, chairman and CEO of SAP. "This is not a tsunami," he said. "We'll deliver the next big thing at a pace you can manage in your company."

As the ESA stack evolves, Kagermann suggested that SAP may move its current pricing scheme away from traditional licensing toward what he called "value-based pricing."

Building on announcements the company made last month at its European Sapphire event in Copenhagen, SAP also unveiled a series of partnerships with several other companies -- including systems management software maker Computer Associates International Inc. and networking hardware vendor Cisco Systems -- to use ESA to optimize the performance of mySAP applications. SAP also announced mySAP CRM 2005, which includes enhanced marketing capabilities, including an e-mail response management system, and service management improvements to let customers automate things such as warranty and returns processes.

The CRM application is slated to ship in October. Kagermann also said that by 2007, SAP's product would be built on a business process-based platform.

A couple of users at Sapphire 2005 were enthused about SAP's continued evolution of ESA.

The NetWeaver stack is "absolutely part of our business strategy," said Ed Deenihan, vice president of global services at Network Appliance, a storage systems and services provider and SAP partner. He was one of four SAP customers to appear during yesterday's keynote address by Kagermann.

Deenihan said his company is looking to integrate its remote and on-site support offerings, and by using NetWeaver, "we don't think we have to rip out what we've already done, " he said. "The key is we can evolve at the pace that a customer wants."

Edward Pisula Jr., director of corporate IT at Respironics, a maker of respiratory devices, sees another use for the Java-based NetWeaver platform: It can be used to tweak his company's software for competitive advantage.

Respironics now runs SAP's R/3 ERP and Business Warehouse data warehousing applications. Pisula said NetWeaver could make SAP's own proprietary ABAP source code easier to work with by crafting simple user interfaces that provide users with pertinent data via a portal.

Respironics also runs the Business One ERP suite, which caters to midsize companies and has a different architecture than the mySAP suite. Pisula questions how Business One will evolve as part of the family of SAP applications, and he fears it may require his company to use Visual Studio development tools for integration. Respironics currently lacks that particular Microsoft skill set.

As for value-based pricing, for now, the jury is out. "I'm willing to listen," Pisula said. He noted that his company was an early adopter of the mySAP pricing scheme, which meant going from tiered pricing to a flat rate, and he feels Respironics is now "probably paying a premium" on the software.

By contrast, NetWeaver isn't particularly relevant to Gary Walden, CIO of C&H Sugar Co.a sugar refiner that runs a set of hosted R/3 apps. While it makes sense conceptually, "I'm still trying to understand it," Walden said.

NetWeaver has the potential of providing something software vendors have been promising for 10 years in terms of creating complete workflows, but there are significant technical problems, said David Dobrin, an analyst at consultancy B2B Analysts Inc. in Boston.

"You have to make sure the puzzle pieces fit together right," Dobrin said. "You can't just take a few pieces here and there and expect to make it all work." It also puts SAP in the services business, as opposed to just selling business applications, he said.

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