SAP profitability claims miss IT exec radar

SAP claims users are 30 percent more profitable when running SAP branded software but new research claims SAP users are 30 percent less profitable. Australian IT managers have ignored both claims and state no platform is more profitable than another, it depends on how the system is used.

SAP ran advertisements last year claiming companies running SAP software are 32 percent more profitable than those who don't run SAP branded software.

The figure was based on a survey conducted by research firm Stratascope which analyzed 587 companies using SAP tools listed on the NASDAQ and NYSE earning more than $50 million over the last four quarters set against 2769 non-SAP customers.

However, Nucleus Research has released a study reporting SAP customers have an average return on equity (ROE) of only 12.6 percent, compared to an industry average of 15.7 per cent.

The research, which wasn't commissioned by a vendor, noted the three areas of focus for SAP, CRM, ERP and supply chain management (SCM) had customers who fared quite poorly, with CRM users achieving profitability 18 percent lower than those using competitors' offerings; ERP customers achieving profitability 32 percent lower and SCM customers achieving profitability 40 percent lower.

Stephen Watts, marketing and business development director for SAP Australia, said the primary motivation of Nucleus Research is self promotion rather than providing insightful research.

Watts said the findings are broadly contrived and based on a methodology and data that is not statistically valid.

"These two findings are completely unrelated, and cannot be compared," Watts said.

"Nucleus compares return on equity (ROE) by company, as provided by Bloomberg.com, with ROE industry averages from Hoovers and these are unrelated sources of data. Without access to the sources, proper screening and definition are not likely to occur and the Nucleus sample size represents 0.0026 of SAP's total customer base.

"Nucleus has a history of selecting topics and vendor targets to promote itself and its sensational findings in the market. As the market leader, SAP is a target of Nucleus' quick, cheap research for the eighth time."

Neal Rodgerson, national distribution manager for Orica, said an ERP platform is just a system and does not drive business strategy or profitability. Orica uses SAP extensively throughout the organization and Rodgerson said it was deployed because of flexibility.

"I would not blame the system if we were not making money and I would not claim it enables us to make money, because at the end of the day it is just a tool and if I wanted too I could do it all on a spreadsheet," Rodgerson said.

"An ERP platform is just a system and does not drive business strategy. It is an interesting proposition to say because you run SAP you are 20 percent more or less profitable.

"We chose SAP because, while it is not cheap, it does deliver business value."

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