SAP Realigns Development and Marketing Operations

FRAMINGHAM (08/08/2000) - SAP AG Monday announced a major realignment of its 6,000-employee software development operations, completing a series of organizational changes aimed at making the business applications vendor more nimble and at improving its sluggish financial results.

The development overhaul follows an internal announcement last week in which SAP said its worldwide marketing activities will now be run by Martin Homlish, who joined the company in January as head of marketing for its SAP America Inc. subsidiary in Newtown Square, Pa. An SAP America spokesman Monday confirmed Homlish's promotion.

On the development side, the realignment splits SAP's development group into 16 separate units that will each be run by a senior vice president who reports directly to the company's executive board. Included are six general business units responsible for developing SAP's applications in functional areas such as finance, supply chain management, customer relationship management (CRM) and business intelligence.

SAP said it's also creating seven groups that will tailor its Internet-enabled software suite to specific vertical industries, including consumer-oriented businesses, discrete manufacturing and financial services.

The final three units will be responsible for specific technologies such as server software, development platforms and application integration.

The changes are designed to "increase the efficiency of the SAP development organization," said Henning Kagermann, co-chairman and CEO of the German vendor. He added that the new structure should enable SAP "to better respond to ever-changing market requirements and [to] bring new products to market more quickly" while still meeting the application needs of existing users.

Meanwhile, as head of worldwide marketing operations, Homlish will be in charge of developing a global branding and advertising strategy that will present a more unified image of the company. Gunther Tolkmit, who previously was SAP's chief marketing officer, is said to be taking a new job with the company's SAP Ventures investment unit.

Like many of its enterprise resource planning (ERP) rivals, SAP has been affected by a flattening of demand for back-office applications since early last year as Y2k-related sales dried up. SAP is trying to move into newer markets such as CRM and supply chain planning, but it faces heavy competition from Siebel Systems Inc. and other vendors that already have established themselves in those markets.

As a result, SAP's recent financial results have been less than stellar. For example, the company last month reported a 28 percent decline in profits despite a 15 percent increase in revenue.

David Dobrin, an analyst at Benchmarking Partners Inc. in Cambridge, Mass., said the organizational changes being made by SAP make sense because many users and potential software buyers have been confused by its strategy.

With, SAP is now developing separate products for different business functions instead of a single integrated ERP suite -- a shift that Dobrin said made a realignment of the company's development organization appropriate.

In a report on the changes at SAP, Boston-based AMR Research Inc. described the reorganization as "a necessary step [that] makes sense given today's business climate." The move should help SAP meet needs in different industries while keep development teams "small and nimble, something SAP desperately needed to do since managing a 5,800-person development staff working on three continents the old way was nearly impossible."

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