SAP Taps Users to Build Software

FRAMINGHAM (01/28/2000) - SAP AG is hiring a boatload of developers as it tries to catch up to more nimble vendors in application areas such as e-commerce and customer relationship management. But increasingly, it's also turning to key R/3 users for help.

In the past six months, SAP has quietly set up a series of joint development projects with individual customers in various industries. Teams from SAP and the customers are working side-by-side to develop new software modules or functionality that will later be made available to other users.

For example, New York-based Colgate-Palmolive Co. is helping SAP design software to let consumer products firms synchronize their production schedules with promotions planned by retailers.

Other projects are under way with big users such as DaimlerChrysler AG in Germany; GTE Corp. in Irving, Texas; and The Goodyear Tire & Rubber Co. in Akron, Ohio, said David Boulanger, an SAP analyst at AMR Research Inc. in Boston.

The goal is to speed up development and make sure new applications meet the real business needs of bellwether users, who in turn get a chance to shape the software and to start using it ahead of other companies in their industries.

"In the past, our experience has been that SAP pretty much developed products without a huge amount of [user involvement]," said Robert Rubin, CIO at chemical maker Elf Atochem North America Inc. in Philadelphia.

But that hasn't always resulted in the best possible software, Rubin said. Elf Atochem and SAP recently talked about the idea of working together to extend R/3's ability to manage compliance with government safety regulations on handling chemicals, he added. But a deal hasn't been struck yet.

SAP has worked with individual customers on a smaller scale before. For example, a version of R/3 released two years ago for apparel and footwear makers was developed with Reebok International Ltd. in Stoughton, Mass., and VF Corp. in Greensboro, N.C.

Early last year, SAP joined with Texas Instruments Inc. in Dallas to develop Web-based software that manages distributors' semiconductor sales.

Finding Help

But Chris Larsen, president of SAP America Inc. in Newtown Square, Pa., said SAP last summer launched a more concerted joint development initiative in an attempt to "come up with stronger [products]."

SAP "realized that [its developers] don't have all the answers," Boulanger said. "This is a direct admission that they need help." The German vendor has signed about 20 deals that link its developers with real business users, he added.

Phil Coup, a vice president at Texas Instruments, said the company's joint project with SAP cut the time needed to develop the distribution-management module by 50% or more.

A half-dozen workers from TI spent more than six months helping to design and test the software. Changes could be made while it was being developed - a big plus when users often "don't even know what they're going to need until they start seeing some things they can test," Coup said.

Peter Burrows, chief technology officer at Reebok, said 20 of the company's employees moved to Germany for a year to help SAP with everything from conceptual design to the layout of individual application screens.

That let Reebok "really articulate our needs," Burrows said. But there's potential danger that such projects could produce software geared too much to a single user, he added. "Both parties have to understand what the rules are."

Larsen said the increased joint development work was part of the impetus for the hiring of more than 700 new engineers this month. That increases SAP's development staff by nearly 15% as it tries to speed up the progress of new applications deemed critical to revitalizing its U.S. business after sales grew just 7% last year.

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