InformationWeek: The Business Value of Technology

November 6, 2000

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SAP Sharpens Focus On U.S. E-Business Market

ERP vendor's initiative is designed to help it to get 'toe to toe' with customers

By Steve Konicki

More on SAP:

MSPs Help Manage IT Assets (10/30/00) VARBusiness: Gen3 Embraces Competing Integrators (10/30/00) InternetWeek: ERP Takes On E-Business (10/30/00)

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ore than 20 years ago, when enterprise resource planning software was still just an idea, SAP wanted to learn how the smartest companies handled shipping and receiving. To do so, the ERP software vendor sent teams of engineers around the world to sit for days at a time on top of companies' loading docks and watch the action. Back at SAP's headquarters in Waldorf, Germany, the engineers did what they had done after hundreds of other field trips: They wrote software that incorporated what they learned--workflows that are based on what are now called "best practices."

SAP America president Chris Larsen says that in the mid-1990s, SAP got away from those roots in the rush to build more complex systems and prepare for Y2K. But the old is new again at SAP. The vendor has launched an initiative that Larsen says is designed to get it "toe to toe" with customers--especially E-business customers--in the United States. The reason: The best way to design complex E-business applications is to find out how E-businesses need the software to work.

As part of the initiative, SAP is building a new Global Solution Center at its U.S. headquarters in Newtown Square, Pa. The center will house the Institute for Innovation--an E-business think tank that will bring together business leaders and academics from more than 400 universities with customers and top SAP software architects and engineers. Larsen insists that the site won't be just a quiet place to contemplate the future. "We're locating in the middle of the E-business battleground, where we can focus on building the software our customers are going to need," he says.

Forrester Research analyst Laurie Orlov says SAP is right that it needs to locate more of its development efforts in the United States. "But they should have done that two years ago when they first began their push to develop E-business software," she says. SAP is also right about another thing: The United States is the battleground on which SAP will fight its future wars, she says. Reducing its development staff in Waldorf and increasing it in the United States is the only way for the vendor to get back in touch with its customers.

In the near term, an undetermined number of senior SAP product development directors and as many as 80 of its top software architects and engineers will be moved from Waldorf to the U.S. facility. SAP also will hire as many as 600 developers and other technology specialists by the end of 2002. Two kinds of development work will take place at the center: customer-specific development and development of core E-business products. As part of the initiative, when customers request new functionality, SAP will begin working on it immediately and make it available as soon as it's tested, Larsen says.

Developers will also return to the company's heritage of sitting on the loading dock, Larsen says. SAP is sending teams of software engineers into the field in the United States to learn how customers want customer relationship management software to work.

SAP expects its U.S. headquarters to grow in importance, and the number of employees located there could increase steadily. About 1,500 people work at the U.S. headquarters. The campus is being expanded by 120 acres to 320 acres, and office space will nearly double, making enough room for around 4,000 people.

Over time, a spokesman says, any number of the company's 5,000 Waldorf-based developers might find new homes in the United States, and there's a good chance that as the E-business software business grows, new hires will be headquartered there.

While nobody is saying that all of SAP's 21st-century development efforts will be headquartered in the United States, SAP is making room--just in case.

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