SAP User Survey. Salesforce.com October WEB: STRATEGY :: EXECUTION :: SUCCESS

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1 SAP User Survey Salesforce.com October 2008 STRATEGY :: EXECUTION :: SUCCESS WEB:

2 Introduction 2 Survey Results 3 SAP CRM 3 CRM Deployment 3 Barriers to CRM Deployment 4 IT Decision Makers 5 Administration, Maintenance and Upgrades 5 Task Backlog 5 Human Capital 6 Adaptation to Business Process 6 Business Stakeholders 8 TCO of SAP Applications 8 Ease of Use/Intuitiveness 8 Business User IT Dependence 9 Demographics Product/Platform Usage 11 About Velociti Partners, Inc. 13 1

3 Introduction Salesforce.com teamed with Velociti Partners, a leading research and consulting firm for technology enterprises to conduct a users survey of the SAP user base. The goal of this engagement was to capture deep intelligence from individual opportunities, roll-up the data in aggregates, and highlight opportunities and threats on both a micro and macro level. The study s findings provide insight into the indirect costs and overall efficiency of SAP ERP implementations. A random sample of 200 SAP Business and IT stakeholders were engaged in phone interviews to capture a range of qualitative data including SAP module utilization, deployment status, access to human capital, ease of use, and ERP s overall impact on the IT organization. The study s metrics indicate that Business and IT stakeholders find SAP applications costly, difficult to use, and time consuming to maintain, administer, and upgrade thus validating the widely held belief that SAP has an excessive Total Cost of Ownership (TCO). 2

4 Survey Results SAP CRM CRM Deployment Out of the participating organizations that have purchased SAP CRM approximately 42% have not fully deployed. This is of particular interest given that 5.85 years on average have elapsed since the original purchase inception. While there are a series of factors that could attribute to the below average deployment rates, it warrants a further investigation into potential resource constraints and functional concerns which will be examined in subsequent sections. Have you deployed SAP CRM? "We have a high quality staff, we are able to do most of the things we need. Some of the biggest pieces are more irritating. We are avoiding CRM at the moment because of the cost. The cost of implementing would be far higher than it is worth." IT Director, Computer Related Services Company

5 Barriers to CRM Deployment Assessing the barriers to full CRM deployment is critical in understanding the potential pain points associated with ERP implementations. While the majority of the organizations have not fully deployed due to insufficient requirements, nearly 30% cited bandwidth or resource constraints while 12% noted that SAP CRM was simply a poor functional fit. If no, why not? "We do not have the resources for it. We are just going to upgrade to the next version and take it from there." IT Manager, Durable Goods Merchant Manufacturer "We did away with it. It did not have enough functionality to sit across the organization." IT Director, Oil & Gas Exploration Company "Other projects that are currently in progress are in the way." Director of IT, Consumer Cylindrical Manufacturer 4

6 IT Decision Makers Administration, Maintenance and Upgrades Participants were queried regarding the percentage of IT team time spent administering, maintaining, and upgrading all of the organizations SAP applications. On average, a third of an IT team s time is allocated to SAP support. What percentage of your IT team s time is spent administering, maintaining and upgrading your SAP applications? The responses averaged 34.16% of an IT team s time. The median value equaled 33.33%, or 1/3 rd, of an IT team s time. Task Backlog Participants were also asked whether or not SAP related tasks created a backlog in their initiative portfolio. Even with a third of an IT team s time spent on administering, maintaining, and upgrading SAP applications, the majority of implementations stated that there was a backlog of SAP-related tasks. Are you experiencing a backlog of SAP related tasks in your initiative portfolio? We have a lot of enhancements that need to be done. Director of MIS, Thermoplastics Manufacturing Company We were constrained by the upgrade and are still catching up." Director of IT, Computer Related Services Company "Of course, this is common." IT Director, Electrical Equipment Manufacturer We do have quite a lot of those. The list is not growing, but it is not a sizable amount of work. We have open requests. In a given week, we will get 100 and close 100. CIO, Metals Manufacturer 5

7 Human Capital Access to skilled IT resources is vital to the success of an ERP implementation. Participants were asked whether it is difficult to find skilled SAP resources for their IT team. The majority indicated that this was, in fact, a challenge. Anecdotal data gathered during the study also suggested that companies struggle with the associated costs. Is it difficult to find skilled SAP resources for your IT team? Absolutely, especially for the price we want to pay. IT Director, Chemicals Manufacturer "People also tend to want more than the company feels they would be worth." VP of IT, Retail Grocery/Foodservice Company Adaptation to Business Process ERP systems are not stand-alone solutions and the success of the deployment resides in process improvements. However, once the solution and processes have been thoroughly thought through and accounted for, companies re-face these challenges when they seek to re-visit or modify processes. Participant feedback substantiated this with nearly half of all participants indicating that it was costly and time consuming to modify SAP to adapt to changes in business processes. Do you find it costly and time consuming to modify SAP to adapt to changes in your business process? "Any ERP is costly." IT Director, Industrial Roofing/Building Materials Supplier Everything is expensive. It has also led to more strain on our IT organization." IT Director, Electrical Equipment Manufacturer 6

8 SAP as a Partner While vendors often tout service and support as a differentiator, most fail to deliver on the promise leaving customers short-changed. SAP s claims to superior service and support cannot be substantiated with a quarter of its customers reporting that they do not believe SAP is a partner in their business or success. Business Stakeholders: Do you feel that SAP as a partner has a vested interest in your success? IT Decision Makers: Do you feel that SAP as a partner has a vested interest in your business? They want to understand your business and develop technology around it. But, not sure they have been a partner in the true sense of the word in becoming engaged in our requirements. Maybe we are too small. IT Group Director, Plastic Packaging Manufacturer It depends if you consider their recent maintenance upcharges Director of IS, Flow Control Device Manufacturer During the implementation, yes, not so much afterwards however. Director of Strategic Business Development, Pharmaceuticals Company 7

9 Business Stakeholders TCO of SAP Applications It is well known that the ongoing costs of an ERP implementation eclipse the initial investment. As a result, TCO has a significant impact on ERP strategies and decisions. ERP vendors often claim differentiators that lower TCO, but fail to validate these claims with substantiating metrics. Customers surveyed during the course of the study rated SAP TCO to be notably above average relative to other Enterprise application investments. How would you rate the TCO of your SAP applications on a scale of 1-5 (1= low, 3=average, 5=high)? SAP s TCO ratings were rated above average, The median TCO rating was 4. Ease of Use/Intuitiveness Ease of use is often one of the most difficult claims for ERP vendors to rationalize. Unsurprisingly half of the participants indicated that SAP applications were neither easy to use nor intuitive. The resources and opportunity costs associated with SAP s steep learning curve further validates SAP s higher than average TCO. Do you find SAP easy and intuitive to use? 8

10 Business User IT Dependence Another indicator of TCO is business users dependence on IT assistance to use or modify SAP applications. While participants frequently indicated that users were able to independently use SAP independently, modifications appear to be much more difficult for the average user. Nonetheless, 85% of business users are somewhat dependent on IT to use or modify SAP. Are your business users dependent on IT assistance to use or modify SAP? "To use, no, modify, yes." Business Requirements Analyst Manager, Motor and Generator Manufacturer Not to use it, but to modify, yes. It depends on how much modification is required. VP of Marketing, Mail Management Company Report and Workflow Wizards Relatively simple tasks such as performing report or workflow wizards appear to be burdensome for more than half of business users. While report creation appears to be simpler for business users, pervasive challenges and dependence on IT exists with workflow wizards. Are your users able to perform tasks themselves such as report and workflow wizards? "They can create reports, but not do workflow." Marketing Director, Broadcasting & Cable Television They are able to, but they do always know how to. Development Manager, Oil Manufacturer 9

11 Learning Curve - Report and Workflow Wizards The participants indicating that users were able to independently perform report and workflow wizards were subsequently probed regarding the length of the learning curve. More than half of the participants noted that over 6 months of training was required. How long was it before business users were able to independently perform tasks such as report and workflow wizards? (Less than 6 months, 6 months to 1 year, 1 year +) Impact on Productivity While a slight majority noted that business users dependence on IT did interfere with productivity, 55% indicated it was at least somewhat problematic. This suggests substantial portions of business users are notably dependent on IT for day-to-day tasks. Does their dependence on IT interfere with their productivity? 10

12 Demographics Product/Platform Usage SAP product and platform usage was captured during the course of the study for data segmentation and analysis purposes. IT and Business stakeholders were asked a series of questions to assess their utilization rates of NetWeaver, the R/3 or SAP ERP platform, and intention to upgrade in the near-term. NetWeaver Usage Are you using NetWeaver? NetWeaver Version If Yes, which version are you using? o NetWeaver 2004 o NetWeaver 2004s o NetWeaver 7 11

13 R/3 or SAP ERP Usage What version of R/3 are you using? Future Upgrades Do you plan on upgrading soon? 12

14 About Velociti Partners, Inc. Velociti Partners, Inc. is the premier research and marketing consulting firm for technology enterprises. Through our suite of strategic marketing services, we deliver in-depth and actionable information to some of the most sophisticated technology marketing organizations in the world. Our modular services focused on Win/Loss Analysis, Customer Insights, Competitive Assessments, and Market Intelligence are leveraged by the Fortune 500 and emerging organizations alike. Based in the San Francisco Bay Area, Velociti Principals and Senior Consultants each have several years of operational experience with leading technology firms, strategy firms, and start-up ventures and play active roles in all client engagements. Velociti Partners, Inc. 712 Bancroft Road, Suite 124 Walnut Creek, CA Telephone: Web: 13

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