SAP Pushes Ahead With Business Suite 7
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NEW YORK -- German technology giant SAP AG is unveiling the biggest upgrade to its business software line in almost three years today, hoping customers will upgrade their systems even as technology budgets shrink.
Analysts say it will be tough for SAP's new Business Suite 7 product line -- which helps businesses manage areas including accounting, sales, manufacturing, human resources and dealings with suppliers -- to quickly gain traction in the midst of the worst economic crisis since the Great Depression.
It is unclear how much existing customers will be required to pay for the software itself because some of the costs will likely be covered by existing maintenance contracts.
About 35 percent of companies are delaying or canceling software upgrades originally planned for this year, according to market research firm Information Technology Intelligence Corp.
"Anything in this market is a tough sell. They have to convince customers why they need to buy it now," said ITIC analyst Laura DiDio.
Customers of SAP will expect discounts on software, training and consulting if they buy the new suite, she said.
That is because it can cost corporations millions of dollars in extra fees on major upgrades as they pay technicians and consultants for help integrating it with existing systems. Businesses also proceed cautiously with upgrades out of fear glitches could interfere with their regular operations.
"Companies don't want to disrupt anything that is working," said Nucleus Research analyst Rebecca Wettemann.
THE SALES PITCH
SAP's top salesman, Bill McDermott, said in an interview last week that he believes the new software will hold up to the increased budget scrutiny, promising it would be relatively inexpensive to install and maintain.
"Companies are going forward with strategic projects," he said.
Some of SAP customers are large corporations like Airbus, Procter & Gamble, Motorola, Apple, and Audi.
McDermott and other company officials declined to provide more information about Business Suite 7 before Wednesday, when SAP Co-Chief Executive Leo Apotheker will formally unveil it in New York.
But people familiar with the software said that SAP designed it in modules so that companies can start with just a piece of the suite, adding more as their budgets allow.
Unlike previous SAP products, all programs in the suite will have a common interface, making them easier to use and less cumbersome for IT staff to implement, the sources said.
It is designed to easily work on mobile devices such as the BlackBerry and iPhone, they said.
SAP already offers mobile features in a few packages, such as programs that companies use to manage sales, but has yet to offer those functions across its full line of applications.
It is not yet clear how Business Suite 7 will compare to an upcoming product from Oracle Corp, the No. 2 maker of business management software, which is developing its own integrated suite of programs dubbed Fusion Apps.
But Oracle is behind SAP in introducing that product, which it does not expect to be shipped until next year at the earliest. Business Suite 7 will ship later this year.
Still, Business Suite 7 may not mark a revolutionary improvement over SAP's current product line, known as ERP 6.0.
"A lot of this product is rehashed. It is pre-existing modules being served up in a different way," said Jefferies & Co analyst Ross MacMillan.
In this rough business climate he is betting the launch will not affect SAP's business performance this year.
Despite the challenges SAP faces with the new product, MacMillan said it is not a bad idea to unveil the software, which it has already spent heavily to develop.
"I don't know if there really is a bad time," he said. "Why not give the sales force something new to take to customers?"