1) SAP was facing challenges due to the rigid and complex nature of traditional ERPs, including high failure rates and investments required. The rise of new technologies also posed threats to SAP's business model. 2) SAP considered alternatives like reinforcing its NetWeaver platform, expanding products into new areas, and developing application service provider models. 3) The recommendation was to reinforce the NetWeaver platform through an open EAI standard and community of practice for knowledge sharing, to align with customers' changing needs in a more flexible way.

1. SAP – ASAP actions!!!October 15th 2009Ahn, Soo JinMoon, Sung JinTheerawat Saendawibadhana

2. 1. Diagnosis of problemsIT Consulting - SAP-ASAP action!!!

3. 1. Symptoms and ProblemsIT Consulting - SAP-ASAP action!!! Symptoms KeywordsTraditional ERPis overly complex and difficult to install ex) Dell, KmartComplexity, Rigid Kmart $130M spending for attempting to implement, Require highinvestmentHigh failure rate in ERP implementations (over budget, delayed, hard to exit)Failure rate > 50% according to HBS surveySlow to changeCustomers should modified more frequently but no-longer wait for upgradeTo heavy for small businessesSmall, Mid-size companies want to adopt the system without high investments

4. 1. Symptoms and ProblemsIT Consulting - SAP-ASAP action!!! Symptoms KeywordsChallenged by transforming open source integrator Push to open, FlexibleMajor IT players had jumped onto the SOA and web service platformInadequate for rapid & complex businessInadequate to help companies become e-business EAI took up half of the time of IT departments. Therefore SAP decide to catch up with mySAPDecrease in benefit*EAI : Enterprise Application IntegrationBegan to suffer from a lack of revenue gain and decrease in net income

5. 2. CausesIT Consulting - SAP-ASAP action!!! Traditional ERP is based on closed platform, one-size-fits-all approach

6. Enterprise packages became incompatible between other venders InternalComplexity, RigidRequire high investment Business model was challenged High license fee model was not preferable for web environmentSlow to change Business environment was changing

7. Growth rates of enterprise market was declining

8. Computing environment became more heterogeneous ExternalTo heavy for small businesses Customers are changing

9. Customer requirements became heterogeneous

10. Tend to adopt best-of-breed model ( custom-built)

11. Look for specific point solution to enhance own process ( preference for keeping uniqueness )

12. 2. CausesIT Consulting - SAP-ASAP action!!!Push to open & Flexible New trend 1. Web service trend Web services would be from an open-system platform, so diverse application melted into a solution  Enterprise SW venders got more integrate approachInadequate for rapid & complex business New trend 2. Software-as-a-service trend

13. Introduction of SOA (Service-Oriented-Architecture)

14. Run off-site operation by the venders, no longer own the software

15. emphasis code reuse and business remodeling

16. impact on reduction in sales and license revenueDecrease in benefit

17. 3. Risk and ObstacleIT Consulting - SAP-ASAP action!!! The new platform strategy would fundamentally affect the company’s business architecture Risk SAP had to rethink of value proposition, target customers, resource allocation, business process, alliance management, growth engines.

18. Threat from competitors ( Indian providers, Oracle, Salesforce.com)

19. SAP would be hard to attract independent developers even if it had open platform