SAP wins over Oracle

When gigantic companies decide to purchase or upgrade a new enterprise resource system, the buzz usually does not just get confined inside the executive boardroom. It goes straight into the IT industry and spreads like wide fire on the internet

Burlington Northern and Santa Fe Railway (BNSF) is one of the largest networks in the United States and one of the four remaining transcontinental railroads. And when the company decided to replace its old legacy systems, the buzz instantly spread dragging with it two names. As can be expected, it dragged giant names too with the familiar question: SAP or Oracle?

According to Jeff Campbell, BNSF's vice president of technology services and chief information officer, "Both have good products, and it was a very extensive search. But for BNSF, there were some specific drivers for SAP."

With China as a rising economy comes Chinese manufacturing creating a bigger demand for transporting of goods from some ports in the US west coast going to other areas and this further translated into strong growth for the rail industry. Added to this reality are situations such as skyrocketing gas prices, aging roads and congesting highways. This growth as been affirmed by many external studies showing a potential 67 percent increase in transportation volume over the next 20 years and this is what has driven BNSF to invest in band end ERP systems whose financial and HR systems were mainframe-based almost 20 years old. .

Accordingly, the reason for choosing SAP over Oracle has ranges from total cost of ownership (TCO) and systems compatibility to other minimally measurable factors.

BNS has more than $15 billion, about 45,000 employees and has operations in 28 states and two Canadian provinces making it the second biggest railroad company in the Unite States. Every year, it transports enough coal to power one in 1 out of 10 homes in the United States.

Many have speculated that the reason for going SAP is that many other companies in the railroad industry as being serviced by SAP. According to Rod Strata, transportation and logistics industry principal for SAP, five of the seven Class 1 railroads in the U.S. are SAP customers. If one closely examines, would find out that in the railroad industry, there are very few companies one can count and with most these companies going with SAP, this is a big thing.
Campbell further said: "When we looked at the long-range roadmap for future functionality and the ability to levy demands on SAP for functionality we wanted, we felt like being with SAP would align us with the majority of the industry and therefore we'd be in better stead. BNSF also felt that SAP would operate better with its existing technology products, especially IBM. SAP will play with anybody."
Oracle has been on tight competition with SAP. And now that SAP is in "Duet" with Microsoft, Oracle will have to work harder. This current deal with BNSF and SAP shows the flexibility and power of SAP and how it has solutions for virtually all kinds of industries.

No Money in Saas?

SaaS stands for Software as a service as is fast rising in popularity over the internet. As the name suggest, Saas software is not sold, meaning that customers will no buy the software or own it for free but they pay for using it. A Saas software is hosted and operated over the internet will the customers will avail of the services through an API accessible over the Web and often written using Web Services or REST

But when Oracle CEO Larry Ellison implied: "Where’s the big money in SaaS?" he caused quite a stir the ERP industry where it is in tight competition with SAP. Ellison remarked that Saas and the small to mid sized markets are very interesting for ERP vendors but not terribly profitable. And as many understood it, it was a word dismissing SAP’s Business ByDesign.

But the real puzzling thing was that Ellison owns NetSuite which is a SaaS ERP provider. Yes, when Ellison remarked about where the big money is SaaS it, he was talking about Oracle and for it to go down-market with an on-demand would mean having less profit compared to Oracle's current business model. But then if he was thinking that there was less money in SaaS ERP, then why is he owning Netsuite still?

The answer, as it was obvious to many, lies in the Oracle strategy. Oracle will not be trying to do a SAP. Ellison's move is having to let SAP figure SaaS out and it SAP become successful, Ellision would buy Netsuite for himself. In other words, if Oracle will buy Netsuite when at the right time. Sounds confusing? Yes, it does as Ellison would really be basically buying his own venture but will done with independent committee when the time comes.

Ellison's long take on the difference between Oracle and SAP strategies is:
"What I’d like to highlight here is the radically different strategies of the two companies for growth. Our strategy for growth is to find a way to add more value to the same customers we already serve, which are the large end of the mid-market and large companies. What we’re doing here is moving beyond ERP to industry specific software. So in the telecommunications industry that would be billing systems and network provisioning systems and network inventory systems; core applications to run their business, to run telco, core applications to run a bank, core applications to run a retail chain of stores. core applications to run a utility. That’s our focus, and that allows us to leverage the existing relationships that we have because we already sell databases to these companies, we sell middleware to these companies. We sell ERP and CRM to these companies, and now we want to sell this industry-specific software.

It’s very different than SAP’s strategy which is to go after small companies; small companies with their new Business ByDesign, formerly known as A1S product. Now, we see the problem in that because we’ve looked at going down market. We’ve looked very closely at it, and we think it’s very hard to make money because there is no synergy. To go down market you need a new product and new product development teams. You spend a lot of money developing a whole new product for the low end. But you also need an all new sales force because we don’t call on those customers. We don’t call on small businesses, and it’s very expensive to call on small businesses. It’s very expensive to do ERP implementations in small businesses. The cost of sales is high. The cost of implementation is high. There are virtually no synergies in sales, marketing, and product development and support."

Well, there is afterall money in SaaS. Everything is just a matter of strategy.

When you have got the hang of ABAP

In yesterday's blog, I mentioned about getting the hang out of ABAP. As it is a fact that SAP professionals are some of the best paid IT professionals in the world, many programmers from different disciplines are jumping into the bandwagon and discovering that coding skill alone is not enough to be a good ABAP programmer but knowing about the ins and outs of ERP is as important as having the programming skill itself.

Okay, so in yesterday's blog, I mentioned that ABAP certification is not enough. To make it clear, what I meant was, according to my friend who has been working with SAP for almost ten years in Graz, Austria, if he was the screening personnel, he would not immediately jump at hiring a person who shows an ABAP certification right in his face. He said he does not get impressed with the piece of paper. But that is from his perspective. An ABAP certification could be an indication of certain level or proficiency or certain degree of knowledge that has been achieved. But then, this knowledge may only be in theory if most highly likely, there will be a hands-on screening (and an intensive one at that) to determine the deserving candidate.

So for anybody who has jumped into ABAP from another discipline but no real life experience, what would be the best way to get started? Well, if you are not that confident with passing an intensive human resource screening, the best way may be to start with consultancy. It does not matter how the small the client is to begin with. The more small clients you handle, the more collection you have under your belt transforms into an impressive portfolio. It is not uncommon for newly trained or newly certified ABAP programming with no real life experience to have difficulty in breaking into the SAP field. ABAP in particular is very different from mainstream programming language as the applications it is designed for are already in the mold of the classic R/3 modules, BW, SEM and many others. An ABAP programmer needs to have intensive knowledge on commercial or enterprise processes. Remember what the acronym ABAP means - Advanced Business Application Programming.

So, if you are really determined to form your niche in ASAP, make good at ABAP programming. Persevere in learning deeply on commercial and business realities. Remember that SAP is one of the biggest solutions for business applications and the biggest supplier of enterprise resource planning applications. Make your code work for long term uses and ensure that they can strictly follow all business rules.

You should bear in the mind that the competition is not just between two or more programmers from different disciplines learning ABAP. Other competitors are coming from business degrees trying to learn IT and programming. So try to weigh and ask the question: is it easier for an IT guy to learn business intensively or is it easier for a business guy to learn intensive programming? Never be complacent.