You may recall my blog on SAP’s farcical claims about its software’s impact on company profitability. It looks like someone with more time on their hands than me actually checked up on the figures and found these lacking, in addition to the lack of logic in the original claim. Nucleus Research, who are noted for their rigor with numbers, found that in fact that SAP customers (identified by being listed on SAP’s web site) were 20% less profitable than their peers, rather than 32% more profitable. Of course this is not quite the same thing, but it is amusing: it suggests that only SAP’s identified reference customers are relatively unprofitable. Perhaps the ones who keep quiet are doing OK? As I noted earlier, the SAP claim was deliberately skewed to exclude all financial institutions (which share the twin characteristics of being highly profitable and rarely using SAP) while anyhow the notion that the choice of your ERP systems provider is a cause of either good or bad profits is both logically flawed and also deeply amusing to those of us who have watched companies spend billions implementing SAP to little obvious effect in terms of hard business benefits.
Good on Nucleus for poking further holes in this especially egregious piece of over-marketing. Bruce Brien, CEO of Stratascope, the company that did the market research for SAP, reacted by sayng:“They’re making an implication that my numbers can’t prove, but it’s a marketing message. Companies do that all the time,†he says. Oh well, that’s all right then.
A Company who shall rename nameless with head offices based in North London decided to install a complete SAP System to run there multi million pound business, now I cant say how good SAP is or is not, but I do know when the price was originally quoted, it was around 25 million pounds to complete the task, if memory serves me right 5 years later it had cost over 70 million to implement this SAP strategy, not to mention the costs for the engineers to maintain it.
I actually agree with you. If you read my original blog on this:
http://andyhayler.blogspot.com/2005/11/bit-rich.html
you will see that my main point was that the choice of software may or may not be correlated with profitability, but it does not cause it. I just find it doubly amusing that the data itself may well be dubious; one can’t tell, because neither SAP nor Stratoscope will publish their data. To suggest that choosing some particular piece of back office software has anything to do with profitability is inherently nonsensical, which makes SAP’s claims all the more outrageous.
Andy,
There are three sides to every story, in this case Nucleus, Stratascope and the truth.
I’m surprised you would so readily endorse Nucleus’ findings when, in my view, the “quality” of their stastistical data set is hardly compelling. Less than 90 companies sampled? For a global enterprise that has 30+ million seats and thousands of customers?
Frankly, anyone grounded in math has to take both the Nucleus and Stratascope research findings for granted. After all, the reality is there are very few large enterprises that don’t have at least one instance of SAP installed. When you’re casting such a wide net, it’s virtually impossible to suggest that the software in and of itself makes a firm more or less profitable.