Culture differences as a barrier to SAP growth

The Wall Street Journal (WSJ) yesterday brought insight (subscription required) concerning the SAP AG internal affairs about globalization. This article puts more light to reasons of recent Agassi’s departure.

The story started five years ago when SAP as Germany's largest software company decided to begins to become less German. In terms of statistics: in year 2000, SAP employed 3900 software developers, 75% of whom were based in Germany. In 2006, the software development headcount increased to 8500, but only 60% were located in Germany. SAP adopted strategy in company language and English became official in every communication within company even meetings in headquarter – Walldorf. In terms of software engineering they started to adopt rapid product development approach instead of traditional methodical approach. Such changes have been droved by influence of former member of the Executive Board of SAP and the changes created a bit conflict situation in company. German’s employees started to be worried and they complained about “March of the Americans”. WSJ quotes one German manager: “It's clear Agassi would like to get as many functions as possible to the U.S.” What else had happed meanwhile? “In April 2006, SAP executives hosted a town-hall meeting in Walldorf on the "Americanization of SAP," where workers aired concerns over the increasing use of English and the hiring of engineers overseas. A few months later, a handful of SAP workers, including Mr. Schick, won enough support to start a workers' council, roughly equivalent to a labor union.”

Germans workers worried about to much and too fast global oriented company and US and other countries workers worried about too less and too slow in changes. SAP’s highest executives were trying to calm down both sides assuring to Germans hat they would still have jobs while saying to others that SAP is still committed to change.

They want to align all development groups worldwide “work hard, and impress them with content”. An example of dissimilarities is that Indian developers like frequent attention while Germans prefer to be left alone, or Americans might say "excellent" when a German would say "good".

Strategy to be more open to other markets and be cost comparative in today’s fast moving world is must for SAP and must to get this real if they don’t want to close the business. Strategy to be less German is right but is not so easy for every company.

- update on 27/05/2007 -

Shai Agassi's thoughts about WSJ arcticle is here.

Last and at least Sapphire key note from Shai Agassi

Here’s some abstract of Shai’s key note as he supposed to present it before he left SAP AG. For full version see his blog.

At first Shai is struggling with critics who say that SAP could invest in area where SAP was really good – in its business processes, they programming language (ABAP) etc in order to improve it like transformation of ABAP to more object oriented languages of it instead of getting in to JAVA industry and trying to become a big JAVA application server vendor. Shai says that approach to new technologies like JAVA, web service architecture and so on was “essential for the continuous success of the company”. On other hand there could be a “back to basics” approach in field of ABAP and implementation of business processes improvement. As a evidence that his strategy (JAVA path) was right he claims that Oracle followed SAP by announcement of Oracle’s Project X which has similar foundation as SAP’s xApps strategy.

According Shai there are 3 axis plus x-factor of thinking how SAP employed beyond the development of their products during last years:

1^st: functionality axis that what SAP is developing for last 30 years, this is what SAP built as transactional modules and they continue with those modules nowadays as a genome.

2^nd: NetWeaver axis as an open platform, with its documented web services to enable many of Independed Software Vendors to build solutions that target SAP backend.

3^rd: SAP simplification axis, in order to exclude consumption of SAP solutions – “SAP tax”.

x-factor: SAP ecosystem a chain of partners, software vendors and others who can contribute to innovation and effectiveness of SAP platform.

Shai believe that SAP software is not only covering more and more functionality but more important is getting this software simpler to deploy, improve usability and make it open by using open standards.

If you attended this year Sapphire you can compare if the key not presented by somebody else has something to do with this Shai’s virtual key note.

There is no power point version of this key note :-)