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SAP CEO Outlines "Next Practices"

Henning Kagermann Speaks of ESA Roadmap at Boston Event

"Mendocino will revolutionize the way information workers work," said SAP CEO Henning Kagermann today in his keynote address to an audience of 7,500 customers, partners, and analysts at Sapphire '05 in Boston. But he stressed that neither SAP, Microsoft, or any other technology provider can be expected to be the sole drivers of innovation.

Kagermann was joined by CIO-level executives from Intel, Colgate-Palmolive, Home Depot, and Network Appliance to reinforce this latter point. "The technology is available to everyone, but it's the speed in which it's deployed and the executive decisions that allow companies to differentiate," said Intel CIO Stacy Smith.

Kagermann sounded a few familiar themes during his remarks, noting that "IT cannot be viewed as a cost center, but as a strategic lever" and "business leaders need more skills to turn technology into business benefits."

But he also espoused the notion that "we can't rely on hardwired, baked-in processes (anymore). You must break up the hardware value chain...(and have) a combination of specialization and consolidation in those areas where this can effected in a parallel fashion."

"The (IT) industry has agreed that web services is the approach of the future," he said. "But enterprise services must be defined in a business language. This approach brings decisions to the business, but brings power to IT, as it demonstrates the importance of IT."

Kagermann laid out a roadmap for SAP's web services strategy, which is called Enterprise Services Architecture (ESA) and has was introduced in 2003. Kagermann said that "we are halfway there" with full ESA deployment, and that the strategy will be fully baked, so to speak, in 2007.

"ESA takes SOA to the next level," he said. "We are moving toward dynamic, adaptive business networks. (But) whatever strategy you have, it must be about, must lead to, plug-and-play within your business. As you turn existing processes into something new, occasional users need change to be so intuitive that they (simply) go on working, while professional users need embedded learning. They must learn on the job. You can't afford to have them sitting in classrooms anymore."

Kagermann said that the idea of customers working with SAP and other technology companies to drive innovation will result in "next practices," rather than simply best practices. Business integrity can be built on existing best practices, he said, but business innovation will drive next practices.

He said that as SAP drives toward completion of its roadmap in 2007, that it will follow four key principles: standards drive interoperability and protect IT investments, industrialization of development and (process) re-use drive quality up and costs down, competitive differentiation preserves data integrity and Sarbanes-Oxley compliance, and partner ecosystems accelerate innovation. Kagermann is CEO of SAP AG, the parent company based in Walldorf, Germany. SAP has long been known as an ERP powerhouse with a large European business base, significant presence in the U.S. and a reputation for enterprise application build-outs that last several years.

With a renewed emphasis on SAP America, based in the Philadelphia area under the leadership of Bill McDermott, SAP has developed a more aggressive posture in the U.S. that has recently involved competing with Oracle for acquisitions (notably PeopleSoft and Retek), for customers, and for thought leadership in the enterprise IT space. Kagermann remarked that the company's increased presence and aggressiveness in the U.S. is explained by a simple fact: "The U.S. is the world's largest market, and people are more aware in the U.S. that to fully use the power of IT, there have to be changes."

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SAP News Desk trawls the world's news information sources and brings you timely updates on the world's leading provider of enterprise resource planning (ERP) and its various software product lines used to integrate back-office functions such as distribution, accounting, human resources, and manufacturing.

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