SAP Needs More than Tech Help to Fix Problems This Week

Remember that old Frank Sinatra song that chided “Love and marriage, love and marriage, Go together like a horse and carriage. This I tell ya, brother, you can’t have one without the other?”

That sounds pretty dated now. But it wouldn’t if you changed that first line to “acquisitions and integrations.” Acquisitions and integrations – they do got together like a horse and carriage. And, this I tell ya, SAP, you can’t have one without the other.

Oops. Did I type that out loud?

SAP has made a lot of bad headlines lately. Here’s a quick rundown, for those of you who might be worrying about something less substantial, like, oh, I don’t know, the economy or something:

• An SAP rollout at Levi Strauss went awry, leading to delayed product shipments for a whole week during the second quarter, which in turn caused a bad earnings quarter. To be fair, the headline focused on SAP, but in fact the rollout was managed by Deloitte Consulting and others, so there’s blame to go around here. As a project management friend of mine pointed out, this is a black eye for the consultants, since “Those who know SAP know that it is a bitch to implement without good consultant support.”

• News of price hikes and a forced transition to the new SAP Enterprise support. Silicon.com best summed up the problem with this:

“While SAP is claiming this as an enhanced offering, it is difficult to see how it will be able to justify this level of fees for customers whose deployments are complete or which do not wish to upgrade.”

• And then today, this headline from PCWorld.com: “SAP Migration Caused Paris Legacy Architecture Clash.” Apparently, the city’s so far behind on payments, suppliers stopped delivering materials for a $37 million restoration on the 17th century church of Saint Sulpice last week. In its defense, an SAP spokesperson says these problems were not caused by the SAP migration. The article quotes spokesperson Françoise Nové-Josserand as saying, “What’s happening isn’t related to the solution we installed,” adding she couldn’t comment on the state of the city’s finance department before the software migration took place.

But it’s going to be hard for SAP to pass the buck on the integration problems with Business Objects users – and this problem will affect a lot more companies.

SAP made the deal to buy business intelligence vendor Business Objects last October for $6.78 billion, but the acquisition was finalized this year. SAP said it will keep Business Objects as an standalone product operated within the SAP company, but integrate Business Object’s capabilities with SAP software product.

It seems SAP has run into problems moving Business Objects users to their own support system. SAP was supposed to migrate 50,000 customer service records into its system and send those clients new logins. The deadline for the switch was July 7.

But this week, InfoWorld reported that many customers did not receive their new ID. In some cases because SAP didn’t have an e-mail contact and had to use regular mail or – in at least one case mentioned in the article – SAP had outdated contact information. You would think a business intelligence company would keep better records, but apparently you’d be wrong.

So far, about 80 percent of Business Object’s customers have been able to access the new support portal. That leaves thousands who cannot, according to InfoWorld.

Meanwhile, Oracle shined this week after announcing a new offering, the Oracle Hyperion Enterprise Performance Management, which is the last step in Oracle’s integration of business intelligence and performance management vendor Hyperion.

Ironically, SAP once criticized Oracle for its acquire-and-integrate business strategy. After SAP announced its plan to buy Business Obects, PCWorld.com reported:

“SAP has always been critical of Oracle’s strategy, saying the company can’t manage several different product families effectively.”

But Oracle has lots of practice and has managed, thus far, to pull the strategy off beautifully. SAP, on the other hand, has just managed to tick off a slew of Business Objects customers.

Fortunately for SAP, those customers are pretty much stuck, for now. As one disgruntled Business Objects customer told InfoWorld:

“We’re pretty entrenched in their product right now. The last time we changed BI providers, it took about a year. … It’s a big rollout.”

But in this SaaS/services/Web 2.0 world, it’s a bad business plan to rely on customer lock-in. Particularly when you’re up against someone as acquisition savvy as Oracle.

While this is a botched migration project, only a small part of any of these problems seems to be about technology. You have to wonder: Would it hurt SAP to step up the customer service and possibly hire a few PR people with a bit more finesse? I gotta think at this point it certainly couldn’t do more harm than the current approach.