Why SAP struggles with innovation

SAP may spend more than most developers on R&D, but it is failing to bring innovations to the market quickly enough, according to a respected IT industry analyst. Stuart Lauchlan reports.

Altimeter’s Ray Wang is one of the leading commentators on the German ERP giant and at the SAP UK and Ireland User Group conference in Manchester last week he summarised the company’s history for the past 10 years as “waiting for SAP to innovate”.

While there’s a widespread perception that SAP is bringing little that is new to the market, the problem is partly due to poor communication. In contrast to leading Cloud developer Salesforce.com, which spends around 10% of its revenue on R&D, SAP spends almost twice as much. In 2008, SAP spent $1.6bn on R&D.

“There’s a ton of innovation going on inside SAP, but it's just not being communicated to customers. It gets mired down in the bureaucracy of SAP,” Wang said.

The result is that SAP is consistently late in product delivery and is currently lumbered with a Cloud strategy that is “all over the map”. The company’s big initiative in web-based ERP software, Business ByDesign, is being worked on, but is a year and half late and does not deliver what it's supposed to do, he noted.

This article is an edited version of a longer piece that appeared on our sister site BusinessCloud9.com.

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