SAP's Platform Strategy in 2006 - Case Study Example

SAPs Platform Strategy in 2006 (A Case Study) Roll No: Teacher: 5th November 2008 Table of Contents Table of Contents 2 SAPs Platform Strategy in 2006 (A Case Study) 3 Introduction 3 SAP’s Traditional and Current Strategies 3 Competitive Environment 5 Critical Success Factors for New Strategy 6 Conclusion 7 Works Cited 8 SAPs Platform Strategy in 2006 (A Case Study) Introduction SAP enjoys a reputable status among its customers on the basis of its traditional development of ERP (Enterprise Resource Planning). The company is considered as the world leader because of its ERP systems but with the passage of time, customers come up with individual needs concerning ERP and other improvements due to which, a new strategy was introduced by SAP, which focused on alluring customers on the basis of its products and technology encompassing NetWeaver that is a new platform which is accommodating for the customers with individual needs. With introducing the new business strategy, SAP has called for a global competition as it has challenged other firms because of its NetWeaver technology. Moreover, the company has allured certain top officials and other employees from reputable competitive firms and appointed them to work with SAP. There are chances of jeopardizing the relationship that the company has developed with certain competitive firms such as Microsoft and IBM. The company has fair chances to succeed on the basis of their new introduced technology of NetWeaver platform. With NetWeaver, customers will be accommodated to bring improvements in their already adopted ERP systems with their specific individualistic needs and requirements. SAP’s Traditional and Current Strategies SAP was the vanguard of developing application systems due to its traditional strategies in the software market (Farhoomand and Tsang 2006). The application systems developed by SAP kept the eligibility of automating not only individual business needs but whole enterprise operations needs. These application packages were called ERP (Enterprise Resource Planning) systems. ERP systems contained the capability of supporting the whole enterprise with its wholesome automation. Traditionally, SAP used to develop ERP systems. SAP brought a revolution in the back office. The ERP system was SAP’s traditionally strategic development and it kept the capacity of replacing all the stand alone systems. SAP made a strong position in ERP traditional market but with the passage of time, there were further needs and requirements from customers. The current strategies of SAP somehow differ from the old traditional strategy that circulated around ERP development only. There was expansion of functional coverage as a new business strategy. Certain new areas such as Customer Relationship Management (CRM), Product Lifecycle Management (PLM), Supplier Relationship Management (SRM) and Supplier Chain Management (SCM) were included in the new business strategy (Farhoomand and Tsang 2006). There was also development of deepening industry knowledge as a current strategy. There were new ways to attract customers and to lure away the customers of Oracle. The firm set up a business strategy to attract customers on the basis of their individual needs related to a business. There was a business strategy of penetration of Mid-Market. To strengthen its position in the mid-market, SAP introduced two scaled down ERP systems known as mySAP All-in-one and SAP Business One (Farhoomand and Tsang 2006). SAP also started rolling back its pay-as-you-go application services which was previously incorporated in its traditional business strategy. The new business strategy also focused on the development of an integrated IT industry. SAP also showed interest in the development of a solicited tremendous customer support. Configuration of resources was also a part of the new business strategy of SAP. The firm has developed a new NetWeaver platform that is seen as an opportunity for gaining more customers. Along with virtual taskforce, SAP appointed about 200 top managers from competitor firms such as Oracle, BEA Systems and Siebel Systems (Farhoomand and Tsang 2006). From an introvert business strategy, the firm moved towards an extrovert status. With NetWeaver, the old customers can make their required changes in their current ERP systems. There are many differences between the traditional business strategy and current business strategy of SAP. Previously, SAP’s business strategy was an introvert and new strategy focuses on becoming an extravert (Farhoomand and Tsang 2006). Previously, the company focussed on a single system that keeps the capacity of overcoming all the stand alone systems and the new strategy focuses on individual needs of customers. Expansion was also a part of new strategy along with alluring new and old customers. There was a lot of competition between SAP and other competitors and SAP acted actively with its new business strategy. Previously, with the traditional strategy, SAP was a dominant firm in terms of ERP systems, while the new strategy focused on the development of further new software applications and systems. Competitive Environment The competitive environment is an environment in which, firms are attached to one another in a competitive relationship. SAP has a number of competitors that have a strong competition with one another and also the other firms are of good reputable status such as IBM, Oracle, Microsoft, Tata Consultancy Services, Wipro Technologies, Infosys Technologies and many others. It is quite true that all the competitive firms enjoy somehow successful status. With the changing business strategy of SAP, it is expected that all the firms will develop their own business strategies with clear cut business objectives quite competitive as compared to SAP. In the new strategy, SAP has allured certain top management people and other virtual employees from the competitive firms due to which, the competitive firms will be tempted to jump into a strong competition by adopting strategies that will be degrading for SAP and for taking away the customers of SAP. The competitive firms will try to introduce competitive products to allure customers towards their firms. Along with introduction of new products, the prices will also be kept a little persuasive to attract the customers. Critical Success Factors for New Strategy With the development of new strategy encompassing new NetWeaver Technology, there are chances for the firm, SAP to get success as compared to other competitors of the market. It is also possible that the other firms develop their own competitive systems in comparison to the NetWeaver technology as they are also working on Web Applications (Farhoomand and Tsang 2006). With the development of NetWeaver technology, SAP has stepped towards growth, expansion and success. With its technology, SAP will be able to facilitate its customers with the engineering excellence of its products. The prices attached with the NetWeaver technology are not monitored by SAP, after their being monitored, there will be a comparison between the authenticity of the technology and its prices. Its prices should be attractive for the customers along with its productivity. Oracle is a highly competitive firm in relation to SAP because of its products and technologies already active in market (Farhoomand and Tsang 2006). There are also chances of jeopardizing the relationship between firms because of the introduction of the new strategy by SAP. With other competitors in the market that are also highly reputed by the customers, SAP has to take several steps in order to make sure that the platform of NetWeaver is employed. With NetWeaver technology and with other business strategies introduced by SAP, the firm enjoys a fair chance to succeed in the market and in alluring the customers with its technology and products. Conclusion By noticing the old and new business strategy development by SAP, it is quite evident that the company was challenged to automate its current products by making them in improved status. The status of the company was of an introvert firm but with the new technology of NetWeaver, the company has become an extrovert. Previously, the firm was a closed source software developer but after introducing the new business strategy, the firm has changed its status from a closed source software developer to an open source software developer. With the introduction of the new technological platform, the customers will be facilitated to bring improvements in their currently employed ERP systems. The company has also challenged many other firms to compete with its new NetWeaver platform. Works Cited Farhoomand, Ali F. and Tsang, Samuel. SAPs Platform Strategy in 2006. Hong Kong: University of Hong Kong, 2006: 1-27. Read More