IT skills: SAP, where quality control pays off

Suppliers of the business software system can name their own price, says Lynne Curry
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The Independent Culture
SAP, the super-successful business software package, has said it will continue to concentrate on producing the goods alone. The lucrative matter of consultancy and implementing the package will remain in the hands of third parties.

The German company confirmed last week that it had no plans to go the way of Oracle, a major competitor whose service division turns in more profits than its products division. This is despite the fact that two major takeovers in the information technology field, including Compac's buying of Digital, have both involved acquiring a service arm.

For people lucky enough to know their way around SAP - and training can be hard to come by - this means that the dosh will keep rolling in. The company insists that all training is done either through its partners on site, or at its UK headquarters near Heathrow airport. Learning Tree International, a training company that has been trying to run SAP courses since 1994, is still no closer to success.

The scarcity of operators proficient in SAP means that their market rates carry on soaring, and acquiring SAP's software can be costly. Most of it is installed through the Big Six consultancy companies and some carefully chosen partners.

Chris Chittock, sales and marketing director of one of them - Diagonal Computer Services, based in Farnham - says that despite other companies' desire for their own service divisions, SAP's policy is sensible in the long term.

"You need the consultants to be committed to implementation and to recommend it," Chittock says. "As soon as a a company sets up its own services division, it starts to lose support from all the big consultancies."

He says the impact of SAP on the market was such that the name Diagonal is now best known through its association with the software. SAP appeared just as many businesses were changing their processes; with its integration of human resources, production, sales and marketing, it was often an obvious solution. Chittock says: "SAP spends more on research and development than other companies generate in revenue for applications.''

SAP has developed a services arm in the US, where there are at least six times as many multinational companies as in the UK, but otherwise leaves installation and implementation to its partners. This may sound cosy - consultants recommending SAP, which then continues to provide consultants with a good living - but Chittock says it comes from a desire to ensure high quality.

"It's a big and difficult product ... Certainly [SAP] do bring in people to help them, but it tends to be things like a functionality first or an industry first. Consultants shouldn't really be playing around with core development," says Chittock.

Gerhard Rickes, part of SAP's corporate communications department in Germany, says there are no plans to buy or set up a service company. "What we do is partner with the Big Six and these partners implement our products. We don't rent out personnel to customers to run the systems."

SAP is currently used by Royal Insurance, Procter and Gamble, the Royal Mail, ICI, Siemens, the Post Office, Morgan Grenfell, British Sugar and Zeneca. SAP skills command up to pounds 3,000 a week. "Until recently, if you knew SAP you could more or less command your own salary," says an industry insider. "It's a good product."

SAP's tight control of how its software is implemented, and how training is done, has prevented it from becoming common currency among freelances. "If your freelances are consultants, fine, or if they're in niche specialisms, great," says Chittock. "But some people are interested for different reasons that may not be of benefit to clients. All they're trying to do really is protect the quality of implementations by making sure people are of a high standard. The easiest way is working with consultancies, which invest in training and development. We have so many clients that we need to be at the forefront of the package all the time."

Jon Tyler, managing director of the Gatton Consulting Group, which places freelance and permanent staff, says it is difficult to control who works on certain applications. "It's a free market, and market forces will still work. However, some clients will perceive greater added value by going direct," says Tyler, whose company has just announced a rise in turnover of 33 per cent, to pounds 27.4m.

Companies that have both product and service divisions could charge more to the client, and pay its staff less, than if they were on contract. "Companies have tried in the past to control the market-place and force rates down," Tyler says. "In that case, there is a natural movement to the agencies."

Dr David Collins, chief executive of Learning Tree, has said that SAP is virtually alone in refusing to let independent companies train in its product. SAP declares that it keeps such a tight rein so that project team managers gain complete understanding; training has to be provided by a trainer who understands the business implications of all the software's functions.