SAP's R&D - asking the right questions

Dennis posted some thoughts on SAP's new co-CEO and their R&D plans.

"Apotheker also confirmed that 2008 is the peak year for SAP R&D investments and that over the coming years, SAP will scale back its investments by around one percent per annum."

then Dennis adds to the equation:

"I’ve said before but it is worth repeating: profit levels for SAP, Microsoft and Oracle are at extraordinarily high levels, reflecting a maturing industry."

Now this is interesting, and I do agree with Dennis' take, but it's the "maturing industry" part I react to:

For the logic to hold it's obvious the "industry" have to be defined as the current "technology". Going from X.1 to version X.2 does not much to your bottom line I would imagine. Tweaking the already well-working HCM or CRM system ditto.

But the market has been barely touched if you think "run your business" overall. We still use email, have meetings, have paper based business rules - and without doubt waste a lot of resources and time thanks to a long accepted "control & steering mechanism" named double-entry accounting. A mechanism that not only is 514 years old and barely untouched, but as anybody knows, is very far from perfection as an "instrument panel" for the organisation.

So why scale back R&D?

My guess is that the issue lies in the high-level questions of "what's our business".

If it's "ERP", well then, time to milk the cow.

If it's "run-your-business" they have barely started.

So, good folks in Walldorf, what's the answer? Are you in the windmill or power generation business?

Comments

[Dennis Howlett]

Excellent response Sig and one I should have riffed in the first place. You can be sure that will be qu.2 when we get to SAPPHIRE. Qu.1 is WTF is happening with BBD?

[sig]

Actually it's a question that could be asked any company - the seed of becoming part of the long tail it is :)

Q 1 is a twist to the same question - a big bet on yet another tweak to the same old same old instead of doing a wee rethink?

All R&D (as well as everything else) starts at board level though, that'll be the ones to ask...

[John Dodds]

Agreed gentleman, if their business has matured they should be increasing R & D in order to find their next growth area before profits begin to truly mature and thus fall.