Wed, Oct 15, 2008 15:37 EDT

SAP Tells Employees: 'Do Not Order Any New IT Equipment at This Time'

Topic: Applications

Current Rating: Comments: 11

That delicious sound bite was delivered recently by SAP's co-CEOs, Henning Kagermann and Leo Apotheker, in an internal company e-mail sent to SAP employees. Mind you, these are the same two executives who, a couple months back, brightened SAP's full-year forecast to the "top end" of its previous financial guidance.

And now, in early October, SAP is locking down on its tech spending, ceasing all hiring and canceling all non-customer-facing travel, according to the e-mail, which was obtained by the Wall Street Journal's Ben Worthen. (A rueful Kagermann pre-announced disappointing Q3 results on Oct. 6, noting that "Throughout the third quarter we felt quite positive about our ability to meet our expectations.")

So what happened to the bright outlook and Q3 bravado? I suppose that, like so many lines of credit, 401(k) balances and investor confidence, it's long gone.

The distressing reversal of fortune is best summed up in this part of the internal SAP e-mail: “We will review all planned investments in IT equipment, hardware, software, facilities, and company cars, as well as internal IT projects,” wrote the co-CEOs. “Do not order any new equipment at this time.”

Hmmmm. This is the same company that will, no doubt, be encouraging its customers and noncustomers to upgrade or purchase SAP's ERP, CRM, supply chain or any of its other range of products now that the economy has gotten tough, because this is when the "great companies" separate themselves from their competitors by using IT applications to their advantage. (Preferably SAP applications, of course.)

And this is the same company that is raising maintenance fees for its customers, to the ire of many of them.

So, I wonder if Kagermann and Apotheker's newfound corporate strategy ("Do not order any new IT equipment at this time") is one that they would want their customer base to follow as well?

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All Comments Comments

Fri, Oct 17, 2008 9:26 EDT

SAP's Spending Cut

Posted by: Anonymous
Rating:

The reference to SAP's internal requirements relative to cutting spending has nothing to with customer facing activities, SAP's promotion of its new products, raising its fees (which include additional service offerings by the way). SAP is being responsible to its shareholders in response to a shock in the broader market. Sounds like the author has a bone to pick and is not capable of seeing the broader picture.

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Sun, Oct 19, 2008 1:05 EDT

Author is clueless

Posted by: Anonymous
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The author has no idea what they are talking about. The memo was sent to employees as a new strategy for cost-savings in a volatile market. Customer priority is always number one.

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Mon, Oct 20, 2008 9:54 EDT

SAP's hold on costs

Posted by: Anonymous
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Holding down costs is a key approach in these uncertain times. I do not see the need for such sarcastic remarks to foster ones point other then to raise the word count on where there is not a real article to be had. Every company is cutting costs and slowing hiring at the least in these uncertain times, SAP controls should be seen as fiscally smart not an evil plan.

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Tue, Oct 21, 2008 15:00 EDT

SAP Objectivity

Posted by: Anonymous
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Where is the balance ,as an editor you seem to lack a balanced view point when writing about SAP , is it just plain jealousy or even worse just plain ignorance.

This is a great website , however your permanent diatribe is inconsistent with the excellent articles written elsewhere on this site , may I recommend that if you are such a great fan of everything anti-SAP why don't you go and find yourself a job with Oracle and the like.

In the meantime whilst you write here then please keep perspective , balance , objectivity and other points which make for interesting and challenging writing , if not move on and get over yourself.

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Tue, Oct 21, 2008 16:49 EDT

Author's response to the comments

Posted by: Thomas Wailgum
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Judging by the comments here, I see that my intended point of showing an ironic situation (in that SAP was telling its own people to cease buying IT software when they will, no doubt, be encouraging their customers to buy more SAP software to make it through this tumultuous period) has been mistaken for some type of schadenfreude. Of course companies should evaluate all their expenses right now. But you just watch for those "This is when great companies invest in SAP software to beat the competition" marketing and salesmen pitches. Oh, the hypocrisy!
-Tom

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