2)
Because ERP is immensely complicated, and encompasses features that would be useful for almost anyone coordinating any organization, and ERP systems are really hard to change, so they have acquired a user base with lots of zeroes and a thick moat to keep them in.
Though they have many competitors. A consultant who works on integrating SAP told me once that what gave them a competitive edge is that they let 3rd party consultants integrate SAP while others insist on in house consultants. That means that 3rd party consultant have a clear preference when it is time to advise the client on which system they should pick. That was 20y ago, not sure if it is still the case.
Indeed, to SAP the "partner ecosystem" is a big thing. I think they realised early on that if they were to succeed, their success would be driven by consultants with "business expertise" who were recommending SAP as "best of breed".
Of course, the reality is that many of those consultants who are being charged to customers at eyewatering rates just finished the training course last week and are now "senior".
Don't know if it's still the same, but I suspect it will be - another insidious part of the 3rd party consultant relationship is (was) that customers would hire one of the big 5 to help them evaluate and select ERP systems. And that consultancy would also be in a consortium with one of the suppliers (usually SAP), to do the implementation. Isn't that a conflict of interest you would ask? Oh no, the two parts of the consultancy are behind strict Chinese walls, and the evaluation was strictly independent of the bid team. But surprisingly, the vendor they were in bed with always won the contract.
As a sales rep with Oracle, I declined to bid on a project. I offered the CFO to write the name of the winning consortium in a sealed envelope, that he could open when the selection was announced.
Ah yes, I remember when Lidl tried to integrate SAP in 2015. No one really knows why and after already having spent β¬500,000,000 in 2016 they pulled the plug and just dropped the project because obviously it wasn't done at that point and they still would have to pay more to finish it. The initial offer never went public but I overheard someone once saying it was like β¬75,000,000 "only" ... They went back to further develop their own ERP system which is still in use today as far as I know.
The issue there was that Lidl did not adapt to SAP.
They tried to adapt the SAP system to Lidl. Everyone tells you that this is a really bad idea. Everyone.
To be honest, I had so many SAP implementations in my career, and it was most likely not that one. Everybody adapts the software to the real existing business processes. Especially in Germany we are not yet there yet, that tech people can tell business people how to work. I think that Lidl most likely did the upfront design approach instead of building a reliable MVP, and moving forward from that. You have to integrate then a lot more with the old system, but more space to move forward and agile. Funny because it mimics a German military concept of FΓΌhren mit Auftrag ("mission type tactics").
You would think so, but all of the large consulting firms (Accenture, Deloitte, etc) are driven by billing and people wanting to climb the corporate ladder. What the customer needs comes a distant second. Many projects are staffed with 90-95% juniors or people who have no industry knowledge.
I've worked alongside consultants from Accenture, Deloitte, IBM, etc over the years and, while many of them are very competent, I would /never/ engage one of those large system integrators (SIs) on any project I was involved in. There are many excellent individuals working for those companies, but the companies themselves are terrible and you will struggle to get any of the excellent people involved during your implementation. The experts will appear during the early stages of the consulting sales cycle but will be nowhere to be seen during the implementation.
Unfortunately this is the dirty little secret of SAP implementations. Many SAP customers think "I'll pay top dollar and get a good SI" but they end up getting the latest round of juniors doing the implementation. Seen it many a time.
fully agree, think what you're saying is a misread of my comment. GP said "literally everyone says this thing is bad." My comment was "Well, clearly there were people not telling them [or else they'd probably have stopped short of $500,000,000 in expenditures]".
Your comment is a mechanistic explanation of the failure mode, which again, I quite agree with. I worked at PwC for a couple of years; quite corrupt incentive structures and quite a dysfunctional organization because of it.
Yes, fair point - I didn't explain myself clearly (I've been commenting too much in this thread as it is!). My thinking is that why would they speak up? Lidl has deep pockets so the thinking was probably "another $5/10/20 million will get the project over the line". Not looking at the project and saying "we've billed you so much already, we've delivered something that's not fit for purpose so we'll absorb some of that and get something that works".
For all its faults, SAP is the market leader ERP. Without knowing anything more than what I've read in the general press, I'm fairly confident that the implementation could have been a success.
Implementing SAP in retail has its own challenges. The large number of products ("articles") sold, locations ("sites"), handling POS data etc.
My first ever SAP implementation was for a large retailer and the project was cancelled (they later implemented SAP ~10 years later after the product matured somewhat) and another project 8 years later was also cancelled. Only two SAP projects I've been involved in that have been cancelled and both were retail (and using IS-Retail, SAP's solution for retail industries).
A guy I interviewed a little while ago observed that SMB SaaS software always tends to become an ERP system on a long enough timeline. It canβt be categorically true but it seemed like a very astute generalization.
1) They do Enterprise Resources Planning.
2) Because ERP is immensely complicated, and encompasses features that would be useful for almost anyone coordinating any organization, and ERP systems are really hard to change, so they have acquired a user base with lots of zeroes and a thick moat to keep them in.