SAP looks to improve on recent successes

In the first year after setting up business in the public sector, SAP America Inc. has exceeded its original goals for the market and has set its sights on even more dramatic gains in the year ahead, according to Robert Salvucci, president of SAP America Public Sector and Education Inc., a subsidiary of SAP America.

SAP, which had only a minor presence in federal, state and local markets before creating a public-sector-focused office in December 1997, has expanded from 11 to 48 customers for its R/3 enterprise resource planning (ERP) software. SAP R/3 includes applications for human resources, financial management and related business functions.

In the first year, "I have tried to get one customer up and running in each segment [of the public-sector market], and I have done that," Salvucci said.

"Up and running" was a critical part of the company's strategy, according to Salvucci. ERP software has a reputation of being difficult to install because it involves closely aligning software functionality with an organization's actual business processes. Many installations have taken more than a year to fully install ERP software.

SAP has focused on pre-configuring ERP systems as much as possible for an organization's requirements. This strategy has helped cut installation time to less than a year, and the company expects that this rate will continue to improve.

But most SAP customers - and most ERP customers in general - are using only individual ERP modules, such as human resources. In the coming year, SAP hopes to build on its success by getting enterprise-level installations, in which multiple ERP applications are used to address the needs of large organizations.

Potential large-scale customers in the federal market include the Department of Veterans Affairs, the U.S. Postal Service and the Defense Logistics Agency. USPS has 900,000 employees; serving that population would require a far larger system than any existing ERP installation. "I don't know if any [ERP company] can do 900,000 employees on a single system, but if anyone can, SAP can," Salvucci said.

So far, most of SAP's public-sector customers are in the state, local and education markets. The company's seven federal customers include the Bureau of Naval Personnel, the National Credit Union Administration and the National Railroad Passengers Association.

SAP is fighting for federal market share with other large vendors. The competition includes such players as American Management Systems Inc. and Oracle Corp., which have been on the General Services Administration's Financial Management System Software schedule for a while, as well as PeopleSoft Inc., which also recently landed on the FMSS schedule.

But SAP has put in place many of the pieces of its strategy for increasing its federal business. "The federal market is the largest potential area of growth for us," Salvucci said.

For starters, the company has gone through the rigorous testing process needed to add its financial products to the FMSS schedule, which is the mandatory vehicle for financial management software in the federal market. The company also has put its ERP software on the GSA schedule.

As SAP did in the private sector, Salvucci has worked hard to form partnerships in the federal arena with systems integrators, consulting firms and other information technology companies that the firm will need to help install and support ERP applications.

SAP has partnered with more than 30 such firms, including Litton/PRC Inc., Lockheed Martin Corp., OAO Corp. and Science Applications International Corp.

SAP also has greatly expanded its Washington, D.C., office. Of particular importance are 10 programmers who staff SAP's Software Development Center. Those programmers help enhance the company's ERP modules to meet the needs of its public-sector customers. By the end of this year, SAP plans to employ 30 programmers.