IBM Insight

By Nathan Dukes

Last week I sat down with IBM Australia New Zealand SAP practice lead, Nigel Silver, to discuss the SAP market, and where IBM is placed in the SAP industry.

We also discussed upcoming IT developments and key technologies that will grow in importance in the future.

ND: Maybe to start off with tell me little bit about yourself and where you’ve come from.

NS: I was actually quite a senior HR manager up until 1994, and then switched into IT to manage the WA Health HR/Payroll roll-out.

Now working in the Global Business Services Group at IBM, which is principally made up of the Pricewaterhouse Consulting SAP practice that IBM acquired in 2002, my role is delivery focussed.

I’ve been with IBM for two and a half years, and whilst I have achieved a significant amount to date, there is always some way to go in achieving everything I want to achieve.  There is always further breadth, depth and market share expansion that we’re looking for.

ND: With your help in 2008 IBM’s SAP practice made 250{db8ca4bbfe57dc8f9b6df9233a3a6c04f4968125edf9bb330d4f787c3a87cd09} of set targets. What would you put this down to? Were the company’s expectations set low or did the practice excel?

NS: A series of events has led to our successes in 2008.  Upon joining IBM in 07 they had a slightly different business model which was a package delivery office combining PeopleSoft, Oracle, SAP and Maximo skills in a much bigger pool of delivery resources.

With 2006 being a tough trading year by all accounts, I helped to refine the go-to-market strategy and set about re-structuring the practice to a more traditional tier one consulting practice.

The end result was a re-energised focus on selling SAP services. The strategy was to promote our delivery capability to our many sales people and that restored their confidence enabled them  to sell what we’re capable of.

The results came from the redefined go-to-market model, as well as being influenced by one particular sale with BHP for their technical support across the globe, a significant win for us.

ND: How has business been recently?

NS: We’re pretty happy with what we’ve achieved and how we’ve gone about things. I guess it’s fair to say we had a spectacular year in 2008. We’re not orphans in this but the first 6 months of this year we were very much delivering what we sold in 2008.

ND: I heard a lot about projects being put on hold during the worst of the economic slump. Did IBM experience this? Are you finding these sorts of projects are now starting up again?

NS: There have been some examples where the boards are being extra careful or they want to decrease IT expenditure.  IBM’s position on this during the downturn was that if you’ve come from a good base and your revenue did not completely dry up then perhaps the good option is to position yourself for further growth when the economy recovers, and certainly some customers have taken that view.

We did progress quite a few projects which were sold and committed to in 08, so we definitely kept our workforce very busy.      

ND: What are your projections in the short term? Do you expect things to pick up again soon?

NS: In terms of net new sales, new opportunities, new projects, new initiatives, from about July through to now we’ve seen quite a significant upturn. At the moment we’re very busy and we see that continuing until the end of this year, and also going through to 2010. This is of course subject to any further earthquakes in the stock market.

ND: The SAP Industry in ANZ as a whole has enjoyed a period of rapid growth, but do you think it can be sustained?

NS: I don’t think it’s going to be spectacular, but I do see sustained and quite reasonable levels of growth. A lot of investment has gone into putting in SAP systems, including the back office and CRM and ESS.

We’re doing that quite well, but there’s further work to be done getting the strategic value out of the investments organisations have made so far.  There is also further value to gain by increasing visibility of SAP systems and further aligning systems and processes.

SAP has been demonstrating this for a few years. Even though there have been a lot of upgrades and implementations happening, I am not sure whether organisations are getting the most value from their enterprise systems.

Competitive pressures will continue, and organisations will always need to become more competitive. I think their ERP systems are of a maturity now where the data is there, and you’ve got one view of the truth, but the view isn’t all that clear.

That affords opportunities, not only for consulting companies, but also for businesses themselves. Not to spend huge amounts of money, but to invest in this area so that they will get a good return on their investment in getting to that final step to have clarity and visibility and really good decision making support information available to them.

ND: I guess you could look at it and say their existing systems are likely capable of giving them what they need, but it just needs to be used more effectively.

NS: Again, SAP has talked about this and there are some good examples. I attended a presentation by Microsoft who were reporting how they used SAP to get their manuals and their software in the right places at the right time and all very seamlessly managed.

Once you’ve got one view of the truth, and you are supporting your day to day business, there is still another step to go to give yourself that competitive advantage.

ND: You mentioned before that the re-structure set up IBM’s SAP practice as a Tier One consultancy. Is that your message to market?

NS: Absolutely, if we’re dealing with the large enterprise end of town, then we do see ourselves as a tier one. We also pride ourselves on the end to end capability. Our position with SAP is that IBM is SAP’s number one partner and vice versa, particularly if you take the full, end to end range of our offering.

So we are joined at the hip to a degree around the go to market models, not withstanding that SAP do partner with Accenture and IBM does partner with Oracle. It’s a mobile dynamic and you have to manage the relationships and opportunities. I guess we have the best intentions in mind for the customer, which is to meet their set of business requirements.

Our General Business Sector focuses on All-In-One reselling and implementation. Bob Jane was one example. We certainly don’t sit up on the top of the pyramid and say we only look at tier one partners or tier one customers; we offer a range of services across the spectrum.

ND: The hardware side of the business must add significant value to your offerings. Do you attract many customers looking for an end to end solution?

NS: It does give us some more leverage in trying to strike attractive deals. But it’s horses for courses. There are times, for example, where CSC might win some consulting business, but they’ll be partnering with IBM hardware, for instance.

It’s quite an interesting dynamic because on one hand we like to have end to end, wall to wall IBM, but that doesn’t suit all customers or all partners.

ND: What are the key areas IBM is looking to for future software developments, both in SAP and across the company?

NS: We like to position our SAP offerings in the context of the broader IBM strategy. IBM’s theme is the ‘smarter planet’.

If you look at our energy systems and our traffic systems, we’re really on, at best, early to middle 20th century technology. The technology infrastructure that supports our community is outdated.

We performed an internal exercise and worked out that in productive terms Sydney drivers were spending 35 million dollars a day waiting at traffic lights.

In the quality of life, the quality of services, reducing emission, energy consumption, I see a lot of opportunity for getting technology into society and meeting the green objectives.

When you then turn to SAP, there is significant opportunity surrounding the emissions trading scheme and what our governments are doing around carbon reporting. SAP has now got some strong offerings here. We have a strong focus on governance risk and compliance, sustainability, and how we can leverage the smarter planet theme and enable this using SAP.

ND: Cloud computing is another area which has grown in relevance. Does IBM have plans within this space?

NS: Within IBM there is definitely, but I think within Australia and New Zealand it’s still early days.

IBM has around 8 cloud computing labs around the world. There’s also a joint project with SAP, which is managed out of Europe. At the last CeBIT exhibition in Europe they demonstrated the ability to move SAP applications across virtual servers within the cloud, and we’re definitely moving in that direction. I think in a sense it’s a natural extension of what we do already.

On the one hand it could afford large companies the ability to set up their own clouds. Some of the benefits they report are load balancing across servers, with virtualisation reducing the number of servers and reducing the overheads of maintaining those. On the other hand small companies can get access to SaaS offerings they wouldn’t normally be able to afford or justify if they were going to have to set up their own server room.

I think it is early days, but certainly IBM is generating a lot of interest in this area and certainly IBM and SAP are working closely together.

I think from an ANZ perspective we are looking to our European colleagues to see how they translate the lab work they’re doing into tangible case studies that we can bring to our customer base here. 

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