Wednesday, May 31, 2006

Some impressions of SAP in Paris

The SAP ERP system is on such a scale that, in terms of Latvia, you could run TWFC* on it. And it seems that is what may be done, as one of the major implementations is at the Latvian Ministry of Finance. The ambition is to compose next year's state budget on the system, getting inputs from all the ministries, etc. Should be interesting.
What I am also trying to say is that the small countries with relatively small businesses are a limited market for these massively capable systems, except to the extent that the small and medium-sized businesses (medium globally, being, say, Lattelecom) will have to eventually integrate with global companies running SAP or brand X. The vision here is of a total electronic information and management nervous system -- you place an order online in Bangkok and it, via three layers of subcontactors, turns on a factory in Latvia that makes a subwidget for the order, and then the ultimate customer in Borneo can drill down and see exactly when the subwidget was made.
This kind of knowledge and information saturation makes it possible, as Shai Agassi framed it, to "drive (a business) while seeing forward." When you think about it, most businesses steer by looking back at what happened. Interesting.
It also means that businesses have to define themselves and their processes very precisely and carefully. It is of little use to "drill down" to the benchmarks and metrics for a particular manufacturing step if one has not defined or determined them and manufactures on the general assumption that most of the stuff will somehow turn out OK as it has, generally speaking, in the past. In this regard, the capabilities of SAP and enterprise resource planning systems generally expose the blindness of much of business to its own essential processes.
So SAP and its like are inevitably coming and businesses in Latvia that don't want to be roadkill in the next few years must adapt.

*the whole fuckin' country (what did you think :) )


Anonymous said...

Interesting that employees of companies with SAP implemented thik it is German revenge for WWII. Isn't it because demo/exhibition is somewhat different from working version?

Anonymous said...

Has SAP paid ypu for marketing them? SAP itself is nothing ... the idea for ERP and defining processes and then automatizing them is the MAIN IDEA. Nevertheless, I do not think it is reasonable that all processes can be defined in ERP systems. People are not robots, they sometimes full of shit, full of creativity, full of etc. Running SAP in Ministry of Finance? Well, why not just get some aggregate cost estimates in a spreadsheet? Will SAP make any difference?

Juris Kaža said...

Dear Anonymous of the second comment: I am certainly not advocating SAP, in fact, I mention it as an example of an ERP system generally.
As for the Finance Ministry, yes, SAP or any other ERP of its scale and capabilities will force those making the budget to do more than just send an Excel by e-mail. There will be a better audit track and people may have to break down and justify (itemize) their cost projections in detail, etc. It is the same as in an enterprise.

Anonymous said...

Lattelecom and Ventspils Nafta also has SAPes ;) I know people here in Latvia which succecfully launched it on home PC for education purposes :D SAP is not as big as you think for this little but proud nation :)