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SAP's Push Into the SMB Market Is Creating a Skills Gap for IT Departments

SAP's strategy to win small- and medium-sized companies as customers has an important "downstream effect" -- it means that there's a shortage of people who know how to help SMBs use ERP, NetWeaver, BI, CRM and other tools from SAP, according to IT skills researcher Foote Partners.

By Thomas Wailgum

May 19, 2008 — CIO — Within the last year or so, there's been no shortage of announcements from SAP as to its new areas for revenue growth, such as the SMB space, and evolving product and application strategies, such as with its ERP, BI and NetWeaver offerings. (For more, see "Five Things About SAP's Strategy That You Need to Know.")

In SAP's eyes, customers now have a smorgasbord of software options to choose from.

However, recent IT skill and salary research from Foote Partners shows the "downstream effect" of all of this expansion and new product offerings from SAP: a widening supply-and-demand gap for many of these new SAP skills inside IT departments.

SAP's expansion has "caused skills and labor shortages that have gripped sizable segments of the employment market in North America and around the world, and created some nasty supply and demand fluctuations," notes David Foote, CEO and chief research officer of Foote Partners, in a news release on Foote's first quarter 2008 "IT Skills and Certifications Pay Index." (For the latest on SAP, see "News and Views from SAP's Sapphire Show and User Conference 2008.")

"And there has been a cascading effect in the supply and demand cycles for these skills—it's not happening all at one time," Foote adds. "Some of these skills pay spikes have hit during the last few quarters."

SAP's Expanding Product Reach

Foote Partners estimates that SAP's products are now found inside 48,000 companies and in 120 countries, and newer CRM and business intelligence tools from SAP complement the vendor's omnipresent ERP software. SAP's evolving NetWeaver application-integration toolset as well as its recent announcement of a business process management (BPM) offering, by late 2008, demonstrate further expansion and SAP's desire to pull all of these applications together and allow them to work seamlessly.

In addition, SAP's push into small and midsize businesses has further expanded its scope and penetration into new customers' IT environments. Foote Partners notes that the SMB segment now accounts for two-thirds of SAP's installed base.

"The combination of these strategies and SAP's obvious success and large installed base can only cause disruptions in the skills market because it's a well-known fact that jobs and skills acquisition lag new product introductions, and sometimes by a considerable time period," notes Foote in the release.

According to the Foote Partners data, more SAP product skills are appearing among those noncertified skills displaying the most "dramatic growth" in market value during the past year. Specifically, of the list of fastest growing skills (which Foote Partners defines as 7 percent or higher growth in value during the past six months or 10 percent or higher in a year), SAP skills comprise 25 percent (for the past six months) and 30 percent (for the past year) of those listed. Among 12 SAP skills appearing are: SAP MDM (master data management), ERP, NetWeaver BI (business intelligence), SAP FI/CO (financials and controls), and Business Objects.

"As a rule," Foote notes, "growth in pay for a skill indicates demand exceeding supply and will fluctuate over time according to the interplay between supply and demand."

 

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