SAP Skills Shortage Costs SAP’s Customers, Partners and, Ultimately, SAP AG

SAP executives knew they had a problem. By early 2007, after several years of quarter-over-quarter growth, senior decision-makers at the German software giant, including co-CEO Leo Apotheker, were hearing more and more about an alarming shortage of SAP talent in the marketplace.

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In the SAP “ecosystem,” as execs like to call it, those with SAP application skills and product expertise were becoming an endangered species.

“Leo called us in for a discussion,” recalls Joe Westhuizen, SAP’s vice president of education strategy and business development. “He said that he had been talking to SAP’s customers and partners, and that there was a common thread coming through: That it’s difficult to find qualified people, and it was impacting their ability to implement on all sales that they’ve been executing.”

The figures cited by SAP today are eye-opening: a dearth of some 30,000 to 40,000 SAP experts worldwide to support its products and customer base.

That deficiency, in turn, has created “some nasty supply and demand fluctuations,” notes David Foote, CEO and chief research officer of Foote Partners, whose data shows that the pay for sought-after SAP skillsets has dramatically increased during the last year, a financial burden on many enterprises. (For more, see “SAP’s Push Into the SMB Market Is Creating a Skills Gap for IT Departments.”)

All of this “downstream” turmoil has unraveled at an inopportune time for SAP because it has embarked on several new product and application strategies, which necessitate even more talented people with even more in-demand skillsets: new NetWeaver, business process management (BPM), BI and master data management (MDM) products as well as its omnipresent ERP software (in this case, its latest ERP 6.0 release). (For more on SAP’s strategies, see “Five Things About SAP’s Strategy That You Need to Know.”)

In addition, SAP’s push into the playing fields of the SMB market, where they have never had a presence and see much opportunity, will demand the “right balance” of skills in the marketplace, Westhuizen says.

SAP’s problem might sound like a problem borne from success: too much demand for its software and not enough talent to implement and service it. But it has become a serious business challenge for SAP. “It does point toward success,” Westhuizen says. “But very quickly success can also become a noose around one’s neck.”

Spreading the SAP Gospel

Historically, SAP has not been well-known outside the business applications and business-to-business worlds. SAP executives lack the marketing braggadocio of their chest-thumping competitors at Oracle. SAP also doesn’t have the historical relevance of an IBM, or the Internet Age appeal of a Google.

That fact was confirmed by SAP six months ago, says Westhuizen. SAP surveyed university students in China, Germany and the United States to gauge their understanding and knowledge of SAP: Had they heard of SAP? If so, what does it mean to them? Was it a career option for them? “And then we compared their understanding and the findings to what they thought of IBM, Accenture, Oracle and Google,” Westhuizen says.

“We found that we needed to do a lot more work in ensuring that people get exposed to SAP,” he says of the results. “Not just when they’re joining the workforce but prior to joining the workforce.” (Apparently, there is such a thing as being too quiet a company.)

SAP’s expansive plan to fill the skills holes in the IT industry targets a couple of key areas where SAP hasn’t typically promoted itself and its products, Westhuizen says.

First, SAP is attempting to better market itself and the job opportunities in its ecosystem—working for SAP itself, inside its customers’ IT departments, and for systems integrators and consultants—through the Internet and social networking sites and other traditional marketing vehicles. “We’ve really been trying to drive the message that the SAP ecosystem is a place where you can thrive, where there are opportunities for you,” Westhuizen says. “From a marketing perspective we feel like we’re starting to get a broader message out there and talk to an audience that we previously didn’t talk to.”

In the United States and abroad, SAP is also going to the source: bringing its message to colleges and universities and even high schools students who might be interested in tech. Its University Alliance Program has been around for more than a decade, but “it’s been a somewhat underutilized asset,” Westhuizen says.

The objective of the program, which currently partners with more than 700 universities, is to “seed the market and influence tomorrow’s leaders,” Westhuizen says. SAP does that by providing SAP systems and applications to the universities’ curriculum, exposing students to SAP and “to make sure when people come out of universities that we have our fair share of people having the SAP ecosystem at least as an option when it comes to deciding their future,” he says.

In addition, SAP is expanding its strategic relationships with its top 20 implementation partners (which, actually, do approximately 70 percent of SAP product implementations) “to eliminate or reduce some of the impediments to growth,” Westhuizen says. (To read about Oracle’s new SMB partner plans, see “Inside Oracle’s Plans to Conquer the SMB Applications Market.”)

Lastly, Westhuizen says SAP now offers expanded and tiered education and certification programs to not only include online learning formats and more flexible pricing options but also courses that are taught in more languages—not solely English and German but Japanese, Korean, Spanish, Portuguese, Russian, French and Mandarin as well. “We revamped the entire certification program,” he says. “We see certification as an underlying benchmark of quality.”

Westhuizen says that SAP will be tracking data points from all of those areas very carefully during the coming years. “We’re trying to be as proactive as possible,” he says, “as opposed to what we used to be, which was reactive.”

What’s at stake is quite apparent to SAP execs, Westhuizen adds. “Without a doubt,” he says, “if it’s [an area] that we don’t continue to address, it is a factor that can impact our longer-term success.”