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SAP's Government Focus

SAP's Government Focus

New Zealand and Australia lead the world in government sector SAP implementations, SAP NZ country manager Ian Black says. In New Zealand 31 per cent of SAP's business is with the government and in Australia the figure's about 40 per cent.

Such a high level of business with government may seem strange for a software vendor known mainly for providing ERP systems for manufacturing companies, and in most other countries the figure is lower, but SAP NZ country manager Ian Black says the figures match government IT spending.

"If you look at New Zealand, 33 per cent of all IT spending is by the government and in Australia it's 40 per cent," Black told Computerworld at SAP's Sapphire conference in Sydney last month.

"SAP is not as focused on government in other regions."

New Zealand government customers include the IRD, Department of Corrections, Police and Tourism New Zealand and SAP has an employee in Wellington who works fulltime on government accounts, Black says.

"It's a critical market for us."

Although its local clients have tended to be larger, SAP has been pushing its small- and medium-sized business product, mySAP All-In-One, in the Asia-Pacific region, recently signing Lighting Direct as a client.

It may seem a case of yet another vendor whose enterprise client base is becoming saturated desperately seeking sales in the SME market, but Black says All-in-One has been carefully designed to ensure the company doesn't lose margins and economies of scale by going after smaller customers.

"By selling through the channel [rather than implementing in partnership with a consultant, usually one of the big five] and designing All-In-One as a prepackaged version of SAP, it produces an outcome more quickly than an implementation requiring configuration."

Some large installations of SAP's flagship R/2 and R/3 ERP suites in the 1990s are legendary for the time and expense required to tailor the software to clients' specific needs, with the cost of implementation and service often exceeding that of the software itself.

The costly implementations led to jokes about what SAP stands for, with suggestions such as "shock, angst and panic", "such a pain" and "send another payment" doing the industry rounds.

However, the packaged nature of All-In-One means implementation costs are one-off and no upgrades will be necessary for the life of the product, Black says.

Traditional large-scale R/3 rollouts continue in New Zealand.

The BNZ, for example, is in the middle of a project to install the suite, with HR and finance and procurement modules already in place and a payroll one to come, replacing a Millennium general ledger system.

"That's kept us very busy for the past six to eight months — it's a huge integration task," says BNZ technology general manager Peter Fletcher.

The BNZ SAP rollout is being driven from the Melbourne headquarters of its parent, the National Australia bank, in partnership with KPMG's consulting arm, now separate and known as BearingPoint.

SAP has had a direct presence in New Zealand since the mid-1990s, when Carter Holt Harvey and Telecom were signed up as initial clients, though Black says strictly speaking Comalco was the company's first New Zealand client, with the Invercargill aluminium smelter using R/2, the mainframe version of SAP's central ERP suite, from 1989.

SAP has a strong relationship with Fonterra, with the giant dairy co-op having implemented demand management and supply chain management modules of R/3 and strongly rumoured to be about to formalise a deal to replace its Oracle financials package with SAP.

Black, however, wasn't commenting on the Fonterra financials deal at Sapphire.

"We're in discussions with Fonterra about a new financials package, but it's not finalised."

Watson travelled to Sydney to attend Sapphire courtesy of SAP.

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More about BNZCarter Holt HarveyKPMGNational Australia BankOracleRIO TINTOSAP Australia

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