R/3 transformed the relationship between business and IT,
enabling wholesale business process re-engineering. As SAP
announces its demise, we look back on its 14-year reign.
The news that SAP has stopped selling its R/3 enterprise resource
planning system marks a turning point for the IT industry.
During its 14-year history, SAP R/3 has become the definitive
business IT system, spearheading a new wave of products that
transformed the way businesses operated.
Enterprise resource planning applications turned management
consultants' dreams of optimising business processes into a booming
industry.
Without ERP there would be no business process re-engineering as we
know it today. Software was to become the glue that held businesses
together and the engine that drove productivity and growth.
Before R/3, most organisations used human resources, financial and
manufacturing software packages from different suppliers.
Getting applications to talk to each other was a constant problem
but R/3 changed that by offering a suite of pre-packaged software
modules covering the main functions of a business.
The advantages were obvious: the different modules would talk to
each other and users only had to deal with one supplier. But to
reap the full benefits of R/3, companies had to go through
considerable pain. Business processes had to be scrapped or revised
to suit R/3's complex software.
SAP installations created heroes and villains out of IT directors
among the leaders of business. A bad implementation could hit the
bottom line and share price hard, but a smart implementation
allowed businesses to reap the rewards of improved operational
efficiency.
"It was an incredibly difficult and expensive process, as R/3
potentially had an impact on the whole manufacturing lifecycle,"
said Gary Morris, principal consultant at outsourcing advisory
company Morgan Chambers.
"But those companies that did install it did eventually saved a lot
of money because they were forced to review their business
processes. Rather than dealing with 100 suppliers they dealt with
10. Often the only catalyst for this was installing R/3."
Another legacy of R/3 was changing the way companies viewed and
controlled their IT function. The cost and time of installing R/3
meant that the boardroom paid closer attention to what the IT
department did.
"For IT directors the battle was internal and about who ran the
implementation - the business or the finance department," said
Morris.
The seven ages of SAP
1992: SAP R/3 launches, replacing the R/2
mainframe-based ERP with a client-server architecture, marking the
start of the ERP revolution.
1996: SAP introduces R/3 Release 3.1 and
refocuses as an internet-enabled company and develops
industry-specific versions of R/3.
1997: Food maker Nestle chooses SAP as the
cornerstone on which to implement its chief executive's vision of a
single view of the organisation.
1998: A series of high-profile implementation
problems highlight the complexity of re-engineering your business
around ERP.
1999: SAP introduces mySAP.com and EnjoySAP,
an initiative to make SAP software easier to learn, tailor and
use.
2002: SAP celebrates its 30th anniversary on
1 April. It claims 45% of the enterprise resource planning
market.
2004: SAP announces it has stopped selling R/3.
Users will continue to receive standard support until the first
quarter of 2009.
SAP highs and lows >>