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.
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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 >>