The Friday Interview: Phil Codd, SAP

14 Jan 2005

The looming merger between Oracle and PeopleSoft means that in little over a year the number of major players at the top end of the enterprise resource planning (ERP) market will have halved from four to just two — Oracle and SAP — and Phil Codd (pictured) will have worked for both of them.

To say that Codd, who became managing director of SAP Ireland on 1 October last, knows his way around the enterprise computing market is a bit of an understatement. Codd helped set up the Irish operations of database vendor Ingres in 1990 before moving on to Oracle in 1997. He left there in 1999 to become country manager in Scotland and Ireland for Siebel Systems, then the hottest name in customer relationship management, before rejoining Oracle as sales director in 2002.

As he tells it, his decision to jump ship to SAP had two motives — quite apart from the obvious financial or career-enhancement considerations that might have been in play. The first has to do with the nature of the sell. At Oracle his mission was selling databases, which was essentially a pure technology rather than a business sell. At Siebel he got his first taste of selling applications and of meeting the needs of the business rather than simply making a technical sale.

“I found it lot more rewarding because you’re really dealing with the business, not just the technology part of the business,” he explains. “So when SAP approached me, I was very interested. Positioning applications software is much more rewarding that positioning technology.”

His second reason for moving was the prospect of joining the recognised market leader in enterprise business applications. “It is a challenge to come to an organisation such as SAP that is very much No 1 in the market for ERP software. How do you maintain that, how do you grow it — that’s really the challenge for me,” he says.

Codd joins SAP at an interesting time for the ERP sector. Not only is the market consolidating into something of a two-horse race between SAP and Oracle (at the high end of the market at least, if not at the middle tier where players such as Sage and Microsoft’s Great Plains are aggressively chasing new business) but also its prospects are looking a lot better than for several years. The gloom has lifted from the global IT sector, corporate purse strings are loosening and business opportunities are increasingly plentiful.

Codd sees opportunities in several application areas. These include wireless applications with built-in CRM, RFID, self-service human resouces systems and payroll packages. In sectoral terms, Codd singles out the health service as being a key focus for SAP. Already 25,000 health workers are paid using the company’s payroll technology and this number will rise to 100,000 by the end of this year, says Codd, who notes that the creation of the new Health Service Executive should encourage the deployment of other centralised business applications.

While he also feels the public sector in general presents a huge opportunity for ERP vendors, it clearly rankles with him that the authorities are being slow to act in areas such as e-procurement where there are significant savings to be made. “We need the public sector to get to grips with procurement. And I think what we’re seeing is frustration in the marketplace in the form of some little niche solutions popping up all over the place which isn’t really going to give them the unified procurement they need for central government,” he says.

Referring to the main trends within the ERP market, Codd sees a growing demand for industry-specific propositions rather than ‘vanilla’ implementations. “Expect to see more tailored solutions for financial services, for telcos, for the public sector and so on. In addition, there’s going to be a lot of competition in the mid-market segment. This means channel relationships are going to be very important and you’ll have to have the right business partner for each sector.”

He also sees a continuation of the trend towards modular rather than ‘big bang’ ERP implementations. “Generally companies are being more strategic in their approach and have moved away from a big bang mindset,” he observes. “They are quite happy to spend money within reason if a project is going to deliver back to the business what was expected. Biting off in sizeable chunks is seen as the way to do it.”

Innovation, too, will continue to be important as a means of differentiating one company’s products from another. In SAP’s case, he points out that much of the innovation is happening virtually unseen to the client, in the middleware layers that facilitate integration with other packages and applications. SAP’s development and integration platform, Netweaver, is a case in point, he says. “Netweaver is an important component but it helps us transition to a services oriented architecture. This is really just a platform that will enable people to adopt some common standards, plug their other systems in and enable us to have a common way of conversing and exchanging data around other applications.”

While new product development will always be a key ingredient of success, he feels that too much innovation can be counterproductive and that a balance is needed. “You’ve got to innovate to stay ahead but you’ve got to make sure that it’s not at the cost of constant upgrades to the client,” he says.

As for the impact the Oracle-PeopleSoft merger on the ERP market in the months to come, Codd’s own view is that Oracle and SAP will lock horns in a battle for customers causing prices to fall — but only for a limited period. It is, he concludes, in neither side’s interest to get into a price war. “Clearly companies such as ours need to be able to demonstrate value to their customers and make the expected returns back to their headquarters. So I imagine vendors will in time certainly look to ‘add value’ and move away from pure price-based competition.”

He also ventures that what he describes as the “market disturbance” that took place during the bid process and that is likely to prevail during the integration of Oracle/PeopleSoft will work in SAP’s favour. “I guess we would see SAP as a safe harbour. It is the stable offering; it is the market leader, so perhaps it’s good for us.”

By Brian Skelly