How did they do that?

I have asked around because I was curious: curious to know how SAP came to dominate the energy industry. It seems that the industry was ripe for the picking and SAP made some very smart moves.

How ripe is ripe?

As I have alluded to before, after the oil price crash in the early 1980' s the industry went from a functional model to an asset-based model - everything was measured by "what's my return on assets?" As also mentioned before, everything became outsourced and IT investment slowed to a crawl. In the mid-1990's...many of the oil companies were still pushing on legacy mainframe systems. So several things began to work together to create SAP dominance:

Variable #1 - Y2K - The notion of rewriting mainframe-based legacy apps to avoid a system crash was not particularly appealing given advances in client-server technologies.



Variable #2 - The oil industry is highly cyclical and wanted to smoothing strategy. SAP sold the oil companies on the notion that they would be able to manage and replace much of the variable costs associated with outsourcing through investment in information systems. In the next upcycle..the oil companies would reap improved profits.


Variable#3 - Oil companies were very highly distributed as were the totality of their information systems...the were looking for a monolithic system structure.

The SAP play book


Variable #4 - SAP outflanked Oracle with the system integrators promising to not compete with them for deployments as became the case with Oracle...it is interesting that this partnering model alone added a level of risk to SAP as SI's faced many challenges effective timely and competent system installs.



Variable #5 - Business Process Reengineering became a fad and SAP played to it well.

It seems unlikely to find this type of confluence again. Nonetheless....SAP is entrenched...so is this an investment opportunity or investment pediment? Choose wisely.