Friday, January 18, 2002

SAP Layoffs Raise Questions About Forthcoming Student-Records Software By FLORENCE OLSEN SAP AG, a German business-software company with about a dozen U.S. colleges among its clients, has announced layoffs and says it expects no significant increases in its higher-education business in 2002. The announcement comes just as the Pennsylvania State System of Higher Education has committed to spending $100-million to convert its administrative systems to SAP R/3 software. In December, the company eliminated 300 jobs, or 7 percent of its United States workforce. SAP also announced that it would trim its expenses for sales and marketing in a number of industries, including higher education and banking. SAP is active in 19 other markets, including aerospace and defense, oil and gas, and pharmaceuticals. The news could be a sign that SAP is cutting back its investment in developing software for the higher-education market, says Michael Zastrocky, vice president for academic strategies for Gartner Inc., a technology-consulting firm. But SAP officials say they still plan to finish work this year on the first release of a student-records system, called Campus Management. Malcolm Woodfield, vice president of SAP public services, says that no employees involved in developing SAP software lost their jobs, and that the cuts will have "no impact on the Campus Management project." Even before the recent cutbacks, Mr. Woodfield says, the company had never really marketed itself as a higher-education software company. Most of SAP's higher-education users, he says, "are interested in using best practices that businesses use and, as far as possible, moving away from higher-education-specific practices." Pennsylvania officials also maintain that the recent layoffs among SAP's American sales and marketing employees, and the organizational changes at SAP, will not affect their statewide project. And Khalil Yazdi, vice chancellor for information technology for the state system, says: "I have not been told that we're going to experience any delays." SAP is expected to provide administrative software for personnel, payroll, finance, and student-records functions for Pennsylvania's 14 state-owned universities, which serve about 98,000 students. The state system had planned initially to involve only five universities in a pilot SAP project, but it has revised that schedule and brought all 14 universities into the design and planning phase. Pennsylvania officials say they will complete the project in five to seven years, rather than in 10 years, as they had previously announced. The shared administrative system will run on large servers from Sun Microsystems and be operated in a central location for all 14 universities. The institutions will connect to the central SAP system over the State System of Higher Education network. SAP is known for its business software, which automates functions known in business and manufacturing as customer-relationship management, enterprise-resource planning, and supply-chain management. But the recent layoffs and other actions have made some analysts skeptical about SAP's commitment to its higher-education business. "Unless they decide to really jump into the higher-education game, we would expect in the next two to three years that they'll be out of higher ed, because they're not doing well in it," says Mr. Zastrocky, the Gartner analyst. SAP is not expected to have a viable student-information system ready until March, and even then the system may not be capable of doing everything that universities need to have done. Since September of last year, the University of Mississippi has worked with SAP to develop a student-information system. Before that, Arizona State University had taken on a similar role, but had to pull out before the project was completed. When SAP releases its student-information system, it will still be lacking a crucial financial-aid module, says Kathryn F. Gates, director of academic-computing and support services at Mississippi. Given SAP's global focus, she adds, "it doesn't really make business sense for SAP to provide a financial-aid system." She says the university will be testing financial-aid software from another vendor, Sigma Systems Inc., and writing an interface between Sigma's ProSAM financial-aid system and SAP's Campus Management system so that the two can exchange data. Mr. Zastrocky says that poor timing is another problem for SAP. Many of the research institutions that he says could afford SAP have already selected a vendor from among those that offer a student-information system as part of their integrated administrative-systems packages. But such concerns don't seem to faze the American institutions that have invested in SAP and that regard it as world-class software. "It is as solid and as advanced as anything you could find," says Ms. Gates. In Pennsylvania, with 14 universities participating, the cost for each university to convert its systems to SAP will be reduced dramatically, says Mr. Yazdi, the vice chancellor. Gartner had advised the state system in 1999 that it could also avoid $29-million in administrative expenses over a 10-year period by replacing its 14 separate university data centers with a shared administrative database. Easy-to-print version E-mail this article

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