The Part I of this blog topic concluded with SAP’s supremacy in the upper-end of the regional market. What also helps SAP ERP [evaluate this product] is a number of well-established value added resellers (VARs) that cover the entire former Yugoslavia region, some of which have a few dozen renowned installation sites (customer references) and a roster of experienced consultants. Some of these are the earlier mentioned S&T Group from Austria and Croatia-based B4B.
While one can always be doubtful about the success of implementations and users’ adoption in those divisions/plants where the implementation mandate came from the HQ office abroad and without any due selection process and users’ involvement (buy-in) in selecting it, some implementations at certain life science companies were apparently successful. That was in part because of implementing corporate-wide best practice templates, such as for current good manufacturing practices (cGMPs).
Still, there are some vertical segments where SAP has not had that much success yet, even though one would logically expect it. For instance, there is a vibrant banking sector following the bankruptcy of most former domestic banks in the early 2000s, which resulted in the entry of foreign banks (many of which acquired the assets of their former Serbian counterparts). Still, SAP has not apparently been selling the SAP for Banking solution in this region (my guess is because of how involved it could be to bring and localize some partner solutions like that of Misys), whereas plain SAP ERP is not functionally sufficient for particular banking requirements. Similar situation is with Oracle i-flex, which too would be a great fit for banks. This lack of presence also might indicate what major effort and commitment to ramp-up partners and own staff in a new region this might require for every vendor, regardless of size.
For that reason, the banking sector still uses domestic solutions like Antegra or Pexim, although there are indications that some banks might need more functional and robust solutions and are thus looking for a better solution fit. Furthermore, SAP’s own consultants (with some honorable exceptions) in the region have not acquired great business acumen, since they are either straight out of school and/or are too programming-oriented. The situation is quite different at most SAP VARs though.
Often, to be fair, many executives at potential user enterprises know very little about the true state of affairs in the global enterprise applications market. There is a state law about public purchases (tenders) that, in theory at least, all government institutions and government-owned enterprises must abide by. The law stipulates two kinds of acquisitions based on their dollar value: 1) smaller purchases up to $20,000 (where the procedure is much simpler and requires much less paperwork), and 2) larger ones that are quite regimented. Still, the buyers can always find a way to buy the preferred solution when they know what and why.
To that end, there are no local consulting practices that can help with users’ education and selection of enterprise systems. Some selections for large and government-owned enterprises (e.g., Kompanija Dunav Osiguranje or the Danube Insurance Company, JP “Zeleznice Srbije” or the Serbian Railways Public Enterprise, and earlier mentioned Telekom Serbia , Elektroprivreda Srbije (EPS) or the Serbian Electrical Utilities, etc.), were facilitated by large foreign consulting houses (e.g., Deloitte, KPMG, Capgemini, etc.), with SAP as the usual winner (gee, what a surprise!).
Needless to say, such selection help from the consulting giants is typically quite pricey and questionably objective. Without an elaborate black-on-white document and rationale why some ERP solution was a better functional fit than the others, there is always the suspicion that the decision was made because the consulting house had a number of available SAP consultants at the time. Also, like in the case of local SAP consultants, these giant consulting firms currently employ local staff of a similar profile – the folks that have not really had a chance to become seasoned enterprise applications business/functional specialists. Again, with some honorable exceptions…
There are also some anecdotal stories (rumors) about high-level politics occasionally playing a part in such big-ticket purchases, i.e., the German Ambassador in Belgrade might bend these buying executives’ ears in favor of SAP, while the American counterpart will do that for beloved Oracle e-Business Suite (EBS). Thus, the domestic ERP providers, without name recognition and financial muscle, have not much to look for here, even if the solution could be a good fit. For instance, the only business that previously mentioned Apollo has ever been awarded by a state-owned firm and via a public tender was at Toplifikacija Pozarevac (a public utility for the town of Pozarevac), for the Apollo ERP & Billing suite, with about 6,000 consumer accounts and monthly bills.
Still, in order to obtain a better picture about the enterprise applications market in Serbia, let me discuss briefly the lower Tiers, i.e., mid-market and small-to-medium business (SMB) market opportunities too. According to data from Privredna Komore Srbije (the Economic Chamber of Serbia) and Uprava Javnih Prihoda (Internal Revenue Service, part of the Serbian Ministry of Finance), there are about 150,000 such enterprises. This market segment is thus apparently much more attractive, and there is a much wider, albeit also much more diverse and scattered, supply of software solutions.
There, Microsoft Dynamics NAV [evaluate this product] has about 50 sites, and one would expect its success in the region with an abundance of livestock, slaughterhouses and meat processing plants. However, I had no chance to check whether the astute NaviMeat or Process800 partner add-on products have been available in the region. What I have heard, though, is that some of the Dynamics NAV deployments have not been the best case studies (and references) on earth, owing to an inadequate consulting knowledge of local Microsoft VARs. Namely, these are often former peddlers of Microsoft infrastructure and volume-based desktop applications, which have attempted to become ERP consultants almost overnight.
Still, until SAP decides to launch a localized version of SAP Business One [evaluate this product], Dynamics NAV will basically be competing with bigger domestic vendors to capture the mid-market. Namely, in the Microsoft world of the midsize market, the undisputed leader is still one local ERP vendor – IIB with several dozen successful implementations of its flagship UPIS solution.
As for the lower-end of the market, the leaders are still basic local accounting packages, such as those from ABsoft and Blue Soft , each having a few thousand users. Slovenia-based DataLab’s PANTHEON ERP that runs on Borland Delphi development platform and Microsoft SQL Server database, and local Mihajlovic Soft have sold about 1,000 company licenses. In this market, there is also a plethora of one-man firms or corner-shop software companies that offer all sorts of point solutions to businesses of a like size and mindset.
In this market segment, software evaluations are often delegated to IT managers, some of which, again, know little about the market and, time and again, might receive an order from the top brass what to check out and buy. There are no structured and documented selection processes with specifications, questionnaires, methodologies, etc., so that one can hardly ever point to a proper selection case study. On the other hand, even if a firm would like to select a solution by the book, it would be in a quandary of how to, not because of the dearth of solutions, but rather because of the lack of educated and unbiased selection consultants. Therefore, willy-nilly, the software acquisition comes as an initiative of the managing director, chief financial officer (CFO) or IT manager, with so few stellar implementations and happy users that love their system.
Many times during my stay there and in conversations with local ERP practitioners, I wondered whether the educational and selection services that TEC provides would be of use here (of course, if someone would franchise and localize TEC’s evaluation centers for the Serbian market). Certainly, the prospective users here should know that they have a choice of available solutions and that they can be in the driver’s seat when it comes to selecting one. But, knowing the mentality of many of my fellow Serbs, there is lot of suspicion and resentment towards paying a consulting service fee for “selecting a simple system”, especially if someone has already made up his/her mind about what to buy.
Thus again, their readers, what is your take in this regard, and do you recognize any above attitudes and practices in your regional market too?
At the very end, I have to gratefully acknowledge two fine gentlemen with decades of local ERP and IT experience for their deep insights and factual help for this blog post. The first one is Mr. Zoran Djurdjevic, who is currently a project manager and SAP PP (production planning) module consultant with B4B. Previously, Zoran was the vice-president of the Serbian Association of IT Professionals, a team member of the Serbian National Committee for the UNESCO (United Nations Educational, Scientific and Cultural Organization) ICT (information & communication technologies) Cooperation, a member of the Serbian Economic Chamber Assembly, and a contributor to the former Racunari (Computers) magazine. As for his previous experience pertinent to enterprise applications per se, he was the CEO of DataLab Serbia, the director of marketing at former SYSCON , director of sales at Infoteh, and a project manager at former SDC-CIP.
The second one is Mr. Branislav “Bata” Djurkovic, the founder and CEO of Apollo. Prior to founding Apollo, Bata spent many years at Energoprojekt, where, as one of his last assignments, he consulted on purchasing Energy Management Systems (EMS). The purchasing methodology was done according to the World Bank guidelines, making the former Energoprojekt’s group possibly the only educated consulting environment at the time in the entire region. Apollo ERP came in the early 1990s, first in the banking sector (adopted as a solution for the Mediterranean region by then a great Italian provider Olivetti), then in manufacturing & distribution (with dozen of midsize customers) and today also for insurances, as Bata’s belief that there was no reason why a localized fully functional domestic ERP product could not compete with foreign counterparts. And the rest is history.