In-Depth

SAP Acquires Pilot for Strategy Management

SAP AG week moved to close the loop on business performance management with its acquisition of strategy management specialist Pilot Software.

• By Stephen Swoyer
• 02/28/2007

Software giant SAP AG last week moved to close the loop on business performance management (BPM), snapping up Pilot Software, a privately held purveyor of "strategy management" software.

That’s SAP’s spin on its acquisition, in any event. Spin or no, there’s an undeniable logic to SAP’s argument, which, thanks to Pilot’s emphasis on middle management (i.e., the folks-in-the-middle business decision-makers commonly charged with managing and enforcing top-down business strategy) can now claim to meaningfully address business alignment at both the top and middle tiers of an organization.

"Typically Pilot applications are being used by large audiences, customers that have hundreds, thousands, or even tens of thousands of users in one organization," says Lothar Schubert, director of Netweaver solution marketing with SAP. "It’s not just a top-down approach for strategy management. It really addresses middle management, and ties into our [existing] performance management solutions."

In this respect, Schubert says, strategy management is a subset of performance management. "Performance Management is broader, but strategy management is a subset of it. [Strategy Management] is really where you define and codify the strategy of the organization, so from top management comes the strategy—say, you have to increase return of capital by X percent. Now if I’m in the customer support organization, I have my own objectives that I have to define, and they have to be linked ultimately to supporting the corporate strategy."

The problem, Schubert argues, is that middle managers frequently don’t have any idea how the decisions they’re making—in every-day, tactical situations, anyway—contribute to the execution of corporate strategy.

That’s where a tool like PilotWorks can help, he says: it uses "industry-first pathways" (which depict the stages of an organization’s long-term vision); "process and goal diagrams" (which help organizations visualize their strategic plans); and "cause & effect" (a visual tool that illustrates which objectives play primary, secondary, or tertiary roles in meeting goals). The idea, Schubert argues, is that PilotWorks gives managers a graphical, intuitive environment in which to visualize, discuss, and update their goals.

In addition, Pilot Software brings PM sales and marketing expertise to the table, too: CEO Jonathan Becher and director of product marketing Ranga Bodla have both written extensively about performance management.

Pilot Software has more than 150 customers, including firms like Coors Brewing Company, DaimlerChrysler, Sara Lee, and Sony Music Entertainment, Schubert says. Going forward, SAP expects to incorporate PilotWorks into its application stack and to integrate it with NetWeaver, too. Schubert ties the Pilot acquisition into SAP’s targeted analytic push, which—since it first kicked off two years ago—now includes a line of industry-specific analytic applications, too. (http://www.tdwi.org/News/display.aspx?id=7746)

"SAP has had a strong push for analytics, where we’ve not only acquired vendors [such as Pilot], but we’ve recruited people with [analytic] expertise, too," he claims, citing defections from Informatica, Hyperion, and the former Siebel Systems. "SAP’s strategy is to bring together analytics and transactional execution—to bring analytics where it’s most needed in the operational context. So when you’re buying something online, for example, we use predictive analytics to suggest what kind of [other] products you might want to buy."