Organizational Forms and National Institutions
Edited by Marcela Miozzo and Damian Grimshaw
Chapter 7: Two Types of Organizational Modularity: SAP, ERP Product Architecture and the German Tipping Point in the Make/Buy Decision for IT Services
Mark Lehrer INTRODUCTION The German IT sector of the 1990s witnessed exceptional changes in IT outsourcing patterns. Prior to this decade, IT outsourcing was comparatively underdeveloped among German companies (Lehrer 2000; Grimshaw and Miozzo Chapter 6). As a result, German ﬁrms were hardly represented among the top IT services companies in Europe (see Table 7.1). Yet just a few years later the situation had changed substantially. Two major German IT service companies emerged (see Table 7.2). As Grimshaw and Miozzo (Chapter 6) document, Germany went seemingly overnight from a laggard in IT services (comparatively little outsourcing) to a leading country in IT services and outsourcing. Two major German IT service companies emerged (see Table 7.2). Why did the IT service industry develop so suddenly in Germany? The focus here is on one piece of the puzzle, namely the role played by Systemanalyse und Programmentwicklung, or Systems Analysis and Program Development (SAP) and the massive installation of SAP’s enterprise resource planning (ERP) systems by German ﬁrms. The simultaneity of SAP’s success and increased German outsourcing in the 1990s is far from coincidental. ERP software package and external IT service provision were part of a common response to a new set of technological opportunities, notably new IT architectures (client/server networks) and the advent of hardware-independent operating systems (UNIX, Windows NT). Furthermore, companies that implemented ERP systems like SAP’s R/3 software almost invariably relied on external IT consultants to implement the R/3 package. As explained below, ERP systems like R/3 require 187 188...
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