When reengineering rajah Michael Hammer admitted recently that up to 70% of all R-word projects ended up disappointing companies, he laid much of the blame on the human factor. Yes, cranky employees can hurt a reengineering effort, but something equally sinister, it turns out, is sabotaging organizational change. The culprit: technology.

As managers get deeper into reengineering, they've discovered that creating a 21st-century enterprise using 20th-century computer technology is fool's work. Most of today's computer systems simply don't give employees the information they need to perform their best in a newly reengineered environment. These incompatible, Tower of Babel-like systems don't let different departments like sales and accounting, or the warehouse and factory, talk to each other in the same language. Worse yet, crucial sales, inventory, and production figures often have to be painstakingly entered by hand into separate computer systems every time a person somewhere else in the organization needs information. Working this way is costly, time consuming, monumentally inefficient, and likely to kill even the most determined reengineering effort.

But don't despair. Chevron, Microsoft, Borden, Intel, and some 4,500 other companies worldwide are betting billions on what may well be the missing technological link to reengineering. It's a software system commonly called SAP, made by a fast-growing company of the same name headquartered in Walldorf, Germany. SAP software allows a company or division to standardize its information systems and give employees in a reengineered environment the data they need when they need it. The software, which runs on mainframes and client-server systems, is expensive--complete systems can run into the tens of millions--and takes time to install. Borden, for example, has been implementing SAP for nearly three years and still isn't finished.

Even so, SAP, as evidenced by its enthusiastic acceptance so far in the marketplace, seems destined to be the business applications software of choice for major corporations. The company was founded in 1972 by four former IBM employees in Germany. The engineers had the idea for SAP, but Big Blue rejected it. Too bad: After SAP came out in 1992 with a new version of its software that runs on client-server systems instead of mainframes, its revenues climbed from $532 million to an estimated $1.5 billion this year. SAP's stock, which trades on the German market, has sextupled since the beginning of 1994.

Last year SAP, whose U.S. headquarters is in Wayne, Pennsylvania, had more than three times the market share of competitors like Oracle and Baan, according to International Data Corp., a research firm in Framingham, Massachusetts. The competition, however, which makes similar software, is starting to thrive too. Baan, for instance, just beat out SAP for a $20 million contract with Boeing. The Aberdeen Group, a research outfit in Boston, predicts that the SAP-related market, which includes not only SAP's software sales but also consulting services and computer hardware made by companies like IBM and Hewlett-Packard, will hit $9.3 billion this year.

If SAP is the ten-ton messiah of enterprise-wide computing, the Big Six are its true disciples, with Andersen Consulting, ICS Deloitte, and Price Waterhouse leading the pilgrimage. Andersen and Price Waterhouse are each training 1,000 new SAP consultants this year to try to keep up with the exploding demand for their services. "We first got involved back in 1987," recalls J. Christopher Everett, who runs the SAP consulting practice at Price Waterhouse. "We'd never heard of SAP before, but we sent three guys to Germany to talk to them. They came back looking like Charlton Heston as Moses, all white as he came down from the mountain. They had seen the vision of what this could be."

While SAP has received great acclaim so far, it's still too early to tell for certain how successful it will be in the long run. It can take years before you know whether you're getting a big payback. Says Bonnie Digrius of the Gartner Group, a Stamford, Connecticut, firm that advises clients on software purchases: "Because these projects are awfully big, it takes a while for them to hit the fan."

SAP trumpets its flagship software product (officially named R/3) as an enterprise-wide software solution. That means the product can handle a range of tasks, from keeping track of manufacturing levels to balancing the books in accounting, and tie it all together too, streamlining the data flow between different parts of your business.

The goal is a company where information gets entered into a computer once, and only once. A sales rep, say, books an order for gimcracks and enters it into SAP. After that the software makes sure everyone stays informed. When the factory begins assembling the order, shipping can check its progress on-line and calculate the expected transport date. The warehouse can check its stock of parts and fill whatever bins the factory has depleted. Once the order gets shipped, the information goes directly into the sales reports for the folks at the top (see diagram).

Perhaps the best thing about the software is that it acts as a sort of template or road map for reengineering. It helps you specifically define what kind of information you need, who needs it, and when. "If you take a blue-sky approach to reengineering, the results often don't translate into implementable solutions," says Michael Pehl, CEO of ICS Deloitte.

When managers reengineer their business, they try to get their people to think about work in radically different ways--something SAP helps them do. A few years back Chevron needed to change the way employees handled number-intensive tasks like accounting and purchasing. At one Chevron subsidiary, Warren Petroleum, the workers at the Mont Belvieu, Texas, plant were writing purchase orders and invoices by hand and mailing them back and forth to the home office in Tulsa for processing. "Now, instead of waiting a week, we can drill down into SAP and get at the information we need," says Dolly Barentine, the office manager at the Mont Belvieu plant. "I can find out how much we've spent that month, who placed what order, when it was processed, and whether it was received."

SAP, it seems, can also make people's work easier. Says Chris Godwin, a Warren employee who had never used an office computer before SAP was installed: "Now I don't need to mess with any paperwork for my purchase orders." In one very important sense, reengineering means getting everyone to work as closely to the customer as possible. And what, of course, do many of today's customers need? Information. But how can you get your customers the right information as they need it, without irritatingly bouncing them from one department to another? Food giant Borden found that SAP helped it solve that problem. Says Monica Dornfeld, a Borden customer-service representative: "Before SAP, a customer like Sam's Club had to order many grocery items through Borden's separate computer systems, which meant multiple purchase orders, multiple invoices, and multiple shipments to the customer."

Determined to give Wal-Mart its Cracker Jacks any way it wanted them, David Norton, vice president of logistics, led a team of Borden workers who in 1994 began implementing SAP in order processing. Says Gena Counts, an early SAP user in Borden's Columbus, Ohio, customer service department: "One of the unique things about this software is that it forces every person who touches it to understand exactly what their business is all about--the customer." With SAP she can now track an order's status online while her customers are on the phone. Before SAP it often took an entire day to track down the same information.

One of SAP's strengths is that it helps you integrate your international operations into your newly reengineered organization. Analog Devices, a semiconductor maker in Norwood, Massachusetts, had plenty of computers but couldn't figure out how to use the technology to manage its explosive international growth during the 1980s. Traditionally each foreign subsidiary at Analog developed its own computerized order management system. It was a cumbersome way to do business. Analog's sales engineers in Germany, say, would take orders from customers there, put the orders on their own computer system, then combine all of their customers' requests and order in bulk from Analog's factories. The factories shipped the order to a German warehouse, where it was unpacked and then repacked for delivery to the customer. "The computers in each of the warehouses that kept track of inventory weren't attached to one another, and we had a hell of a lot of expensive inventory lying around," says Gerry Dundon, Analog's director of order fulfillment.

With SAP, Analog found a way to consolidate its warehouses and create a worldwide order-processing system. The Analog folks in the States now share the same onscreen information with their brethren in Germany and thus can ship product more efficiently and more cheaply. One reason SAP works well globally is that the program can automatically calculate exchange rates and translate foreign languages. Says Dundon: "If I can do things on a global basis with integrated software, the opportunities for dramatic reinvention of my business are practically endless."

Before you proceed with SAP, however, there are some caveats. First, it takes a long time to implement--in many cases a matter of years, not months--and in the process you can expect a lot of disruption. Consultants will camp out at your company, installing applications for your special needs, training your people, and working the bugs out of the system. All this, of course, is going to make you feel that SAP's name is all too appropriate, as the money flows out of your company like maple sap in the springtime. With consultants' clocks ticking, a major, corporation-wide implementation can be staggeringly expensive. Even a small SAP project can add up. Acugraph, a $25 million company in El Paso that sells computer network software, implemented a piece of SAP in only two months, an all-time speed record. Still, the $450,000 pricetag presented to CEO Dennis McGinn was more than twice the cost of the next-best option. No matter. Says he: "If we're going to be in the big leagues, we're going to need SAP to compete, and world-class solutions don't come cheap."

One thing to keep in mind: If you're going to spend a lot of money on a program like SAP, make sure you've got the right people to implement it. Says the Gartner Group's Digrius: "Don't pick computer consultants simply based on price." She insists, "If you don't look at the cultural fit or at things like industry experience and the talent of the project manager, you probably won't get a cost-effective solution." She may have a point. If in the end your computer system doesn't match your business goals, who cares what you paid for it?

Reporter Associate Madeline Jaynes

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