Beginning on Tuesday March 22, Supply Chain Matters will be in Orlando  attending and providing commentary from the SAP Logistics and Supply Chain, PLM, and MFG 2011 conferences being sponsored by the SAP Insider organization.  In addition to Supply Chain Matters commentaries, readers can also look forward to authored commentaries on the SAP Insider blog as well.

This conference occurs annually, draws fairly large attendance, and is where SAP supply chain management customers gather to exchange learning, education and insights regarding SAP’s current and future technology addressing global supply chain process needs.

If you are attending this conference, please seek me out or drop us an email.  We would enjoy speaking with you.

We also extend thanks to SAP for inviting and hosting us at this key customer event.

Bob Ferrari

In our Part One commentary, Supply Chain Matters reflected on a rather contrasting year of highs and perceived lows for SAP. Certainly, many executives at SAP may take issue with the notion of lows, but feedback should also be taken with an open mind.

At the SAP Influencer Summit, SAP executives stressed that the company will not pursue a growth by acquisition strategy, but rather an innovation based strategy. CTO Vishal Sikka made a bold and revealing statement: He noted that customers don’t really care or seek a technology stack.  They are instead seeking solutions to their business problems. While that was an obvious barb toward Oracle, bravo for telling it like it should be told.  SAP executives are also fully aware that not all customers elect to follow SAP’s technology direction, and many remain on older platforms.  This year alone has brought even more choices and another upgrade to the SAP Netweaver integration platform.

Customers do seek support for their business process challenges, and that especially includes procurement, contract management and supply chain process needs. We continue our view that SAP has been somewhat remiss in stepping-up innovation across the entire SCM area. An increased global supply chain presence introducing higher levels of complexity coupled with business process needs for more timely synchronization of planning and execution process activities certainly qualifies as needs for streamlined business solutions.  It took nearly five years to bring transportation management capabilities up to customer expectations for required functionality. Similarly, SAP Supply Network Collaboration has experienced a promising, but elongated period of planned enhancements, with much remaining to bring this application to current ‘best-of-breed status’.

As we approach 2011, SAP should perhaps reflect more on Vishal’s statement and adopt some company-wide New Year’s resolutions.   Here is a potential list for consideration:

• A continued focus in innovation combined with consistent execution and quality in product release programs.  Enough of the re-branding and spiffy videos. Customers know SAP and new prospects can find out more about SAP in social media than in expensive videos and branding campaigns. We believe that SAP customers seek clear communication of product direction, firm delivery timetables and logical customer upgrade paths.
• Serious efforts directed at simplification in organizational structure coupled with more accountability for senior management performance. We trust that accountability for the oversight and direction of the ill-fated TommorowNow venture would be included and serve as a milestone for accountability.
• Continue to compete on what brought SAP its success. That would include deep roots in understanding and responding to business and unique industry business process needs, the scale and scope of SAP footprints, and a renewed desire to work in partnership with customer needs. SAP could garner more widespread customer goodwill if it focused more on customer timetables vs. those of SAP
• A renewed emphasis on enabling win-win ecosystem partnerships with smaller as well as larger partners, with genuine opportunities for joint goal accomplishments.
• Achieving its five year old vision of enabling more adaptive and more globally oriented supply chain planning and execution processes for its customers.  That would include a serious step-up in the synchronization functionality of SAP Supply Network Collaboration and a faster, more streamlined SAP Advanced Planning and Optimization (APO) application that could perform more rapid planning cycles.  APO is a natural for enhanced in-memory computing technology enhancement. Deeper supply chain planning, collaborative execution and coordination within SAP Business By Design should be a resolution as well.

Installed base customers know that they have a stakeholder interest in SAP’s continued success and market performance. Customers also need a more responsive and predictable SAP.   The highs and lows of 2010 should be tucked away as a learning. Customers really care that a vendor such as SAP can not only support scale of implementation, but have the flexibility to serve individual customer needs, large or small.

Bob Ferrari

Enterprise software providers can have periods of highs and lows but in the case of SAP, 2010 should be logged as the year of both. I had the opportunity to view live webcasts in conjunction with the SAP Key Influencer Summit held this week, and I could not help but reflect on a rather interesting year for a company that is trying hard to increase momentum, and better respond to more dynamic market with a even keel.

For SAP, 2010 was no doubt, a year of highs and otherwise.  There are many large and small SAP installed base customers that continue to have a stakeholder interest in SAP’s success in innovation and business support, but at the same time, have their own challenges in keeping up with constantly changing business needs while reducing unnecessary costs.  Customers need to have choices among various dynamic enterprise software providers since that helps keep the market vibrant and constantly innovating vs. the taxing of customers with the burden of maintaining older and less responsive technology. This has special significance for supply chain management process needs.

SAP entered 2010 with a two year burden of intense activity directed at the re-architecting of its core ERP system, which in our view, hindered the pace of product innovation.  A near revolt from global customers relative to increased annual software maintenance fees led to a decision of change at the CEO level.  In early 2010, the Co-CEO structure of Jim Snabe and Bill McDermott assumed the reigns.  We have previously voiced our observation that co-CEO models have marginal track records, especially in times where strong leadership models are required. To their credit, their first agenda item was to speak directly with hundreds of customers to gain direct feedback on customer impressions of SAP as a partner.  We only wish we could have been able to listen in on some of these sessions.

May 2010 provided highs and perhaps other reactions. In mid-May, SAP announced its intent to acquire database provider Sybase for a reported $5.8 billion. Many of us in the blogosphere questioned why such a high price, as well as the long term value of the acquisition.  In August, Sybase management responded by articulating the framework of a combined vision for on-device applications, but many will have to wait until next year to see some specifics in terms of applications support.

A high point in 2010 was the annual Sapphire conference held in May. Masterfully orchestrated and globally simulcast, the event provided vision and an uplifted SAP.  In a previous Supply Chain Matters commentary, we noted our observation that SAP had returned to its roots for articulating its former role as a broad based business solutions provider, avoiding the previous one trick, sales oriented marketing shows of the past.  The vision and organizational alignment in product direction looked sound, and the in-memory concept of future product direction had the potential to be game changing. In late September, SAP announced its Q3 earnings which reflect 12% revenue and 31% profit growth year-to-date. That is an obvious positive. Disappointing remains the lack of any appreciable progress in SAP Business By Design’s depth of supply chain functionality. SAP management indicates that there has been lots of large customer interest in the business subsidiary model of BBD. If so, the suite needs to have deeper supply chain planning, execution and fulfillment collaboration functionality to tie back to corporate systems.

The obvious low point was the announcement of the November verdict in Oracle vs. SAP TommorrowNow where a federal jury awarded Oracle $1.3 billion in damages for copyright infringement by this SAP subsidiary.  Beyond the implications, if upheld in the appeals process, of the largest amount of copyright infringement ever awarded, was the outright admission by SAP of liability.  The obvious question in hindsight lies in the degree of management and oversight that SAP had in managing the activities of this subsidiary, not to mention the wisdom of the this acquisition. If the verdict is upheld, these funds that would have been invested in innovation or people will instead go to an arch competitor.

Other disappointments were the delay in Release 5 of SAP Business Suite scheduled in late summer, which was re-scheduled to December.  This followed last years delay and entire revisit of the SAP Business By Design product architecture. An argument can be made that SAP is serious enough about meeting customer expectations that it is willing to make the toughest management call.  That is a good news, since some software companies would forgo initial quality for revenue goals.  Conversely, a track record of product milestone delays does not help customers in planning their own technology timeline deployments, and nor does it help instill confidence to make the leap into a new technology platform.

In the combination categories, in our view, were statements made regarding the breakthrough release of SAP Business Objects 4.0, SAP NetWeaver 7.3 and of course, SAP Business By Design 2.6. I note these in the combined category because they acknowledge it has taken multi-year efforts to bring these platforms to what is termed breakthrough status, while communicating to customers months ago on the compelling benefits for each.

In the category of encouraging is this month’s announcement of the initial release of the HANA application (high performance analytical appliance) which was conceived and developed in a matter of months, and can have significant implications for future supply chain analytical enhancement capabilities.

In our part two commentary, we will reflect on our 2011 resolutions for SAP.

Bob Ferrari

Supply chain professionals who are working with SAP as their ERP backbone, or any collection of SAP Supply Chain Management (SCM) or Supplier Relationship Management (SRM) applications more than likely are aware of the SAP Insider publications.  This organization not only produces publications and articles specifically directed at the SAP installed base community, but also sponsors a series of quality conferences and training events on key supply chain management process and information management needs. I have in the past had the opportunity to speak at some of their conferences and the Insider teams go to extraordinary lengths to insure that presentations deliver a learning experience.

At the recent SAP ASUG and Sapphire Conference held in Orlando, Bob Croce, Product Director of Wellesley Information Systems, the parent group, invited me to view the new Insider Learning Network and I was very impressed with the content and options available for community members. This community was established to help SAP users network and exchange related learning and information with other individuals, or to find expert advice or educational opportunities.  You can also perform your own blogging with other members of the Insider Community. The community can be a further social media option for your needs in SAP applications knowledge. 

You can view an introduction and sign-up for this new network at the following Insider Learning Network link. 

If you do decide to join, look for my name as a connection.

Bob Ferrari

I recently had the opportunity to speak with Krish Mantripragada, Vice President of suite solution management for SAP.  For those readers who may not be aware, Krish oversees end-to-end supply chain and manufacturing business process management applications for SAP. I know of Krish from my previous contributions as a global product marketing manager for mySAP Supply Chain Management applications suite. We talked about a number of topics regarding business developments within various industry supply chains as well as SAP’s current and future direction in supporting customer needs.

One of the more interesting topics for me was discussing SAP’s Supply Network Collaboration (SNC) application.  Experienced SAP supply chain customers may remember this application by its original name, Inventory Collaboration Hub (ICH).   The application was first launched in 2003 as one of the very first SAP composite applications that could take advantage of the then evolving technology components of SAP NetWeaver.  The application itself was designed as an extension of both SAP’s ERP and Advanced Planning Optimization APO’s demand, supply and purchase order planning capabilities to support broader many-to-many supplier focused collaboration scenarios, such as a vendor managed inventory (VMI), responsive replenishment or purchase order release process. 

In 2005, SAP began to initiate organizational changes that have in my view helped to add more customer value to this very useful collaboration focused application.  First, as part of a large-scale restructuring effort driven to service enable the entire SAP applications portfolio including ERP, SAP reorganized its solution teams to be more end-to-end process oriented, returning to an end-to-end process view of customer business process needs.  The industry business units (IBU) also gained greater say in overall development schedules.

ICH was renamed to SNC, and SAP senior development executives addressed customer confusion regarding the overlap of SCM and SRM solution suites for supply collaboration process support, particularly in the area of purchase order coordination and management among external suppliers. Incremental functionality was added to support needs for supplier focused and contract manufacturing coordination, along with added customer collaboration processes.  A broader use of NetWeaver technology components and additional industry scenarios such as Life Sciences supply chain collaboration process support have led to SNC being one of the more popularly adopted applications within the SAP Supply Chain Management suite.

I’ve noted this brief history of SNC to emphasize a rather important take-away in software product management and marketing.  Although it was not always thus, SAP is overcoming its tendencies toward allowing organizational barriers to confuse important customer business process needs and SNC is turning out to be a prime beneficiary.

Nest month, SAP will be hosting its annual North American ASUG and Sapphire conferences, and I have been invited to participate in the worldwide blogger coverage of this event.  I plan to take advantage of that venue to further investigate SAP’s progress in responding to global supply chain business and technology needs within the SAP Business Suite and particularly the progress made around the Supply Network Collaboration application.

Bob Ferrari