How far can SAP go beyond the enterprise?
SAP has a dominant position as the supplier of enterprise software for the biggest companies. And SAP is sure to make big gains in the SME space. SAP also has a footprint among nonprofits, government agencies and so on. The question is, how much more potential is there for what SAP does best?
My take on the issue is that there is huge potential if we only have the courage to grasp it. Recall that wherever people or goods or money are interacting in an organized way, there is scope for software to orchestrate the interaction. The only limit is set by the hardware and software infrastructure that sustains the information flows, and this limit is being stretched speedily outward every day. For example, as new user interfaces gain traction, so the scope for the sort of software that SAP ships increases.
Consider some recent history. Deskbound workers have long benefited from comprehensive access to business information from SAP systems, but now notebooks with gigabyte memories and wireless LAN have enabled consultants and others on the move to leverage the same resources. This is a huge increase in depth of penetration into the world of business. Another increase in depth comes with handheld organizers and smart cellphones, which empower not only information specialists but also employees who need only occasional access to enterprise data. Together with widespread deployment of RFID tags, mobile access gives an order of magnitude zoom into the real world of business.
So much is familiar, but more will come soon enough. Augmented reality (AR) headsets, first for engineers and mechanics and then for many more, will project animated visualizations of business processes directly onto the real world, not just 24-7 but 60-60. If SAP can stay on top of 3D animation developments for AR systems, this will pay off handsomely. To see the real potential here, recall that a business process is any well defined (hence algorithmic) process that adds value (hence revenue), such as fixing a car, flipping a burger, or cutting hair. Any company that supplies the software and infrastructure to enhance or improve the quality, effectiveness, productivity or efficiency of such processes has a revenue stream worth fighting for.
But all this is only half the story. We all know that a free enterprise economy is a moving feast, where again and again the big old dinosaurs that lose their drive get replaced by nimble startups with good business models. There is a constant turnover, with new companies exploiting ever new business sectors by finding ever new ways of adding quantifiable value and hence creating a sustainable business. What SAP needs to see here is that there are not just 25 industry sectors, set in stone, to serve, but an infinity of new possibilities. In each case, the key to success for SAP is to get involved early, before the new startups find other big brothers to give them the backing they need.
Again, a few examples suggest more. Once, driving a taxi in big city was a highly skilled job that required expensive tools and years of training, and hence a taxi service was a natural monopoly. Now anyone who drives a decent car with a hands-free phone and a satellite navigation system can do the same job and undercut the monopoly. A new business sector is born and variant models can compete. Once, coffee bars were boutique businesses, each bar a one-off, and getting them right was an art. Now big chains have hammered the art into a science and offer standard outlets that can be customized to give that boutique feel every time, with all the gains in quality control and productivity that come with a large operation. The same story goes for other retail sectors, such as clothing, books and wine. In all such cases, complicated processes become amenable to precise analysis and reconstruction using increasingly powerful IT resources, resulting in quantified added value and accelerated evolution of business models.
The further possibilities are so numerous that the mind boggles. Anything we do that reliably adds value can become a business, and SAP could be there to support that process. As the technology for micropayments becomes ever more friction-free, so payment for ever more trivial services can be routinized and hence business models for delivering those services can become viable. Examples:
- Sorting and packaging household garbage for professional disposal is a bore. It is also a business opportunity for anyone who can find a way to deliver the service for a few cents a pop.
- Washing and cleaning the car or the dusty surfaces at home, properly, in all the corners, needs a human touch. This too is a business opportunity for anyone who can offer an easy and efficient service with good quality control and a professional billing process.
- Routine medical services like check-ups are still an expensive professional monopoly. With good online databases and cheap onsite scanners and monitors, a startup could offer many of these services more efficiently.
- Clothing can be cleaned and laundered more easily if clothes are tagged, so that you can drop your soiled items unpackaged into a handy public bin and get them delivered, clean and pressed, to your designated locker the next day, all for a few cents deducted from your bank account.
These are just a few ideas, drops from an ocean. SAP could offer big brother support for all such ideas and accompany the startups from day one. What better way could there be to build a loyal customer base and secure the company’s future for generations to come?