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This blog is part of the Retail Innovation Strategy and SAP Technologiesblog series.

 

Tim O’Reillywrites in his blog Web 2.0 Compact Definition: Trying Again: “Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform.” Here is my attempt to describe how SAP is positioned to some of these rules and I encourage the community to fill the gaps.

About SAP and Web 2.0

Web 2.0 is placed in the business sector of the innovation radar as it shapes the dynamics of the marketplace of the retail industry. Web 2.0 is ranked by Gartner as a transformational technology with less than 2 years until mainstream adoption. A general discussion of Web 2.0 can be found at wikipedia under web 2.0, including a wonderful web 2.0 tag cloud that links directly into related terms in wikipedia.

web 2.0 in the context of the innovation radar

In my recent blog “Architecture, Vitruv and Web 2.0” I discussed briefly that Web 2.0 may be seen as the final proof that differences in design principles between constructing “digital buildings” for “digital natives” and constructing buildings made of bricks and mortar for “physical natives” is diminishing  and Vitruv‘s 2000 years old definition of design principles for the architecture applies also for IT. Web 2.0 is comprised of so many things that touch basically all aspects of architecture. Therefore, I will try to group the discussion along the three pillars of Vitruv’s definition of architecture: venustas (gracefulness), utilitas (usefulness), and firmitas (firmness).

SAP and the venustas architecture aspects of Web 2.0

Venustas (gracefulness) of Vitruv’s definition of architecture covers all esthetical aspects; thus we look at the Web 2.0 tags like design, joy of use, and user-centered design utilizing Rich Internet Applications.

Since the rise of Apple’s stock price through devices like the iPod or the iPhone, it is obvious that joy-of-use and design make the difference between enthusiasm and a basic commodity in consumer perception for devices as well as software. And consumers continue to gain importance in the overall IT service space versus the traditional business user. To this end, Gartner identified the Mega Trend of consumerization of IT: “The increasingly powerful global communities and the changes in societal behavior arising from the consumerization of IT will lead to social and economic disruptions, which will affect the balance of power among the enterprise, technology providers, the individual and the state“. Web 2.0 is building a kind of symbiotic relationship with IT consumerization, and industries like retail that are interfacing through CRM with consumers are at the epicenter of both trends that build on an ever growing group of “digital natives” where Web 2.0 technology has become the foundation of their societal interactions.

SAP’s CRM product interfaces with consumers and business users and is therefore the prime candidate to look for venustas. SAP has invested tremendously in its CRM 2007 release to improve the user interface experience. Paul Greenberg, a CRM expert, writes in his blog Its 2008. SAP FINALLY Gets It. They Really, Really Do…..: “the new use interface of SAP CRM 2007 which was I think the best looking interface and perhaps the most functionally useful and simple one I’ve ever seen in a large enterprise CRM application” and continues later in saying that “SAP is living the Web 2.0 “philosophy” or whatever you call it and they are different than they were even a year ago.” In direct comparisons that we have performed as part of an evaluation project between Siebel 8.1 and SAP CRM 2007, we were also surprised to see how SAP’s user experience has improved. Obviously, SAP is now paying more attention to user-centered design or, as Paul says in his blog: “None of that “traditional” SAP “we’ll do it and you’ll like it” approach that characterized the past.” In the SAP blog Web 2.0 in Action! How SAP is Leveraging Web 2.0 in CRM to improve customer experience, the speakers give a very good overview of the current capabilities of the CRM GUI.

What about SAP ERP? From my personal experience as a corporate citizen , I can’t wait until I see considerably more venustas in my user experience with SAP ERP. But I do see light at the end of the tunnel, when I look at SAP’s user interface technology and strategydocument. Sven Denecken, a SAP ERP product manager, writes in his blog MarketTrends@ERP (1) Market trends and expectations from users: “I would not go so far and position Web 2.0 “enablement” with this, watch out for a blog on this from my colleagues around future at ERP.”  Well, I will watch for it and do hope that SAP understands the effect of consumerization of IT.

Clearly, companies like SAP, Oracle and IBM have traditional been focussing on the enterprise needs and are now challenged by the growing expectation of business users that in their private lifes are experiencing what a user experience can look like, for example in Apple products. The pressure to have better design and joy-of-use in business applications is increasing and will become more dominant in corporate IT decisions; a recent proof is the migration of 12.000 desktops to Apple at Springer, where the CIO Dr. Mathias Döpfner, argued specifically with the design and joy-of-use and ended his message to the Springer employees with: “perhaps you will have even more fun at work“. The disruption of the traditional business user market is starting…

 

Utilitas (usefulness) Aspect of Web 2.0

Utilitas of Vitruv’s definition relates to the use of buildings and the provided functionality. Sharing, blogs, wikis, collaboration, social software, recommendation, long tail etc. increase the usefulness of Web 2.0 applications for the growing population of “digital natives”. Examples of business scenarios in the Retail industry is community marketing, recommendations based on mixing customer preferences from enterprise internal sources as well as information gathered from social software, or more easily implementing Distributed Order Management leveraging Web Oriented Architecture (WOA) to easier integrate with partners.

SAP CRM as well as SAP NetWeaver Portal are amongst the usual Web 2.0 suspects. SAP CRM’s Web Channel (see the retail reference architecture in  About SOA at SAP) is the main starting point to enable “long tail” business models and social networking with consumers as part of sales, services and marketing processes  and the term CRM 2.0 has already been coined for the CRM subset of Web 2.0. In Gartner’s Magic Quadrant for E-Commerce, 4Q06, a recent but rather old and pre CRM 2007 research, SAP is positioned in the challenger quadrant, leading slightly to its arch rival Oracle, but maintaining overall the 3ed best ranking with ATG and IBM in the leaders quadrant (this research is to be updated soon). SAP NetWeaver Portal is positioned in the leaders quadrant in Gartner’s Magic Quadrant for Horizontal Portal Products, 2007research, leading to Oracle by a hair’s breadth but trailing the leader of the pack, IBM. Thus, both SAP CRM and the Portal start from a good position. However, as of today, there are no out of the box sales and service processes that integrate information from social software, product blogs, wikis etc. SAP continues to focus its investments in CRM, most likely to establish a leader position in Gartners magic quadrant for e-commerce. Overcoming the current lack of Web 2.0 collaboration features like wikis, as outlined for the with the next Portal 7.0 release (Collaboration Features of the Portal), will be a major enabler to create packaged CRM 2.0 functionality in the near future.

 

SAP and the firmitas architecture aspects of Web 2.0

Firmitas (firmness) covers the area of structural design, tooling and materials (= infrastructure) in Vitruv’s definition of architecture. The stability and technology elements of IT systems is currently commonly understood as “architecture”. I truly think that this is an overly narrow interpretation of architecture. However, I will not change or comment each citation’s usage of the word architecture. Therefore, the word architecture in this paragraph refers most of the time actually to the firmitas dimension of Vitruv’s definition of architecture.

Structural Design

From as structural design point of view, Web Oriented Architecture (WOA) is a guiding principle for Web 2.0. In Gartner’s research “Understanding and Applying the Design Differences Between WS-* Based Architecture and Web-Oriented Architecture“, the authors explain the difference of WOA and WS-* based architectural styles of the SOA family. In a nutshell WOA is:  “A set of specifications and an architectural style centered on two fundamental (required) standards: URL and HTTP. WOA is further characterized by Representational State Transfer (REST) and plain old XML (POX) over HTTP integration.”  WS-* is defined as: “A set of specifications and an architectural style centered on two fundamental (required) standards: SOAP and WSDL.” A very good graphical representation and down to earth discussion can be found at Dion Hinchcliffe’s blog “The SOA with reach: Web-Oriented Architecture“. A main difference between WOA and WS-* is, that WOA does not differentiate between an API and a GUI as separate interfaces to a resource, which is on the other hand a major distinction for WS-*. Another major difference is functional richness of WS-* due to the many specifications to master “enterprise integration”. However, that richness causes complexity that seems to slow down the wide adoption of WS-*, especially for cross inter enterprise projects. Therefore, large scale Web service providers like Google or Amazon are designing their services according to WOA design principles; this is a proof that WOA leads to highly scalable and flexible applications that are easily integrated, mixed and re-used in often unforeseen ways. Gartner predicts that “By 2012, 25% of new enterprise applications will adopt WOAs, which will require significant changes in data and process models” in its report Predicts 2008: Business Applications’ Architectural Styles Are Changing. The technical challenges for these Extreme Transaction Processing (XTP) “computing clouds”, alike to traditional Software as a Service (SAAS) applications, is to master high availability, reliability, manageability, security, metering, multitenancy and elasticity, as well as the features of traditional transaction processing on a global scale, that is beyond the normal enterprise level that ERP systems usually cope with.

Now, what does this mean relative to SAP? In my blog About SOA at SAP I wrote that SAP’s roadmap to SOA for the Business Suite is not a radical re-write of its existing applications, but an evolutionary “outside in” re-design, where a facade of Enterprise Services is but on top of the re-engineered ABAP based code in order to establish the foundation for extensibility through Composite Applications.  The Business byDesign (BBD) product, which is SAP’s Software-as-a-Service (SAAS)offering, is a rewrite of the functionality below that facade using ABAP. Both architectures are based on the NetWeaver platform and use the WS-* style of the Enterprise SOA architecture from SAP. Besides the NetWeaver platform , BBD usesMaxDB as its database, and leverages Adaptive Computing in the SAP operated datacenter. Some more detail may be found at the interview SAP’s Peter Zencke: Inside Business ByDesign. Forrester, wrote in their research “SAP’s Business ByDesign Faces Delayed Ramp-Up” that Mega-Tenancy” Deployment Strategy Has Proven To Be An Architectural Challenge“, causing a delayed adoption of this offering. Nevertheless, BBD is SAP’s first step to move ERP to the internet as a platform and SAP is “eating its own dog food” while doing so. This is a huge opportunity for SAP to toughen the underlying NetWeaver platform for global scale computing.

Tooling and Infrastructure

An important technique for Web 2.0 applications are mashups, that merge content from different sources, client- and server-side. The concept is related to Composite Applications. Both Composite Applications and Mashups have much in common, as they are building new functionality from existing Web Services. However, Composite Applications are process centric, business user focused and mainly based on WS-* style of Web Services, whereas Mashups are data centric, consumer focused and mainly build on WOA style of Web Services . The emerging “Enterprise Mashups” is the consequence of joining the two concepts, or as Dion Hinchcliffe’s puts it in his blog “Enterprise mashups: More about processes and less about services?“: In the past I’ve written about the need to provide an enterprise ‘context’ to Web 2.0 software in order for it to flourish […] :Enabling outcome-driven activities, or business processes by any other name.  And though the first great mashup tools we’re seeing emerge are still primarily about integration of data, it’ll be the ones that take it to the next step that might really break out.” Thus, business application providers like SAP should target their tooling and material to enable Enterprise Mashups in order to anticipate the demand of consumerization in the enterprise.

 

As I have pointed out in my blog About SOA at SAP, SAP’s tools are strong in constructing composite applications that leverage their Enterprise Services (= material) as well as other Web Services, but SAP is not really good in providing the tooling to build business applications from scratch. Thus, you find SAP is leading amongst the “big four” (IBM, Microsoft, SAP, and Oracle) in the Magic Quadrant for Application Infrastructure for Composite-Application Projects and SAP is trailing the “big four” in the Magic Quadrant for Application Infrastructure for New Service-Oriented Business Application Projects, 2Q07. Hence, SAP is in a pool position to construct the tooling for Enterprise Mashups, and according to Forrester’s recent report The Mashup Opportunity: “Vendor Strategists Must Develop A Mashup Road map Today; […] Only a select few, such as Oracle, SAP, and Salesforce.com, will have the heft to become mashup platform vendors.” SAP is apparently working on such a roadmap and positions Enterprise Service Composition Platform (Pronounced ESCaPe)according to a SAP Research Presentation Mashups for Composite Enterprise Applicationsas a mashup platform (see also the blog Towards Mashups for Enterprise Applications).

Conclusion

 

SAP’s abilities to leverage Web 2.0 for business applications is very promising:

  • Venustas (gracefulness): SAP’s approach relative to design, joy of use, and user-centered design utilizing rich internet applications as exposed in CRM 2007 is promising. It remains to be seen how the user experience of typical ERP business users will benefit from Web 2.0 trends in these areas.
  • Utilitas (usefulness): The demand for sharing, blogs, wikis, collaboration, social software, recommendation, long tail etc. increases with the growing population of “digital natives” and SAP has a promising platform to support these functions in the near future. SAP continues to focus its investments in CRM, most likely to establish a leader position in Gartners magic quadrant for e-commerce and CRM 2.0 features such as blogs, wikis, podcasts, user communities into the sales, services and marketing processes. This demands a broader set of structured and unstructured data to be managed and analyzed. SAP has the necessary building blocks for CRM 2.0 but still needs to integrate its social media tools with the CRM processes utilizing its technology stack. SAP as a company is doing a great job with the SDNand BPX communities for themselves in leveraging these as a platform to listen, gather and co-innovate with their partners. I am sure that SAP will package these experiences into their software soon.
  • Firmitas (firmness): Web 2.0 is about moving to the internet as platform, as Tim puts it in his statement cited at the top; that requires a technical design which scales well beyond traditional ERP applications. Web Oriented Architecture (WOA) has proofed to be a solid foundation for globally scaling applications. SAP’s architecture is based on the more complex but powerful WS-* type of Enterprise Services. SAP’s position relative to WOA is not clear. However, with its Business ByDesign product, SAP is hardening its NetWeaver technology foundation for global scale, which is very promising. SAP’s tooling to support the emerging Enterprise Mashups builds on its strong positive capabilities in the Composite Application space, but the roadmap for Enterprise Service Composition Platform must be executed quickly to maintain leadership.

Overall, it takes probably another year until SAP has transfered the consumer centric Web 2.0 to packaged business applications for the consumerized enterprise of tomorrow.

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4 Comments

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  1. Clement Selvaraj
    How about these ?
    1. On a CRM Account if CRM can display your best contact working at the Account from “Linked In”
    2. If you can bookmark a CRM page in digg / delicious
    3. Integration with On Demand solutions (like facebook, twitter etc..) out in the market for Collaboration
    And what more ?
    (0) 
    1. Stephan de Haas Post author
      Dear Clement,

      your points are excellent examples and I think there are even more possibilities to change from CRM as a inside out to an outside in tool. Furthermore, amazon sets the benchmark for functionality in the e-commerce / long tail area… Here is work do do, especially since SAP dropped in the latest e-commerce magic circle evaluation behind Oracle…

      kind regards

      (0) 

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