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Last week we had our Chemical Executive Advisory Council meeting, which took place in Mannheim, Germany. The Council consists of the CIO’s of major Chemical companies like BASF, Dow, Bayer, DuPont, Akzo Nobel and others.  As you could expect, a lot of discussions were around TCO and how to save costs but also other topics like sustainability were discussed. The Council had the following questions to SAP:

  • TCO and the current economic environment
    How can SAP help to reduce SAP related costs
  • Review of eSOA
    Is there proof that eSOA has lowered TCO, or raised it? What is the actual roadmap and toolset that supports the business case for eSOA.
  • Sustainability and interoperability of SAP product groups
    What is the true SAP roadmap for sustainability activities, i.e. energy management, carbon tracking, alternative raw materials, etc.

 In a roundtable environment, we discussed these questions with our board member Jim Hagemann Snabe, who is responsible for the complete Business Suite. When it comes to TCO, customers really appreciate SAP’s Enhancement Package concept. The technology is already in place for our ERP product and we just shipped the 4th Enhancement package on ERP6.0. With Business Suite 7, this concept is being extended to the complete Business Suite consisting of ERP, CRM, SCM, SRM and so on.  With Enhancement Packages, customers are able to activate only the new functionality they are interested in. This reduces the change management and testing effort tremendously and as such reduces costs of “upgrades” substantially. Actually we cannot speak of upgrades anymore. It’s more of a continuous flow of innovation we are delivering to our customers. Another advantage is that you can combine these Enhancement Packages with Service Packs installed e.g. to bring adjustments to new legal requirements in the system or to fix bugs. This further reduces TCO. The customers brought to our attention that they would need very clear and accurate information about which transactions and business processes are affected by new functionality delivered through EP’s. Although we already have tools in place to deliver this information we will follow up on this topic in one on one discussions with customers to further improve our EP concept. On the topic of eSOA , we had a very fruitful discussion about where (and where not) to use eSOA concepts. It became clear that using eSOA concepts in your core concepts like financials, costing and so on doesn’t make sense. This is our business suite. What SAP did in the last years was to Service Enable the suite to enable the creation of applications on top of the suite to differentiate. For example, RheinChemie has created a customer portal to give their customers all information about products, their specifications and characteristics, their availability, pricing, order status and so on. They used the newest SAP development tools like NetWeaver composition environment (Galaxy) and our Enterprise Services that we ship with our Customer Factsheet bundle. The Enterprise Services are ensuring the consistency of the data within the business suite whereas the new composite application can concentrate on a unique customer experience. The audience agreed on the combination

  •  Business suite as stable core  +
  •  Service enablement to build +
  •  Differentiating and innovative composites.

This equation lowers TCO and increases innovation speed, but it will raise TCO if the core applications are “falling apart” in numerous applications thereby increasing the integration effort. We took this feedback to reemphasize that we are on the right track. The Business Suite 7 is already a big step forward to reduce TCO by further increasing the integration of the different building blocks and we are going down further the path to bring applications like SRM and ERP on the same instance. 

I will discuss the Sustainability topic in a separate blog.

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    1. Franz Hero Post author
      Hi Ken,
      of course this is a delicate question that was and is still discussed within SAP’s customer community and it was also discussed at CEAC. We had a separate session about this. Perhaps I can summarize the discuusion points in some bullet points:
      – The way how the maintenance increase was communicated left a “lot of room for improvement”
      – Yes its a price increase, but SAP did not increase the maintenance fees since 10 years, that means e.g. if you bought 10 years ago SAP software worth $100 000 you paid $17 000 mainteance until now, despite all inflation.
      – SAP improved the service offerings substantially
      – Our competition is asking the same maintenance fees and sometimes even more.
      I hope this explains the situation a bit. If there is a lot of interest in the bpx community, perhaps we could organize a webcast around this to explain our offerings in detail.
      Regards
      Franz
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      1. Kenneth Moore
        Hi Franz,

        It was a rhetorical question – no need to answer.  I’m aware of SAP’s reasons that they stated.  That doesn’t mean we have to like it.

        Maybe the SAP Waldorf Developers could give up one choice on the lunch menu and pass the savings on to the customers. That will never happen, huh? He..he.

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  1. Vijay Vijayasankar
    Several things come to mind..and none of this is new 🙂
    1. Faster resolution via OSS – probably with better level 1 support
    2. Less technologies – like do we really need webdynpro for abap and java, along with java?
    3. Have better reccomendations for overlapping tools – should I use IP? or BPC? or BPS? Why am I stuck with BPS since CRM continues to only use BPS?

    I am sure others will add, so I will stop here

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    1. Franz Hero Post author
      Hi Vijay,
      you are bringing up very valid points that were also discussed at CEAC.
      Some info to point 3:
      – SAP BPS Is mandatory and required for CRM 2007 and CRM 7.0 embedded planning applications (TPM,
      Sales Planning, Account Planning, Marketing Planning)
      – Consider using SAP BPC for NetWeaver (Outlooksoft) when needing integrated planning, budgeting, and forecasting applications
      – BI-IP may be considered in specific cases for existing SAP customers
      Concerning point 2:
      You are right SAP had too many user face technologies in the past. With Business Suite 7 we reduced the technologies to three: Webdynpro abap, java and Business Server Pages.
      – SAP is using Abap mainly in core Business suite applications
      – BSP’s are used in CRM and
      – java can be used in composite applications
      But with the new release all user interfaces do have the same look and feel from the user perspective.
      The innovation speed in the area of user interface technology (specifically if you include mobile) is generally spoken very high and SAP has to adopt to this by not sacrificing the stability.
      But as said this message was also brought to Jim Snabe who was representing our board and he promised that SAP will take these issues seriously, specifically also the quality and OSS part.
      Regards
      Franz 
      (0) 

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