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Pundits who attended a recent blogger meeting in Palo Alto were presented with insights into SAP’s Cloud strategy. Many lamented the lack of direction and clarity in the related messaging. I didn’t attend the meeting but I’m slowly getting a very clear understanding of the NetWeaver Cloud and its relationship to SAP’s entire Cloud strategy. This perspective isn’t coming from the usual broad marketing brush strokes but rather through an analysis of the solutions planned for this platform (for example, SAP for Utilities Cloud EV Readiness Package, Connected Car Initiative, M2M Initiative, etc). In my opinion, too much attention is being paid to the LoB OnDemand applications (SuccessFactors, Travel OnDemand, etc) while more innovative solutions are quietly emerging on SAP’s PaaS.   A deeper analysis of the recently announced SAP Precision Retailing solution will provide some indication of SAP’s momentum in this area.

A push in the right direction

I remember hearing about SAP’s Cloud-based Retail Framework – the Apollo project – last year in various discussions but not until Peter Peshev reminded me of the fact that SAP Precision Retailing was based on NetWeaver Cloud did I decide to revisit the solution and do some digging.

Mohamed Amer’s short blog about the solution was a good start and I started following the included links.

I was blown away by the amount of accompanying material that was available – even more I was impressed by the maturity and depth of the offering and what this meant for the maturity of the NetWeaver Cloud solution on which it is based. 

The intention of this blog is to surface this new solution – provide a general overview of its functionality and describe why I think the solution is so interesting.

A quick description of the solution

The solution has a strong mobile-focus with a Smart Shopping app for consumers, is based on SAP NetWeaver Cloud and HANA, has cool analytics, represents a hybrid architecture with OnPremise tightly integrated, REST APIs … what else do you want?

SAP Precision Retailing (SPR) enables one-to-one marketing interactions between retailers and consumers to inform and influence consumers in real-time at the point of decision.

To consumers, SPR is a digital Personal Shopping Assistant that delivers rich product information, special offers, and qualified recommendations. Enabling interactions with the consumer when and where he or she is actively engaged in a shopping activity and ready to select a product is the first critical element of SPR. The second critical element is the capacity to leverage these interactions to extract the shopping context of the consumer (who, where, what, and when) and select in real-time the right information to send to the consumer with a high degree of personalization, maximizing its impact. Finally, SPR generates a wealth of information on consumer behavior from the time consumers leave their computer screen, to the time they arrive for check-out with a credit card in hand. SPR includes role-based business dashboards, providing real-time understanding on consumer behavior, promotions, and suggestions performances. [SOURCE]

Remember – this is isn’t a solution planned for 2014 – its status is Release to Customer. Indeed, this solution is already being used by customers including L’Oreal, European grocer Groupe Casino and the Montreal Transit Agency.

Technical Architecture

A quick look at the technical architecture shows that this solution is non-trivial and involves many moving parts.

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[SOURCE]

Although these various components all play critical roles in this particular solution, I’m more interested in the underlying services and their potential to build other related solutions.  If you are partner building a different retail solution, won’t it be great to have such services (Shopping Services, etc) as your foundation.  I don’t know whether these internal components will also be exposed but I’m hopeful that this will occur as well.

REST APIs

Despite their critical importance in the Cloud paradigm, I’ve always been hard-pressed to find business-related APIs in SAP’s Cloud offerings (there are some more technical APIs available). There is announcement about a new “open” API for Sales OnDemand but no further details.

You can imagine, therefore, my surprise when I found the documentation for the two SPR REST APIs.

Device Services API

The API to be used by the retailer’s developers, partners, or SAP custom development organization to access shopping services, and consumer profile data. This API is designed to support a variety of presence scenarios, including mobile applications, in-store kiosks, POS and retailer consumer portals.

Partner Service API

The API to be used by the retailer’s IT developer or partners to integrate the retailer information system with SPR using a Machine to Machine (M2M) interface. The API supports creation and updating of data in the back office, both for individual requests and batch uploads, and retrieval of the data already stored in the back office.

[SOURCE]

These are huge APIs that provide an amazing amount of functionality. The documentation for the Device Services API contains over 85 pages while that of the Partner Service API contains almost 150 pages and covers such diverse topics as Customer Profile Management, Store Management, etc.

There is also a great deal of general information about the usage of the APIs – for example “Signing REST Requests”. I assume that many NetWeaver Cloud applications will also have REST APIs, therefore, I’m curious as to whether the described functionality is specific to the SPR solution or more general to the platform in general.

SAP ID Service and the consumer market

I’ve always stressed the importance of the SAP ID Service. Its role in consumer-facing apps wasn’t really known or acknowledged. The REST API description for SPR Devices API includes an intriguing paragraph:

This service registers a consumer and/or a device with the Device API.

When a new consumer is created, an identity is created in the SAP ID Service and the consumer is sent an email to confirm their registration. This email contains a link for the consumer to set a password; upon the setting the password, the consumer creation is complete and the consumer’s credentials (email address and password) may be used, for example, to create a Device API authenticated session. 

Consumers and devices (mobiles, etc) will be registered in this service. This means that 1) these users can use other SPR-based implementations without having to register again. For example, if your grocery store and your hardware store were both using the SPR solution you wouldn’t have to register again to use both services.  Furthermore, if other consumer-focused applications (not SPR-based) were based on the SAP ID service then the user could use the same identity.  These applications also don’t necessarily have to be running on the NetWeaver Cloud but could behosted somewhere else (perhaps even the HANA AppCloud)

Remember we are talking about consumers – not business users. This is a big difference and one that has major implications on the power of the ID Service combined with NW Cloud.

Is there a Hidden Agenda for SAP’s Consumer-facing solutions?

There is a paragraph in the SAP Precision Retailing Supplemental Terms and Conditions which is very interesting and gives some indication why SAP is focusing on consumer-facing applications.

Consumer Data means data collected from or submitted by individual consumers using a mobile device to remotely transmit such data to the Service and transaction log data collected by the Service showing the purchase activity of individual consumers that have utilized a mobile application. Consumer Data may include, without limitation, consumer preferences, buying habits and patterns, purchase locations, and other consumer behavior information. Customer agrees that SAP is free to use the Consumer Data for purposes of operating the Service, and to collect, store, analyze, process, display and distribute the Consumer Data in an anonymized form as part of or independent of the Service during the term of the Order Form and thereafter without any obligation to compensate Customer or any other person or entity. Customer hereby represents and warrants that it has in place with each consumer utilizing a mobile application to interact with the Service, all necessary and legally compliant privacy policies regarding the use of Consumer Data, and has obtained from each such consumer all legally required consents for SAP to use the Consumer Data as described in this Section 4. Customer agrees to indemnify, defend and hold harmless SAP and SAP Affiliates against any claim that an individual consumer did not consent in a legally sufficient manner for the use of his or her Consumer Data in the manner described in this Section 4. [My emphasis]

Usually, SAP’s focus on reaching those 1 billion users is associated with user licenses or other monetary rewards of selling software. However, as this paragraph demonstrates, another goal is the use of the data created by such users. In a world where BigData is a new buzz word, this data and the included patterns are extremely valuable.   This anonymized data can be used by SAP without SAP customers (in this case, retailers who use the solution for their customers) sharing in the financial rewards from the use of such data. Such a relationship isn’t new in the OnDemand world but the impact of this potential is much greater for the OnDemand services created by SAP.  How can we forget the advertisements that show the penetration of SAP in various markets (“SAP produces 72% of beer, etc)? This high level of industry penetration combined with the emergence of tools to mine this huge amount of consumer-related data (ie HANA) provides a very powerful combination.

A recent YouTube video from James Governor reinforces the importance of this data:

Conclusion

In a recent tweet, Chief Product Owner SAP NetWeaver Cloud Harald Mueller announced that the NetWeaver Cloud is now GA.

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The fact that SAP Precision Retailing is already being used by customers is proof that the platform has reached a level of maturity that would justify such announcements.

I’ve focused on the SAP Precision Retailing solution in this blog but I’m more interested in the patterns / momentum that it demonstrates. SAP initially called the NetWeaver Cloud its “Edge” platform and viewed it as the little brother of the more important LoB / Core applications. In the meantime, this label has been dropped. Yet, the innovation demonstrated by the Precision Retailing solution as well as other present or planned solutions on the platform might necessitate a return to the label “Edge” – this time without the negative / inferior connotations.  Time will tell whether the applications on this platform produce SAP more revenue and gain more positive attention from the marketplace than the LoB OnDemand applications.

The upcoming TechEds in Las Vegas and Madrid should provide additional details regarding plans for NetWeaver Cloud – I’ll be watching these announcements closely to see if they correctly reflect what I see as the platform’s true potential.

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7 Comments

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  1. Matthias Steiner

    Hi Dick,

    really like your enthusiastic blog about NW Cloud in general and the Precision Retailing solution specifically. Indeed there’ll be plenty of news related to SAP NetWeaver Cloud as we approach the TechEd season!

    Looking forward to our discussions 😉

    Cheers,

    Matthias

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  2. Pierre Dominique

    Hi Richard,

    Thanks for your feedback. I’m part of the team who developed SPR and it’s always nice to get some positive feedback. 🙂

    For your information there will be a session at Teched LV about SPR : http://TechEd2012.sapevents.com/sessions?&sid=9461_23720

    And we are also currently working on providing a free trial access to SPR on SCN so that everyone can use our REST APIs to build their own apps. No official release date yet so stay tuned!

    Cheers,

    Pierre

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    1. Richard Hirsch Post author

      And we are also currently working on providing a free trial access to SPR on SCN so that everyone can use our REST APIs to build their own apps. No official release date yet so stay tuned!

      This would be great and would give developers a chance to take the solution for a test drive. It would also be great example for other solutions.

      Will there be a similar session in Madrid?

      D.

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  3. Mohamed Amer

    Hi Richard,

    Very good read!  I like your “forensic” approach :-).

    From a retail perspective we’re pretty excited to see this come to life as it began in the Global Business Incubator.  We really like the powerful combination: the NW Cloud Platform, the blazing speed of Hana, the future opportunity of REST APIs, and the reach of SPR into legacy content.  .

    Cheers,

    Mohamed.

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    1. Richard Hirsch Post author

      I know that the solution originated in Global Business Incubator. I’ve taken a closer look at other solutions that originated there and I’m impressed with their innovative character. 

      I’ll be watching how SPR evolves as it should provide an excellent foundation for other NW Cloud solutions.

      D.

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  4. Luke Marson

    Hi Dick,

    While HCM is my bag, this is a really interesting viewpoint and you are really opening my eyes to cloud from many different perspectives. For me it’s interesting to see the consumer example here – which is different from the transactional HR or casual employee usage I see in my line of work. I like how the device ID system works – like an avatar.

    As usual, keep up the great work.

    Best regards,

    Luke

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