SAP’s cloud strategy explained
SAP’s cloud strategy around four major pillars
At SAPPHIRENOW in May 2012 SAP unveiled a new cloud strategy centered around 4 major pillars:
This is the graphic that was shown at SAPPHIRENOW:
The four boxes are a very simple picture of the key areas SAP wanted to invest in in regards to cloud solutions. It doesn’t say anything about the number or names of solutions itself. In fact already in May SAP had more than 6 or 7 different cloud solutions – more than the four boxes indicated. But the main message was: “We are in all areas of your business in the cloud”
Lars Dalgaard who announced the new strategy said that all of the solutions will be “loosely coupled”. This is not reflected in the simple picture of our strategy but it basically means two things:
- On the one hand all of SAP’s cloud solutions will be integrated tightly with each other.
- On the other hand each solution will be open to also be integrated with non-SAP solutions. You can easily start using any of SAP’s cloud solutions and integrated it with any other solution you are already using.
And whatever you add at a later point in time – SAP or non-SAP solution – it will integrate with your existing SAP cloud solutions.
Take this integration and try to put it into a graphic you come up with something like this:
The applications behind the strategy
Now you might ask what’s behind these four areas.
Well, as mentioned there were already multiple solutions available in May. But SAP really focused on these four key areas in the 6 months after that, published new solutions such as Social OnDemand, or recently Financials OnDemand, and acquired Ariba – the leading cloud provider of SRM solutions.
Mapping all of today’s existing products to the picture above we end up with something like this (I might not even know all of the solutions yet):
One important piece that must not be forgotten is one more new solution: SAP JAM will bring social collaboration capabilities to every product of SAP, including on-premise solutions such as SAP CRM. And it will bring it into the business context of the people, rather than becoming a standalone application aside from the solutions where the real business is happening. To read more about SAP JAM, have a look here, or watch this presentation from SAPPHIRE NOW in Madrid with Sameer Patel and Steve Hamrick.
SAP JAM makes the picture look like this:
Suite solutions and subsidiary integration – the fifth pillar
After focusing on the key four areas plus social in the last six months it was time again to also add two more cloud solutions to the strategy picture which already cover all of the four key areas people, money, customers and suppliers in itself:
I am talking about SAP’s cloud suite solutions Business One and Business ByDesign.
At the latest SAPPHIRE NOW in Madrid in November 2012 the cloud strategy slides got a fifth category called “Business”.
How does that fit into the picture?
We know that especially the very large enterprises might only want to use new applications in one or two of their departments, such as sales, purchasing or HR. But they don’t necessarily want to replace their complete system landscape with cloud solutions at once. Therefore the approach with different solutions in the four categories people, money, customers and suppliers makes sense.
But there are a lot of small and midsized companies or subsidiaries of large enterprises who do exactly that because they might not have existing solutions and don’t want to add other separate solutions in the future. Therefore for them it might be cheaper and faster to implement a single solution than multiple different – though integrated – solutions. For these companies Business One (for small companies) and Business ByDesign (for the midsize market) are exactly the right approach.
Both solutions are especially interesting if you are in the manufacturing or wholesale business because there’s no stand-alone SAP cloud solution for logistics or manufacturing available and Business One as well as Business ByDesign both cover Supply Chain Management from Inventory Mgmt to Production.
Last but not least especially in the case of small subsidiaries of large corporations we also need to integrate all of these solutions with the existing on-premise SAP Business Suite.
Putting all of these solutions into my graphic we get the following picture:
This is the system landscape how it might already look like today for some of our customers. All of the mentioned solutions have to integrate of course. A great example of this is Hilti: They already run 3 of their subsidiaries on ByDesign and integrate them with the Business Suite in their headquarters – planning to extend the use of ByDesign to subsidiaries in more than 30 countries. Listen to the interview with Dr. Martin Nemetz from Hilti here or read the following article.
Integration with your business partners – the business network
The very last piece is the question of how to integrate and collaborate with all of your business partners: Customers, suppliers or even financial institutions.
To be able to effectively work together with all of these different parties you need a network.
SAP worked on several network applications in the past. Let me point out 4 in particular:
The SAP Supplier Infonet allows you to benchmark your suppliers against thousands of other suppliers. The solutions depends on the data from SAP’s customer base: The more customers participate, the more suppliers are listed and the more accurate is the information about the performance of each company. More information can be found here.
Financial Services Network
You might have more customers and suppliers than bank accounts, but still the amount of data being exchanged with these institutions is nearly the same. The lag of data integration standards in the financial services industry is another reason why communication with your banks or other institutions often includes a lot of manual interaction. SAP’s new Financial Services Network will help with that.
The Ariba Network
Every such network can only be successful if the number of participating companies is big.
One company who achieved to build a massive business network with more than 700000 registered companies is Ariba.
The Ariba Network allows companies to discover each other, collaborate and exchange business transaction with each other without any needed work to integrate with multiple business partners.
Personally I believe that we will see a consolidation of all the different network solutions under the umbrella of the Ariba Network.
A possible roadmap was already communicated. You can read more about it here .
Information Interchange OnDemand
In case you still need communicate with business partners who are not part of the Ariba Network, SAP Information Interchange OnDemand helps you to electronically connect to these business partners, too.
Adding all these combined networks to the picture, we end up with something that is much more complex than the original four categories, but that is also much more powerful:
A landscape of solutions that integrate with each other but also allow any other business partner to tap into this ecosystem and make use of it to make the world run better.