One of the hot topics at Sapphire this year was rather retro, but with an updated consideration. After the initial release over 2 years, SAP Integrated Business Planning (which now includes a full suite of applications) generated the most the most excitement, the most potential and the most clamor from the competition. What is retro about SAP IBP? The topic itself, integrated supply chain planning with Sales and Operations Planning, has been around for decades (not 50’s retro, but technology retro). The chemicals industry has been leveraging S&OP as a business process for decades – dealing with how feed stocks may impact finish goods availability and pricing.
The clamor can be characterized by the fact that we (SAP) have a great supply chain suite today, still affectionately called APO by our long-time users (2000+ customers). We recently optimized APO for our flagship HANA in memory technology, and even added in functionality for the Supply Chain Info Center. Core support and additional development will continue for at least ANOTHER decade for the entire Business Suite (which includes APO), yet our competitors have somehow twisted this message to think that we have discontinued support. Considering that two of the largest chemical companies just went live on APO on HANA with great success, I understand why our competitors are nervous. They see that our existing customers have moved forward with recent developments in our well-established application (APO), and then Gartner comes along and puts our new suite (SAP IBP) in the leader’s quadrant. I’d be nervous too, if I were them.
The product demonstration of the cloud application SAP IBP highlights why Gartner put it in the leader’s quadrant. First, the web front end is beautiful, collaborative, and simple. My demo started with the General Manager operating in ONLY the web-front end, checking his/her safety stats by plant, and then focusing on a revenue shortfall. He/She requested the Sales Manager to investigate why the forecast was off. The Sales Manager, using only the web-front end, was able to easily navigate and drill down to isolate a potential problem with a sales rep. The sales rep, operating in SAP Cloud for Customer only (I never liked sales rep’s messing around with APO or any other supply chain application), gets all the mobile-enabled information he/she needs while in front of the customer to update the system of record. At this point, the planning community (supply/demand planners) is then updated that a change has been made and need to determine if the change is feasible from a capacity/inventory perspective. Guess what? Planners use MS Excel, and we developed an EPM client directly in MS Excel with full capabilities. Again, if I were a competitor I’d be nervous too.
SAP IBP is a cloud-based, HANA-enabled platform with 2 primary user interfaces – a simple web front end for the manager, and MS Excel for the planners. The entire platform is integrated by leveraging SAP HCI (HANA Cloud Integration) – when I make a change to my demand, I immediately see the impact on inventory, capacity, revenue, etc. I can make a change to a key feedstock price (ie I am predicting that the price of natural gas will rise due to a tough hurricane season and I want to see the impact on my margins for the next 6 months), I can simulate an extended plant shutdown, I can simulate, simulate, simulate ANY scenario and visual the impact in real time. In the cloud, powered by SAP HANA.
SAP APO (SAP SCM) has over 2000 customers. Let me be perfectly clear here – SAP APO is not going away and some supply chain functionality that is really important for the chemicals industry is only available in APO. For instance, shop-floor scheduling and tank planning (dealing with constraints) can only be done in APO PP/DS. We have APO customers who have started to deploy our latest technology footprint (SAP IBP) in conjunction with APO – core detailed planning is handled in APO (ie demand planning, capacity planning, plant scheduling) and then the strategic planning (1-5 year horizon), scenario planning and multi-echelon inventory optimization are managed thru IBP. Depending upon what pain point(s) you are trying to solve will dictate your supply chain footprint, which may include both APO and IBP, just IBP or just APO. I have seen successful deployments in each scenario.
So, whether you are an existing APO customer (amongst the 2000+), or a ‘new’ IBP customer, you will get to leverage the SAP HANA in memory technology with a new user experience. See for yourself why the competition is really getting nervous!