Dr Stephen Covey is a hugely influential management guru, whose book “The Seven Habits of Highly Effective People” became a blueprint for personal development when it was first published in 1990. The book shares a remarkable set of inspirational and aspirational habits for anyone seeking to live a full, purposeful and successful life.
SAP is the world leader in enterprise applications in terms of software and software-related service revenue. Based on market capitalization, SAP is the world’s third largest independent software manufacturer with 183,000 customers in over 130 countries. With its roots in Germany and a 40 year history in delivering world class Enterprise Applications, SAP is best known for its ERP product which was officially launched on 6 July 1992 as SAP R/3. The product has improved vastly over the years in terms of functionality, usability and performance, but the core of the product has remained largely unchanged since Release 4.7 was launched in 2003.
SAP is today orchestrating a remarkable shift in strategy and transforming itself to emerge as the enterprise product of choice in not just ERP, but in areas as diverse as database, mobility, cloud and platforms.
This blog-post is a commentary on Seven Strategies that are driving the core of SAP’s transformation in a fast changing enterprise world of today. I believe the strategies are as inspiring to the business world, as those advocated by Dr. Covey, were for the individual.
HOW, WHAT & WHY - THE 101 QUESTIONS
“How often do you check your emails on your Blackberry or iPhone over the course of a working day?” For most of us, the answer is likely to fall in the range of 5-30. The reasons why we love our emails on the mobile device are many - fresh and updated emails are pushed to the device; reading an email is easy and intuitive; we can reply to, delete or forward an email with ease and strange as it may seem, many of us respond to emails in near real time, simply because of the ubiquity of our mobile devices.
Now, if we can do this with emails, why can’t we run our business from mobile devices in the same manner? Why can’t we get a view into sales, production, supply-chain, post-sales data in real time? Why can’t we dive deeper into this data, participate in workflow actions and conduct business transactions in as intuitive a manner as we deal with email?
These were likely the same questions SAP was asking of themselves way back in the early half of the last decade as they sat down to chart out a product strategy to deal with a variety of trends that they expected to influence the marketplace. Emergence of a new-generation consumer of information technology, the pervasiveness of the Internet, the ubiquity of mobile devices, the emergence of social networks and a dozen other trends such as the falling price of computing memory would have likely played in the minds of SAP strategists as they scanned and analyzed the world around them. The strategists at SAP would have realized fairly early, that the coming decade and years would be led by a generation of tech savvy users who would expect an experience in business applications, similar to features that would rapidly evolve and emerge in the consumer internet & technology world. Responsive, intuitive, intelligent, un-tethered and always available applications would be the standard for consumer applications – features, which the SAP Business Suite was ill prepared to deliver. The SAP Business Suite wasn’t architected to support demands on responsiveness and intuitiveness; the platform wasn’t architected to take advantages of new and faster computing technologies; the product and the eco-system weren’t attractive to the newer generation of programmers or business users either.
The results of SAP’s intense rethinking of the very fundamentals of their product and firm’s strategy is now emerging in a comprehensive and convincing remake of SAP’s product portfolio and market strategy. Key aspects of the unfolding “Seven Strategies” follow.
STRATEGY 1 - Fundamental re-architecture at the database level was essential to drive transformation of the SAP Business Suite in a manner, such that users could access the Business Suite from their mobile devices via intuitive and responsive business apps. To get there, the first step was to fundamentally engineer a modern database and transform the way the Business Suite interacts with the database – this was the only way SAP could support the demands on responsiveness from mobile apps. Hence, the genesis of SAP’s foray into databases and the birth of SAP HANA. SAP HANA is not just another database – it has been designed to leverage the latest in computing advances to drive innovation into the Business Suite. In-memory capabilities, columnar and row format of data storage, inbuilt calculation engine removing the need for aggregates and indexes, real time data replication engine - are some powerful design features that have been introduced into SAP HANA. In addition, SAP is in the process of cleverly engineering and bundling Sybase ASE and IQ – acquired database assets, with HANA, to deliver a traditional database option to customers alongside HANA. IQ-HANA will form the hybrid option for Analytics while ASE-HANA will stand for Applications. The SAP strategy will advocate for real-time sensitive data volumes to reside on HANA, while warm and cold data volumes can reside in IQ or ASE. HANA integration to IQ and ASE will see strong engineering efforts dedicated to it, to drive seamless access to data volumes from queries originating on HANA. Features such as pre-processing of data in IQ and ASE, will be engineered into the integration of the products. ASE and IQ will likely be bundled aggressively to offer customers attractive Value + TCO options to migrate from their current database platform.
STRATEGY 2 - And while SAP HANA is a remarkable database and has been adopted by customers already for its core strengths in the database arena, the second aspect of SAP’s strategy is to re-engineer SAP’s products closely into HANA to create high performance apps that are virtually inseparable from the database. SAP BW has been integrated into HANA in such a manner to create a powerful Reporting and Analytics tool. Real time replication of data from ERP to BW, integrating the BW Analytical and Planning engine into HANA, moving data processing capabilities into the HANA database from the application tier are some examples of engineering of BW on HANA. Similar to BW, the SAP Business Suite is being significantly re-engineered for tight integration into HANA. Key features that will emerge are – migration of select business objects into the database, completely new UX for certain parts of the Suite etc. While the Business Suite will initially be engineered for HANA around horizontal business processes, over time, the industry focused processes will also be engineered into HANA. It is conceivable that SAP will deliver industry solution stacks that are tightly integrated into HANA for individual Industry Solutions. Also, with SAP Business Suite and SAP BW both working on HANA, there will be no need for data replication or ETL – essentially, transactions and analytics will work off the same data set delivering real time analytics alongside transactions. In the interim, SAP will deliver innovation around the Business Suite by bringing to market Business Suite Accelerators that allow companies to accelerate select resource intensive processes using the HANA platform eg. COPA, MRP etc.
STRATEGY 3 - Finally, SAP HANA will emerge as a platform for new applications to be developed on - leveraging the inherent strengths of the HANA database, as well as, leveraging the possibilities that open up with the SAP Business Suite and BW running on HANA. SAP will define a new and modern programming environment (likely to be named River Definition Language) that will be open to developers to build a new class of applications – thus driving the creation of an eco-system to engage the developers of today. The applications that will be built on HANA will initially emerge as a class of applications that leverage the strengths of the standalone HANA data mart. Moving ahead, these applications will address industry specific problems leveraging a multitude of strengths that SAP brings to the table – performance, driven by the database; embedded analytics & transactions - driven by ERP and BW integration to HANA; richness of application functionality - driven by SAP’s inherent strength in industry business process. Christened “Extreme Apps”, these applications will address core operations based requirements of various industries that were not addressed so far by SAP or by any other application – eg. predictive maintenance driven by real time analysis of sensor and machine generated data – for HVAC, Elevator, Mining companies
STRATEGY 4 - SAP will make big and significant moves on Mobility to channelize the HANA driven capabilities of the Business Suite and BW, to serve a new class of enterprise apps on the mobile. Hence the huge investments on Mobility and the slew of large acquisitions in this area – including Syclo and Sybase. SAP is re-making large portions of the Business Suite for primary consumption on the mobile. At the same time, SAP is aggressively driving towards creating an eco-system of mobile partners and developers to rapidly build an arsenal of mobile apps for the enterprise
STRATEGY 5 - SAP Cloud will take all the innovations around HANA, Business Suite, BW, Mobility and deliver that on the Cloud. SAP’s stated goal is to offer specific back-office functions on the Cloud – CRM, HCM, SRM, Financials and hence these are likely to be the first areas of the Business Suite that will be engineered for migration to HANA. SAP Business by Design (ByD) on HANA will likely be part of SAP’s initial drive to move the Business Suite to HANA – for obvious reasons of lower size, complexity and ability to bring in quick wins to create reference customers for Business Suite on HANA. The Cloud will also drive SAP’s efforts to incubate and build a vibrant SAP community as SAP uses Cloud infrastructure like AWS to take its platforms and development tools to the developer community.
STRATEGY 6 - With huge investments in driving the vision for a new class of enterprise applications, SAP will seek out new markets to drive its growth. In the mature geos, SAP will expect new revenue streams driven by Mobility, HANA & Cloud. Traditional Business Suite customers will be enticed by attractive business value driven by HANA and Mobility integration to the Business Suite. Via Extreme Apps, HANA will drive SAP into core operations of the enterprise creating new revenue streams. The SAP Cloud will be disruptive, as features and functions of the SAP Cloud will entice business users in Finance, Procurement, HCM primarily to move away from the traditional Business Suite or force their IT organizations to bring in the same features via on premise Business Suite on HANA implementations. In addition, SAP will seek out an aggressive growth path in emerging geos to create revenue streams from new installs of Business Suite. LATAM, MENA, Africa will be growth focus areas with SAP already announcing huge investments to drive growth in Middle East & North Africa as well LATAM. The growth in new geographies will be largely driven by partners as SAP attempts to grow exponentially and capture market share aggressively.
7. STRATEGY 7 - The last and final aspect of SAP’s strategy will be focused on making it easier and faster for customers to deploy SAP’s applications. SAP has launched a concept of Rapid Deployment Solutions that combine software, enablement content and services in a fixed price and fixed scope capsule that deliver predictability, speed and simplicity to the customer. The age old methodologies of SAP implementation will be challenged as SAP embraces Agile and Scrum methods of software development internally.
The elements of SAP’s strategy are today unfolding in a spectacularly successful and orchestrated manner as SAP strives to get the message out and secure early wins. This is a make-over that is being closely followed by the industry, the market, the SAP community and competition alike.
This is by no means an exhaustive account of SAP’s strategies as I expect SAP to develop and introduce new strategies running the course of its transformation over the next 12-24 months.