Continuing our “Star Trek” series, this is the first of several posts specific to vendors offering various renditions of “next generation ERP.”
In previous posts (you can find links to the right), Mint Jutras had some fun using a Star Trek analogy to describe the next generation of ERP in terms of new technology that enables:
- new ways of engaging with ERP
- custom configuration without programming
- better integration
- more innovation
We predicted the core functions of ERP would retreat “into darkness,” surrounded by newer, easy to consume, intuitive consumer grade apps that would deliver innovation and competitive advantage. We also hinted at even newer technology that would power your ERP to operate at warp speed.
SAP HANA is that newer technology that could potentially propel your ERP into overdrive. Additionally, back in May SAP announced SAP Fiori, a new collection of 25 apps that would surround the SAP Business Suite, providing a new user experience for the most commonly used business functions of ERP. Can the combination of these two technologies and other innovation being delivered by SAP allow its prospects and customers to explore the final frontier and boldly go where no ERP user has gone before?
Can SAP Really Be Nimble and Quick?
SAP’s competitors love to sell against them by saying its ERP is big and complex and anything but user-friendly. They point to long, difficult, multi-million dollar implementation cycles. Of course they conveniently forget that many of these implementations are massive simply because the large enterprises themselves are more massive. Rolling out a solution to operating locations in multiple countries around the world is easier with modern, web-based solutions, but it is still not an easy task.
Competitors assume all deployments are heavily modified and use words like “monolithic” and “outdated” to imply SAP customers are locked in to a solution that is over-priced and under-delivers. It is true that many of these are very mature implementations that were installed and implemented when all solutions were developed as tightly integrated, monolithic solutions using tools that would seem archaic today. These older implementations are far more likely to have undergone invasive customization than would be required today. But unless the competitor is relatively new on the scene, it too is likely to have customers on legacy versions of older products, facing the same kind of challenges.
Competitors and pundits love to liken innovating SAP’s ERP to steering a battleship: Big and powerful, but difficult to steer and change direction. In contrast, competitors describe their own solutions as lighter weight, flexible, agile, and modern. They will proudly tell prospects that their solutions aren’t the big battleships, implying they can indeed innovate faster. That may or may not be true. All you can be sure it means is that their solutions don’t have the depth and breadth of functionality.
In all fairness, competitors’ customers and prospects might not need that same depth and breadth, particularly if the vendor targets small and/or mid-size companies, or perhaps specific verticals, micro-verticals or even a niche market. SAP Business Suite is a strong solution for mid-size to large to mega-sized enterprises in 21 different industries, some of which can be further broken down by micro-vertical.
But what many of its detractors miss in using this “battleship” attack strategy is the simple fact that SAP stopped innovating the battleship itself several years ago. Does that mean it’s ERP solution is dead or dying? No, far from it. It means it has all the basics down pat. And the very basic of basic requirements haven’t changed in decades. Basic functions like accounts payable, accounts receivable, inventory control and purchasing haven’t changed and they aren’t rocket science.
Of course, all functions and processes evolve in some ways. Take accounts payable, for example. While we still receive materials, match receipts to invoices and pay suppliers, the options for payment have indeed changed. Electronic payments are fast making printing checks obsolete. And for that matter, we receive fewer and fewer paper invoices that have to be manually matched. Automated processes have allowed us to turn clerks into knowledge workers. So we do more spend analysis and supplier collaboration.
All these new ways of doing things require new features and functions in our supporting ERP. But notice that all these are new tasks to be added to the core basics. They can be developed and delivered as separate components without changing the direction of the battleship or the battleship itself.
And is being a battleship all that bad anyway? An aircraft carrier is a battleship in the context of modern warfare. No it can’t turn on a dime in order to attack. It steams to a strategic location and it can then pinpoint any target within a wide radius. Why? Because the aircraft carrier is simply the base of operations from which the fighter planes can attack in any direction. The carrier provides support and fuel much like ERP provides data. The planes must “fit” the ship, as they must be tethered on landing, just as components must be integrated to ERP. But, like the planes on the ship, they are loosely coupled rather than tightly bound. And providing the planes use standard fittings, one plane might be swapped out for another with relative ease, just like the next generation ERP modules that use a standard definition of a business object.
This is exactly how SAP has continued to develop new features and functions over the past several years in spite of having stabilized core ERP. The concept was first introduced circa 2006 with the introduction of its enhancement packs. The approach was to bundle enhancements together periodically in feature packs, but allow customers to selectively implement individual innovations without having to upgrade the entire solution.
As SAP’s cloud strategy has developed more recently, so has its object-orientation of development. Take for example its latest release of Cloud for Sales (initially named Sales On Demand). In order to be an effective piece of customer relationship management (CRM) it needs access to a customer master file. But if you have SAP ERP, you already have a customer master file.
Think of the customer (master data) as a business object. An older ERP solution will build that customer master file (the business object) right into the solution. Instead, SAP treats the customer master as a separate business object that lives outside of the application. By doing this, both applications can point to, access and reference the same business object.
But what about file maintenance? Instead of building the maintenance functions directly into each application, SAP treats that function as a separate function as well. Instead of building that directly into Cloud for Sales and SAP ERP separately and individually, SAP builds it once and puts it in a “business process library” which both (and other) applications can use. This approach allows additional components of functionality to plug into these applications much like the fighter planes plug into the carrier upon landing.
A New User Experience
So far our analogy of a battleship (a.k.a. aircraft carrier) has been sufficient, but a ship on a sea hardly represents a “final frontier.” How do we then turn that ship into a starship? We’re not really as far off as you might think because in some ways, the USS Enterprise operated much like a traditional battleship. You didn’t really see it landing on the surface of those alien planets. Like a carrier, it parked itself strategically (in orbit around the planet) and used another means of transportation for that final approach.
Shuttlecraft were the equivalents of a fighter plane or a helicopter, but they weren’t used very frequently. More often the crew of the Enterprise used Chief Engineer Scott’s transporter beam. In a sense it didn’t add new functionality. The function was to get people from point A to point B – not a new sort of thing. But it certainly added a new user experience. You might even call it the consumerization of space travel.
That is exactly the concept SAP has applied to its newest product, Fiori. SAP estimates that 80% of SAP users “experience” the solution through older technology today. Fiori sets out to change that without necessarily adding any new features or functions. SAP has taken the most commonly used screens and applied what it calls the 1-1-3 rule: one use case, one user, no more than three screens. The screens will typically include one as a “to do” list, a screen with more details and a sub-screen where the user takes action.
These new apps can be run from any kind of device, from on-premises or in the cloud. This potentially opens the door for more users and a different kind of user. These apps are easy to use, but also easy to customize. If you can pretty up a PowerPoint slide you can customize the look and feel of these apps. Executives that have previously been loath to touch ERP because they just didn’t have time to “figure it all out” will no longer have that excuse. Answers to questions will be a few clicks away on their smart phones and tablets.
The selection of which screens to revamp was not random. SAP has the ability to actually measure usage of different functions within the Business Suite, providing its customer grants permission to do this. Many of them have and after analyzing this data, SAP selected a set of 25 apps, which it feels covers the top 40% of usage. This set of 25 is likely to expand but SAP doesn’t expect it to blossom into thousands of screens. It will continue to focus on those functions most widely used in the course of conducting business.
SAP customers will have to pay for this, but a single, modest license fee is charged for the entire set of applications. SAP is not looking to make lots of money but also understands that putting a price tag on it conveys value.
Turning the Battleship Into a Star Ship
All this is great, but adding additional components of functionality and a new user experience doesn’t necessarily turn a battleship into a star ship. A star ship traverses beyond our own solar system; so it definitely needs to travel at warp speed. Otherwise it would take more than a lifetime in order to reach remote parts of the galaxy. Decision-makers need access not only to data from structured applications within their enterprise applications, but also to vast treasures of previously unexplored data from the Internet: news feeds, customer sentiment, social media, etc.
So to conquer the final frontier of ERP exploration, you need speed: Speed not for the sheer sake of speed, but with a functional purpose.
That’s where HANA comes in. Neither the Business Suite nor Fiori require HANA in order to run. Existing customers can benefit from this next generation functionality without transitioning to HANA. But if they don’t, they won’t be on the ERP equivalent of the starship Enterprise.
SAP HANA Enterprise Cloud: Speed, Power and the Benefits of Cloud Delivered Faster provides more detail about the speed HANA brings, along with the benefits of operating in the cloud. But the benefits of speed are equally applicable in a traditional on-premises environment as well. Suffice to say, with HANA, batch processes become obsolete. Processes like Material Requirements Planning (MRP) and sales forecasting that used to take hours to process can be reduced to minutes, or even seconds, without constraining the amount of data processed. This adds a whole new “real time” dimension to decision-making.
To operate effectively in the uncharted territory of global competition today, enterprises need vehicles that will carry them into the future. Monolithic, outdated ERP built on old technology won’t get you there. You need the next generation of ERP to provide new ways of engaging with ERP. You need new ways of tailoring it to your own individual needs, without building barriers to moving forward. You need new innovation delivered as components that can be easily integrated to your core ERP.
SAP has been on this path to next generation ERP longer than most, delivering new innovation in an innovative way. SAP Fiori and SAP HANA are simply the next steps that will help companies venture into the final frontier. The real question: Do you have the necessary vision and are you ready to boldly go where no ERP has gone before?