In Memory

ANAPLAN: The New Age of Connected Planning

A Connected, Living, Actionable Plan for Continuous Improvement

In a recent report, Mint Jutras posed the question Is Planning & Performance Management A Marriage Made In Heaven? We concluded the key to marital bliss: more data, more tools, more often. Anaplan is one company that is committed to this approach. Back in December 2015 we applauded its solution as A Complete, Connected and Living Plan. But Anaplan hasn’t been resting on its laurels since then. The theme of its most recent customer event (Anaplan Hub 2017): A New Age of Connected Planning. Yes, Anaplanners are able to connect planning and performance management, but “the connected plan” means much more. Connected planning connects data, people and plans. And we’re not just talking about financial plans. We’re talking about being connected across the enterprise.

“Connected Planning”

Ideally, the enterprise should have a single, cohesive plan to maximize growth and profits. This should be both a financial plan and an operational plan. Of course there are different components of that plan, but you need all the different functions within an organization pulling in the same direction. This requires each function to narrow its focus and figure out exactly what it needs to do, without losing sight of the end goal. That is often easier said than done because traditionally this requires specialized tools and applications for each function, resulting in separate sales, finance, workforce and supply chain plans. How do you bring them altogether? Too often the answer is, you don’t.

After all, what software company provides financial planning, budgeting and forecasting, sales and operations planning (S&OP), workforce planning, supply chain planning (SCP) and inventory optimization (and possibly more) all in a single solution? While some of the giants in the industry can satisfy all these needs, they tend to do so with discrete applications. Very often those different solutions are the result of acquisition, which means they weren’t developed from a single platform and the integration is far from seamless, if it exists at all. Instead of a single, coordinated plan, you risk having disconnected or even competing plans pulling you in different directions, even though you work with a single vendor.

This is why Anaplan takes a completely different approach. Instead of the traditional point solution approach for each of these planning functions Anaplan offers a single planning platform that is cloud based. The team at Anaplan likes to say, “one platform, unlimited possibilities.” The goal is to connect the organization, end to end.

What’s New in this New Age?

Given the title of our December 2015 report, it is clear the concept of a connected plan is not entirely new at Anaplan. Yet not only has that connectivity evolved, it really is a new age at Anaplan.

New Leadership, New Focus

First of all, Anaplan has a new leader. New president and CEO Frank Calderoni came on board in January of this year. It was a tribute to the rest of the executive leadership that the company hadn’t really missed a beat since former CEO Fred Laluyaux had stepped down in April 2016.

But Mr. Calderoni came with some new ideas. He largely kept the same executive team that worked well without the guidance of a CEO, reflecting his trust in them. He also brought a three-pronged corporate strategy, focusing on:

  1. Customer first: Beyond the cliché, Mr. Calderoni hopes to bring this mantra into the very culture of Anaplan.
  2. More innovation: Expect the investment in improving the technology to grow, but Anaplan will carefully choose where to develop innovation and where to partner. For example, new workflow capabilities will be developed internally because they impact the customer interaction so directly. But Anaplan chose not to re-invent automation of data integration, choosing instead to partner with Informatica. And new visualization capabilities are courtesy of Tableau for advanced analytics.
  3. Focus on community: An engaged and connected community is important to any software company, but more so for Anaplan. It delivers “use cases” or “apps” on top of its planning platform. But as noted in a previous Mint Jutras report,these are not your traditional commercial apps. And Anaplan isn’t the only one creating them. Both partners and customers (i.e. the community) contribute to the growing pool of them.

New Context for “Connected”

Anaplan started out by offering a planning engine built on its patented HyperblockTM technology. This calculation engine supported (and still supports) a level of granular detail that lets you connect all the dots naturally. So back in December 2015, we used the term “connected” in the context of connecting the dots. By changing one (connected) dot, Anaplan automatically propagated that change to any other part of the plan connected to that data. And because visibility and transparency are built in, you can easily adjust the plan as you monitor performance, making it a living plan.

Anaplan is still able to connect all the dots, but today it connects much more.

More Data

First of all it connects to more data. As we noted in previous reports, a planning engine is useless without data and this data might come from any number of sources, including enterprise resource planning (ERP), customer relationship management (CRM), human capital management (HCM), additional financial applications or any other source of structured data. Back in 2015, most of the use cases for Anaplan centered on finance, workforce management and sales, relying primarily on internal data. Supply chain planning had only recently become a focus (late 2014).

In 2016, supply chain planning gained significant momentum for Anaplan. A year ago there were just 10 supply chain apps available. Today there are over 30. Supply chain planning can’t rely exclusively on internal data and communication. It wouldn’t be a supply “chain” if it didn’t involve other enterprises, including suppliers on the back end and customers on the front end. And a supply chain is only as strong as its weakest link, making connections a key criterion for success.

One customer, a manufacturer and distributor of high-end fashion accessories, credits Anaplan’s planning engine for its ability to significantly strengthen its forecast accuracy. Using the tool for demand driven planning has allowed the company to transition from pushing supply (with the hope of it being consumed) to pulling from an accurate forecast of demand. Given the volatility of fashion trends, nowhere in the organization is a living plan more important. And nowhere is it more important to connect directly to external forces driving the seasonality and downright fickleness of the world of high fashion. And nowhere is communication and collaboration beyond internal employees more important.

Prior to doing demand planning with Anaplan, the company had been overly dependent on the information management (IT) project management team to respond to needed changes in planning models. Not only was planning too slow and cumbersome, but the process itself was not flexible, and it took way too long to respond to change. But with Anaplan, the planning team became more self-sufficient and the planning process itself went from being performed monthly to weekly. The company currently plans a week of production and is heading toward daily planning. Given the volatility of high fashion, its products might only stay on the shelf for 3 months. It is critical to connect the plan to sales, social and economic drivers. With Anaplan, the frequency is higher and the data is fresh and planning is connected to reality.

 More Functions, More People, More Connections

While Anaplan’s planning engine is capable of connecting all the dots, oftentimes companies need to work hard to get all the different functions in the organization to play along. Yes, Anaplan is a platform for planning, but typically Anaplan’s customers don’t start out looking for a platform. They start out with one particular group looking to solve a particular problem. In solving that problem they may be collecting data from other parts of the organization and connecting those dots. But there are many more potential problems to solve and more connections to be made.

Anaplan customers tend to start with a single pressing problem, which is solved with a custom-tailored use case. On average, they then go on to solve at least two more, often related problems. Some wind up with 10 or even 30 use cases built on top of the platform. The more use cases, the more connected the enterprise and the more people are pulling together, all working from a cohesive plan.

So what holds customers back from taking full advantage of the platform in order to satisfy all their planning needs? Probably the most common obstacle is the custom nature of the solution. Remember, Anaplan started out as a planning and modeling engine, which makes it flexible and powerful. But if a department within the organization is looking for a quick fix, right out of the box, they might wind up looking elsewhere.

If you have a generic problem and are looking for a rigid, prescribed way of dealing with it, or perhaps you yourself really don’t know how to (theoretically) solve the problem, the solutions that work right out of the box are perhaps your best bet. But if you have a problem that is rather unique to your particular business or that calls for regular changes or course corrections, and you know how you would solve it if you just had the right tools, then a powerful platform that is easily tailored by the business user without a lot of assistance from IT might be the better solution. That’s Anaplan.

Back when Anaplan’s planning platform was first conceived you would have had to start solving the problem from scratch, perhaps with the assistance of a consultant. This is becoming less the case as more and more apps are added to the library of use casesAnaplan App Hub, increasing the likelihood that someone else has solved at least a similar problem previously. But even if they start with a pre-defined app, Anaplan customers will typically custom-tailor it to address their specific needs, either on their own or with the assistance of a growing number of partners.

You might fear that you don’t have the necessary technical skills to custom-tailor the solution. But don’t worry. If you can work a spreadsheet, you have most of the technical skills you need. You might need some assistance from the IT staff to setup the automated data integration from various sources of structured, and perhaps even unstructured data. But since you have freed them up from having to do the heavy lifting normally associated with a custom-tailored solution, they have much more time to work with you on the more strategic stuff.

Over time, most Anaplan customers see a clear path to moving on to solve the next problem and chances are the average number of use cases deployed will steadily rise.

Case in Point

Another Anaplan customer, achieved a 900% return on its investment (ROI) in two years.

A global leader in innovative comfort footwear for men, women and children is a vertically integrated enterprise with five factories around the world. The head of global supply turned to Anaplan to optimize supply planning.

Many of the offered products can be made in any of the factories, although some do some specialized production. Prior to deploying Anaplan, the company had to rely on a planner’s gut feel as to the best source of supply. But there was no financial consideration factored into these decisions even though the trade-offs between cost to make and cost to transport were significant. The head of global supply felt the decisions needed to be more fact based. She needed to be able to easily rebalance allocation. She needed to be able to easily and quickly consider various “what if” scenarios in order to not just make a sourcing decision, but to make the optimal sourcing decision.

It took one year to completely develop a customized use case for optimization. The team tested for six months and then ran in parallel with the old methods in order to prove the cost effectiveness.

They changed some products from being single sourced to dual sourced. They found that while the cost to make certain products in Europe was higher, the offsetting savings were huge. It was also a huge learning experience because some of what they discovered was counter-intuitive. But with the real facts in hand they were able to save about one million euros – a 900% ROI in two years. The long ramp-up was not so much dependent on the skills of the people doing the setup, but rather the nature and complexity of the problem, and the number data sources and volume of data required.

The next step is to move from detailed allocation to more strategic planning, a necessary step to convince the rest of the organization that this disruptive technology is not too good to be true.

Conclusion and Recommendations

In today’s fast-paced world, you need to be working from a well-formulated plan, around which all parts of the enterprise can rally. You also need to marry that plan to performance and make it a living, breathing plan – one that is well grounded in real data and able to respond to the forces of change that impact businesses every day. And the plan needs to bring all the different functions in the organization together. Unfortunately today too many plans are built on solutions that are anything but happily married. Even the different departments live entirely separate lives, either consciously or unconsciously avoiding each other or, even worse, they are in contentious relationships.

When it comes to planning and performance management, Anaplan is not the only kid on the block. But no other company does it quite like this kid. Based on its own in-memory Hyperblock technology, Anaplan delivers a platform that is flexible enough to adapt to your specific needs and solve your specific problems. But it is easy enough for the nontechnical user to work with, especially with a growing number of pre-built use cases.

If your different financial and operational plans are not well coordinated across the enterprise, perhaps it is time to connect them. If your planning and performance management does not enjoy marital bliss, perhaps it is time to connect them. If your current plans are not based on real data, perhaps it is time to connect them. Anaplan’s connected planning is designed for all these connections, but perhaps most importantly, it may just be the path to connect you with reality and guide you into the future.

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Can Running SAP Business Suite on SAP HANA Be a Game Changer?

It can if you change the conversation

Back in February I posted this update on SAP Business Suite on HANA after having spoken with Jeff Woods, former industry analyst, currently Suite on HANA aficionado at SAP.

As a follow-up I joined Katie Moser for a webcast.

Click here to listen to the webcast

And now for the original post:

Jeff had lots of good stuff to share, including some progress to date:

  • 800+ Suite on HANA contracts have been signed
  • 7,600+ partners have been trained
  • There are 200+ Suite on HANA projects underway
  • 55 of these projects have gone live (and the number is growing)
  • The largest ERP on HANA system supports 100,000 users

So the Suite on HANA is quite real. But the single message that resonated the most strongly with me: the conversation has (finally) changed. While we’ve been hearing about HANA as this wonderful new technology for several years now, for the most part, the talk was about technology and even when the technologists spoke about purported business value, they spoke in very technical terms. But the audience I write for, business leaders in various industries, don’t care about technology for technology sake. Many don’t (care to) understand tech-speak. But they do care about what technology can do for them.

A Year Later…

It was just about a year ago that SAP announced the availability of SAP Business Suite powered by HANA, complete with live and live-streamed press conferences in both New York City and Waldorf, Germany. I don’t think I have ever seen such genuine excitement from SAP folks as was displayed in this announcement, and yet the “influencers” in the audience were a bit more subdued. A year ago I attributed this to the fact that these same influencers tend to be a quite jaded bunch, hard to impress. We had also been hearing about HANA for a few years already. There wasn’t a “newness” or game-changing feel about the announcement. But impressing the influencers is only one step towards the real goal of engaging with prospects and customers.

A year ago I also wrote, “SAP is trying hard to change the conversation to be less about the technology and more about the business value.  What is the real value? In the words of one early adopter: HANA solves problems that were deemed unsolvable in the past.” But uncovering those previously unsolvable problems required some visionary thinking.  Tech-speak is not going to get the attention of the guy (or gal) that signs the check or spur that kind of thinking. And a year ago the conversation hadn’t changed. Just look at how the vision of HANA was portrayed:

  • All active data must be in memory, ridding the world of the “rusty spinning disk”
  • Full exploitation of massively parallel processing (MPP) in order to efficiently support more users
  • The same database used for online transaction processing (OLTP) and analytics, eliminating the need for a data warehouse as a reporting tool for OLTP to support live conversations rather than “prefabricated briefing books”
  • Radically simplified data models
  • Aggressive use of math
  • Use of design thinking throughout the model

Look carefully at those words. They mean nothing to the non-technical business executive. Sure, those words got the attention of some forward thinking CIO’s, and that was enough to kick start the early projects, projects that produced amazing results. But that’s as far as the message got. And even when the message was not articulated in technical terms, it was presented at too high a level of abstraction. Business executives faced with important decisions don’t think in terms of “becoming a real-time business.” Operational managers don’t seek out “transformative innovation without disruption.” They want to get through the day most effectively and efficiently and make the right decisions.

Asking the Right Questions Today

So how do you change the conversation? By asking a different kind of question. Because “faster” is universally accepted as a good thing, in the beginning the HANA conversation might have been kicked off with the question to the CIO: What processes are running too slowly today? But in talking to the business user, you need a different approach. SAP’s “cue card” below is a good start. You are now seeing conversation starters that make more sense to the business leader. Take the time now to read them carefully. If you are a business leader, they will resonate much more than discussions of MPP and column-oriented databases or even speed of processes. I especially like the business practice questions in the rightmost column.

Cue card

Source: SAP

But if I were sitting across the table from a business leader, I might ask questions that are even more direct and down-to-earth. For example:

  • Describe a situation where you have to hang up the phone, dig deeper and get back to your customer or prospect later. (By the way Jeff’s thought was that by hanging up you only encourage them to pick up the phone and call your competitor.)
  • What summary data do you get today that consistently requires more detail before you make a decision? Can you get at that data immediately (no delays) and easily (no hunting around)?
  • What level of granularity are you forecasting revenue? Is it sufficiently detailed? Are you forecasting by region or maybe by product line when you would love to be able to forecast by territory, individual customer and individual product combined?
  • Are there decisions that require you to consult with others? How much time does this add to the decision-making process? How easy or hard is it to keep track of who to contact? How quickly can you make contact? Quickly enough?

The goal really is to improve the business not only in small linear steps, but also to increase speed of decision and therefore efficiency exponentially. The first step is to provide new ways of engaging with the system, which means changing the user experience. But to change the game, you need to make improvements to the process itself. SAP’s new Fiori applications are a good example of this progression.

 Fiori: More Than Just a Pretty Face

Last spring, SAP announced SAP Fiori, a collection of 25 apps that would surround the Business Suite, providing a new user experience for the most commonly used business functions of ERP. While useful in pleasing existing users and perhaps even attracting new users within the enterprise, this first set of apps just changed the user interface and did not add any significant new functionality.

The latest installment has 190+ apps supporting a variety of roles in lines of business including human resources (HR), finance, manufacturing, procurement and sales, providing enhanced user productivity and personalization capabilities. The apps offer users the ability to conduct transactions, get insight and take action, and view “factsheets” and contextual information. The next round of Fiori apps are expected to add even more new capabilities, thereby taking them to the next level in changing the game.

The MRP cockpit is an example of this next generation Fiori app and a perfect illustration of how these new apps can recreate processes, even ones that are 30 years old. If you “know” manufacturing, you probably also know that the introduction of Material Requirements Planning (MRP) software back in the late 70’s was transformational, although nobody really called it that back then. “Transformative” innovation is very much a 21st century term. But it truly was game-changing back in the day.

Last year, even before the conversation had shifted, I saw the parallels between the potential for HANA and the automation of the planning process that MRP brought about. Today the MRP cockpit delivers on that potential.

For those outside the world of manufacturing, in a nutshell, MRP takes a combination of actual and forecasted demand and cascades it through bills of material, netting exploded demand against existing inventory and planned receipts. The result is a plan that includes the release of purchase orders and shop orders and reschedule messages. While the concept might be simple enough, these bills of material could be many layers deep and encompass hundreds or even thousands of component parts and subassemblies. Forecasts are educated guesses and actual demand can fluctuate from day to day. Without automated MRP there is simply too much data and complexity for a human to possibly work with.

As a result, prior to MRP, other ways of managing inventory became commonplace. You had simple reorder points. Once inventory got below a certain point, you bought some more, whether you actually needed it or not. You also had safety stock as a buffer, and the “two bin” system was quite prevalent. When one bin was empty, you switched to the other and ordered more. These simplistic methods may have been effective in some environments, but the net result was the risk of inflated inventory while still experiencing stock outs. You had lots of inventory, just not what the customer wanted, when it wanted it. And planners and schedulers still had to figure out when to start production and they knew enough to build a lot of slack time into the schedule. So lead times also became inflated and customer request dates were in jeopardy.

Once MRP entered the picture, these were seen as archaic and imprecise planning methods. Even so, most didn’t rush right out and invest in MRP when it was first introduced. In fact now, decades later, the adoption rates of MRP in manufacturing still sits at about 78%. Why? The existing practices were deemed “good enough” and, after all, that’s the way it had always been done.

It required a paradigm shift to understand the potential of MRP and the planning process executed by MRP was complex. Not everyone intuitively understood it. And if they didn’t really understand, planners were unwilling to relinquish control. Particularly since MRP runs were notoriously slow.

It was not unusual for early MRP runs to take a full weekend to process, and during that time nobody could be touching the data. This didn’t work so well in 24X7 operations or where operations spanned multiple time zones. Of course over time, this was enhanced so that most MRPs today run faster and can operate on replicated data, so that operations can continue. But that only means it might be out of date even before it completes. And MRP never creates a perfect plan. It assumes infinite capacity and “trusts” production run times and supplier lead times implicitly. So while most planners were relieved of the burden of crunching the numbers, they were also burdened with lots of exceptions and expedited orders.

Yet over time, MRP brought a new dimension to material planning. It brought a level of accuracy previously unheard of and helped get inventory and lead times in check. Manufacturers have experienced an average of 10% to 20% reduction in inventory and similar improvements in complete and on-time delivery as a result of implementing MRP.

But through the past three decades, MRP hasn’t changed all that much. Yes it has improved and gotten faster, but it hasn’t changed the game because it still involves batch runs, replicated data and manual intervention to resolve those exceptions and expedite orders. Now with HANA we’re not talking about speeding up the processes by 10% to 20% but by several orders of magnitude, allowing them to run in real time, as often as necessary. But if it was just about speed, we might have seen this problem solved years ago.

You probably don’t remember Carp Systems International or Monenco, both Canadian firms that offered “fast MRP”. Carp was founded in 1984, and released a product in 1990 bringing MRP processing times from tens of hours down to 10 minutes. It ran on IBM’s RS6000 (a family of RISC-based UNIX servers, workstations and supercomputers). But it was both complex and expensive for its time ranging in price from $150,000 to $1 million). Not only was it expensive and required special servers, in order it to work it needed to replicate the data and then apply sophisticated algorithms.

About the same time Monenco introduced FastMRP, also a simulation tool, but one that ran on a personal computer. While it cost much less than Carp’s product, it was also less powerful and had significantly fewer features.

You won’t find either of these products on the market today. If speed was all that was required they would have survived and thrived. In order to change the game, you also need to change the process, which is exactly what SAP intends with its new Fiori app for MRP.

The new MRP cockpit includes new capabilities, like the ability to:

  • View inventory position looking across multiple plants
  • Analyze component requirements with real-time analytics
  • Perform long term MRP simulations
  • Analyze capacity requirements and suggest alternatives

But this too requires a paradigm shift. Manufacturers, as well as other types of companies, are quite accustomed to making decisions from a snapshot of data, usually in report format, possibly through spreadsheets. They have become desensitized to the fact that this snapshot is just that, a picture of the data, frozen in time.

What if you never had to run another report? Instead, whenever you needed a piece of data or an answer to a question, you had immediate and direct access, not to the data as it was at the beginning of the day, or the end of last week, but to the latest data in real time? Not only will decision-makers need to adjust to thinking in real-time, but will also have to trust the software to automate much of the thinking for them. Will they be able to sit back and let the software iterate through multiple simulations in order to find the best answer to an exception even before it is reported as an exception? I suspect they will if it is fast enough. And HANA is now delivering at speeds that just a few years ago would have been impossible. But with these speeds accelerating by orders of magnitude, the ability to communicate and collaborate effectively must also accelerate.

Making the Human Connection

It is not enough to change the way users engage with the software, it is also necessary to change the way they engage with other people. How often do you or your employees today express sentiments like:

  • If I just knew who to contact for approval/help….
  • I don’t know what to ask
  • I wish I could check with (several) people on this quickly

What if the software could help? As work flows are streamlined, automated and accelerated, so must the lines of communication and potential collaboration. Whether employees are looking to move a process forward, resolve an issue or mature an idea faster, lack of communication and clumsy modes of collaboration can inhibit the game-changing effect of the technology. Which is why SAP has upped its game in the area of Human Capital Management and social collaboration tools. It took a significant step forward with the acquisition of SuccessFactors and JAM and has been blending these capabilities with the HANA platform.

Key Takeaways

Nobody today would disagree that the SAP Business Suite, powered by HANA combines deep and rich functionality with powerful technology. But can it be game changing in terms of how businesses operate? The potential certainly exists, but it’s not just about speed. Changing the game means changing the way we’ve been doing things for decades. Before we can change the process, we need to change the conversation. Are you looking to optimize business processes? Are you ready to talk?

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The Message from SapphireNow was Simple

Period.

You probably thought I was going to tell you what the message was, after describing it as simple, right? Wrong. “Simple” is the message. In the past, SAP’s products and SAP, the company has been anything but simple. Anyone that follows me knows I am a very big fan of keeping things simple. I spend a good chunk of my time and efforts distilling complex concepts down to understandable …simple terms. So you might think I would be thrilled with this message. But when I walked out of Bill McDermott’s keynote earlier this week, there was something about the message I found troubling. My issue: Business isn’t simple.

No place is this more apparent than in manufacturing, which is sort of “home” for me. But all enterprises face complexities. First of all, all are becoming more distributed. My research shows even the average small company (with annual revenues under $25 million) has 2.2 operating locations. That number escalates to 13.7 in large enterprises (over $1 billion in annual revenues). Increasingly these are global organizations, managing complex, global supply chains. Add to this changing regulatory requirements, the uncertainties of a global economy and the emergence of new sources of competition as well as new markets. There is no magic wand anyone is going to wave that will remove these complexities. And yet with the liberal use of quotable sound bites generated on the main stage, I had visions of SAP’s personnel aggressively promoting and promising “simple business.”

Then I happened to have a conversation with Josh Greenbaum (@josheac) about our mutual reactions to Bill McDermott’s keynote. A remark from Josh made it all click for me. Essentially what he said was: “Simple” is the wrong word. “Simplify” says it much better. Josh is right.

Yes, doing business with SAP could be simplified, both from a partner and a customer perspective, as well as from a supplier standpoint (I can personally attest to the latter – yes, SAP is my customer). The software products and associated implementations scream for simplification. The way innovation is delivered can be made simpler. So can pricing. The same can be said for SAP’s organizational structure. So the real question is: Can SAP deliver on this promise to simplify? There is no single answer. Instead you need to break it down by the many different opportunities for simplification. Here are a few.

SAP’s Organizational Structure

We’ve already seen a few changes here. Obviously with Jim Hagemann Snabe stepping out of the co-CEO role, leaving Bill McDermott as the sole CEO, this, in of itself, could be seen as a simplification. And I think this was a catalyst for creating the focus on “simple.” I am convinced that this is not just a word, a tagline or a marketing message to Bill. He is truly committed to simplifying everything he can. Indeed SAP has already made some organizational moves, but I would say the jury is still out on whether SAP can really deliver on this one.

I gave up a long time ago trying to figure out the organizational structure and who does what in just the parts of SAP that I cover and deal with directly. I have never encountered a more confusing mess of titles, reporting and seemingly overlapping roles. Back when I did try to keep track of all of this… just when I thought I had it figured out, it would change. So rather than waste cycles second-guessing the organizational structure, I have come to rely on the phenomenal analyst relations (AR) staff to guide me. If there is a better AR team in the industry, I haven’t met them. Yet, while they do a fantastic job, I vote for a simpler organization chart, clearer roles and responsibilities and titles that give you a clue as to what the individuals actually do.

One recent change leads me to believe that SAP is trying. This is the recent announcement of Rodolpho Cardenuto as the head of a new Global Partner Operations (GPO) organization. Prior to forming this organization, partners were covered in a very fragmented way. The new GPO organization consolidates these disparate groups, combining the existing Ecosystem and Channels team, with the SAP® Business One business (which is sold exclusively through the channel), the OEM business and all the company’s strategic partnerships around the world – much simpler.

I know there are some other changes underway and I have to believe some of the jobs that were recently eliminated may have been as a result of “simplification” efforts, since SAP execs made it quite clear this week they are in growth mode, and not contracting.

 

Simpler to Partner?

Speaking of this new GPO organization, partners are becoming increasingly important to SAP. In addition to the strategic decision to sell to small to medium size enterprises (SMEs) exclusively through the channel several years ago, SAP now sees the potential for accelerating growth worldwide by building alternative routes to market through its partner ecosystem, whether this is through added coverage or added capabilities.

SAP has also actively encouraged partners to develop their own “value-add” in terms of industry-specific functionality and other add-on capabilities. The development of new platforms (the HANA Cloud Platform) and an online marketplace directly supports this.

Of course the formation of the GPO organization is one step in the simplification process in dealing with partners. Before, different groups dealt with different types of partners (e.g. systems integrators, global VARs, strategic partners, etc.) However, more and more, partners have taken on multiple roles. Systems integrators also became resellers; global VARS also became strategic partners and co-innovators, etc. In the past that meant they had to deal with different groups within SAP, and those different groups all worked differently.

The formation of the consolidated GPO organization is therefore one more step in the continuing effort to make it simpler to partner with SAP. Of course some of these partners are large companies, like Cap Gemini, Accenture and Deloitte and are well-equipped to deal with complexity. But then there are thousands of partners that are themselves small businesses. Think what it must be like for a small Business One reseller to deal with a company like SAP. I first saw these simplification efforts get underway about 4 years ago when Kevin Gilroy came on board. One of his first tasks was to simplify contracts. Don’t quote me on the page count, but I think before Kevin arrived, the contracts were upwards of 30 pages or more. He proudly brought a two-page contract to Bill, who promptly told him to get it down to one.

The partner management team has made great strides already in making it simpler to partner with SAP, and this week I saw a new partner portal that will likely make the life of a partner much easier. It is a single point of entry, easily searchable, to access all the assets and resources SAP provides. This is free, but for an added fee, partners can also sign up for the SAP Learning Hub, which brings additional virtual educational directly to the partners.

Bottom line: I think the simplification efforts have been successful and will continue to make it easier for partners, which will in turn allow them to spend less time figuring out how to deal with SAP and more time servicing the customer.

Easier to Do Business With?

But what about the customers that deal directly with SAP or even indirectly through partners? Often questions of ease of doing business boil down to pricing. One analyst in a press conference this week asked about simplifying pricing, citing Oracle’s policy of publishing its price list for all to see. I would caution anyone against confusing transparency with simplicity. Oracle might publish prices, but good luck in trying to figure out what anything will really cost, because its pricing is far from simple.

In all fairness though, any ERP vendor struggles with this, particularly those with broad portfolios. SAP has already taken steps to further simplify its pricing structure, particularly around the bundling of HANA, but any prior efforts were dwarfed with one announcement this week: Fiori apps are free. Here is the announcement:

SAP AG today announced that SAP Fiori user experience (UX) and SAP Screen Personas software will now be included within underlying licenses of SAP software. For existing customers [those who already purchased], SAP will provide a software credit redeemable against future software sales. In addition, SAP will offer a portfolio of UX services, including design, rapid deployment and custom development, to enhance customer engagement. SAP users can now take advantage of a next-generation user experience based on modern design principles setting a new standard in the industry.

This announcement is huge, for a couple of reasons. First of all, it really does help to simplify the pricing because there is no price. From the moment Fiori was released with a modest price tag, the hue and cry from customers and industry observers was that it should be free. This perception was largely based on the fact that the first 25 Fiori apps simply changed the user experience and added no new features and functions.

A new user experience adds “value” in of itself but no further value was added, so it is understandable that customers would expect their maintenance dollars would pay for this. In addition, because Fiori largely just delivered a new user interface, many customers and industry experts alike lost sight of the fact that they were indeed developed and delivered as apps. They thought SAP had just gone into the presentation layer and changed the user interface, as it would have for an upgrade. That was never the case and now the Fiori apps that are being developed go well beyond changing the user interface. The SAP Smart Business Cockpits being developed now are changing business processes and delivering very significant added features and functions.

These cockpits address a variety of functions and roles throughout the organization, including:

  • Cash management
  • Sentiment analysis
  • Bank analyzer
  • Demand forecasting
  • Bulk pricing scenarios
  • Mass execution of availability checking
  • Transportation asset management
  • MRP cockpit
  • Transportation management
  • Purchasing
  • PLM Variant configurations
  • An accounting hub
  • An “exposure” hub

These will be delivered over the next year or so. I am sure I have missed a few, but you get the picture. What does this have to do with simplicity? All of these are being developed as Fiori apps, which means there won’t be an SAP salesperson knocking on your door to sell them to you. They are released on a quarterly basis and they are free. And because they are delivered as “apps” and not as traditional “enhancements” you don’t have to go through a complete upgrade cycle to get the one (and only one) you are interested in. You just implement that one app.

This essentially paves the way for SAP to reinvent the Business Suite from the outside in, without causing a major reimplementation along the way. I think this added value was overshadowed by the declaration of victory by ASUG in having won the battle over charging for Fiori apps and the fact that many are still thinking Fiori is just a new user interface.

A Simpler Solution?

Which brings us to how the “Simple” or “Simplify” message pertains to the SAP products. The best example of the impact is probably the introduction of a new product, “Simple Finance.” Don’t let the name fool you – it is not just for small companies that might have simple accounting requirements. SAP itself made the transition to this product and is now running its financials with it. And I heard it made that transition over a weekend.

I myself don’t have as clear a picture of this as I would like, since my packed schedule at SapphireNow often conflicted with sessions and discussions on the topic. So I will turn to the dynamic duo of Jon Reed (@JonERP) and Dennis Howlett (@dahowlett) to add some insight since they spent some one on one (or two on two?) time with Hasso Plattner and new head of development Bernd Leukert on the topic. Den and Jon published this to better explain SAP’s cloud strategy, and indeed Simple Finance was developed as a cloud offering. But this excerpted section is perfect for the point I am trying to get across:

Plattner and Leukert confirmed that the freshly-named ‘Simple Finance’ is part of a broader rewrite/re-imagining of SAP ERP, with HANA and cloud as the enablers. Referred to as the ‘simple suite’ or the ‘S system,’ Leukert said that the monstrous ordeal of rewriting 400 million lines of business suite code was not necessary, because of a “massive reduction in code” resulting from the simplification HANA allows and in particular, the elimination of bulky aggregates which account for a significant percentage of current code.

This simple suite, currently focused on the Simple Finance area also includes an aggressive paring down of software accounting complexities, a now-familiar talking point of Plattner’s.

While anyone can see the value of massively reducing the amount of code required, the non-technical person might not immediately appreciate the significance of the elimination of aggregation. Forgive me for over-simplifying, but think of it this way. Traditionally accounting solutions have accumulated all sorts of totals. Some are for periodic reporting (monthly, quarterly, annually, etc.), while other aggregates are used to gain insight into different parts of the organizational structure. This aggregation enables reporting without having to sort and calculate totals across a potentially large volume of transactions. Sounds simple and effective because you can gain access to these totals through a simple query. But there were some drawbacks.

Not only is there embedded code to maintain these aggregates, but sometimes these totals are not updated in real-time, and instead are calculated with batch runs. That means you are looking at a snapshot in time and not the “real” number. Secondly, what happens when you want to change the organizational structure and report in a new way? Those pre-calculated totals are now meaningless. If you can instantly slice and dice and calculate on the fly using any criteria, you don’t have to do any of this aggregation and you get complete flexibility.

This flexibility and speed is the real value HANA brings to the business, along with improved, faster decision-making. If SAP can deliver this simpler suite through a combination re-writing code and adding Fiori apps, I believe the SAP products will undergo a dramatic transformation.

Of course, even if this happens, SAP’s competitors won’t let go of the message that SAP is big, clumsy and complex any time soon. They will still be inserting that FUD (fear, uncertainty and doubt) in the minds of prospects as long as there is a shred of truth to it. That only makes it more of a challenge for SAP.

Conclusion

SAP will never deliver Simple. But it can Simplify. These are just a few of the ways. While I believe SAP has already made progress, it still has a long way to go to deliver simplification. But I do believe it is committed at the very top of the organization. But the buy-in has to permeate throughout the ranks. I believe some of the SAP folks will need a frontal lobotomy to make this transition, but many more will be breathing a sigh of relief. They, like SAP partners and customers, will say, “Finally.”

 

 

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Insights from SAP Insider BI2014 – BI for the Business User?

Those of you who follow me (and my blog posts) might have scratched your heads a bit earlier this week when you saw me Tweeting from the SAP Insider BI event. After all, I generally write for an audience of business users and let’s face it, it is the IT department that buys and uses BI tools. Well, I was there because of all the exciting new advances in BI tools and technology that have the potential to assist you, the business user in gaining insights and intelligence about your business. But more importantly I was there because so few of you are screaming for these new tools. As Steve Lucas, President of SAP Platform Solutions, said on stage, “When was the last time a business user came up to you and asked for more middleware?” Bingo! As business users, you don’t want more (or any) middleware; you want answers to your questions and solutions to your problems. The problem is, many of you have become so frustrated waiting (too long) for simple things, like a new piece of data added to a report, that you’ve stopped asking.

Case in point: You also might have noticed that you only heard from me during the opening keynote. Why? Did I just breeze in and out? Did I lose interest? Was there nothing else of importance to comment on? None of the above. After that first keynote I was never able to actually connect through the network available in the other meeting rooms. In the “Happiest Place on Earth” (yes, we were at a Disney resort), it didn’t make me very happy to have no access to Twitter, HootSuite or any of the other platforms I would have used to communicate. But actually saying “never” is a bit misleading. The reality was, after the first few (or dozen) attempts, I gave up trying. And that’s exactly what happens to the business user in search of the next bit of “intelligence” needed to make a serious impact on the business. After a certain period of frustration (minutes in my case, years in yours) you just assume it is too difficult and it is not worth asking.

While some of this new technology is new enough to be bleeding edge, and not everything that gets presented and discussed is generally available, I can tell you: Now is time to start asking for more. Yes, there will be a price tag, but when did you ever get something for free that really added value? And if it adds enough value, it should pay for itself in a reasonable period of time. But in order to find that potential value-add, you might have to start thinking out of the box. In fact, maybe you should re-evaluate problems that were deemed unsolvable in the past.

That is certainly the case when it comes to predictive analytics. Everyone would love to forecast, predict and plan accordingly, but hardly anyone is really doing it today. I grew up (professionally) in the world of manufacturing. Everyone knows there is one universal truth about the forecast: It is always wrong. It’s just a question of how wrong it is. Of course there are all sorts of different forecasting tools and models to use, but the problem is, they are usually very complex and only as good as the input provided. And how does the typical businessperson know which variables really matter? Are some truly indicative of cause and effect, or is it just a correlation? Do you really understand the difference? What if you didn’t have to?

What if you had a tool that allowed you to just throw a lot of variables at the problem? What if you had a tool that was smart enough to pick out the ones that matter and come back with a prediction with a 99% confidence level? That’s exactly what SAP InfiniteInsight is supposed to do. Never heard of it? I’m not surprised. First of all, the name itself doesn’t exactly speak volumes about what it does. I am a firm believer that the name of the product should tell you (or at least hint at) what the product does. There is really nothing in InfiniteInsight that even implies prediction.

Also, the product comes to SAP through acquisition. The acquired company is KXEN, formerly a privately-held San Francisco-based company. Its specialty:  the automation of (at least many aspects of) prediction so that business users can make forward-looking decisions. So does this mean this is a self-service function and the business user doesn’t have to wait for the technical staff to do something? Not really. Those variables the business user wants to throw at the model? Well, someone has to know where they are and how they are represented in the grand scheme (or schema).  But that should be relatively easy for the technical staff and tech-savvy business analysts might also be able to construct the model. So we’re not talking days or weeks; we should be talking hours. This makes the whole process that much more dynamic. How many times have businesses stuck with a forecasting model that was known to be flawed or no longer reflected the real business environment (after all, things change over time) just because it was too difficult and time-consuming to change?

Production forecasts, sales and operations planning and financial planning are just the tip of the iceberg here though. Getting accurate predictive analytics will become contagious. Get good results in one area and you will start to think of all the other ways you would like to “predict.”

And how many times have massive volumes of data sat largely dormant because there weren’t tools to handles such volumes in real time? Those days are also gone. While the Internet of Things is all the rage right now and spells huge opportunities in many different disciplines, this is not a new problem for manufacturers. Many have been collecting these massive volumes of data from sensors on the shop floor for years. And while these sensors might have the ability to shut down an automated production line as temperature or viscosity or any number of other measures start to drift out of tolerance, how many are able to accurately predict when that might happen?

Since preventive maintenance also causes a line to shut down production, timing is critical. Shut it down too early and you lose more production. Wait too long and you pay an even greater price. And yet without the ability to not only collect, but also process and analyze colossal volumes of data in seconds, that data is massively underutilized. Moving data off storage devices and into memory is the key to improving speed and in this case SAP will turn to HANA.

And finally, a third SAP product will play a key role in drawing the business user out of his or her complacency. All the predictive capabilities and all the speed and processing power in the world will be meaningless to the business user if the tools can’t present the results in a meaningful way. That’s the problem SAP Lumira is intended to solve.

Here’s another product name that doesn’t tell you what it does. No it doesn’t treat rheumatoid arthritis or diabetic nerve pain. Does it illuminate data? Hard to say. But even though it doesn’t tell you what it does, the name has a couple things going for it: it’s short and it doesn’t say the wrong thing; it makes you ask what it is. Here’s what SAP says it does:

“Gather and quickly make sense of your data with SAP Lumira, our easy-to-use, data visualization software. In just a few clicks, you can combine and visualize data from multiple sources – presenting both big picture and granular insights in a single view. Use a drag-and-drop interface to create beautiful visualizations, explore data, and share insights with your team.”

Does this mean as a business user you can do it yourself? My guess is, you will still need some help from IT or that tech-savvy super user. Because you still need to know how your enterprise data is organized. But if you have data in spreadsheets now (and who doesn’t?) you can download it for free and try it out for yourself. You’ll educate yourself on the different possibilities and perhaps even come up with those new (out of the box?) ideas.

The bottom line: you don’t have to be a BI expert or a techie to gather more intelligence and insight today. And you don’t have to be a psychic to predict the future. But if you sit back and think all this stuff is too difficult and time-consuming, you better hope your competitors aren’t figuring out that it isn’t.

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SAP Business Suite on HANA: Changing the Conversation

It’s Not About the Technology, It’s About the Business

I recently got an update on SAP Business Suite on HANA from Jeff Woods, former industry analyst, currently Suite on HANA aficionado at SAP. Jeff had lots of good stuff to share, including some progress to date:

  • 800+ Suite on HANA contracts have been signed
  • 7,600+ partners have been trained
  • There are 200+ Suite on HANA projects underway
  • 55 of these projects have gone live (and the number is growing)
  • The largest ERP on HANA system supports 100,000 users

So the Suite on HANA is quite real. But the single message that resonated the most strongly with me: the conversation has (finally) changed. While we’ve been hearing about HANA as this wonderful new technology for several years now, for the most part, the talk was about technology and even when the technologists spoke about purported business value, they spoke in very technical terms. But the audience I write for, business leaders in various industries, don’t care about technology for technology sake. Many don’t (care to) understand tech-speak. But they do care about what technology can do for them.

A Year Later…

It was just about a year ago that SAP announced the availability of SAP Business Suite powered by HANA, complete with live and live-streamed press conferences in both New York City and Waldorf, Germany. I don’t think I have ever seen such genuine excitement from SAP folks as was displayed in this announcement, and yet the “influencers” in the audience were a bit more subdued. A year ago I attributed this to the fact that these same influencers tend to be a quite jaded bunch, hard to impress. We had also been hearing about HANA for a few years already. There wasn’t a “newness” or game-changing feel about the announcement. But impressing the influencers is only one step towards the real goal of engaging with prospects and customers.

A year ago I also wrote, “SAP is trying hard to change the conversation to be less about the technology and more about the business value.  What is the real value? In the words of one early adopter: HANA solves problems that were deemed unsolvable in the past.” But uncovering those previously unsolvable problems required some visionary thinking.  Tech-speak is not going to get the attention of the guy (or gal) that signs the check or spur that kind of thinking. And a year ago the conversation hadn’t changed. Just look at how the vision of HANA was portrayed:

  • All active data must be in memory, ridding the world of the “rusty spinning disk”
  • Full exploitation of massively parallel processing (MPP) in order to efficiently support more users
  • The same database used for online transaction processing (OLTP) and analytics, eliminating the need for a data warehouse as a reporting tool for OLTP to support live conversations rather than “prefabricated briefing books”
  • Radically simplified data models
  • Aggressive use of math
  • Use of design thinking throughout the model

Look carefully at those words. They mean nothing to the non-technical business executive. Sure, those words got the attention of some forward thinking CIO’s, and that was enough to kick start the early projects, projects that produced amazing results. But that’s as far as the message got. And even when the message was not articulated in technical terms, it was presented at too high a level of abstraction. Business executives faced with important decisions don’t think in terms of “becoming a real-time business.” Operational managers don’t seek out “transformative innovation without disruption.” They want to get through the day most effectively and efficiently and make the right decisions.

Asking the Right Questions Today

So how do you change the conversation? By asking a different kind of question. Because “faster” is universally accepted as a good thing, in the beginning the HANA conversation might have been kicked off with the question to the CIO: What processes are running too slowly today? But in talking to the business user, you need a different approach. SAP’s “cue card” below is a good start. You are now seeing conversation starters that make more sense to the business leader. Take the time now to read them carefully. If you are a business leader, they will resonate much more than discussions of MPP and column-oriented databases or even speed of processes. I especially like the business practice questions in the rightmost column.

Cue card

Source: SAP

But if I were sitting across the table from a business leader, I might ask questions that are even more direct and down-to-earth. For example:

  • Describe a situation where you have to hang up the phone, dig deeper and get back to your customer or prospect later. (By the way Jeff’s thought was that by hanging up you only encourage them to pick up the phone and call your competitor.)
  • What summary data do you get today that consistently requires more detail before you make a decision? Can you get at that data immediately (no delays) and easily (no hunting around)?
  • What level of granularity are you forecasting revenue? Is it sufficiently detailed? Are you forecasting by region or maybe by product line when you would love to be able to forecast by territory, individual customer and individual product combined?
  • Are there decisions that require you to consult with others? How much time does this add to the decision-making process? How easy or hard is it to keep track of who to contact? How quickly can you make contact? Quickly enough?

The goal really is to improve the business not only in small linear steps, but also to increase speed of decision and therefore efficiency exponentially. The first step is to provide new ways of engaging with the system, which means changing the user experience. But to change the game, you need to make improvements to the process itself. SAP’s new Fiori applications are a good example of this progression.

 Fiori: More Than Just a Pretty Face

Last spring, SAP announced SAP Fiori, a collection of 25 apps that would surround the Business Suite, providing a new user experience for the most commonly used business functions of ERP. While useful in pleasing existing users and perhaps even attracting new users within the enterprise, this first set of apps just changed the user interface and did not add any significant new functionality.

The latest installment has 190+ apps supporting a variety of roles in lines of business including human resources (HR), finance, manufacturing, procurement and sales, providing enhanced user productivity and personalization capabilities. The apps offer users the ability to conduct transactions, get insight and take action, and view “factsheets” and contextual information. The next round of Fiori apps are expected to add even more new capabilities, thereby taking them to the next level in changing the game.

The MRP cockpit is an example of this next generation Fiori app and a perfect illustration of how these new apps can recreate processes, even ones that are 30 years old. If you “know” manufacturing, you probably also know that the introduction of Material Requirements Planning (MRP) software back in the late 70’s was transformational, although nobody really called it that back then. “Transformative” innovation is very much a 21st century term. But it truly was game-changing back in the day.

Last year, even before the conversation had shifted, I saw the parallels between the potential for HANA and the automation of the planning process that MRP brought about. Today the MRP cockpit delivers on that potential.

For those outside the world of manufacturing, in a nutshell, MRP takes a combination of actual and forecasted demand and cascades it through bills of material, netting exploded demand against existing inventory and planned receipts. The result is a plan that includes the release of purchase orders and shop orders and reschedule messages. While the concept might be simple enough, these bills of material could be many layers deep and encompass hundreds or even thousands of component parts and subassemblies. Forecasts are educated guesses and actual demand can fluctuate from day to day. Without automated MRP there is simply too much data and complexity for a human to possibly work with.

As a result, prior to MRP, other ways of managing inventory became commonplace. You had simple reorder points. Once inventory got below a certain point, you bought some more, whether you actually needed it or not. You also had safety stock as a buffer, and the “two bin” system was quite prevalent. When one bin was empty, you switched to the other and ordered more. These simplistic methods may have been effective in some environments, but the net result was the risk of inflated inventory while still experiencing stock outs. You had lots of inventory, just not what the customer wanted, when it wanted it. And planners and schedulers still had to figure out when to start production and they knew enough to build a lot of slack time into the schedule. So lead times also became inflated and customer request dates were in jeopardy.

Once MRP entered the picture, these were seen as archaic and imprecise planning methods. Even so, most didn’t rush right out and invest in MRP when it was first introduced. In fact now, decades later, the adoption rates of MRP in manufacturing still sits at about 78%. Why? The existing practices were deemed “good enough” and, after all, that’s the way it had always been done.

It required a paradigm shift to understand the potential of MRP and the planning process executed by MRP was complex. Not everyone intuitively understood it. And if they didn’t really understand, planners were unwilling to relinquish control. Particularly since MRP runs were notoriously slow.

It was not unusual for early MRP runs to take a full weekend to process, and during that time nobody could be touching the data. This didn’t work so well in 24X7 operations or where operations spanned multiple time zones. Of course over time, this was enhanced so that most MRPs today run faster and can operate on replicated data, so that operations can continue. But that only means it might be out of date even before it completes. And MRP never creates a perfect plan. It assumes infinite capacity and “trusts” production run times and supplier lead times implicitly. So while most planners were relieved of the burden of crunching the numbers, they were also burdened with lots of exceptions and expedited orders.

Yet over time, MRP brought a new dimension to material planning. It brought a level of accuracy previously unheard of and helped get inventory and lead times in check. Manufacturers have experienced an average of 10% to 20% reduction in inventory and similar improvements in complete and on-time delivery as a result of implementing MRP.

But through the past three decades, MRP hasn’t changed all that much. Yes it has improved and gotten faster, but it hasn’t changed the game because it still involves batch runs, replicated data and manual intervention to resolve those exceptions and expedite orders. Now with HANA we’re not talking about speeding up the processes by 10% to 20% but by several orders of magnitude, allowing them to run in real time, as often as necessary. But if it was just about speed, we might have seen this problem solved years ago.

You probably don’t remember Carp Systems International or Monenco, both Canadian firms that offered “fast MRP”. Carp was founded in 1984, and released a product in 1990 bringing MRP processing times from tens of hours down to 10 minutes. It ran on IBM’s RS6000 (a family of RISC-based UNIX servers, workstations and supercomputers). But it was both complex and expensive for its time ranging in price from $150,000 to $1 million). Not only was it expensive and required special servers, in order it to work it needed to replicate the data and then apply sophisticated algorithms.

About the same time Monenco introduced FastMRP, also a simulation tool, but one that ran on a personal computer. While it cost much less than Carp’s product, it was also less powerful and had significantly fewer features.

You won’t find either of these products on the market today. If speed was all that was required they would have survived and thrived. In order to change the game, you also need to change the process, which is exactly what SAP intends with its new Fiori app for MRP.

The new MRP cockpit includes new capabilities, like the ability to:

  • View inventory position looking across multiple plants
  • Analyze component requirements with real-time analytics
  • Perform long term MRP simulations
  • Analyze capacity requirements and suggest alternatives

But this too requires a paradigm shift. Manufacturers, as well as other types of companies, are quite accustomed to making decisions from a snapshot of data, usually in report format, possibly through spreadsheets. They have become desensitized to the fact that this snapshot is just that, a picture of the data, frozen in time.

What if you never had to run another report? Instead, whenever you needed a piece of data or an answer to a question, you had immediate and direct access, not to the data as it was at the beginning of the day, or the end of last week, but to the latest data in real time? Not only will decision-makers need to adjust to thinking in real-time, but will also have to trust the software to automate much of the thinking for them. Will they be able to sit back and let the software iterate through multiple simulations in order to find the best answer to an exception even before it is reported as an exception? I suspect they will if it is fast enough. And HANA is now delivering at speeds that just a few years ago would have been impossible. But with these speeds accelerating by orders of magnitude, the ability to communicate and collaborate effectively must also accelerate.

Making the Human Connection

It is not enough to change the way users engage with the software, it is also necessary to change the way they engage with other people. How often do you or your employees today express sentiments like:

  • If I just knew who to contact for approval/help….
  • I don’t know what to ask
  • I wish I could check with (several) people on this quickly

What if the software could help? As work flows are streamlined, automated and accelerated, so must the lines of communication and potential collaboration. Whether employees are looking to move a process forward, resolve an issue or mature an idea faster, lack of communication and clumsy modes of collaboration can inhibit the game-changing effect of the technology. Which is why SAP has upped its game in the area of Human Capital Management and social collaboration tools. It took a significant step forward with the acquisition of SuccessFactors and JAM and has been blending these capabilities with the HANA platform.

Key Takeaways

Nobody today would disagree that the SAP Business Suite, powered by HANA combines deep and rich functionality with powerful technology. But can it be game changing in terms of how businesses operate? The potential certainly exists, but it’s not just about speed. Changing the game means changing the way we’ve been doing things for decades. Before we can change the process, we need to change the conversation. Are you looking to optimize business processes? Are you ready to talk?

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SAP’s Next Generation ERP: HANA and Fiori Help Customers Explore Final Frontier

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.

Key Takeaways

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?

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Impressions from SAP Americas Partner Summit: Partners Make it Real

Tis the season for partner summits. SAP Americas Partner Summit was the 3rd of these I attended in a week and a half. This was the first of this type of event for SAP since it recently merged North America and Latin America into a single unit under the direction of Rodolpho Cardenuto, President SAP Americas. This merging of the Americas bucks the trend in the industry. As Latin American economies, most particularly Brazil, continue to emerge, it is more likely for Latin America to be spun off from a previously combined unit.

And the combination of the two Americas has a further bit of a unique twist. Typically North America will be the dominant player, and therefore you might expect it to bring its southern neighbors into the fold. Yet at the Summit, it really felt more like Latin America was taking North America under its wing. Presumably this is largely based on the recent successful growth of Latin America under Mr. Cardenuto’s direction.

Over the course of two days we heard lots from SAP executives on the main stage, in smaller groups and one-on-one meetings. Some of what we heard simply reinforced the four pillars we have been hearing about quite consistently at various events over the past year or more, namely how SAP intends to:

  • Leverage the core business applications
  • Deliver in mobile
  • Lead in the cloud
  • Capitalize on big data (read: HANA, HANA, HANA)

But how do these key elements of SAP’s strategy pertain to the partners and the customers they serve?

Leveraging the core business applications

The key message here: industries are important and partners are critical to building out solutions. There will be common processes across all companies. These common processes are easily handled by basic functionality that has become quite commoditized today, making it hard for any software company to differentiate itself solely on the basics. It is equally hard for any customer running “just the basics” to gain a competitive edge.

SAP’s approach to delivering that source of differentiation is to co-innovate with partners and customers. First of all, SAP constructs specific “value maps” for each of 25 different industries, identifying market trends and specific business capabilities required to compete in these markets. It then creates very unique blocks of solutions for each industry.  The goal is to not just deliver technology, but to create more value for its customers, and therefore SAP is taking a design thinking approach. This has been music to my ears, which are tuned more to business issues than pure technology. I spend much of my time and efforts translating techno-speak to business-speak.

Design thinking is becoming more and more popular these days, but in case you are not familiar with the concept, it is a repeatable process for solving problems and discovering new opportunities. It consists of 4 key elements:

  1. 1.    Define the problem
  2. Create and consider many different options
  3. Refine selected directions
    Repeat steps 2 and 3 until you reach…
  4. Pick the winner; execute

As the pace of change accelerates, as technology allows us to solve problems previously deemed unsolvable, SAP understands it can’t possibly deliver all this value itself, and therefore turns to partners. As Chakib Bouhdary, EVP Industry Solutions and Customer Value stated on stage, “We all have to change our tolerance to IP sharing.” This is an important concept and one critical to encouraging partners to develop complementary solutions, along with a go to market plan that includes revenue sharing.

At first glance this “sharing” of IP and revenue might seem to pertain only to the traditional Value Added Reseller (VAR) or the larger service providers/system integrators. But during the Summit SAP also introduced the SAP PartnerEdge program for Application Development, “a simple and comprehensive program designed to empower partners to build, market and sell software applications on top of market-leading technology platforms from SAP.

How is this new and different? Essentially it lowers the cost of entry for small partners, while also simplifying the process of signing up. Partners can choose from a set of “innovation packs” based on the latest platform technologies from SAP, including the SAP HANA platform, SAP HANA Cloud Platform, SAP Mobile Platform, SAP databases and the SAP NetWeaver platform. The innovation packs contain technology-specific license rights, resources and services to help partners rapidly get enabled to develop applications on SAP platforms. The packs are also designed to support custom development for co-innovation with customers, which often is the first step to developing a more commercial, standard application. All for an entry fee of around 2500 euros.

These small partners pay a low annual fee (500 to 1500 euros per year) for each of these innovation packs. In turn they can also offer their wares through the SAP online app store and potentially reach a much broader market and therefore better monetize their efforts. This encourages a larger volume of smaller partners in a very real “win-win” scenario.

Deliver in Mobile

Notice the SAP Mobile Platform is included above as one of the innovation packs. The consumerization of IT has changed expectations of connectivity and accessibility of data. But nobody (in their right mind) really wants to lift and shift the traditional ERP user interface to a mobile device. Mobile executives today want answers to specific questions, hence the increase in demand for more purpose-built mobile apps. Lots of questions potentially generate the need for lots of mobile apps. And the SAP online app store is the perfect place for partners to showcase those they build on SAP’s mobile platform.

Lead in the Cloud

It seems everyone today wants to claim “leadership” in the cloud and SAP is no exception. With all the “mine is bigger than yours” rhetoric in the market today, determining who is on top is difficult and probably a bit subjective. However, after developing its own “born in the cloud” (SaaS only) business management suite (Business ByDesign), two major “cloud only” acquisitions (SuccessFactors and Ariba), 30 million users in the public cloud and the world’s largest business network supporting $460 billion in transactions, SAP has to be right up there on the leader board.

While there is still a lot of confusion over cloud and SaaS, the interest in both has taken a quantum leap over the past couple of years. I’ve written a lot about the benefits of moving to the cloud, but while others predict that very soon the vast majority of applications will be running in the cloud, my research indicates only 33% will be SaaS in 5 to 10 years. I attribute this to the fact that there are so many solutions running on-premise today and many companies are reluctant to rip and replace only to convert to a SaaS deployment model. So does that limit the number of companies that can effectively leverage the benefit of the cloud to those willing to abandon their current software licenses? SAP says, “No.”

Many of the companies running on-premise solutions would love to relinquish the responsibility of managing and maintaining those solutions and reap the benefits of the cloud. SAP’s answer to this is to offer Managed Cloud as a Service (MCaaS). This isn’t a brand new concept. Back in May, SAP announced its SAP HANA Enterprise Cloud. As I wrote back in May…

On May 7, 2013 SAP announced SAP HANA Enterprise Cloud. As the name implies, it is a cloud-based service that allows an organization to move existing (or new) implementations of the SAP Business Suite and SAP NetWeaver Business Warehouse, powered by HANA, off their own servers and into SAP’s massive data centers. Why would an enterprise want to do this? The short answer: Speed, power and the benefits of cloud computing without the disruption of replacing existing on-premise solutions. Speed and power come from HANA, adding visibility and agility to the business by enabling decisions to be made in real-time with volumes of data that were inconceivable just a short time ago. Cloud computing lowers cost and adds elasticity, allowing capacity to stretch as your business and your need for data grows.

This is not SaaS and is not a public cloud. It is really a private cloud for the customer managed by SAP. This was a purposeful decision on SAP’s part since the objective is to make the solution truly “elastic.” While this term may be common in technology circles, it is less so in the business community. Essentially, it means the customer is never constrained by hardware limitations. Data center configurations expand (transparently to the customer) as more computing power is required. And if there are any lingering concerns about applications running in a public cloud, those go away with this model.

So what does this mean for partners and how is MCaaS different? It means they can bring the benefits of the cloud to those not quite ready for a SaaS solution. Partners can purchase product licenses and offer them, along with other services on a subscription basis. While this is the same concept introduced with the HANA Enterprise Cloud, HANA is not a requirement, nor is the Business Suite. SAP may be hosting the software, but partners may also sign up to do the same. SAP Business One and Business All-in-One are already offered in this kind of hosting model by several of the larger partners.

Capitalize on Big Data (HANA, HANA, HANA)

This was the first SAP event I have attended in a long while where HANA was not the primary focus. Yet its presence was certainly implied, if not directly referenced. Steve Lucas, President, SAP Platform Solutions talked a lot about “the real time connected enterprise:”

  • Real time business applications
  • With real time integrated analytics
  • Delivered on any device in real time (securely anywhere in the world)

Of course you need HANA for this. But I think the real message for the partners here is that SAP needs them to deliver applications that leverage HANA. This makes Dr. Bhoudary’s comment about SAP’s tolerance to IP sharing even more relevant beyond the concept of building out industry solutions. I’ve said it before and I’ll say it again (and again and again if necessary)…Without this way of thinking, without the development of applications leveraging its technology, HANA is simply an elegant technical solution in search of a problem. And as Steve Lucas said, “No one wakes up in the morning and says, ‘I really want to install HANA.’ They wake up with problems to solve…. Partners make it real.”

 

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SAP HANA Enterprise Cloud: Speed, Power and the Benefits of Cloud Delivered Faster

On May 7, 2013 SAP announced SAP HANA Enterprise Cloud. As the name implies, it is a cloud-based service that allows an organization to move existing (or new) implementations of the SAP Business Suite and SAP NetWeaver Business Warehouse, powered by HANA, off their own servers and into SAP’s massive data centers. Why would an enterprise want to do this? The short answer: Speed, power and the benefits of cloud computing without the disruption of replacing existing on-premise solutions. Speed and power come from HANA, adding visibility and agility to the business by enabling decisions to be made in real-time with volumes of data that were inconceivable just a short time ago. Cloud computing lowers cost and adds elasticity, allowing capacity to stretch as your business and your need for data grows.

This announcement builds on the progress SAP has made in bringing HANA to market, first with analytics and then applications powered by HANA, including both the Business Suite and Business One. Because HANA is essentially enabling technology and it is technologists that deliver the message, the significance and potential for business value is difficult to convey. This newest announcement is focused on the cloud, but without first understanding the power and potential of HANA itself, it loses its punch.  So let’s backtrack a bit and highlight what HANA brings to the party.

Speed

SAP HANA is the brainchild of SAP founder Hasso Plattner and is often referred to as Dr. Vishal Sikka’s “little girl.” Professor Plattner is Chairperson of the Supervisory Board of SAP AG and Dr. Sikka is Member of the Executive Board of SAP AG, Technology and Innovation. Both men are brilliant technologists. They speak quite eloquently about the possibilities created by this breakthrough technology, but often that eloquence is lost on business executives. The non-technical businessperson cares little about row versus column processing, in-memory databases, massively parallel processor arrays (MPPAs) or multi-threading.

However, they do care about speeding up processes like Material Requirements Planning (MRP) in a manufacturing organization or forecasting demand to optimize restocking the shelves in a retail environment. These and other “batch” processes are the Achilles heel of most ERP systems. Even as hardware innovation continues to accelerate, because they are “batch” and not real-time, they are run overnight or over the weekend. Between “runs” things change and therefore decisions get made with something less than a full and accurate picture of the world.

Benchmarks from early projects have proven that HANA can reduce these run times from hours to minutes, or even seconds, without constraining the amount of data processed. In fact doors are opening to bringing in volumes of data that were previously inconceivable. However, having been constrained for so many years, it is often difficult to look beyond current real and perceived constraints and understand the possibilities. While a business executive might not really care how this is accomplished, understanding some of the concepts to a certain extent might help business executives and their IT staffs see the possibilities. Without that vision, businesses will never make good use of the technology.

Parallelism versus multi-threading is one of those concepts. Most computers today appear to be able to do many things all at once. After all, you have multiple users logging into ERP and CRM and other applications, and you can record an inventory transaction at the same time you are entering a new customer quote or matching invoices to cash receipts, right? Not really.

A processor in a computer can really only do one thing at a time. But it breaks each of those transactions down into minute elements and strings them together into a “thread.” If the processor has 3 tasks to do, it does one element from one thread, then an element from the second thread, then one from the third before it cycles back and picks up the second element of the first thread. Because these elements are so small and this is happening so quickly, it appears as if it is doing all three things simultaneously, when in fact it is doing only one thing at a time. Think of it like going through a turn-style. Only one person fits through at a time.

Going massively parallel allows you to throw a large number of processors (or separate computers) at a task (or multiple tasks) to perform a set of coordinated computations in parallel, like adding hundreds or thousands of turn-styles. In order to do this, you might have to modify or even redesign the subway station or the football field where the turnstyles function, so it is not as simple as it might appear on the surface. But the net effect is to increase the throughput by several orders of magnitude. Yes work needs to be done to the application before it can take advantage of the power of HANA, but the potential for adding throughput, and therefore speed, is nothing short of amazing.

Of course this is an over-simplification, but hopefully it helps the non-technical business person see the vision of the kinds of massive volumes of data and computations that can be handled quickly and efficiently with HANA. One goal of SAP HANA is to eliminate the need for “batch” processing.  It reached this goal by increasing the speed at which computations can be completed. According to Prof. Plattner, “There is no batch any more. After 40 years of trying to kill it, batch is now a monster of the past. We can do this now.”

Power

While speed is great, speed for the sake of speed alone adds little business value. What is more important is the ability to make more real time decisions.

While computers and enterprise applications have opened new doors to new possibilities over the past several decades, most of us have also become accustomed to being constrained largely because our ability to generate and collect data has far exceeded our ability to process it effectively for decision-making. We need to break through those constraints in order to create the vision of possibilities:

  • We run MRP weekly. We plan and schedule assuming infinite capacity. What if we could run a full ERP the moment a new big order came in to see how it would impact the finite capacity throughout the enterprise?
  • We forecast demand by product line, not individual products, or by region, not by customer. What if, instead we could forecast by product for each customer by individual region?
  • We put a plan together to replenish shelves in a retail store mid-day based on sales last week or last month or even last year. What if we could re-plan at noon based on sales that same morning?
  • We analyze the performance of trade promotions once the program is completed. What if we could see the impact on profitability in real-time throughout the life cycle of the promotion?

Overcoming these perceived constraints requires a new way of thinking. At SAP, that new way is called “design thinking.” This concept was not invented by SAP, and SAP is by no means the only company that is doing it. But SAP has certainly embraced it fully. Virtually every employee directly involved with customers and/or products has been trained.

Design thinking is an important concept in unlocking the power of HANA. The SAP Services organization is engaged to conduct a comprehensive assessment, including a design thinking brainstorm session. The goal is to determine which solutions will have the highest performance impact as a result of moving to SAP HANA Enterprise Cloud.

Moving to the Cloud

This brings us to the real meat of the announcement: managed services delivered via the cloud. Perhaps the best way to describe SAP HANA Enterprise Cloud services is to point out what they are not:

  • This is not an option for companies to run applications powered by HANA in their own private clouds. It is really a private cloud for the customer managed by SAP. This was a purposeful decision on SAP’s part since the objective is to make the solution truly “elastic.” While this term may be common in technology circles, it is less so in the business community. Essentially, it means the customer is never constrained by hardware limitations. Data center configurations will expand (transparently to the customer) as more computing power is required.
  • This is not Software as a Service (SaaS). Customers will bring their own licenses to the party. There will be no multi-tenancy (multiple companies sharing a single instance of the software). Right now the offering includes all of the SAP Business Suite except for SRM (which has not yet moved to HANA), and/or SAP NetWeaver Business Warehouse, any or all of which must be powered by HANA. But SAP also welcomes other applications that might be developed using the HANA platform or existing applications that will first need to undergo a transformation whereby they will be powered by HANA.
  • This is not a public cloud like Amazon Elastic Cloud Compute (EC2) where any and all different types of applications can run. This is an environment specifically for HANA-powered applications.

These are managed services, where customers outsource day-to-day responsibilities for managing some segment of their solution to SAP. As part of the ramp-up process for any prospect or customer, the SAP Services organization will likely perform a comprehensive assessment, delivering advisory services to determine which solutions will have the highest impact on performance – “likely” because this is not a mandatory step. SAP pitches a design thinking session and this generally results in at least one project and may result in a whole bevy of projects or a sustained rollout.

Once a project, or projects are defined, SAP Services provides migration and onboarding solutions. For an existing SAP customer this might include bringing the application up to the latest release. Remember an application can’t just be dropped onto the HANA platform. SAP has spent a lot of time and effort “powering” the Business Suite with HANA. The fastest way to take advantage of this will be to come up to the latest release.

The ease or difficulty of this upgrade (and migration) will largely depend on how far behind the customer is and how customized its solution is, and therefore the range of difficulty will be quite broad. The prime candidates for SAP HANA Enterprise Cloud, at least initially, will be large enterprise customers, and they are most likely to have customized the application extensively. Small to midsize enterprises (SMEs) and very new large enterprise customers are less likely to require extensive customization because configuration options and the ability to tailor without programming have evolved dramatically over the past several years. But more mature implementations will probably need to overcome this hurdle.

If this, or other hurdles can be overcome, then the benefits of moving to the cloud can be very significant. The benefits are largely based on the elasticity noted above and cost related factors. The customer should never have to wait for new hardware to be evaluated, selected, delivered and configured – which is exactly what would happened if they continued to operate from their own data centers.

Mint Jutras research finds that cost and upgrade factors are perceived as the most important benefits of a SaaS offering (Figure 1). Given the tendency for many to equate cloud and SaaS (even though they are different) there is no reason why we can’t extrapolate these perceptions to this offering. Survey respondents were presented with five general categories of benefits of SaaS and asked to sequence them in order of priority (with 5 being the highest).  The numbers shown in Figure 1 (the mean average response) denote the relative order of importance.

Figure 1: Relative Importance of Benefits of SaaS

  • Cost factors: 3.59
  • Upgrade issues: 3.09
  • Support of distributed environments: 2.90
  • No hardware purchase/maintenance required: 2.75
  • Less IT expertise and staff required: 2.67

Source: Mint Jutras Understanding SaaS

While the upgrade factors can be directly applied in terms of the hardware, they will be a little different in terms of SaaS versus cloud services that are not based on a multi-tenant model. Cost factors are also a bit different. Customers will not experience savings in terms of software licenses with the “bring your own license” model. However, there should be some savings in trading hardware costs for services.

But the real cost factors come into play when you measure value. Recognize that you are making a quantum leap forward in terms of taking applications to an entirely different level in supporting real-time decision-making. Remember those “What if’s?” listed earlier? Without this type of option, most companies simply would not be able to afford this move, and even if they could, they might find it difficult, if not impossible, to keep up with the level of hardware and technology innovation being delivered today.

Key TakeAways

SAP HANA presents a whole new world of opportunity for speed and power, limited only by the customers’ ability to see the vision of what is now possible. It is most important to understand the potential and identify your own possibilities for innovation. These opportunities for innovation may be staring you in the face. Or you may have to apply some design thinking: dig deep into existing processes and identify those problems you have been living with for so long you might think they are unsolvable.

In the words of one early adopter: HANA solves problems that were deemed unsolvable in the past. As you identify these opportunities, the next question will be, “Can I afford the solution?” With the introduction of SAP HANA Enterprise Cloud services, the answer is far more likely to be a resounding, “Yes!” SAP HANA Enterprise Cloud also adds the ease of consumption of the cloud at an affordable incremental cost.

So once again, why would an enterprise want to do this? The short answer is also the best answer: Speed, power and the benefits of cloud computing.

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Infor’s Inforum 2013: Building Momentum; Going Faster

Like any conscientious industry analyst that attends a big event, I always feel compelled to write and share something about what I heard. But when the event is an enterprise software vendor’s customer conference, it’s not always easy to come up with something really compelling. More often than not, a quick blog post or news article is really sufficient to sum things up. But that’s not the kind of “stuff” I like to write. I prefer something that requires some analysis that leads to conclusions I can support with data I have collected through my research.

About a year ago, returning home from Inforum 2012, I struggled with this. It certainly wasn’t for a lack of announcements. Honestly, there were no less than 21 different press releases talking about everything from the reinvention of the company under its new leadership to numerous technology and product announcements. But mostly these announcements were about strategy and what this new leadership was planning for a company that was obviously changing dramatically. The theme of the conference was “Go Faster” but it was clear that while Infor was out of the starting blocks, it was still very early in the race.

Now, a year later, in leaving Inforum 2013, let me just say, finding something compelling to write about is definitely not a problem. Having hired 650 new developers, not only is Infor “going faster,” it has already completed a few races.

This year there were at least 25 different announcements and that didn’t even include the surprise proposed acquisition of TDCI (product configuration). Announcements emphasized a continued focus by Infor on not just verticals, but micro-verticals, and the new release of Infor 10x. Announcements were sprinkled with a little cloud and a big dose of technology in the form of industry-specific use cases for its “purpose-built” middleware ION technology.

Because I prefer to have any one paper, report or post to be “about” a single topic, the problem this year will be prioritizing what I write. To give you a preview of what’s to come and some highlights from Inforum 2013, here’s what’s on the table:

  • Loosely Coupled Versus Tightly Integrated: The Infor Perspective I recently  did a post that referenced Infor briefly, but was more about SAP’s introduction of Financials OnDemand. It posed the question, “Why should CFOs care?” It’s time to give Infor its turn in the spotlight to dive deeper into Infor’s overall strategy.
  • Is “Convergence” a Dirty Word? Any solution provider that has grown largely by acquisition (as Infor has) must make a decision as to whether or not to rationalize its product portfolio. Thus far Infor has very consciously and conscientiously avoided a convergence strategy, promising not to discontinue support of products and to never force customers to migrate to new solutions. But when you have customers continuing to run on systems based on seriously outdated technology, does this do them a disservice?  In these cases, even a slight shift in strategy can make a huge difference in encouraging these customers to move forward. I’m sensing this shift in pockets of Infor even as it still insists on “no convergence.”
  • Collaboration is Key: Helping Employees Ming.le Ming.le (pronounced mingle) is Infor’s new platform for enterprise collaboration, which it describes with minimal use of the word “social.” I find that refreshing. Designed primarily with the Gen-Y folks in mind, it uses a lot of the concepts and approaches popularized by social media. But by describing it more in the context of triggering alerts and helping those receiving the alerts come to a resolution quickly, it makes it much more “real” even for baby boomers who might not intuitively see how those types of tools can save them time and effort.
  • Introducing Infor Sky Vault: Infor’s answer to big data? You can’t pick up a trade journal today without being confronted with the concept of big data. We “get” it. The volume of data we deal with for decision-making has been growing for decades. Now it is growing exponentially. Not only are there limitations inherent in traditional databases, but more and more data is floating out on the Internet that is not even captured in a structured database. Solutions are emerging to break down those barriers and Infor’s Sky Vault is one of them: a cloud-optimized data repository powered by Amazon Redshift, available through Amazon Web Services (AWS) at a very reasonable price. Because of the traditional difficulty in dealing with massive volumes of data, business decision-makers have essentially learned to “do without.” Now they have to learn about what is possible. Infor’s job now is to help them, as Infor’s James Willey puts it, “see the vision.”
  • Microverticals: Will they save the day or become an enormous burden? The message at Inforum was clear. Forget a vertical focus. Infor is all about micro-verticals. Think dairies, breweries, meat packagers or bakers versus “food and beverage.” The ultimate goal of attacking a micro-vertical is to offer a more customized solution, without customization.  That’s the upside. The downside is the sheer volume of micro-verticals and the burden this places on Infor. Obviously the answer lies not in having entirely different solutions for each micro-vertical. The only way Infor will survive and thrive in this environment is through the effective use of its “purpose-built” middleware (ION) that will allow them to develop components of functionality once and re-use. So how does this work?

I could go on and list more possible topics of discussion resulting from all the different technology, product, acquisition and customer announcements. But I think this is a good start. What do you think? What would you like to hear most about?

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With SAP HANA, will “Big Data” cease to exist?

I know that sounds like a strange question, particularly with all the hype today about big data. We’ve all been watching the volume of data grow and grow and grow. I’m sure you’ve heard as many statistics as I have thrown about. We’ve progressed from talking about gigabytes to terabytes to petabytes. So why do I think it might be going away?

Last Friday I attended one of SAP’s Startup Forums in the Boston area.  Dr. Sam Madden, who runs MIT’s CSAIL (Computer Science Artificial Intelligence Lab) presented the keynote for the event. While most might think the concept of big data is self-explanatory, Dr. Madden actually defined it as follows: Big data is data that is too big, too fast or too hard for existing systems and algorithms to handle. Big data, by Dr. Madden’s definition, might eventually go away. Not because there is less of it, but because we are better equipped to handle it.

SAP is certainly trying very hard to make this happen and its Startup Forums are manifestations of this effort. While this is the first of its kind in the Boston area, SAP has been holding these around the world for a while now. The format is interesting. Think of it as speed dating between really bright technologists and potential investors (including SAP Ventures and its $155 million venture fund). Picture 15 different startups in a room, each with five minutes to give their pitch on who they are and why their ideas are the next best things in the world of big data.

Why is this a match made in heaven for these guys (and yes, sorry, but every single one of them was male)? Because these brilliant minds come up with truly creative ideas and often need funding to get them (and their products and services) off the ground. SAP is looking for promising startups interested in developing solutions on top of the HANA platform. SAP doesn’t ask for money, code or intellectual property (IP).  It provides an SAP HANA test environment and development licenses, a development boot camp and technical support at no charge until the startup runs live on HANA. At the point when HANA is embedded in a product, SAP will begin to see some revenue.

Of the 15 presenting, some were already participating in the program; others were potential participants. Some made the HANA connection in their pitches; some did not. Dr. Madden suggested (and a panel of partners from technology investment companies from the area agreed), “Big data is over-hyped. It is a new name for something we have been doing for the last five years.” But he also acknowledged awareness of and access to new data as a result of the convergence of some major trends. We have the digitization of data. We’re collecting more because of the emergence of inexpensive sensors, access to cheap computing and storage and an increasingly connected world.

While it might be over-hyped, big data is not going away any time soon. There is still plenty of opportunity based on current solutions’ inability to handle the volume of data that already exists and is emerging from these trends. That’s probably a good thing for SAP and other vendors jumping on the in-memory and big data bandwagon. Right now SAP HANA’s value proposition needs big data. But do customers and prospects see that? And do they see HANA as the solution?

It is clear that those bright technologists presenting their ideas recognize this opportunity and HANA’s potential. As do the 170 live customers of HANA and the other 40-50 that have HANA projects underway. But this is still a very small sample of the 232,000 SAP customers worldwide, 80% of which are small to medium size enterprises (SMEs). Does the typical SAP customer (or prospect) understand what HANA can do for them? The answer isn’t just, “No.” The real answer is, “Hell no!”

SAP’s single biggest challenge in bringing HANA to market is not in developing the technology, but in describing it in a way that helps average business people understand what it can do for them. So far SAP has largely described it as an elegant technical solution in search of a problem. It also suffers from having initially described HANA as an in memory alternative to a traditional database. Dennis Howlett has summed it up the best of any I have seen so far in saying,

HANA is much more than that. While it might have started out as a poorly thought out (Oracle competitive) database play, it is a development environment that is providing ISVs with extraordinary opportunities to rethink business processes as well as providing the real time platform for both analytics and the transactional systems.”

But the average enterprise, particular an SME isn’t looking for a development environment.  This explains why HANA has been most successful in large enterprises where you have large IT staffs with big budgets and lots of problems to solve. But that is not how the vast majority of businesses spend their budgets, particularly SMEs. They are looking for a solution to a problem, but they don’t want to develop a solution.

The typical SME won’t develop a HANA solution. It will seek a solution developed on HANA. This is why the SAP Startup Forum is so important- to provide solutions to all those potential problems. Lots of problems, across lots of industries will require lots of solutions.

In the meantime SAP is also making its ERP solutions available on HANA thereby providing some important differentiation in a market where in some ways traditional ERP has become viewed as a commodity. But HANA will not differentiate SAP’s ERP solutions until or unless business leaders understand what HANA can do for them. ERP will run faster, but unless speed is a barrier to doing business, the business won’t pay much (if anything) to make it faster.

Businesses won’t pay to make life in general better. But they will pay to solve a particular problem or overcome a particular challenge. The challenge SAP faces is first in helping those business leaders identify those problems and secondly to convince them the problem is indeed solvable.

For those of you in my generation, think back to the phone you had in your childhood. For me it was a rotary-dial, three party line. Our biggest problem was calling a neighbor who shared our party line. If you had told us we could have a phone that would allow us to snap a picture and instantly send it to someone, not across town, but halfway around the world, we wouldn’t necessarily have jumped at the chance. First of all, we probably wouldn’t have believed you. Secondly, we wouldn’t have perceived the need to do it.  We just didn’t think like that.

It took us many years and many generations of technology to get from that rotary dial three party line to today’s smart phones and networks, with all the inherent capabilities. Something tells me it won’t take us 50 years before business leaders start demanding what HANA has to offer, but we’re not there yet. In the meantime, it is safe to say big data is here to stay.

 

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