SAP Influencer Summit, Dispatch 1: On-Demand Differentiation and Vision

After a 1:30 AM landing (thank you, United), I made it to my hotel room early Tuesday morning so that I could attend the SAP Influencer Summitlater in the day. The main reason for my attendance, a Wednesday session specifically devoted to sourcing, would follow the preceding day's higher-level discussions on broader topics. But in a session I attended yesterday on SAP's On-Demand strategy, I did come away with a few interesting tidbits courtesy of John Wookey, Executive Vice-President of Large Enterprise On-Demand at SAP. In laying out his argument for an On-Demand philosophy and approach, Wookey shared, among other concepts, a number of specific points that paint SAP as somewhat unique in how it's looking at On-Demand.

For one, Wookey suggested that On-Demand must act as a natural extension of the SAP business suite (e.g., SAP SRM). In this regard, tight integration -- but not just what we've traditionally thought about systems integration -- becomes key. In fact, there are three types of integration required between On-Demand and business suite/back-end technologies. These include not just basic data integration and process integration, both of which you might expect, but also what SAP is labeling "behavioral integration." As Wookey exlained it, behavioral integration is contextual to the organization; for example, if you've defined business rules in the business suite, SAP's On-Demand integration layer will extract these and make them part of how the on-demand application runs. Nifty theory, in concept. I suppose such rules might include certain workflows or approval thresholds based on spend volume, category, operating unit, geography, etc.

Next, Wookey shared the notion that one of the powers of On-Demand is to broaden the potential solution. In other words, if there is an opportunity to broaden the usage pattern of an application beyond the usual suspects (e.g., a category manager in the case of sourcing, or a contract- / vendor-management professional in the area of contract management), SAP wants to enable it. I can see a scenario where, for example, when it comes to spend analysis or sourcing-strategy development and execution, procurement reaches out and engages business stakeholders and spend owners (e.g., plant managers in direct categories, function leads for services categories) and, using a flexible toolset, actively solicits their input and sustained involvement in the process.

The final area Wookey touched on that creates some differentiation in how SAP is thinking about On-Demand relative to many others is the possibility of a network effect from the applications themselves. Here, consider Wookey’s example of a supplier collaboration product that leverages a network approach to enablement and connectivity, letting manufacturers connect with suppliers by leveraging a hub-and-spoke system where individual point-in-time nodes provide greater information, transparency, and reuse relative to point-to-point connectivity approaches. This thinking is in fact more along the lines of information-management leader Aravo, at least in my humble view. Now, granted it also sounds like a similar vision to an Ariba, Ketera, Basware, and -- not to mention many others -- but coming from an ERP provider, it represents a fairly sizable shift in thinking and strategy.

Clearly, SAP is taking On-Demand seriously, even if its acquisition rate of large new customers has been glacial. In Wookie’s words, "SAP sees On-Demand as the next change in computing models. We are very serious about it and see it as an important transition in the industry." But now that we’ve heard the vision thing, the big question on many people's mind at the summit is whether or not SAP will move quickly enough to get enough passengers on its enterprise On-Demand train for a late departure, catching up with competitors that left the station years before.

Jason Busch

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