'Collaborative Commerce': ERP, CRM, e-Proc, and SCM Unite! A Series Study: SAP AG

Introduction 

In the early 90's, ERP came of age. Everyone had to have the functionality ERP packages promised. Since then, as Web and Internet technologies have matured, CRM on the front end, and e-Procurement and Supply Chain Management on the back end, these packages have come into their own.

Now in 2001, the catchphrase is "Collaborative Commerce," where we unite all of the above elements into one coherent system within and between organizations. This is the Big Kahuna, the zero latency, fully transparent, 360 degree exposure that is the stuff systems integrators dream of. Is it here? Are the technologies mature enough? Simple enough?

This, the fourth in a series of articles on Collaborative Commerce (C-Commerce), takes a look at the fresh, new efforts of SAP AG, as they expand their software footprint and welcome outside help and inter-application communications.

First in the series was an examination of Collaborative Commerce.

Second was a look at J.D. Edwards.

Third was a look at Baan and Invensys.

SAP: The History 

SAP has long been the kingpin in the ERP world. With probably the most broad set of features, a large marketing machine, and a subsequent reputation as "the big solution for the big players," SAP has dominated in the ERP space for large corporations. Rightfully so based on technology. Their downside has always been their approachability, cost, long implementation and training times, and less-than-simple product upgrades.

SAP Crosses the Chasm

Trying to determine just when, and even why, the major power players at SAP decided to almost turn the company on its head by opening itself up to alliances, absorbing other companies' technologies through acquisitions, and even opening up its software to work friendlier with other, non-SAP software components, is difficult to pin down. But that is just what it has done. SAP's new tagline is "mySAP.com: Solutions for the New, New Economy - The Integrated E-Business Platform for Any Industry." This is the SAP, for all its warts and thorns, that we have grown to know and love? No. They have crossed a strategic chasm, embracing the Internet while embracing partners and competitors alike, and there seems to be no turning back. Witness just some of their actions:

April 2000 - SAP AG and Microsoft announce the intention to bring mySAP.com functionality to Microsoft's Pocket PC platform. "SAP is furthering mySAP.com to empower people working on customer relationships with key information they need on mobile devices, including the Pocket PC," said Peter Zencke, member of the executive board, SAP AG.

May 2000 - SAP announces a strategic alliance with Nortel Networks to develop and integrate industry-specific customer interaction solutions that will extend the scope of collaborative customer relationship management (CRM). With the agreement, SAP would embed Clarify's eFrontOffice CRM functionality into its mySAP.com offering. In a statement coinciding with the agreement, Peter Zencke, comments: "Enabling collaborative virtual communities of companies to present one face to their joint customers, SAP and Nortel Networks will deliver a new quality in customer relationship management." The agreement would enable mySAP.com to present customers with multi-channel (Web, phone, fax) access to a company's Customer Interaction Center (CIC). The agreement would also bolster a company's ability to share information amongst and between it's employees, customers, suppliers, and partners with tie-ins to SAP's Supply Chain Management (SCM) functionality to create "a holistic circle of commerce."

May 2000 - SAP and Nokia jointly announce development agreements to WAP (Wireless Access Protocol)-enable mySAP.com components, so that information can be viewed on any WAP-enabled device, such as certain high-end cell phones from Nokia and other cell phone manufacturers.

May 2000 - At the company's yearly international conference, SAPPHIRE, the company announced that they were going to establish an integration center in the United States , to be opened in late 2000, to build "preintegrated, preassembled, SAP-certified, SAP-supported, multi-vendor functionality that fuses mySAP.com and leading third-party applications into an overall solution that best meets customer needs."

June 2000 - The announcement of mySAP.com Dynamic Procurement, a pro-active system that automates the procurement process for direct materials and includes strategic sourcing and contract management. SAP claimed the system is able to dynamically match supply to demand via real-time processing across the Internet.

June 2000 - SAP enters the online marketplace arena with mySAP Marketplaces, an Internet-based solution designed to integrate front- and back-office systems of all participants in marketplaces, maintaining data integrity with so-called end-to-end integration with participating companies' internal systems. Interpreted, this solution is the equivalent of providing to companies not only an XML platform, but also the definition of the words in the language, for two databases to communicate, and it also intends to build the integration between the two pieces, something other marketplaces, or inter-company communication technologies, do not do. And they plan to do this on a grand scale.

June 2000 - Introduction of the Internet-Business Framework to support open integration strategies. Under the plan, mySAP.com's Workplace enterprise portal would be the common, web-browser-based interface between disparate systems. Beneath the covers, the systems would be linked at the application layer through XML, SAP's own Business Application Programming Interfaces (BAPI's), XML Common Business Library (xCBL), as well as support for Biztalk and RosettaNet XML standard language dictionaries.

March 30, 2001 - SAP announced its intent to purchase Top Tier, a portal software company.

April 2001 - SAP announces a far-reaching alliance with Yahoo! to build state-of-the-art enterprise portal solutions, with the common vision of providing employees - as well as the extended business community of customers, partners, suppliers and other stakeholders - with convenient access to the resources they need to manage the flow of business information, processes and transactions.

In May 2001 - SAP snared former Siebel Systems General Manager Michael S. Park to lead the mySAP CRM efforts, something of a coup and a sign of the strength and scope of SAP's vision.

In July 2001, in something of a coup-de-ett, SAP surprised the enterprise software world by announcing that Baan, long one of its fiercest competitors, was going to embed technology from SAP Portals within the iBaan Portal solution, and that Baan was joining the advisory board of SAP Portals.

This month, SAP announced the release of its latest version of its mySAP CRM package.

For more detailed information on the 2001 Sapphire announcement see SAP - A Humble Giant From the Reality Land.

The Pieces in Place Today 

Here's a short overview of all the technology pieces offered by SAP today:

mySAP Workplace - Enterprise portal solution, including application integration, personalized view for employees, customers, partners, and suppliers.

mySAP Supply Chain Management - Typical Supply Chain Management functionality, with the advanced functionality of Dynamic Procurement (see above), and the ability to link to and understand customer demand via mySAP Customer Relationship Management and out to the supplier and collaborate on product development via mySAP Product Lifecycle Management.

mySAP Customer Relationship Management - Formerly based around Nortel Networks' Clarify eFrontOffice, and since written and re-written several times, the new my SAP CRM supplies a significantly complete CRM package, with functionality in all key areas, including "Customer Engagement" (Marketing and Sales), "Business Transaction" (product and pricing configurator, electronic order processing, telesales, andfield sales), "Order Fulfillment" (real time Available-To-Promise checks, and contract, billing, and financials management), and "Customer Service" (Call Center, web self-service, RMA handling, and field service).

mySAP E-Procurement - Powered by Commerce One solutions.

mySAP Product Lifecycle Management - Integrating all players in the product development lifecycle.

mySAP Business Intelligence - Includes datawarehousing capabilities, knowledge management, and business intelligence analysis tools.

mySAP Financials - One of SAP's longstanding core strengths.

mySAP Human Resources - One of SAP's longstanding core strengths.

mySAP Mobile Business - Palm, Pocket OS, and WAP-enabling the mobile user.

mySAP Marketplace by SAPMarkets - virtual marketplaces bringing together buyers and suppliers in an online business exchange.

mySAP Hosted Solutions - Application Service Provider (ASP) capabilities through certified providers.

What does all this Mean? 

It has been reported that a total of over 4 million users are using some part of the mySAP constellation of software technologies. SAP has announced 50% sales growth in its CRM business since the beginning of the year, bringing the current number of mySAP CRM customers to more than 850 worldwide. SAP Portals, Inc., reports more than 6 million individual users and 2,000 corporate customers.

Alliances with vital companies such as Accenture, IBM, and Yahoo! bolster its image as open and progressive. It reaches out to the mobile worker with Palm and Pocket PC and WAP enablement; it covers extended demand and supply chain with CRM on the front end, dynamic collaboration within SCM, and dynamic procurement with intelligent agents toward the back end, and Product Lifecycle Management to collaborate on product development at the supplier end; it maintains its core strengths in Financials and Human Resources; it trumps a rival (Baan) as it forges new and best-of-breed technologies in the Internet Portals and Marketplaces arenas; and finally, it boldly plans to establish an integration center to pre-integrate and pre-assemble both SAP and non-SAP software solutions to adapt to specific vertical marketplace requirements. What is not to love about the new SAP?

Here's What You Might Not Love 

Looking strictly at the technology aspects of the myCRP spectrum, knowing that SAP dumped Clarify's CRM solution and wrote and re-wrote their own package gives us pause concerning the stability and usability of the CRM components; it just needs more burn-in time before we're completely comfortable with it. We also see weakness in its Business Intelligence offerings. How powerful are the Extraction, Transformation, and Loading tools for its data warehouse? How powerful are its front-end tools? Do they include OLAP capability? Customized reports? The ability to send the reports to any web page or any email box?

From a business standpoint, you need to be asking the following questions:

• How ready for prime time is their CRM suite?
  
  
• How does SAP plan to move its existing, non-web-enabled, client-server-based SAP R/3 user base to the new model?
  
  
• How does SAP plan to sell the story that customers can truly compartmentalize their purchases, swallow small pieces of the mySAP pie, and enable the buyer to deliver some form of return on investment in 90 days or less?
  
  
• Will SAP be able to sell the story that integration between parts is already seamless and relatively easy?
  
  
• Can SAP convince the world that C-Commerce IS the future, that they are the leader, and that everyone needs to be moving there? This is the common challenge for all the C-Commerce contenders: is the marketplace ready for the breadth of what the vendors are talking about?
  
  
• Will SAP be able to convince the burgeoning small- and medium-size business market that it should even be a contender in their enterprise software solutions evaluations, given its historic large-company focus?
  
  
• And finally, costs. SAP software has never been cheap. Nor are its implementations, both in terms of costs and time. Will it be able to convince companies, both large and small, to swallow the whole picture and plan on feeding the SAP coffers for years to come as it implements, interconnects, and inevitably re-implements SAP's technologies as the technologies and corporate directives shift in the blowing sand of the Internet Age?

User Recommendations 

We make recommendations about SAP's Collaborative Commerce capabilities and reasonableness to three distinct sets of customers:

1. Current SAP customers
   You will need to bang hard on SAP to give you a straight story about the migration path between what you have today, the legacy R/3 system, and mySAP. What are the implications to your databases and hardware infrastructure? How fast and how much for planning and implementation? What about employee retraining? How fast? How much money? How hard? These are tough questions. Generally, if you've been a SAP customer for more than a few years, you might as well consider yourself a new customer that is thinking about migrating to a brand new platform. The only plus is that you'd be dealing with the same company you've always been dealing with, and SAP shouldn't be intending to proverbially bite the dogs that have been feeding it. But question, question, question. And then ask for proof. Have others done what you need to do to migrate? Can you talk to them to find out how it went? Due diligence is the duty of the day.
   
   
2. New, large-company customers
   SAP has a great vision. We give them an 'A-' for vision and scope. But we score them a 'B-' for execution and delivery. If you've got the intestinal fortitude - plus a stockpile of money and a cadre of well-qualified IT people, this is the one stop for you. If not, consider and carefully study the componentized-application message that SAP is trying to forge, consider striking down your worst business pain with one of SAP's point solutions, and see how it goes. Test the waters. Let SAP prove that you should go all the way.
   
   
3. Small-to-medium-size companies
   "SAP? Are we crazy? Huge costs, long implementations not in this day and age! We're fast, we're nimble, and we need software tools that are as flexible as we are." This is what you're saying, right? Well, you're not about to eat the whole enchilada. Maybe nibble at SAP's outsourced ASP offerings and see if they've got the goods. Or, again, maybe opt for a small point solution, comparing that solution against similar point solutions from smaller companies that are solely focused on that area. What level of service can you expect? Implementation times? Response to bug reports or enhancement requests? User friendliness? Make SAP prove that they represent themselves as small and local while they're huge and multi-national.
   

The Bottom Line 

We have to say that SAP has shown us the most compelling and promising C-Commerce vision to-date. We especially like their moves in the portal space (acquisition of Top Tier; partnership with Yahoo!) and the marketplace - two ideal enablers of C-Commerce. But for SAP, there's plenty of proving to do. They need to show the world they can integrate and deliver, and satisfy the small and medium-size customer with quick implementations and nimble responses to problems, just as they state. If they can, the C-Commerce world is theirs for the taking.

Look for future articles in this series on IFS, Oracle, and PeopleSoft.