July2017

SAPBUSINESSByDESIGN:SAP’SBEST-KEPTSECRET

Ithasbeenalmost10yearssinceSAPBusinessByDesignwasfirstintroduced.Thisenterpriseresourceplanning(ERP)solutionhasalwaysandonlybeenofferedassoftwareasaservice(SaaS).ItwasborninthecloudandlaunchedinSeptember2007withgreatfanfare.ThiscameatatimewhenSaaSERPsolutionswerestillquiterareandjustbeginningtogainacceptance.Sincethenithasbeendeployedinmorethan3,600companiesin109countries.Andyetwhilecustomersseemveryhappywiththeirchoiceofsolutions,inmanywaysSAPBusinessByDesignistheRodneyDangerfieldofERP–itjustdoesn’tseemtogetanyrespect.Whilesomeofitsmostdirectcompetitorswouldbethrilledwiththelevelofsuccessithasachieved,somehowpunditsandsomeindustryobserversjustwon’tgiveSAPabreakontheByDesignfront.Rumorsofitsdeathhavesurfacedperiodically,andyetitliveson,butquietly.Perhapsthat“quiet”istoblamefortheapparentlackofrespect.PerhapsitistimeforSAPtoraisethevolumeandbuildtrustinthemarket,beyonditscustomerranks.

THEEVOLUTIONOFSAPBUSINESSByDESIGN

BeforeSAPBusinessByDesignwasfirstintroduced,SAPalreadyhadtwoERPproductsanddeepmarketpenetration.SAPERP(whichhasgonethroughitsownevolutionandseveraldifferentnames)targetedthelarge(andverylarge)enterprise,whileSAPBusinessOnewasaimedatsmalltomid-sizebusinesses(SMBs).Therewas(is)alsoSAPBusinessAll-in-One,butinrealitythatwasneveraseparateproduct,butratherSAPERPpackagedwith“bestpractices”aimedatsimplifyingthe(largeenterprise)solutionformid-sizebusinessesinspecificindustries.

InordertoofferaSaaSsolution,SAPcouldhavetakenafewdifferentpaths,includingmovingeitheroftheseproductstothecloud.SAPERPwasthemorerobustsolution,buttocomedownmarket,itwouldhavehadtoshedsomeofthatcomplexityorbeoverkillforanSMBorevenforasubsidiaryordivisionofalargeenterprise.

Ultimately,startingoverallowedSAPtoarchitectthesolutionspecificallyforthecloud,drawingonacquiredandorganicallydevelopedleadingedgeinfrastructure.Andevenmoreimportantly,SAPwasabletodrawonthethousandsofperson-yearsofexperienceaccumulatedbyitsstaffinaddressingtheneedsofthelargeenterprise.Afterall,theneedsofmid-sizecompanies

SAP Business ByDesign by the

Numbers

ü 3605companies/customers

ü deployedin109countriesin9languages

ü 2641partnerbuiltadd-onsolutions

ü 29Industriesincluding:

Ø ProfessionalServiceorganizations(PSO)

Ø Wholesaledistribution(WD)

Ø HightechØ ConsumerproductsØ Industrialmachinery

andcomponents(IM&C)

Ø publicsectorandhighereducation

ü Usageanalysisofproductivetenants:

Ø 85%FinanceØ 71%SRMØ 68%SalesØ 67%Asset

management(mgt)Ø 44%WarehousingØ 43%ProjectmgtØ 42%ExpensemgtØ 40%TimerecordingØ 27%CRMØ 24%Production

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arenotallthatdifferentfromtheneedsoftheirlargercounterparts.Buttheydon’thavethedeeppocketsofalargeenterpriseandcan’taffordthetimeittakestowadethroughthecomplexitiesthathadevolvedwiththelargeenterprisesolution.TheinitialgoalofSAPBusinessByDesignwastosimplifyforthemid-market,whilealsodeliveringa100%cloud-basedsolution,acleardifferentiatoratthetime.

Bothofthosegoalswereachievedearlyoninitslife,butthatprovednottobeenough.TheearliestversionofSAPBusinessByDesignwasasingle-tenantsolution.Whilethefirstchartercustomerswereperfectlyhappywiththischoice,SAPwasnot.Singletenancyprovedtobeanobstacletotheprofitabilityneededtosustainalevelofaggressivedevelopmentofboththesoftwareandthemarket.Thisresultedintheneedtore-architecttheproduct,causingSAPtogoquietasitdevelopedthisnewarchitecture.

There-architectedSAPBusinessByDesignbecametheplatformofchoicefordevelopmentofallcloudofferingsatSAP–foratime.ButthencametheacquisitionofSuccessFactorsandtheaccompanyinginfusionof“cloudDNA”.AllofasuddentheByDesignplatformwasn’timportant.Thepowersthatbeatthetime(SapphireNowMay2012)said,“Customersdon’tcareaboutplatforms.Theyonlycareaboutbeautifulapplications.”

ThencameSapphireMadrid(November2012)andtherewasanewplatformintown:TheHANAplatform.ItwasdecreedthatSAPBusinessByDesignmustnowrunonHANA,SAP’s“gamechanging”in-memorydatabaseandthebasisforthiscloudplatform.Fromadatabaseperspective,SAPBusinessByDesigngainedlittlefromthissinceitalreadyhadin-memorypowersbuiltin.TherealbenefitwouldcomelaterinconformingtoSAPstandardsandthereforebenefitingfromtechnologybeingdevelopedbyothergroups(underotherbudgets).Andthusanotherquiettimeensuedasthedevelopmentteamwas(again)workingunderthecovers.

WHAT’SNEXT?A3-PRONGEDSTRATEGY

Nowthattheheavyliftinghasbeendoneintermsofre-architectingfortheHANAplatform,it’stimetokickthingsintohighgear.So,what’snext?SAPhasathree-prongedstrategyforSAPBusinessByDesign:

• Deliverbestinclassinnovation• Drivemeaningfuldemand• Developsuccessfulpartnerships

Soundssimple,butthenthemostsuccessfulstrategiesusuallyare.Interestinglyenough,whileitwastheshiftsinplatformthatkeptthelidonSAPBusinessByDesigninthepast,MintJutrasbelievesitwillbetheplatformthatcouldpotentiallyblowthelidoff,oratleastprovideastrongervoicein

Multi-tenant versus Single-tenant SaaS

Multi-tenantSaaS:Multiplecompaniesusethesameinstanceofhostedsoftware;configurationsettings,companyandrole-basedaccesspersonalizebusinessprocessesandprotectdatasecurity.

Single-tenant(orMulti-instance)SaaS:Eachcompanyisgivenitsowninstanceofthesoftware,butmaysharecommonservices,suchasanintegrationplatform,andsecurity.

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thefuture.Andthefirstpartofthestrategy(bestinclassinnovation)islikelytoplayaverymeaningfulroleinenablingtheothertwo.

DELIVERINGBESTINCLASSINNOVATION

Innovationencompassesbothtechnicalstrengthandfunctionality.Theunderlyingplatformbringsthetechnicalmuscle.Butyes,functionalityisalsostillimportant,andSAPissettingaboutenhancingthefunctionalitybuiltintoSAPByDesign,specificallyforthecoreverticalswhereithasenjoyedthemostsuccess.Whileithasbeensoldinto29differentindustries,itsstrongestpresenceisinprofessionalserviceorganizations,wholesaledistribution,hightechandconsumerproducts,industrialmachineryandcomponents(IM&C),thepublicsectorandhighereducation.Weexpecttoseetheteamplacemorefocusonmanufacturingandproductioninthecomingmonthsaswell.

ButSAPwillchoosewheretoinvestwithintheseindustriescarefullyinordertofillgapsinthemarket.Highereducationprovidesagoodexample.SAPhaschosennottoinvestinstudentmanagementorstudentloans,simplybecausethoseneedsarealreadywelladdressedbyothersolutions.Thefocushereinsteadwillbeonintegration.

Butintegrationswingstwoways.Solutionsforstudentmanagementorloansaremostlikelytocomefromexistingorpotentialpartners.ButSAPwillalsobeintegratingSAPBusinessByDesignwithappsandtoolsfromitsownportfolio.SomeoftheappsfallintothecategoryofwhatSAPcallsitsown“bestofbreedlineofbusiness(LOB)”applications.TheseincludeSuccessFactorsEmployeeCentralforemployeemanagementandConcurforexpensemanagementandtheAribasuppliernetwork.ItwillalsotakeadvantageofthebusinessintelligencetoolsfromtheBusinessObjectssideofthehouseandlayeranalyticsontopofSAPBusinessByDesign.

Theuserexperience(UX)providesagoodexampleofhowtheSAPBusinessByDesignteamisnowabletoleverageinnovationdevelopedbyotherSAPteams-oneoftheadvantagesofthepriorworkdone“underthecovers.”TheteamwasabletousetheunderlyingUXlibrariescreatedbytheteamsdevelopingtheSAPFioriappsforSAPERP.SAPBusinessByDesigndoesn’thavetodevelopanystyleguides.TheysimplyusethosedevelopedbytheFioriteam.ThiswashowtheSAPBusinessByDesignteamwasabletocompletelyrenovateitsuserinterfacefromSilverlighttoHTML5quickly.

TheconversiontotheHANAplatformisSAPBusinessByDesign’stickettootherservicesaswell,servicesthatleadtomorefeaturesandfunctions.Likeinvoiceasaservice–theabilitytotakeapictureofadocumentandturnitintoaninvoicewithnoopticalcharacterrecognition(OCR)softwarerequired.Tothebusinessuser,thisconversionappearstobemagic.TheHANAplatformisthepixiedustsprinkledon(orratherunder)SAPBusinessByDesignthatmakesthemagichappen.

Innovationencompassesbothtechnicalstrengthandfunctionality.Theunderlyingplatformbringsthetechnicalmuscle.Butyes,functionalityisalsostillimportant,andSAPissettingaboutenhancingthefunctionalitybuiltintoSAPByDesign,specificallyforthecoreverticalswhereithasenjoyedthemostsuccess,including:

ü professionalserviceorganizations

ü wholesaledistributionü hightechandconsumerproducts

ü industrialmachineryandcomponents(IM&C)

ü publicsectorü highereducation

TheconversiontotheHANAplatformisSAPBusinessByDesign’stickettootherservicesaswell,servicesthatleadtomorefeaturesandfunctions.

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AndtheotheradvantageoftheHANApixiedustisthedramaticsimplificationofthedatamodel.Howisthatpossible?Doesn’ttheoperationalandtransactionalsystemofrecordofyourbusinessrequirethesamelevelofcomplexity,perhapsevenmorecomplexity,aseventhesmallestcompaniesdealinglobalmarketsandadigitaleconomy?Thesimpleansweris,“No.”

Thinkabouthowandwhythedatainsystemshasbecomemorecomplex.Asingletransactionneedstocaptureessentiallythesamepiecesofdataitalwaysdid.GettingthiskindoftransactionaldataintoERPhasalwaysbeenfairlyeasy.Gettinginsights,answersanddecisionsout?Notsoeasy.Justsortingthroughalltherawtransactionaldataeachandeverytimeyouhadaquestionsimplytooktoolong,evenwithsimplequestionslike,“HowmuchinventorydoIhave?”Youcouldn’tverywelladdupallthestockgoinginandoutsincethebeginningoftime.Itwouldsimplytaketoolong.

Soyouhadtoanticipatewhatyouwouldneedupfrontandaddressthoseneedsbyaddingaggregates(totals).Butasingleaggregatewasn’tenough.Overtimeyoulearnedyouneededtoknowthetotalreceiptsandissuesinagivenmonth.Andhavingmonthlytotalsledyoutoaskforquarterlyandannualtotals.Youanticipatedthatandaddedthoseaggregatesin.Itworksforawhile,butthenyoufindyouneedthosetotalsbycountryorregionorbusinessunit.Butyoudidn’tanticipatethat,soyoucan’tanswerthatquestionwithoutlongprocessingtimes(tofindandaddupthetransactions),oraninvasiveanddisruptivechangetothesystem.Andwhathappenswhenyoureorganizeterritoriesorbusinessunits?

ThespeedofHANAnowallowsyoutoeliminatemanyofthoseaggregates.ForverycomplexjoinoperationsitstillmakessenseforSAPBusinessByDesigntopre-calculateratherthanre-calculateeachtime(anditdoes).Butwhybothertokeeptrackofsimpletransactionaldatamonth-to-date,quarter-to-date,year-to-date,bycountry,regionorbusinessunit,whenintheblinkofaneyeyoucouldadditallup?Andifallofasuddenyouneedtosliceanddicethedataadifferentway?Noproblem.Andthinkoftheamountofcodenolongerneededjusttomaintainthosetotals.Thatisdevelopmenttimethatcannowbespentprovidingrealandimpactfulinnovation.Asimplifieddatamodelleadstoaddedagilityinthesolution,whichtranslatesintoaddedagilityinyourbusiness.

THEVALUEOFAGILITYWeliveindisruptivetimes.The2016MintJutrasEnterpriseSolutionStudyfound88%ofcompaniesbelievetheyfacesomelevelofriskintheirbusinessesand/orindustriesbeingdisruptedbynewinnovativeproducts,newwaysofsellingorpricingexistingproductsorservices,entirelynewbusinessmodels,orsomecombinationofalloftheabove.Andthenofcoursetherearestillthemoretraditionaldisruptivefactorslikeexpansionandgrowth,organizationalrestructuringandregulatorychanges,justtonameafew.All

Simplifying the data model

Thecomplexityofthedatamodellargelyresultedfromanticipatingtheneedfortotals.ThespeedofHANAnowallowsyoutoeliminatemanyofthoseaggregates.

Asimplifieddatamodelleadstoaddedagilityinthesolution,whichtranslatesintoaddedagilityinyourbusiness.

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thisdisruptioncanhaveacascadingimpactonbusinessapplicationrequirements,makingagility-theabilitytoeasilyinnovate,evolveandchange-evenmoreimportantthancurrentfunctionality.

Our2017EnterpriseSolutionStudyconfirmedmanysolutionprovidershaveincreasedthepaceandvolumeofupgrades(Figure1).

Figure1:Howhasthepaceofinnovationdeliveredchanged?

Source: Mint Jutras 2017 Enterprise Solution Study

ButMintJutrasknowsofnoothersolutionproviderotherthanSAPthathasgonedownthepathofremovingaggregatestosimplifythedatamodelandtheassociatedcode–certainlynottothisextent.

DRIVINGMEANINGFULDEMANDSowillthisinnovationimmediatelydrivemeaningfuldemand?NotnecessarilyandnotifSAPremainsquiet.Itmustraisethevolumewithnewanddifferentwaysofmarketingthesolution,newwaysthatarereflectiveofhowsearchesfornewsoftwareareconductedtoday.Likeotherfunctionsinanyorganizationtoday,marketingmustgothroughadigitaltransformation.

TheSAPBusinessByDesignteamisrespondingbybuildingoutaDigitalDemandGenerationEngine(DDE).Theyunderstandpeopledon’trespondtothesameeffortsthatusedtowork.TheyknowthemajorityofB2Bpotentialbuyersconductresearchoutsideofthenormal9-to-5workday.Searchengineoptimization(SEO)iscritical.DoesSAPBusinessByDesignevenshowupinonlinesearches?Andwhathappenswhenitdoes?ThespeedwithwhichSAPrespondsandactsonanyinquirieswillhaveadirectimpactonwhetheritiseveninvitedtotheparty.Thegoalistorespondimmediately24/7.

Thisofcourse,willhaveasignificantimpactonitssuccessinthethirdprongofitsstrategy.Bydevelopinga“virtualagency”thatdeliversallcomponentsofacampaign(emails,landingpages,supportingmaterialsfortelemarketingandsocialmedia),SAPcanprovidereal(andmuchneeded)marketingsupporttoitspartners.

DEVELOPINGSUCCESSFULPARTNERSHIPSMuchofSAPBusinessByDesign’searlysuccesswasachievedthroughdirectsalesefforts.Butthathaschanged.In2016partnerswrote70%ofSAP

Disruptioncanhaveacascadingimpactonbusinessapplicationrequirements,makingagility-theabilitytoeasilyinnovate,evolveandchange-evenmoreimportantthancurrentfunctionality.

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BusinessByDesigncontracts.Indeeditwouldappeartheplatformhascontinuedtobolsterthistransition,asevidencedbythe2,641partner-builtadd-onsavailabletoday.

Thisisnecessaryinordertogettothenextlevel,andifsuccessfulcouldleadtoexplosivegrowth.ApartnerstrategyisattheveryrootofSAP’spriorsuccessintheSMBmarketwithSAPBusinessOne.Thatmeansbuildingasuccessfulindirectchannel.ItmayindeedtapintotheexistingSAPBusinessOnechannel,whichhasgrownthatinstalledbasedtoover55,000customers,supportingoveramillionusers.Oritcouldrecruitfromitscompetitors.Eitherway,SAPplanstodoubletheSAPBusinessByDesignpartnercapacityinthenextyear.

CONCLUSIONS

It’sabouttimeforSAPBusinessByDesigntoleaveitsRodneyDangerfieldimagebehind.SAP’sthree-prongedstrategyforSAPBusinessByDesign…

• Deliverbestinclassinnovation• Drivemeaningfuldemand• Developsuccessfulpartnerships

…seemstocoverallthebases.ItwillcontinuetoinvestinthecorefunctionsofERP.InfactSAPhasvowedtoaddanadditional100developerstotheteam.Itwillbegintoleverageitsinvestmentintheunderlyingarchitecturetoimprovetheuserexperienceandintegratetoother“bestofbreed”functionalitywithinitsownportfolio,initspartnercommunityandperhapsevenbeyond.

Anditplanstoraisethevolumeofitsmarketingbeyondthewhisperthatithasbeen,withthehopeofattractingnewpartnersandevenmorenewcustomers.

Incombiningthesethree,MintJutraswouldcontendthattheplatform-theverythingthatcausedSAPtogoquietinthepast-shouldnowbethereasontoshout.AwordofadvicetoSAP:Shoutloudandclear.

Abouttheauthor:CindyJutrasisawidelyrecognizedexpertinanalyzingtheimpactofenterpriseapplicationsonbusinessperformance.Utilizingover40yearsofcorporateexperienceandspecificexpertiseinmanufacturing,supplychain,customerserviceandbusinessperformancemanagement,Cindyhasspentthepast11yearsbenchmarkingtheperformanceofsoftwaresolutionsinthecontextofthebusinessbenefitsoftechnology.In2011CindyfoundedMintJutrasLLC(www.mintjutras.com),specializinginanalyzingandcommunicatingthebusinessvalueenterpriseapplicationsbringtotheenterprise.

SAPBusinessByDesignhas2,641partner-builtadd-onsavailabletoday.

SAPplanstodoubletheSAPBusinessByDesignpartnercapacityinthenextyear.