SAPs Platform Strategy
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1) SAP was facing challenges due to the rigid and complex nature of traditional ERPs, including high failure rates and investments required. The rise of new technologies also posed threats to SAP's business model. 2) SAP considered alternatives like reinforcing its NetWeaver platform, expanding products into new areas, and developing application service provider models. 3) The recommendation was to reinforce the NetWeaver platform through an open EAI standard and community of practice for knowledge sharing, to align with customers' changing needs in a more flexible way.
SAPs Platform Strategy
- 1. SAP – ASAP actions!!!October 15th 2009Ahn, Soo JinMoon, Sung JinTheerawat Saendawibadhana
- 2. 1. Diagnosis of problemsIT Consulting - SAP-ASAP action!!!
- 3. 1. Symptoms and ProblemsIT Consulting - SAP-ASAP action!!! Symptoms KeywordsTraditional ERPis overly complex and difficult to install ex) Dell, KmartComplexity, Rigid Kmart $130M spending for attempting to implement, Require highinvestmentHigh failure rate in ERP implementations (over budget, delayed, hard to exit)Failure rate > 50% according to HBS surveySlow to changeCustomers should modified more frequently but no-longer wait for upgradeTo heavy for small businessesSmall, Mid-size companies want to adopt the system without high investments
- 4. 1. Symptoms and ProblemsIT Consulting - SAP-ASAP action!!! Symptoms KeywordsChallenged by transforming open source integrator Push to open, FlexibleMajor IT players had jumped onto the SOA and web service platformInadequate for rapid & complex businessInadequate to help companies become e-business EAI took up half of the time of IT departments. Therefore SAP decide to catch up with mySAPDecrease in benefit*EAI : Enterprise Application IntegrationBegan to suffer from a lack of revenue gain and decrease in net income
- 5. 2. CausesIT Consulting - SAP-ASAP action!!! Traditional ERP is based on closed platform, one-size-fits-all approach
- 6. Enterprise packages became incompatible between other venders InternalComplexity, RigidRequire high investment Business model was challenged High license fee model was not preferable for web environmentSlow to change Business environment was changing
- 7. Growth rates of enterprise market was declining
- 8. Computing environment became more heterogeneous ExternalTo heavy for small businesses Customers are changing
- 9. Customer requirements became heterogeneous
- 10. Tend to adopt best-of-breed model ( custom-built)
- 11. Look for specific point solution to enhance own process ( preference for keeping uniqueness )
- 12. 2. CausesIT Consulting - SAP-ASAP action!!!Push to open & Flexible New trend 1. Web service trend Web services would be from an open-system platform, so diverse application melted into a solution Enterprise SW venders got more integrate approachInadequate for rapid & complex business New trend 2. Software-as-a-service trend
- 13. Introduction of SOA (Service-Oriented-Architecture)
- 14. Run off-site operation by the venders, no longer own the software
- 15. emphasis code reuse and business remodeling
- 16. impact on reduction in sales and license revenueDecrease in benefit
- 17. 3. Risk and ObstacleIT Consulting - SAP-ASAP action!!! The new platform strategy would fundamentally affect the company’s business architecture Risk SAP had to rethink of value proposition, target customers, resource allocation, business process, alliance management, growth engines.
- 18. Threat from competitors ( Indian providers, Oracle, Salesforce.com)
- 19. SAP would be hard to attract independent developers even if it had open platform
- 20. The entire revision of product line wouldn’t be done until 2007Obstacles Necessary of supporting from scalable infra providers 2. AlternativesIT Consulting - SAP-ASAP action!!!
- 21. SAP Strategic Positioning & Business DesignExpansion of functional CoverageDevelop new systems over new Business areasDeepening Industry KnowledgeEnter to new industry segmentPenetration of Mid-MarketEnter to new customer groupDevelopment of New Flagship OfferingDevelop and Offer new products on technology basis.Configuration of ResourcesResource constraints for SAP developmentIT Consulting - SAP-ASAP action!!!
- 22. AlternativesReinforce the “NetWeaver” with Knowledge ManagementPromote and open the NetWeaver as the open platform for SAP integration development. As well as, to support Knowledge Management System to the community to enhance capability to reconfigure and modify the SAP and applications on the appropriated ways.Expand Product into different business and technical areasDevelop the new products and modules to support the market changes such as CRM system, SCM system as business concern or BPM and SOA applicable as technical concern.Develop ASPs service with individual module basisAllow the customers access and utilize the SAP system, which SAP would provide the service available as Application Service Provider.IT Consulting - SAP-ASAP action!!!
- 23. Alternative 1: Reinforce “NetWeaver” with KMIT Consulting - SAP-ASAP action!!!Score to align to SAP strategy5 – Most aligned, 4 – Likely aligned, 3 – Moderate aligned, 2 – Unlikely aligned, 1 – Not aligned
- 24. Alternative 2: Expand Product on different areasIT Consulting - SAP-ASAP action!!!Score to align to SAP strategy5 – Most aligned, 4 – Likely aligned, 3 – Moderate aligned, 2 – Unlikely aligned, 1 – Not aligned
- 25. Alternative 3: Develop ASPs servicesIT Consulting - SAP-ASAP action!!!Score to align to SAP strategy5 – Most aligned, 4 – Likely aligned, 3 – Moderate aligned, 2 – Unlikely aligned, 1 – Not aligned
- 26. Alternative EvaluationIT Consulting - SAP-ASAP action!!!Score to align to SAP strategy5 – Most aligned, 4 – Likely aligned, 3 – Moderate aligned, 2 – Unlikely aligned, 1 – Not aligned
- 27. 3. RecommendationIT Consulting - SAP-ASAP action!!!
- 28. Recommendation: Reinforce “NetWeaver” with KMDevelop the NetWeaver as Commercial SAP EAI product as professional service standard.Prepare the technical readiness to be Open NetWeaver Platform as Open EAI Standard for SAP integration.Develop, Promote, and Contribute the Community of Practices to allow the developers to participate on “NetWeaver SAP Integration Experience & Expert”.IT Consulting - SAP-ASAP action!!!Community of Practice (KM): Developers and SAP contributedHRPPMMFICOBCSDNetWeaver: Commercial EAI / Open NetWeaver
- 29. Actions and ImpactsDevelopers would be volunteer as well as force to participate.The content have to be produced with quality and accurate to create the trust on Knowledge.Maintain the product/service quality as well as the technical support, which directly provided by SAP and certified SAP partners.The sale both SAP and Commercial NetWeaver would not increase at the beginning stage since implementer may not be familiar to the technology.However, it would be increased later according to the technology acceptance and existing SAP customer based.Additionally, the next phase, SAP shall provide the separated module installation and configuration, which it would serve the customer needs as well as enhance the EAI functions to support the future customers’ business changes.IT Consulting - SAP-ASAP action!!!
- 30. ConclusionGet the developers as partner by making communities (like Google Android, open-social, etc) .Let companies familiar with new products, technology and concept. “ Let Customers Do Their Job” – The Long Tail Improve the products and service and gear to Business Oriented. Software-as-a-Service ex) SAAS IT Consulting - SAP-ASAP action!!!
- 31. Thank youChallenge SAP – ASAPbefore Enemies PASs you!!!IT Consulting - SAP-ASAP action!!!