Category Archives: Technology

The SAPphire Sensation

As just about everyone in the enterprise space knows, SAP‘s big annual conference, SAPPHIRE, was last week, and, especially since SAP took the progressive stance of again reaching out and inviting bloggers to cover the conference, it received quite a bit of press. Since I was not among the fortunate few invited to Atlanta to cover the conference, I’ve been keeping up with the postings of the bloggers who were in attendance to try and figure out what what SAP has been up to.

A number of leading bloggers, including Jason Busch of Spend Matters, Dennis Howlett of AccMan [WayBackMachine], Jerry Bowles of “Enterprise Web 2.0”, Craig Cmehil of Craig’s Rantings [WayBackMachine], Michael Cote of People Over Process, Dan Farber of “Between the Lines”, Thomas Otter of Vendorprisey, and Robin Fray Carey of Social Media Today [WayBackMachine] were in attendance and together posted a considerable amount of coverage and insight (which can be augmented by a few thought pieces from AMR as well).

From these posts (which are direct-linked at the bottom of this post), one learns the following about SAP:

  • SAP has their work cut out for them if they ever want to reach a thought leadership position in the sourcing and procurement space.
  • SAP recognizes that their solution is quite expensive compared to other best-of-breed solutions and that users today want to try before they buy (even though what they have is not yet competitive with some of the other best-of-breed players).
  • SAP has recognized the need for proper spend analytics.
  • SAP’s Master Data Management Solution is not ready for prime-time.
  • SAP’s Duet offering (being jointly developed with Microsoft) is not ready for prime-time either (despite its sale to 250 customers), but 1.5, intended to have better integration between Microsoft Office and SAP business processes, is slated for later this year. However, it may be version 2.0 (slated for release in late 2008) before it lives up to initial expectations.
  • SAP is starting to understand the importance of community in sourcing, procurement, and the supply chain as a whole (and that SDN and BPK will be key to their innovation strategy), and is working on a social computing application called Harmony, currently under a controlled test, as well as doing a lot more development with partners.
  • SAP is still solid on Netweaver as the center of its platform
  • A1S, the upcoming on-demand mid-market platform built on a SOA architecture and pegged for a 2008 release, remains a mystery and source of confusion.
  • No more MySAP, it’s now SAP ERP 6.0.
  • SAP wants 100,000 customers by 2010 (as compared to the 39,000 it has today).
  • SAP will embed the Adobe Acrobat Connect Professional Web conference system in its workforce development product.

The following news is quite interesting:

  • SAP is now offering a 90-day E-Sourcing trial consisting of 3 pre-configured events for only $10,000 that comes with (limited) training and support
  • Their forthcoming spend analytics xAPP solution should have a much better UI than old-school SAP products
  • Most customers only use 30% of SAP functionality

The E-Sourcing offering is likely to get them a lot of traction, but is it likely to win them a lot of business. I expect that many customers who do not have an E-Sourcing solution at present will try it, say “that’s great”, but then start looking elsewhere when they get the quote, since I believe Iasta (acquired by Selectica, merged with b-Pack, rebranded Determine, acquired by Corcentric) and Procuri (acquired by Ariba, acquired by SAP)will offer considerably more on-demand functionality at a considerably smaller price-tag for some time to come. As Jason Busch said, once users sip the Kool-Aid, they’ll want to buy their own refrigerator, blender, mixers, and booze to tailor it just to their liking and although some may have the budget to afford SAPs full offering, I’m betting many won’t.

The xAPP solution is interesting since it sounds like it will compete fairly well with solutions offered by Emptoris (acquired by IBM, sunset in 2017), Ketera (acquired by Deem), Procuri, and Zycus and since it sounds like they have integrated Macromedia UI capabilities, and maybe even Flex, into the application.

The 30% statistic, although something I more-or-less knew as a technology expert, is interesting nonetheless as it comes straight from the source and hammers on the need to carefully evaluate what you are buying, whether you truly need it, and how many seats you really need if you do before you sign the contract. Otherwise, you might end up paying millions more than you need to. And although every large corporation needs a solid ERP system for their master data store, it forces you to think about whether you will get solid value for the price, especially since there are much more affordable enterprise open-source alternatives, such as Aptean Compiere, out there. For some companies, a properly configured SAP instance with the appropriate number of licenses will be worth (much more than) the cost, but for others, it may not be.

I’d like to leave you with a paragraph from Brian Sommers, whose long blog entry of yesterday drives the point home.


The users that should be showcased at these events are the ones who spent a pittance and got a ton of value. Morever, the focus should be on highlighting the customers who were able to figure out a lot of the change management challenges on their own and actually solved them without the use of consultants or a strait-jacketing piece of technology.

The Links:

  • Spend Matters [WayBackMachine] by Jason Busch
    SAP: 3 Sourcing Events for $10K?*
    SAP Gets Serious about Spend Analytics*
    SAP SRM Users: Don’t Feel Compelled to Upgrade to MDM*
    Waiting for Duet*
    SAP’s E-Sourcing Transformation: Part 1 — Setting the Stage*
    SAP’s E-Sourcing Transformation: Part 2 — The Services Ecosystem*
    SAP’s E-Sourcing Transformation: Part 3 — Just the Product Facts*
    Procurement Goes Main Stage at Sapphire*
    Making the Sapphire Procurement Scenario Real*
    SAP needs to Realize that Procurement Extends Beyond the Four Walls*
  • AccMan [WayBackMachine] by Dennis Howlett
    SAPPHIRE 07 – Day 1, the wrap
    Hasso Plattner’s blackboard
    On not seeing A1S
    Will You Trust SAP With Your Business?
    Harmonising inside SAP
    SAPs A1S go to market strategy – the addressable market
    SAPs A1S go to market strategy – potential hurdles
    SAPPHIRE wrap
    AMR sees A1S, confusion reigns
    Flashing Open the A1S Kimono
  •  Craig’s Rantings [WayBackMachine] by Craig Cmehil
    Oracle invades SAP SAPPHIRE
    SDN and SAPedias
    Emerging Solutions brings “Harmony” to the Enterprise

People Over Process by Michael Cote
Sapphire 07: Support, Enterprise 2.0
Sapphire 07: Stable Agility, Web 2.0 Everywhere

Between the Lines WayBackMachine] by Dan Farber
SAP Sapphire gets underway
SAP internalizes social networking for business
MySAP fades into history
SAP aims A1S on demand solution for 2008
Hasso Plattner outlines SAP’s software vision
SAP and Microsoft lay out Duet roadmap
SAP gets on the Enterprise 2.0 bandwagon
SAP CEO: We are not arrogant, we are the market leader

Social Media Today [WayBackMachine] by Robin Fray Carey
Meanwhile, at Virtual SAPPHIRE
Dennis Moore at SAPPHIRE: “No More Waterfalls”
Hasso Plattner: “Virtual is Real”

Vendorprisey by Thomas Otter
Live blogging Leo’s keynote
The name game. My My.
The future of HR systems and thinking?
Henning’s Kagermann’s Keynote
Rio Tinto, SAP, talent management and Youtube
Talking GRC and the office of the CFO gang at Sapphire
Dinner with SAP customers and an old friend
Co-innovation is a strength not a weakness

“Enterprise Web 2.0” or
Enterprise Irregulars by Jerry Bowles
SAP Shows the Love for Bloggers
SAP to Enterprise 2.0 Community: We Get It

Enterprise Irregulars by Brian Sommer
Getting to know the SAP Customer

AMR
“SAPPHIRE 2007: Usability and Flexibility Take Center Stage” by AMR Research Staff
“SAPPHIRE: SAP Widens Its Embrace to the Extended Value Chain” by Stephen Hochman, Mark Hillman of AMR
“SAPPHIRE 2007: SAP Lets the A1S “Secret” Out of the Bag” by Simon Jacobson, Jim Shepherd
“SAP is Starting to Take a Leadership Role” with SRM by Mickey North Rizza, Jane Barrett

“Sapphire 2007: An SAP SRM Gem?” by Aberdeen

P.S. David Bush of e-Sourcing Forum [WayBackMachine] offered his opinion of Spend Matters’ ERP week yesterday.

P.P.S. I also hear Jason Wood of Ponderings of Woodrow and Mike Masnick of TechDirt were present for at least part of the conference, so you might want to check their blogs in the coming days as well to see if they posted their thoughts.

Where’s My UI?

The title of a recent article on the “The Future of the Enterprise User Interface” by AMR’s Jim Murphy caught my attention. In it, he claims that the user interface (UI) will evolve into a pervasive layer for user interaction in the next five years, extending established enterprise systems to users in their work environments – wherever they happen to be and that it will be an intrinsic part of every company’s architecture while allowing end users a persistent, consistent, and personalized means of accessing, contributing, and delivering information across internal and external sources; structured and unstructured systems; and business, personal, and community services.

He then goes on to characterize the new UI, which will be:

  • Rich
    graphically intuitive
  • Pervasive
    consistent, reliable, secure access
  • Continuous
    users will be able to switch between access points and pick up where they left off
  • Contextual
    information and services will be presented based on context
  • Personalized
    users will have their own portals to publish and consume content and services
  • An Extension of Identity
    users will be able to establish a holistic sense of identity
  • Interface-Free
    interface tools will expand
  • Information Intelligent
    users will be able to use their native language to ask questions and get answers

Which is not only where interfaces are heading, but where they are today!

  • Microsoft is trying to do with Vista what Apple has been doing with the Mac OS X for years, and make interfaces usable
  • Most on-demand applications now provide a consistent, reliable, and secure service whose availability is only limited by availability of the underlying connection
  • Some leading on-demand applications and portals are including contextual sensitivity that remembers where the user was and returns the user to that point the next time she logs in
  • Some portals now push content based upon where the user is in the workflow
  • A host of free and low-cost platforms now exist on the web for users to publish and consume content and services
  • Leading web-sites now allow users to establish their own identify
  • Interface tools are expanding daily. Creating a web page is now child’s play. Back in the day, it was a monumental programming task.
  • Researchers are making tremendous progress in natural language interfaces.

In other words, although the title caught my eye, the article itself left something to be desired. In five years, the UI should progress well beyond where it is today. Now, I should point out that the article was focussed on the enterprise UI, and it is a fact that traditionally enterprise applications have significantly trailed consumer applications in user interface advancements, but with the recent surge in on-demand applications and the current push by many leading companies to move to web 2.0 “community” applications, I am of the belief that any software company that waits five years to upgrade its UI to these capabilities will not be around in five years. The new workforce is much more technically competent and used to a “networked” world. I don’t think they’ll wait five years for you to catch up. So, although I agree that the enterprise of the future will be rich, pervasive, continuous, contextual, personalized, an extension of identify, interface-free, and information intelligent, I believe that future will come much sooner than Mr. Murphy seems to imply.

McKinsey, Web 2.0, and India

Recently, the McKinsey Quarterly ran an interesting article on the results of their survey on “How Business are Using Web 2.0” technologies, which rely on user collaboration, including Web services, peer-to-peer networking, blogs, podcasts, and online social networks. They found that there was widespread careful interest in the trend, that most respondents expressed satisfaction with their investments to date and that they viewed Web 2.0 technologies as strategic, but that most companies were placing the greatest importance on the technologies that enable automation and networking.

When asked what their companies might have done differently during the past 5 years to make more effective investments in Web 2.0 technologies, in hindsight 42% of companies said they invested at the right time but should have invested more in internal capabilities, 24% said they should have invested sooner, and 18% would not have done anything differently. In other words, 84% have a strong belief in the value of Web 2.0 technologies.

The most popular bets that companies are using or planning to use are web services at 80%, collective intelligence at 48%, and peer-to-peer networking at 47%. Even though Web 2.0 is best known for blogs, podcasts, wikis, mash-ups, and RSS, most companies are more interested in the tools that connect all of the stakeholders together. This is backed up by the fact that the fourth most popular bet is social networking at 37%.

However, one of the most interesting points was that interest in Web 2.0 was highest in retail, and not high tech, and that investment interest in India significantly surpasses interest in China by 16%. Does this mean that forwarding thinking companies believe that Web 2.0 technology can be used to overcome many of the infrastructure short comings that plague India compared to China and put India on more even footing? I’m not sure, but it’s a very good question. Any thoughts?

You’re Losing Money on Your Invoices

Those who follow Aberdeen Research will realize that there are three levels of publication frenzy: ( a) end-of-the-month, ( b) end-of-the-quarter, and ( c) end-of-the-year. Well, end-of-the-quarter just passed, and a slew of new reports just hit the Aberdeen website. In addition to the “Supplier Performance and Risk Management Benchmark” that was the subject of yesterday’s post, the “E-Payables Benchmark Report” also hit the e-waves this week.

The report found that Best-in-Class enterprises that utilize automation to drive performance report the following advantages:

  • 91% lower invoice-processing costs
    ($1.50 to $2.00 compared to $10.54 for industry average and $58.09 for laggard)
  • 46% shorter process cycle time
  • 12% fewer late payments
  • 30% less time responding to inquiries

The report also gives some advice to organizations that want to become Best-in-Class. These recommendations include:

  • Moving toward a fully automated environment that integrates A/P with existing procurement and financial systems
  • Establish a linkage between your A/P goals and objectives and the broader goals of the finance and procurement groups
  • Develop disbursement strategies in concert with your treasury and finance teams that seek to optimize working capital
  • Leverage data visibility to drive performance improvement across the enterprise
  • Increase collaboration with IT to assist in the development of a portfolio strategy to best manage an array of electronic receipt and payment methods

These recommendations are important because over 60% of enterprise lack visibility into the primary A/P spend and invoice data and paper invoices cost 74% to 89% more to process than electronic invoices. This lack of visibility cascades into lost opportunities across the enterprise, including treasury, procurement, and supplier management. Treasury is unable to make optimal working capital decisions, procurement is unable to identify opportunities for leverage, and supplier management is unable to even answer the simple question “have you received my invoice?”.

The sad thing is that getting to best-in-class is not very hard, especially compared to risk management or strategic sourcing. The enabling technologies are straight-forward, have existed for a while now, and include:

  • E-Invoicing
  • Document Scanning, Workflow, and Management
  • Spend Analytics for Invoices and Compliance
  • Reporting Capabilities
  • Invoice Dashboards
  • Payment Networks

Moreover, Aberdeen lays out a straight-forward e-payable framework to follow. The framework is a four-part solution that progresses from receipt through approval and inquiry to validation and reconciliation, and finally to settlement. After all, in addition to significantly lower invoicing costs, A/P automation also allows for improved resource productivity, stronger controls, fewer errors, better payment performance, reduced cycle times, and improved visibility into spend. This is another report I’d make time for if you’re not best-in-class already.

Ahoya, Akoya

When I was being blown away in the windy city, I had a chance to sit down with Brett Holland, Co-Founder and SVP of Akoya (acquired by i-Cubed). It was an illuminating conversation, and one that highlighted why companies like Akoya and Apriori are taking spend management to a whole new level, especially in manufacturing (even though they are both attacking problems at different ends of the spectrum using two different approaches). Not wanting to spoil Brett’s upcoming posts over on Spend Matters, I decided to hold off on a post of my own.

In his “Getting Ahead of the Product Cost Management Curve”* post on Spend Matters [WayBackMachine], Brett points out that procurement and sourcing play a very critical role in understanding the product cost implications associated with the sourcing and purchasing of engineered components and that procurement and supply management can and should lead conversations regarding product costs since today’s spend management 2.0 solutions allow procurement and sourcing professionals to arm themselves with much more information about what drives costs and where there are opportunities to save money in direct materials and contract manufactured component categories. Furthermore, most of the current approaches in the market are highly complementary to each other and manufacturing companies should be working with all types of product cost management techniques to maximize their position in an increasingly competitive environment. And this last point is key. One solution is great – a small basket of complementary solutions that attack cost from all the angles is either better.

In his “Taking Control of Cost Management for Engineered Direct Materials”* post on Spend Matters, Brett points out that in the past, there have not been very good ways to systematically find cost inefficiencies and take action on them within engineered direct materials. Companies have developed cross functional teams, conducted six sigma projects, brought in consultants and domain experts, but none of them have had the direct access to the critical data and the analytical tools to dissect it so they could have a clear picture on the factors that drive cost inefficiencies in the direct materials across the organization.

However, today, analytical solutions are available for product cost management that can take the data that is within your control – financial, purchasing, supplier, and manufacturing – analyze it, and present you with a highly accurate list of parts that have potential cost savings. Additionally, these analytical solutions provide reasons why these savings opportunities exist and potential actions to take to capture them. The analytical solutions can then be complimented by activity-based cost models, risk management solutions, supplier relationship management solutions, and e-Procurement packages that help execute on the actions.

Furthermore, Today’s product cost management analytics work by drawing out the elemental factors within the part and its manufacturing requirements that drive the cost. They then analyze this data to determine commonality and comparability, and can predict target costs. They augment (and sometimes correct) this predicted cost with data that determines the factors that may contribute to cost inefficiencies (you can think of it as the evidence that makes the case). From this combination of approaches, these analytical solutions can accurately assess which parts are good renegotiation candidates, which parts are good resourcing candidates, which suppliers are best at each part, and other actionable findings.

This last point is key – and why you should use a basket of complementary solutions, starting with Akoya and Apriori. Akoya helps you figure out where you are likely overspending and why, and Apriori helps you figure out by how much and what you do about it, with its process-based mechanistic cost models. In other words, given the forest, Akoya helps you find the trees that need to be cut down and Apriori is the saw you use to tackle the trees.

For another perspective on Akoya, refer back to Jason’s “Spend Management Goes Upstream: Part 3 – The Akoya Philosophy” post.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.