Corporate Officer SAP Group, Member of the Executive Council,
Executive Vice President
SAP serves a wide variety of industries. None (not even the winners in this downturn) are immune to the impact of this recession. How SAP customers prioritize and address their most pressing challenges varies by industry.
In the retail sector, for example, where consumer confidence and frugality have had a crushing effect on sales, there’s now heightened emphasis on real-time visibility into buying patterns, operational efficiency, and the performance of competitors. Manufacturers are focused on making their operations as lean as possible while managing supplier risk. Utilities companies are focused on energy efficiency. And oil and gas companies contend with various challenges: market fluctuation and dramatic pricing oscillation, regional political instability, intensified compliance legislation, and a shift in demand toward renewable sources of energy. All of these industries need dedicated solutions for their unique business challenges.
To successfully serve an industry, it’s a given that SAP needs to know the customers, concerns, business processes, market challenges, and solutions specific to that industry. If you then extend and apply this need for profound expertise through more than two dozen distinct industries (see Figure 1), it’s evident that SAP Industry Solutions are, by necessity, underpinned by the best solution management in the business.
Defense & Security
Higher Education &
Aerospace & Defense
Engineering & Construction
Oil & Gas
Travel & Logistics
A sampling of SAP Industry Solutions’ coverage
Given the research SAP actively conducts and the insights it draws from embedding product managers at customer sites to see first-hand how processes work within the industries it supports, SAP has amassed an intimate knowledge of industry operations and requirements. Calling upon this expertise, SAP routinely offers guidance and options, drawing from the entirety of the SAP solutions and services portfolio, to address challenges that are shared by companies within an industry. Therein lies tremendous, and often untapped, value for SAP customers.
The task of focusing on industry expertise and mapping that understanding to customer environments comes under the leadership of Bob Stutz, Corporate Officer and Executive Vice President of all industry solutions at SAP. In this interview, Stutz offers an up-to-date look at the holistic SAP Industry Solutions approach, as well as recommendations for leveraging SAP resources when addressing the challenges and opportunities presented within any given industry.
Q: SAP’s know-how of ERP, SCM, SRM, PLM, and CRM is widely acclaimed. But the company also has deep expertise in the different industries in which its customers operate. How does this industry expertise get leveraged to a customer’s advantage?
A: Each industry faces a unique set of processes — and challenges. Clearly, market forces and priorities are not the same for a consumer goods company and a healthcare provider, for example. With our industry expertise comes an in-depth understanding of each industry’s specific processes and requirements, ranging from the way they interact with customers and handle exceptions to their industry regulations, standards, and best practices. We also track market trends, industry-specific metrics and key performance indicators, emerging strategies, and game-changing partnerships.
On top of this, we realize that it’s not sufficient to merely provide the answers to today’s business process issues. We also provide a systematic approach to equip and empower customers to rise to the challenges of tomorrow. SAP Industry Solutions provide analytical insight through the value chain; we ensure that our customers have the capabilities to anticipate changes in the market, diagnostics tools to pinpoint critical processes, thorough and consolidated market and customer information, and modeling tools to swiftly identify and isolate risks and competitive threats. Simply put, we’re in business to ensure sustainable forward momentum for our customers.
All this is brought to bear on the offerings we develop for customers. Right out of the box, SAP solutions hit the mark with minimal requirements for customization since the software is so tightly coupled with industry requirements. Any customization that customers perform targets that which is specific to their company. The industry-centric customization, which is quite substantial, is already in place.
SAP: Touching the Daily Lives of Millions of People Worldwide
Did you know that SAP drives:
- Production of 40 million barrels of oil per day?
- Retail outlet transactions totaling US$330 million per day?
- 75% of worldwide annual beer production (1.5 billion hectoliters)?
- Production of 32,000 car engines per day?
- Defense forces across 107 countries?
- 54 million annual healthcare patient visits in the US alone?
- Processing of 2.5 billion utility bills per year?
- 65% of worldwide annual chocolate production (2.2 million tons)?
- Production of 4 million tons of chemicals per day?
Q: How does SAP develop this exceptional industry expertise?
A: SAP teams go on site with customers. In this way, we experience their business challenges and operations firsthand in their day-to-day work environments. We use the same tools and user interfaces they do. And we’re privy to internal processes and how they are conducted. We also see how different industries model and share data.
Such real-life experience and exposure to authentic customer issues is the most effective way for SAP solution managers to fully appreciate — and work to address — their challenges. Take a process like trade promotions, where front-office teams from consumer industries interact with retail strategists to collaboratively understand and better serve the consumer. This example is representative of the body of knowledge we draw upon to optimize SAP functionality for different industries.
And it’s not simply features and functionality that we’re mastering; it’s an understanding of the end-to-end processes in which these capabilities come into play. In the case of trade promotion management, for instance, we’re examining activities from promotion planning all the way through to financial settlement. This is how you deliver solutions that address the real business challenges customers are up against.
SAP is now driving its entire product strategy around this industry focus. We will continue to embed our product managers inside the industries we serve. We’re working with a much greater degree of intimacy with our customers and enabling them, in turn, to achieve much greater degrees of intimacy and success with their customers.
Q: How are industry-specific capabilities reflected in SAP solutions?
A: Industry groups at SAP are the eyes, ears, and advocates of our customers, channeling our understanding of customers back to SAP development — the bridge between customer realities and the SAP product portfolio.
It used to be that SAP product management organizations were siloed by horizontal application areas such as finance, HR, CRM, and SCM, and that separate business units focused on industry-specific add-ons. We’ve flipped this model entirely. Now, each of the industry-focused business units looks at all SAP solution offerings (not merely the add-ons) for that industry in a holistic way, and drives our product portfolio forward. Today, industry-specific components are built into the SAP Business Suite platform. They are not add-ons (see Figure 2).
Industry-specific components now embedded in SAP Business Suite software
All this means that companies must have one common platform for all application components. It’s what enables you to readily adapt, update, and innovate business processes. You can’t do that with point solutions. Too many constraints are imposed and too much integration and rework is required. By contrast, consider what you can do with the SAP platform, where you can create and change processes using any element of the SAP Business Suite.
Imagine that you run a car dealership, and you have application building blocks available to you from SAP for finance, HR, and logistics, as well as for activities that are wholly specific to the issues and customer interactions of dealerships. Now imagine that you can easily take these building blocks and assemble and reassemble them any way you like to create new or improved end-to-end business processes. Current times call for this type of agility; today’s customers aren’t really excited about spending a lot of money for new cars, and dealerships want to incentivize their existing customer base. With one platform, dealers can do this quickly and easily.
Increasingly, business transformation blurs conventional industry boundaries. Consider a manufacturer of consumer goods, with global presence and corresponding brand recognition, that is expanding into the retail sector. As the manufacturer’s business expands, the SAP platform plays a pivotal role. It offers enabling functionality for the entire, expanded manufacturing value chain.
Across all the industries we support, SAP customers will now get significantly more out of their SAP implementation because they can connect the dots from the back office to the front office. The front office — encompassing all of your customer-facing processes — is particularly important these days. This is where the differences among industries are most pronounced. How utilities companies interact with customers is markedly different from how retailers and chemical companies interact with customers.
Customer buying behaviors have changed. There is now more price sensitivity, a lack of consumer confidence, limited credit, a heightened sense of vulnerability, and tougher tests being issued by customers for vendors to prove their value. We all have to adjust, because economic recovery isn’t imminent. Even when this recession is over, it’s not likely that customers will revert back to their old buying behaviors and tactics. So, addressing this immediate need — getting closer to your customers (just as SAP has) and optimizing operations — will serve you well now and in the long term.