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American Express Co-Innovates with SAP

by Dave Hannon | insiderPROFILES

October 1, 2011

When SAP customers evaluate third-party solutions, a crucial piece to consider is how the new solution will integrate into the business’s existing technology landscape. To ensure an easy integration, SAP has been focused on co-innovation with its partners. This article details how American Express collaborated with SAP to develop a more easily integrated payment solution for SAP customers.

When SAP customers evaluate  third-party solutions, they must review a host of factors: the functionality provided, the vendor’s reputation, the cost. However, the most crucial piece to consider is how this new solution will integrate into the business’s existing technology landscape. A poorly developed or unreliable interface to the back-end SAP ERP system can greatly reduce the solution’s expected benefits. In an effort to ensure the easy integration of a wide variety of third-party solutions into SAP landscapes, SAP has been heralding its strong focus on co-innovation and is collaborating closely with its partners to achieve this end. A prime example of this strategy — and its benefits to SAP customers — is the recent work that the American Express Global Commercial Card team and the SAP Custom Development organization have done to streamline the integration of American Express’ electronic payment platform, Buyer Initiated Payments (BIP), into SAP ERP. The two organizations co-developed a plug-and-play interface, or connector, that allows SAP users to quickly and efficiently integrate American Express’ BIP payment solution with SAP’s accounts payable functionality. Sewing the systems together on American Express’ side is SAP’s functionality for process integration (PI) underpinned by the SAP NetWeaver technology platform.

The connector sidesteps the need for long and costly integration projects and allows customers to rapidly benefit from working capital improvements. This collaboration provides a clear-cut blueprint for other companies that are looking to co-develop products with end customers in mind.

Common Customers, Common Goals

The co-innovation of the new solution spawned from the fact that SAP was the largest ERP provider among large American Express corporate clients. And each one of these businesses had to complete a time-consuming integration project — developing blueprints, securing technical resources, defining data streams, and completing all of the other steps required to connect the two platforms. Essentially, each company was re-inventing the same wheel.

“You could integrate these two solutions as a manual process — where every time you do it, you do it as a discrete project — but taking time and resources like that is inefficient,” says Jaromir Divilek, Senior Vice President of Global B2B Payment Solutions at American Express. “We recognized a challenge and saw an opportunity. We approached SAP, a company that was similarly aware of the issue, and together decided to find a way to solve this roadblock and create a painless process for our mutual clients.”

Through this co-innovation project, American Express and SAP standardized the custom development process that each individual customer was required to undergo in order to connect the two solutions.

“We needed collaboration, not only across the leadership of our two companies, but also between various departments at SAP.”
Jaromir Divilek, Senior Vice President of Global B2B Payment Solutions, American Express

“We offer an electronic payment solution called Buyer Initiated Payments that interacts with the accounts payable module of SAP ERP Financials,” says Andrew Jamison, Vice President of B2B Product Management at American Express. “And we realized we could work with SAP on the development required for a plug-in and offer an easy-to-use interface to our joint customers. We wanted to build it once and deploy it many times.”

The American Express BIP solution is a web-based payment platform that incentivizes customers to focus on working capital, being it through access to liquidity or through improved payable metrics. The solution has the added benefit of helping customers transition away from managing costly check payments.

From the suppliers’ perspective, the solution focuses on ensuring they receive payment acceleration against their invoiced terms along with full remittance information.

To develop the new interface, SAP Custom Development and American Express followed a process similar to a classic consulting engagement. It started with a whiteboard session between the two organizations to define the goals and the resources that would be required to develop the solution. They then pulled together a project team that included functional, business, and technical representatives from both companies, and soon began defining the business needs and requirements for the project.  

The Collaboration’s Outcome

The new interface, the result of the co-innovation project, is a connector that significantly streamlines the implementation of the Buyer Initiated Payments solution for SAP customers. The net result is that a company can install the connector simultaneously as it deploys Buyer Initiated Payments. And because of its integration with SAP software, the connector leverages the workflow and approval processes that customers are already running in their SAP systems. How it works is the connector sends the standard output of any payment run in SAP ERP Financials to American Express’ PI platform, which is fully integrated with BIP and allows for payments to be processed automatically. Now, rather than spending weeks or months to develop an interface that connects the electronic payment solution to SAP ERP, customers can simply pay an implementation fee to install the connector during setup, which reduces the cost and time it takes for customers and suppliers to access the benefits that BIP has to offer. “The ability to demonstrate that return on investment is becoming critical in all IT projects today,” says Jamison. “And IT organizations are being held to the rate of return they defined. So by facilitating a faster return, these customers can use the savings to expand other areas of their SAP landscape.”

Partnering with SAP Custom Development

Developing a more deeply integrated payment solution required a true partnership between the two organizations at the highest levels. Mark White, the CFO of SAP America, was the key sponsor of the co-innovation project. Having such a strong advocate helped move the project along swiftly. “Mark White was very instrumental in the process of creating a solution for our joint customers from the very beginning,” says Divilek. “We needed collaboration, not only across the leadership of our two companies, but also between various departments at SAP. Importantly, Mark immediately latched onto the brand strength of both SAP and American Express as leaders in our respective markets and the value that would carry for our customers as we jointly developed this solution.”

Divilek also stresses that leveraging each company’s specific expertise helped make the project a success. “SAP Custom Development has the deep technology knowledge for a project like this,” he says. “American Express’ knowledge of electronic payments was also vital to making this collaboration work.”

As with any product development project, another key factor for success was ensuring that the development process involved the customer’s voice. American Express brought several existing users into the discussion to avoid “developing something in a vacuum,” as Jamison puts it. “Essentially, both organizations know our respective businesses very well,” he says. “But we were dealing with a challenge not previously addressed by an outside company: the gap between ERP systems and payment technology solutions. We resolved a client usability and interactivity issue that previously seemed outside of one specific company’s area of responsibility, which is why it was so important to tackle it with the customer’s needs in mind from the very beginning.”

As part of the agreement, SAP became the first company to deploy the integrated payment solution in May. What is truly remarkable is the speed with which these two companies brought this solution to market — pioneering a new way to address client challenges with a mere 10 months between signing an agreement in August 2010 and deploying the solution with SAP in May 2011. This solution highlights what can be achieved in a successful collaboration.

On the Horizon

In addition to creating a successful solution, this co-innovation project solidified a strong relationship between the two organizations, setting the stage for future projects that could help SAP customers integrate other American Express B2B or electronic payment solutions. “Both our companies agreed we had to learn to walk before we could run, but there’s a lot of opportunity to bring this relationship to other products,” says Jamison. “SAP is a great partner, and it’s clear what each of us brings to the table. So with that combination, there is a lot of potential.”

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