Forty years ago, SAP built its business by transforming the way companies used data. Organizations found that they could achieve new levels of insight, productivity, and efficiency by dropping spreadsheets in favor of SAP ERP applications. Now a new technology presents companies with the opportunity for a similar business performance transformation: the cloud. Rather than tying themselves to costly, time-consuming deployment models, customers can turn to the cloud for quicker time to value. In doing so, they can simply introduce and deploy new application capabilities and easily and efficiently access their growing volumes of data.
But customers aren’t using cloud solutions just because they’re in the cloud — they’re adopting them because of the business outcomes that cloud solutions increasingly enable. The ease of use and better access to data leads to improved decision making. And more than ever, business and budgeting decisions are now being influenced, led, or in some cases, entirely driven by line-of-business executives, so the fast time to value provided by the cloud is gaining traction among management. Cloud solutions from SAP give customers the agility both to accelerate and to simplify business processes — a key driver of value to decision makers who are looking to adopt new technology to meet their evolving business needs.
SAP’s idea-to-performance solutions in particular derive significant benefit from the cloud. The cloud enables these solutions to support complex, overlapping, integrated processes as well as the exchange of data between functional areas, compressing time to value for customers, simplifying manufacturing cycles, and lowering cost and risk while maintaining flexibility and scalability.
SAP’s Idea-to-Performance Approach in the Cloud
One of the key features of cloud solutions is that they can be deployed rapidly, frequently, and flexibly. Since most customers are going through a transition to cloud solutions, SAP provides flexible deployment models. You can use managed cloud, public cloud, or a hybrid model that integrates cloud solutions with any mission-critical on-premise application.
Leveraging this flexibility, SAP’s cloud-based idea-to-performance solutions accelerate value by:
- Enabling a virtual value chain
- Empowering a networked business
- Creating new business models
Enabling a Virtual Value Chain
Using the cloud, SAP’s idea-to-performance solutions enable a virtual value chain by connecting external parties and information in manufacturing, design, and customer engagement. A virtual value chain allows global coordination of distributed manufacturing resources as well as extended aftermarket service of products. Furthermore, the virtual value chain allows for rapid response to customer, stakeholder, and regulatory input from ideation to manufacturing.
One example of a cloud-based virtual value chain is in the area of workforce management. With its recent acquisition of Fieldglass, which provides solutions for contingent labor and services,1 SAP provides companies with a cloud-based vendor management system (VMS) for managing flexible workforces that include both temporary and permanent staff. The system can enable quick onboarding and engagement at any point in an employee’s time with the organization. It also integrates well with the Ariba Network and SuccessFactors solutions, providing a procurement network and human capital management capabilities.
Another example of a cloud-based virtual value chain is in the product safety and stewardship area. SAP monitors global product safety regulations and, on a subscription basis, keeps customers up to date with regulatory changes by developing content that is provisioned via cloud access or downloaded to an on-premise SAP Environment, Health, and Safety Management (SAP EHS Management) application via SAP EHS Regulatory Content. The content is also incorporated into an ongoing content service that provides customers up-to-date safety data for their products that contain hazardous materials. These solutions reduce companies’ compliance risks while eliminating the need to have resources in house to keep up with product regulatory changes.
Empowering a Networked Business
SAP empowers businesses in the virtual value chain — including suppliers, distributors, and outsourced services — by connecting them in a many-to-many network. Networks enable increased manufacturing flexibility through outsourcing or deferred manufacturing. They also encourage consistent supplier compliance and provide transparency into steps in the manufacturing process, as well as best practices such as sustainability assurance. And by using innovations like supplier network collaboration software from SAP, the same visibility of work-in-process, quality, and batch tracking can be coordinated for contract manufacturing as for internal facilities. This allows for the flexible expansion of manufacturing capacity while maintaining the same high production standards. Using cloud-based networked SAP solutions, such as SAP Product Stewardship Network and the Ariba Network, companies experience lower capital requirements and inventory costs, reduced compliance risk, and increased competitive differentiation.
Using cloud-based networked SAP solutions, companies experience lower capital requirements and inventory costs, reduced compliance risk, and increased competitive differentiation.
The SAP Product Stewardship Network enables online collaboration between companies within supply chains to help them exchange product compliance and sustainability data efficiently in many-to-many relationships. The collaboration network supports product compliance (for REACH and RoHS, for example); supplier compliance (for conflict minerals, for instance); and sustainability assessments (with embedded product category toolkits from The Sustainability Consortium, for example). Companies of all sizes can leverage this network to save time and cost while connecting with their supply chains. The SAP Product Stewardship Network can be used alone as well as in a hybrid solution with SAP EHS Management. In this hybrid deployment, customers can use data exchanged on the SAP Product Stewardship Network and download data and documents to on-premise SAP EHS Management systems that are integrated with engineering and manufacturing processes to provide compliance information and control throughout the enterprise.
The Ariba Network connects suppliers and customers to automate the procurement-to-invoicing process and gain insight into suppliers and business operations. The Ariba Network helps businesses achieve measurable outcomes and drive innovation, delivering superior business-to-business connectivity, collaboration, and insight to optimize buying, selling, and managing cash. Through this global business network and cloud applications, businesses become more agile and gain competitive advantage by delivering unique spend-, process-, and network-derived insights to fuel more informed, real-time decisions and drive optimal outcomes.
Creating New Business Models
SAP’s cloud-based idea-to-performance solutions are part of an emerging technology revolution that includes concepts such as the Internet of Things and Industry 4.0.2 This revolution, which is based on connecting devices and machines, is driving new business models that enable organizations to create additional customer value and expand the markets they serve.
In manufacturing, these new models are enabling manufacturers to embed capabilities for remote monitoring and service into their products. This can redefine their relationships with customers by bringing additional value and offering new sources of revenue in aftermarket services, including performance guarantees and even delivering the product as a service. For example, aircraft equipment manufacturers are selling their engines and all parts and services required to maintain them based on the hours used or the performance stress of the airframe. Printing companies are selling at cost per unit printed and providing all required equipment, ink, paper, and maintenance. One of SAP’s large industrial machinery customers has incorporated advanced equipment monitoring capabilities into customized mining machinery. By monitoring the performance of the equipment within the context of its environment, the customer and manufacturer can gain additional insights into the mining operations as well as equipment performance. The responsibility and risk of the intended performance of the equipment is transferred from the customer to the manufacturer, which is the product expert. The manufacturer creates a competitive differentiation through its value-added aftermarket services, and taps into new sources of revenue, creating a partnership with the customer with mutually aligned goals.
Responsive and Agile IT
SAP’s cloud-based idea-to-performance approach not only benefits the business, it enables responsive and agile IT by simplifying landscapes and increasing flexibility. SAP recognizes that companies have different starting points and strategies for taking advantage of cloud solutions, and offers various options for using the cloud, including private cloud, public cloud, and hybrid deployment with on-premise solutions, so that customers can make the choice that best suits their needs in an idea-to-performance scenario.
For example, SAP HANA Enterprise Cloud, a managed or private cloud that is available through SAP or partners, is ideal for running applications, such as SAP Business Suite powered by SAP HANA and SAP Product Lifecycle Management, that are mission-critical to an idea-to-performance scenario. With SAP HANA Enterprise Cloud, customers have a dedicated solution to meet their specific requirements while reducing their IT infrastructure and operating costs, and benefiting from a subscription model that moves the expenditures from capital spend to an expense line item.
SAP’s public cloud solutions are multi-tenant and provide a variety of industry-standard processes to support idea-to-performance scenarios. For example, SAP EHS Regulatory Documentation OnDemand generates safety data sheets, while Fieldglass manages contingent workforces and services. Public cloud options can also include business networks, such as the SAP Product Stewardship Network and the Ariba Network, that provide many-to-many connections with supply chain partners.
In short, the cloud is not an either/or proposition — it is all about flexibility and choice. Companies can mix cloud, hosted, and on-premise technology to meet their specific needs. We have seen best-run companies shift from ad hoc spending on point cloud providers to investing in one platform that combines the right mix of cloud, on-premise, social, mobile, and big data technology. With its flexibility and potential for cost savings and business process improvements, the cloud represents an intriguing deployment option for SAP’s idea-to-performance solutions. For more information, visit www.sap.com/pc/tech/cloud.html.
1 See http://global.sap.com/press.epx?pressid=22589. [back]
2 For more, please see Mike Lackey’s article “How Will the 4th Industrial Revolution Affect Your Business?” of this July-September 2014 issue of SAPinsider. [back]