SAP closes the gaps around ERP

With a 25% share of the enterprise resource planning (ERP) market, German application-maker SAP can reasonably claim responsibility for the nuts and bolts that underpin global business. Its core ERP software is for many of the world’s largest corporations the engine of enterprise.

But historically, those systems that sit apart from the engine room – such as business intelligence (BI) and business process management (BPM) – have not been seen as SAP’s heartland.

At the company’s Sapphire 2008 user conference in Berlin, however, SAP presented a concerted push to remove that degree of separation. It sought to bring analysis and process management into the fold of ERP while making the ERP platform the medium for collaboration.

SAP’s most explicit display of this desire has been its acquisition of BI vendor Business Objects, announced in October 2007. By linking BI directly into the ERP system, SAP argues, the gap between analysis and execution is eliminated, creating a ‘closed loop’ of performance management.

What does this mean? Timo Elliott, strategic marketing director for Business Objects, says that when BI and ERP are integrated, business processes can be automatically redirected on the basis of analytics, removing the need for explicit decision-making from middle management.

He admits, however, that this ‘closed loop’ of analysis and execution should be possible today, as SAP and Business Objects are technically interoperable already. What has changed since the acquisition, Elliott says, is that the combined company is working on pre-built kits that make integration far slicker.

SAP is looking to close a similar gap with its forthcoming BPM toolset, code-named Galaxy. Not scheduled for mainstream release until 2011, Galaxy is undergoing early testing by select clients such as the German arm of drinks giant Coca-Cola. The company is already a sophisticated BPM user, says Alexander Grobe, innovation specialist in its customer and business strategy department, in that it already documents and models its many business processes – both automated and human – using the process visualisation and navigation tool ARIS from IDS Sheer.

But a gap between business process modelling and execution persists, a gap where business requirements can be lost in translation. A BPM tool such as Galaxy closes that gap: when a business process analyst makes a change in the model, it directly alters the underlying applications.

What he has seen of Galaxy, says Grobe, has the potential to “close the gap between modelling and executing, and so the gap between IT and business”.

But the gaps that featured most heavily in the rhetoric from SAP executives at Sapphire 2008 were of the inter-organisational kind. Managing business networks is the key to business process innovation, implored co-CEOs Henning Kagermann and Leo Apotheker in each of their keynote addresses.

For Nicholas Lindop, a director at UK chemical manufacturer Pentagon Chemicals, this argument has real substance, and his company’s pre-release test-case use of SAP’s forthcoming software-as-a-service (SaaS) offering Business ByDesign demonstrates how software will underpin such collaboration.

Pentagon is a small organisation that sells its products to global corporations. Using Business ByDesign allows it to remove the unwelcome cost of supporting its own IT infrastructure, but it also lets it employ the same data definitions as its corporate partners, who also use SAP, at a fraction of the cost of their enterprise software deployments.

“Because we are now also using SAP,” says Lindop, “we can align our business metrics with those of our partners right down to the unit of measure.”

As that highlights, SAP sees an opportunity to become the owner not just of the nuts and bolts of business but of the language of business too.

Further reading
SAP rethinks software SAP’s on-demand applications offering, Business ByDesign, may turn the company into a mass market vendor

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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