My retired colleague Den Howlett spiced up his email correspondence with the tagline "strong opinions, loosely held." I need to work on the "loosely held" part, but it's a darn good mantra for covering the enterprise.
Take my previously negative perceptions of SAP's business networks play - an opinion that is starting to change. How does my narrative shift?
- Trusted colleague(s) challenge me to take another look.
- New leadership team engages openly - and inspires confidence.
- Customer adoption and advocacy - use cases I can validate.
(Notice I did not say "market the living heck out of the solution." That's not going to move my position - if anything, I'll dig my heels in).
These three factors are starting to change my views on SAP's business networks moves. It all started with a random-but-revealing SAP Sapphire Orlando run-in with Muhammad Alam, President & Chief Product Officer, Intelligent Spend and Business Network at SAP.
SAP's business networks messaging - my stubborn take
Enterprise software vendors have different kinds of weaknesses. Sometimes the messaging over-reaches the product. Sometimes the product is better than the messaging. SAP has accumulated some formidable assets in the business network/spend management market - but I struggled with how it was presented. I've poked fun at SAP's keynote catchphrase "network of networks" so many times, I'm at risk of becoming a Las Vegas lounge act.
I've always felt SAP's "business networks" messaging is off. Isn't this about helping customers solve vexing supplier issues in volatile markets? Customers don't tell me "Jon, I really need a network of networks." But if you ask:
- Do you want to be able to onboard suppliers easily? (Something I'd argue Ariba isn't ideal for; I'll get to that).
- Do you want timely recommendations of potential suppliers/clients?
- Do you want to easily screen suppliers based on ESG criteria, or find better localized options?
How many customers would say no? Does SAP not have a strong commitment to sustainability that could use more product teeth? I've never understood why SAP didn't connect the dots here.
To be fair, I thought this year's keynotes finally nudged closer, including a strong Sapphire keynote debut by Etosha Thurman, Chief Marketing & Solutions Officer, Intelligent Spend and Business Network at SAP.
But my talk/debate with Alam at an SAP Sapphire reception really made me think. That led us to a deeper dive via video this summer - my chance to share some of this dialogue on the record. I referred to SAP's Business Network assets. This slide has the gist:
Note: this slide doesn't name the products behind the networks. Example: SAP has a spend management solutions page that centers on SAP Ariba, Fieldglass and Concur. Procurement now spans both indirect and direct materials, as well as product sourcing.
Fluid supplier onboarding - the new imperative
Here's what I said to Alam:
SAP has been carrying on about business networks for a few years, but in a way that I don't think has resonated very well with customers, because customers haven't really understood what SAP is talking about... You have an enormous collection of assets now... But is it going to be one integrated 'network of networks,' as we've heard? Or is it better to think of them as specialized networks for different situations? How can SAP continue to transform the messaging to speak to customer pain points, and in particular, around onboarding suppliers?
We think about it in three distinct layers. Layer number one is the business network, which allows us to connect an organization to its tier one network. That tier one network could be its indirect suppliers. It could be its direct suppliers; it could be carriers; it could be financing providers; it could be the people and talent that you need to bring onto the business.
Tier one is a known entity to the buying organization, and you need to be able to facilitate a level of collaboration with them in a seamless fashion, ideally, where the network participants are already onboarded through some other engagement. They just sort of self-discover, and start the engagement in a super seamless, fluid manner.
As for "fluid onboarding," Alam adds:
That's the ideal state that we want to get to. And herein lies your third problem... If you're not on the network, then the discovery of it - and the ability to start interacting - just needs to be as fluid as possible, as it is in LinkedIn, as it is in Facebook, and the other core networks out there.
But it doesn't end with tier one suppliers. Alam also sees the need to connect tier two/three/four suppliers (what he calls "tier N"). That can be tricky, as tier one suppliers don't always want to reveal/share the names of their trusted sources - call it fear of disintermediation. However, Alam thinks we need to tackle this:
If you don't know what your multi-tier supply chain is, you don't know what the true risk is in your supply chain. How can you protect yourself against it?
If somebody says, 'Great, I don't have anything that's actually blocked,' they might have this false sense of comfort, but what they don't know is the component provided by a tier one has material that's blocked on that port - and they don't know yet. Eventually, they're going to find out that things are delayed for them, because of something they didn't know in their supply chain.
Alam referred to a tech company I'm-not-going-to-name - one that ran into supplier problems when their tier ones and tier two overlapped too much: "They thought they had more diversity in their network than they really did."
Diversifying your suppliers is just the beginning
That's one thing a good supplier network can obviously support: supplier diversification. But Alam says it doesn't stop there:
Supplier diversity is great. But it's also knowing where to apply pressure; where the capacity is, where's the demand and so forth. So that's the second thing: how do we, in our business network, enable organizations to, in a safe manner, allow for multi-tier collaboration?
This also comes into recall scenarios as well. If there's a part that's broken, you can trace the genealogy back. It also enables scenarios like sustainability: what's the carbon footprint and emissions footprint? Also ESG, human rights situations, and things like that. So that's the second scenario, super hard to solve, but one that we are solving today, and we continue to invest more into solving.
Makes sense - but as Alam said, now we have to line this up with customer concerns. As I said to him:
To me, the big things are: supply chain volatility is now a permanent condition. Supply chain volatility has exposed your organization's weaknesses. Second, ESG is creating a new pressure around compliance, and regulatory issues around sourcing suppliers... The other ESG piece is: not only is there a regulatory aspect, which is the stick, but the carrot is: you have a chance to become a leader in your industry in these areas, and have a more transparent supply chain - while your competitors lag.
Alam says that's exactly what's driving his team.
Two big points of disruption that we can help with: what organizations are facing with supply chain, and what they're facing with ESG. Both of these topics are board-level discussions.
Customers want straight talk about supply chains
For Alam, straight talk about supply chain comes down to transparency and resiliency. If SAP can help customers on those two fronts, his plan is on track. Part of the SAP's agenda here is the predictive element, providing customers with next-best-actions:
To me, transparency is visibility and insights, and resilience is action and collaboration, where you are then taking specific actions to make yourself resilient. Knowing where the disruptions are, and have recommended actions, being able to collaborate on your order real-time, and reduce downtime of your assets and equipment, because you're collaborating with the OEMs and others.
Which brings us back to fluid onboarding - how will SAP get that done? I see two problems: first, while Ariba's UX has improved from my grouchiest days, I don't see it as ideal for easy onboarding. Also, there are more entry points into SAP's networks than Ariba. Alam's "end state architecture" anticipates that:
Think about the apps that support the network - and support the collaboration - both for tier one and tier N. All these use cases that solve super complex problems that our customers are having. Where all of these apps need to align on is the onboarding, and the trading partner profile.
So the SAP Business Network, and all the partner apps - all will eventually have a single trading partner onboarding, and a trading partner profile that allows everybody to join the network, create that vibrancy and virality, and then discover the use cases that they can connect with.
If, once they join, they say, 'Hey, I want to do planning and forecasting collaboration as well. I'm doing my orders and invoices today. But I think sharing my planning and forecasts is even better, because then I'm more proactive.' Click here - and another app provision within the same network allows you to collaborate with the partners that you've selected, as opposed to having to do a different onboarding.
I still have pesky questions on SAP's plans to work AI throughout this, to facilitate opportunity matching, etc. During a recent podcast with Avantra CEO John Appleby on SAP automation, we wrapped with our SAP Business Network takes. Appleby sees a big opportunity for SAP here:
I always thought that the opportunity with the business network is to connect people that are hard to find with scarce resources. One of the shames about the SAP Business Network is it's not really accessible to mid-market customers, not in an easy way. It'd be really nice if it was, because you've got these people that produce these scarce commodities. And how do you connect people so that they can have a business conversation? If you could do that, you could buy anything in a way that you know, Amazon and Walmart, have for customers. I think there's a phenomenal opportunity for the scarce-to-scarce connections to be made.
During a recent talk with ASUG CEO Geoff Scott, he said ASUG members definitely care about this topic. But he emphasized the need to speak in the language of customers:
I don't think the phrase business networks resonates. I don't think anyone knows what to do with that... I've had lots of conversations about business networks with fellow ASUG board members in the room, and SAP. We probably spend the first twenty minutes of the conversation trying to figure out what we're talking about. Then finally, when the light bulbs go off, we have a much more productive conversation.
What about timeframes? Alam isn't ready to give a firm date on the onboarding/profile project, but they are pressing ahead. I can tell you this: it will be my top question for his team at SAP Sapphire 2023. If they give me a chance to look under that hood sooner, I certainly will. An easy UX is harder than it looks - not to mention platform integrations. Alam says his UX goal for onboarding is "five minutes to wow," a worthy-but-high bar.
I wanted to get into how talent sourcing (Fieldglass) fits into this picture, but that will have to wait. It doesn't stop there: a supply chain financing twist comes via SAP's January 2022 acquisition of SAP Working Capital Management vendor Taulia. For now, Taulia is being run independently, but the question of how Taulia fits into these plans looms large (check Josh Greenbaum's Scandal and Redemption in Trade Finance: SAP's Business Network Gets an Improbable Boost for insight).
We focused more on strategy than roadmap detail; I'll dig further. For those who don't feel like waiting to drill into product questions, SAP's upcoming Spend Connect Live show is on deck in October.
I like that Alam's team is utilizing SAP's Business Technology Platform for partner apps and extensions. The more consistency SAP applies to BTP for its cloud-based extensions across products, the better it will go for customers (example: a couple of the core apps that support the Logistics Business Network are BTP apps).
As for that "network of networks" phrase I keep trying to get SAP to put on mothballs, Alam sees two ways it does apply. One would be to the universal onboarding push. The other would be open industry networks SAP doesn't own. I've already written about SAP's Catena-X involvement - this is one of SAP's smartest moves in the so-called business networks space, something I believe it could duplicate in other industries (Inside the Catena-X automotive industry consortium - the biggest story SAP isn't talking about (yet)).
So has my view on SAP Business Networks changed? Yes and no - there is plenty SAP still needs to execute on. But I'll say this: I did not even expect to write a piece on SAP Business Networks this year. Well, a spirited dialogue with an ambitious team changes things. It certainly made me rethink what's possible here. Let's see how far this goes.
Updated, 10am PT, September 1, with a few small tweaks for reading clarity.