Most years, I had three days to make sense of Sapphire Now. This year, I have three weeks - I might need the time. Since my opinionated Sapphire Now preview, a few things have gone down - see the reader comment thread for more. By now, we have clarity on the overriding themes of Sapphire Now 2021:
- Business networks are the future of the enterprise.
- Sustainable business practices will give these networks more value to customers.
- RISE with SAP, aka "business transformation as a service," will give SAP customers what they need to navigate this cloudy journey, with S/4HANA and the Business Technology Platform as the enablers of these changes.
SAP might quibble with this characterization, but that's my best attempt as of today. Now, the diginomica faithful know how grouchy I get with this type of messaging. But despite how grouchy I become at vendor fanfare, I think it's important to examine these messages - and understand what they mean for customers.
I've spent considerable editorial time on RISE with SAP, and will return, don't you fret (my pending interview with the DSAG board will surely hit on that - they are looking for SAP RISE proof points). I'll get to some of SAP's sustainability messaging shortly, but for now, SAP's Business Networks are on deck, with a flurry of SAP Business Network news announced this week.
SAP Business Networks - sorting the Sapphire Now high points
We've got multiple news threads to sort, but these three jumped out:
- Integration of business networks announced: "SAP unveiled the first step toward creating the world's largest business network with SAP Business Network, which will bring together Ariba Network, SAP Logistics Business Network and SAP Asset Intelligence Network. Over 5.5 million organizations will benefit from being members of this connected community."
- Sustainability functionality announced: "To support this central announcement, SAP is also announcing new innovations designed to help companies modernize and digitalize their business processes to become intelligent enterprises. In addition, customers can benefit from a new portfolio of sustainability-specific business applications that deliver exceptional transparency and measurement capability across the supply chain." As you can see, SAP played some serious buzzword bingo on this one.
- New business networks portal announced: "Members of the new SAP Business Network will be able to access a single, unified portal to gain a holistic view into their supply chain ecosystem, logistics and traceability, and equipment management and maintenance." A new portal might not seem significant, but, and I am speculating here - this may be a signal that SAP is taking steps to make it easier for new suppliers to onboard and participate, without mastering the considerable UX nuances of Ariba (some smaller suppliers I know might use a more profane word than nuances).
But hold up - there is a more fundamental question here. As I was reminded by numerous community members on the backchannel, in the 2013/2014 timeframe, a different SAP CEO made similar proclamations about the virtues of business networks from the Sapphire Now keynote stage. I was surprised SAP didn't address this fundamental question in 2021: Haven't we been here before? Does this mean business networks didn't live up to their promise the last time around? What's changed? Why do we have a better chance of deriving value now?
I wasn't trying to troll SAP here, or catch them in an awkward spot. It's not unusual for enterprise tech to come up short before it delivers (see: the history of digital commerce). But we need to understand why, and acknowledge the stumbles we all made. SAP Chairman Hasso Plattner did a very good job of this in his keynote interview, but on other topics.
Pressing the question: why business networks, and why now?
I pressed this topic with every SAP executive I could get my virtual hands on, including a 1:1 with John Wookey, President, Intelligent Spend Management and Business Network at SAP. I also took this question up during a small group media session with new SAP Chief Marketing and Solutions Officer Julia White, and SAP North America President DJ Paoni. White, who was obviously not at SAP during the last business networks push, believes two things have changed:
- The Business Technology Platform makes these network ambitions achievable.
- Spurred by pandemic disruptions, suppliers have the will and desire to participate in industry networks. In the past, they might have held back, perhaps on concerns of working with competitors, etc.
Here's how White put it:
Some of it is the customers and our partners' willingness and desire. Suddenly, it's important in a way it wasn't before. Also, back then, we didn't have a coherent platform strategy; we didn't have a way to have a shared domain model, we didn't have a way to get those things connected in a way that could create a network effect.
Now with the Business Technology Platform, with a single data model, technically, we have that capability to bring more of that to it. So it's not just an app with point-to-point connections. So I think the ecosystem is different, and then the technology we're now armed with is different.
At a prior SAP influencer/analyst event, Wookey said we're actually in the early days of what he believes will be the "transformational effect" of a business network. During our chat, I asked Wookey: why now? He told me:
I think it's gaining momentum now because I think people have a much clearer sense of the idea of a network. People have always understood supply chain, but they've always accepted point-to-point connectivity as part of it. The idea now is that we've actually built a model that can show that.
Then there is the pandemic effect of supply chain urgency. Wookey adds:
I think part of the last 18 months was getting people to understand that supply chain visibility is something that has to be managed in an active, dynamic way. I think there's much more understanding of the criticality of this, and how it affects real world outcomes. We've become much more global. We're still trying to manage, in many cases, to be a just-in-time world. If you don't have network visibility, it's difficult to execute on that.
In sum, SAP thinks it can support that execution, with the help of this integrated supplier portal, and the industry networks behind it.
At the influencer session, Wookey alluded to their core mission, via a series of potent questions:
- How do we enable our customers to align every spend decision with their business strategy, and the network economy?
- How do we ensure that spend decisions reflect the balance companies want to make between financial, operational, and environmental and social considerations?
- What's the executive-level thinking? How do they understand it? How do they measure it?
Those are superior questions to ask, versus the classic procurement agenda of buying the cheapest paper clips possible, or negotiating suppliers down to a price threshold. Wookey responded:
Every single dollar/Euro/Yen/Pound spent in a company, other than global payroll, comes for these applications. It's a huge impact; it needs to be aligned to the strategy that I have as an organization... I think people haven't really recognized that they looked at supplier collaboration as sort of a separate thing from the way you thought about managing spend, and the way you thought about supplier lifecycle management and supplier risk. All these things need to be integrated, because in the end, it's about managing the relationships, that's really the most important thing.
In my reader comments, I said SAP's sustainability messaging was sharper this year than last. Why? Tying it into products, including the business network. SAP calls this "operational sustainability," but whatever you call it, it's good to be moving away from annual reporting and happy talk, into day-to-day improvements via product functionality. Examples include:
- SAP Responsible Design and Production - "to ensure product designers can make sustainable choices from initial product concepts to production."
- The SAP Product Footprint Management - "to track sustainability through a product lifecycle.
- The SAP Sustainability Control Tower solution to provide end-to-end visibility.
SAP CEO Christian Klein also said that soon, SAP Business Network suppliers would be able to screen suppliers based on both sustainability and diversity ratings. He also said every S/4HANA customer would have access to carbon footprint management features (I think all SAP customers should have access to this, but that's another conversation).
During our talk, Wookey credited the rise of so-called "stakeholder capitalism" with the strong interest he is seeing from customers on this. The more SAP's sustainability approach is validated by customer demand, the more credible SAP's attempts to differentiate on this become.
If SAP wants to be perceived as a cloud company, it needs to start getting in the habit of announcing product General Availability(GA) at events, not intentions to release product later on. To be fair, many cloud vendors are falling back into the "production intention" habit, so SAP is not alone. I find such announcements deflating. Also, they put customers/media/analysts in scramble mode, trying to determine roadmaps and integration timetables.
In the case of the new unified partner portal, Wookey indicated this has already been in active beta mode for a while. During the media session with White and Paoni, a question was raised on the timeframe for the full integration of the logistics, asset intelligence, and business networks. White responded that it's a "phased approach," with the new consistent UI demoed last week, across the portal. Into Q3, she anticipates back end capabilities coming together. In other words, stay tuned.
I've been pressing SAP on a related integration project: getting Fieldglass, Concur and Ariba to the point where they are greater than the sum of their parts. Wookey says his team has made "great progress" there, "doing a lot of what I call the basic integration work." They'll add to that this year, by putting releases for all three products on the SAP Analytics Cloud: "I think that will allow people to start getting that common view across [all three]." The next step? "Take some of that insight, and embed it back in the products."
Earlier, I took a potshot at the Ariba UX. While I now think that SAP *might* be moving to a less Ariba-centric approach in its new supplier portal, Wookey pushed back on the idea that the Ariba UX needs work. He believes the current UX is much improved (he cited the newly-announced "guided buying" as an example). Wookey also noted that a new Ariba mobile version is due out later this year. That's a topic for further evaluation.
I try to be consistent with my vendor grading scale: customer adoption and results are how you get that A grade from me. No awards are handed out for the "best vision," or "most revolutionary framework." Along those lines, what impressed me about SAP's business network program this week was not the pending product news - it was the industry consortiums. White referred to the Catena-X Automotive Alliance. Perhaps even more impressive was the keynote highlight: SAP's organizing role in the clinical trials ecosystem.
As White put it:
When you start to see some of those things happening, and people coming to us and saying, 'SAP, we need a technology partner. We're a consortium; help enable us,' it becomes a bit of our responsibility to fill this need.
Yep, that's SAP at its old school best, getting industry work done. Now let's see if they can deliver on that with business networks.
Note: for more context, and questions to consider, check Josh Greenbaum's important post, SAPPHIRE 2021 Watch: SAP’s Business Network Initiative.