Post on 25-Feb-2016
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SAP Beyond the Edges of the EnterpriseMichael DominyThe Yankee GroupMdominy@yankeegroup.com
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AgendaBeyond the EdgeIT Spending ShiftsEdge of the Enterprise ResearchTechnology DriversSAP’s ResponseConclusions and Recommendations
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Beyond the Edge: Definitions & Clarifications
“The Edge”• The Business Process and IT intersection between
an enterprise and the outside world.• Includes the management of access to interaction
between the enterprise and its customers, suppliers, or complementary business partners.
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Beyond the Edge: The Opportunity
Reduce Inventories $117 - $293 billion Increase Sales $83 - $166 billionHow?• Connecting, collaborating, and synchronizing with
the extended supply chain
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Beyond the Edge: Who’s Cares? (Enterprises)
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Beyond the Edge: Who’s Cares? (Vendors)
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Beyond the Edge: Application Characteristics
Edge applications • Automate business processes that require human
or machine input from external partners• Integrate data and information from multiple
heterogeneous systems inside and outside the four walls of an enterprise
SAP Netweaver and xApps as examples
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AgendaBeyond the EdgeIT Spending ShiftsEdge of the Enterprise ResearchTechnology DriversSAP’s ResponseConclusions and Recommendations
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IT Spending Shifts:Away from Operational Backbones
75% Increase at the Edges!
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IT Spending Shifts:…Beyond the Edge
HRFinance
EngineeringProcurement
Mfg/OpsPlanningLogistics
Customer ServiceMarketing & Sales
Operational Backbone
Customers
Suppliers Outbound Logistics
Financial Services
Inbound Logistics
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AgendaBeyond the EdgeIT Spending ShiftsEdge of the Enterprise ResearchTechnology DriversSAP’s ResponseConclusions and Recommendations
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Edge of the Enterprise Research: Research Sources
Interviewed more than 110 B2B decision makers in the past 12 months• Billions in revenue and technology spending
Surveyed 78 North American ERP users to• Validate the Edge budget shift• Identify key Edge business drivers• Inquire about ERP strengths and weaknesses
Finishing a Q3 Edge of the Enterprise survey of 300 end-users
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Edge of the Enterprise Research: Phone Interviews
Results from 78 ERP decision makers at Global 2000 organizations
Interviews conducted in Q1-Q2 2003Conducted by experienced enterprise application
analysts Interviews averaged 45 minutesGathered detailed IT budget data, 2003 project
data, vendor preference information
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Edge of the Enterprise Research: Interviewee Demographics
Large Global 2000 organizationsAveraged $2.4 billion in revenueAveraged 7,000 employeesUtility, telecom, manufacturing, wholesale, and
transportation services were interviewed• 76% of respondents were manufacturers• Even split between process and discrete manufacturing• Concentration in high-tech and consumer goods
manufacturing
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Edge of the Enterprise Research: Interviewee Demographics
61% of respondents run SAP R/3• Majority of respondents on version 4.6• Several running version 3.1• None running SAP Enterprise 4.7 or Netweaver
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Edge of the Enterprise Research: IT Budget Impact
Overall IT Budget• 64% increased IT budget from 2002 to 2003 • Average budget increase was 3.7%• Budget growth ranged from –6% to 23%
Edge Investments and Budgets• 95% increased investment in systems that require/enable
browser- or machine-based partner input• Edge budget growth ranged from –3% to 300%• Average Edge budget increased 75%!• Average 2003 Edge budget totals $5.8 million• 2003 Edge budgets ranged from $440,000 to $66 million
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Edge of the Enterprise Research: Budget Growth
3.7%
75.3%
0.0%
20.0%
40.0%
60.0%
80.0%
Total Edge
IT Budget Growth
IT Budget Growth
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Edge of the Enterprise Research: Average Edge Budgets
$3.31
$5.81
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2002 2003
Average Edge Budget
Average Edge Budget
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Edge of the Enterprise Research: Budget Drivers
Budget shift is driven by prioritization, not capital expenditure• Do more with less• Extend existing systems• Develop in-house• ROI in months not years
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Edge of the Enterprise Research: Budget Analysis
71%
20%9%
0%
20%40%
60%80%
100%
Percentage of Respondents That Increased Edge Spending in 2003
Don't knowNoYes
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Edge of the Enterprise Research: Budget Analysis
Most interviewees expect edge investment to increase substantially with economic improvement
Most edge investment is dedicated to customer facing systems
Among interviewees, suppler facing systems were secondary investment priorities
300 end-user survey…
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Edge of the Enterprise Research: Projects
Primary, secondary, and tertiary edge projects were captured and classified
Primary edge projects included• Web-based sales content delivery, order entry, pricing,
order status• Machine-based order management• Collaborative forecasting• Collaborative logistics• Electronic catalogue• VMI
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Edge of the Enterprise Research: Project Categories
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Percent of Respondents
Electronic Catalogue
Customer Portal
Electronic Pricing
BtoBi
Procurement Management
Collaborative Forecasting
Distributed Order Management
Other
Edge Projects
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Edge of the Enterprise Research: Objectives
Collaboration and Coordination• Cost reduction through collaborative planning and
distributed order management and fulfillment
Sales and marketing content delivery Inventory visibility and supply trackingCommon theme across objectives:• Strengthen relationship, integration and coordination with
customers to improve service and reduce costs
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Edge of the Enterprise Research: Vendor Preference / ERP Abilities
Interviewees were asked to rate incumbent ERP vendor’s ability to meet primary edge technology need (1 to 5 scale, 5=very high ability and 1=not at all capable)• 62% of respondents did not consider their ERP vendor as a
solution to an Edge of the Enterprise technology need• Among respondents that rated their ERP vendor, average
rating was 2.3 • SAP users rated SAP 2.4 for its ability to meet edge
technology needs
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Edge of the Enterprise Research: SAP Customer Example 1
Company: Multi-billion dollar global consumer packaged goods company
Goal: Reduce logistics cost through collaborationSolution: SAP + RedPrairie + NistevoFinding: SAP unable to meet edge requirements –
Collaborative Logistics
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Edge of the Enterprise Research: SAP Customer Example 2
Company: Multi-billion dollar global beverage manufacturer
Goal: Collaborate with downstream distributors (forecasts, marketing & promotions, etc.)
Solution: SAP + Manugistics + VignetteFinding: SAP unable to meet edge requirements –
CPFR and Content Management
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Edge of the Enterprise Research: SAP Customer Example 3
Company: Multi-billion dollar global high tech manufacturer
Goal: Synchronize supply and fulfillment across the extended supply chain network
Solution: SAP + Synchronization HubFinding: SAP unable to meet edge requirements –
Distributed Order Management
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Edge of the Enterprise Research: SAP Customer Example 4
Company: Multi-billion dollar global consumer products manufacturer
Goal: Collaborative Customer Business PlanningSolution: SAP+custom application+best-of-breedFinding: SAP unable to meet edge requirements –
Customer level sales, marketing and merchandise planning
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Edge of the Enterprise Research: SAP Customer Example 5
Company: Multi-billion dollar North American electric utility
Goal: B2B Procurement Exchange Solution: SAP + SAP B2B Procurement ProductsFinding: SAP able to meet edge requirements –
SAP able to address transaction oriented supply- side applications where the SAP customer has significant power or influence
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AgendaBeyond the EdgeIT Spending ShiftsEdge of the Enterprise ResearchTechnology DriversSAP’s ResponseConclusions and Recommendations
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Technology Drivers:Enabling Edge Initiatives
Plummeting hardware costsPervasive Internet accessJava XMLInteroperability
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Technology Drivers:Methodologies, Standards & TCO
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AgendaBeyond the EdgeIT Spending ShiftsEdge of the Enterprise ResearchTechnology DriversSAP’s ResponseConclusions and Recommendations
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SAP’s ResponseExperiences with Commerce OneAcquisition of TopTierSAP xAppsSAP Web application serverSAP Enterprise Edition – Core versus ExtensionsSAP NetweaverSAP Adaptive Business NetworksSAP Licensing Strategies
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AgendaBeyond the EdgeIT Spending ShiftsEdge of the Enterprise ResearchTechnology DriversSAP’s ResponseConclusions and Recommendations
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Conclusions Demand is shifting from the core to the edge
• 75% growth in edge applications and technologies
Integration and customization costs are falling Edge projects are primarily customer-facing
• Sales effectiveness and distributed order management
Most SAP customers have not been successful extending SAP beyond the edges of the enterprise
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RecommendationsEstablish a flexible architecture to support edge
applications and initiatives but…• Balance integration costs carefully
Edge initiatives require a mix of internal and external integration involving people, process, and data
• Validate interoperability claims Ensure edge platforms and applications comply with
Java, XML and Web services standards Perform interoperability tests
• Example: Test best-of-breed on Netweaver
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RecommendationsFollow the collaboration continuum• Integrate Optimize Collaborate and Network
Leverage edge (composite) applications rather than building from scratch• Development, implementation, and support costs are too
high to justify custom applications
Be skeptical when core vendors claim expertise beyond the edges of the enterprise• Managing network oriented business processes in
fundamentally different than controlling internal activities
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Thank You!
Michael DominyThe Yankee GroupMdominy@yankeegroup.com
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Break sponsored by
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Are you shift IT dollars and initiatives from internal technologies to the edges of the enterprise?
Audience Response
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