SAP AG is improving its supply chain management portfolio by clarifying its roadmap for customers and drawing in newer technologies, according to a new report from Stamford, Conn.-based IT analyst firm Gartner
"What it essentially boils down to is that SAP has got the potential to allow companies to reach a higher [level of] supply chain performance," said Tim Payne, a Gartner analyst and co-author of the report, Technology, Service Provisioning and Emerging Applications are Key Drivers for SAP SCM Transformation.
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The SAP SCM software portfolio covers such tasks as managing and forecasting supply and demand, inventory optimization, order fulfillment, transportation management, and warehouse operations.
The software maker also is adding to its line of Rapid Deployment Solutions (RDS) applications in the supply chain space. It's offering slimmed-down versions of SCM packages that are designed to be deployed at a lower cost and in less time. "SAP has a reputation in the supply chain world [for having] a fairly long implementation process," Payne said. "They're up against best-of-breed vendors. [To compete], they're offering more in terms of their implementation roadmaps and methodologies for getting better ROI."
Clearing up confusion over the SCM roadmap
SAP didn't always deliver a coherent roadmap that illustrated for customers just how its portfolio of supply chain applications fit together, according to the Gartner report. The company's "responsive supply networks" motto sounded great, but failed to explain how these applications were tied to the systems needed to support various business processes. Instead, customers were left having to decipher how and where SAP's SCM applications came together to create business process support.
With SAP's decision to organize its SCM software into five components, each component supporting a very specific set of business processes, that's now changed. "It was always a confusing picture," Payne said. But now "it's much cleaner, and simpler. It will be more meaningful, we think, for the end users [who need to] figure out what has SAP got, what does it support, is it something that I need?"
The five SCM components include:
- Sales and operations planning (S&OP): Includes SAP Advanced Planner and Optimization (APO); SAP BusinessObjects S&OP; and SAP HANA S&OP.
- Demand management: Includes SAP APO Demand Planning, SAP HANA Demand Signal Management (DSM) and SAP Enterprise Inventory Optimization (EIO).
- Collaborative response management: Covers SAP Response Management (by third-party vendor ICON-SCM AG), SAP Secure Network Communications and SAP Information Interchange.
- Manufacturing and supply planning: Covers SAP Response Management (by third-party vendor ICON-SCM), SAP APO Supply Network Planning, Production Planning and Detailed Scheduling, and SAP EIO.
- Supply chain execution: Covers SAP Global Available-to-Promise, SAP Transportation Management, SAP Extended Warehouse Management, SAP Event Management and SAP Supply Chain Performance Management.
SAP HANA for supply chain management
While other vendors have created in-memory applications, SAP is the first to create an entire platform on which applications can run, according to the Gartner report.
HANA is becoming the underpinning for all SAP applications going forward -- and that includes SAP SCM applications. The report states that SAP plans to upgrade existing SCM applications to HANA and deliver new HANA-based applications.
Currently, SAP offers the following HANA-enabled SCM applications:
- S&OP: A collaborative application that helps integrate planning across sales, marketing, and finance operations.
- Trade promotion management: Improves forecasting and the efficiency of promotion spending, and reduces the number of outstanding customer claims.
- DSM: Software used to sense, shape and respond to customer demand.
- Supplier InfoNet: Helps predict and manage supplier risk and performance.
- Visual Enterprise: A three-dimensional visualization application that helps bring cross-functional data to life.
Gartner also notes that SAP's plans for HANA include enabling companies to run entire ERP suites on the in-memory platform.
It's important to remember, however, that many of the new HANA applications will take time to mature. Gartner recommends that customers consider SAP's next-generation applications, along with other vendor options. "[Customers should] watch for initial customer feedback as the availability of this new technology platform will open alternatives for customers by using an SAP product as their database," Gartner's report states.
SCM in the cloud
SAP will continue to add to its line of Software as a Service (SaaS) applications, according to the report. Two of SAP's SaaS SCM applications that are available are SAP Supplier InfoNet, which also runs on HANA, and SAP Information Exchange, a multi-tier information exchange application that allows customers to connect with any trading partner in their global supply chain network.
This past spring, SAP acquired Ariba Inc., provider of a cloud-based network of buyers and sellers. The addition of the SaaS-based procurement network will give SAP customers access to Ariba's 730,000 members and a "closed-loop" source-to-pay process, according to SAP.