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SAP technology to help industries build networks

Composite applications on top SAP's core business software will help move manufacturers to develop adaptive business networks. But innovation must begin with a change in business philosophies, says SAP's senior vice president of industry solutions.

Product lifecycle times have accelerated, forcing manufacturers to build networks to monitor products and supplies in the supply chain closer than ever before, according to Nils Herzberg, senior vice president of industry solutions at SAP.

The SAP architecture is evolving very much to engines and composites.
Nils Herzberg,
senior vice president of industry solutionsSAP

"Dependency on supply networks is becoming greater and greater than in the past," Herzberg said in an interview with "The sensor network is a very important part of the adaptive business."

And SAP's products and technologies are only part of the answer, Herzberg said. Whole business mindsets need to change.

The era of push-based manufacturing, in which a product is first made and then marketed and sold to consumers, is over, Herzberg noted.

"The order is going to be the best forecast you ever have. So if you are able to be responding to orders rather than building to forecasts that would be a good way to go," Herzberg said. "The next step is to anticipate orders."

One example is the European car industry, which is very much an order-driven industry, Herzberg said.

"North American car makers continue to discount until consumers take stuff that the manufacturer wants to sell," Herzberg said. "You don't get discounts from BMW because you get exactly what you ordered."

An adaptive business network is a group of companies within an industry that collaborate and share data. SAP is clear that an adaptive network is not a software product, but rather a change in business processes and synchronization between business partners.

But the software maker is responding to market changes and the role of adaptive business networks by rolling out products aimed at helping companies build them. SAP launched an entire sensor-based product line called the SAP Auto-ID Infrastructure to monitor the supply chain, and is working on collaboration products to foster change, according to Herzberg.

But SAP executives acknowledge that more innovation will come from partner software vendors that will develop software called composites, or SAP xApps, that bolt onto core SAP applications.

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In a recent presentation to investors and analysts, Werner Brandt, chief financial officer and member of SAP's executive board, said revenue growth will shift away from SAP's core enterprise resource planning business suite and onto the analytical and composite applications generated from partners and independent software vendors on its NetWeaver platform.

"We will deliver new solutions between transactions, analytical capabilities and collaboration capabilities across organizations and their partners," Brandt said.

Composite applications are the future according to SAP's sales model, Herzberg said. Those applications will help increase features and functionality in manufacturing software, adding to the best practices used to develop SAP's core applications.

SAP partners are also jumping on board to license products built on SAP's architecture concept called the enterprise services architecture (ESA), which was highlighted at SAP's recent Sapphire user conference. Leveraging NetWeaver, SAP plans to make its entire mySAP Business Suite ESA enabled by 2007.

"The core engines are up and running and you will find that we will invest into those engines to keep them up to date from a technology point of view," Herzberg said. "But the SAP architecture is evolving very much to engines and composites."

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