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SAP releases new supply chain management software system

With its latest enhancements, SAP is hoping to provide a migration path for current customers and a viable alternative for new customers, particularly in the midmarket.

SAP this week previewed the next release of its supply chain management (SCM) application, a move that should help it catch up with niche SCM vendors, according to one analyst.

"We are providing visible enhancements in all areas -- especially industry-specific enhancements and new business processes to our customers -- designed to fit their [need] to generate immediate return on investment," said Stefan Theis, vice president of solution management for SCM with SAP.

SAP SCM will be generally available in the middle of this year, Theis said, but a couple of dozen select customers have already begun deploying it.

Its supply network collaboration (SNC) features include enhanced capabilities for outsourced manufacturing to improve supply network inventory and work-order collaboration; functionality to allow suppliers to create Web-based invoices; and enhanced vendor-managed inventory capabilities using a new menu approach for various levels of detail.

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"In this globalized world, collaboration is a centerpiece into bringing visibility into supply chain activities," Theis said.

That's a feature SAP must have if it's going to compete with "best of breeds," said John Fontanella, vice president of research with Boston-based AMR Research.

"That's a component that's absolutely necessary," Fontanella said. "They recognize the need to go outside the four walls of the enterprise to connect with suppliers. On the supplier side, there is a lot of emphasis on that. They're acknowledging the need for a network not just within the company but the entire trading community."

The ability to electronically coordinate with suppliers can offer big savings over manually reconciling invoices, he added.

Enhanced labor management functionality will also help to maximize the productivity of the warehouse workforce with new reporting features, according to SAP, and enhanced planning can help optimize capacity utilization and timely delivery.

Service enablement

The release continues SAP's efforts to service-enable its platform, and customers will be able to take a modular approach to deployments, Theis said.

"The customer has the alternative to implement the complete set, but he can also implement pieces," he said. "Wealth management, collaboration -- they are available as separate standalone applications. We are offering customers the flexibility to have more focused implementations with smaller systems so they aren't so dependent on the planning piece."

That's a key step for SAP as it moves down market to smaller organizations, according to Fontanella.

"Think of it as a much, much more modular architecture where you can introduce new functionality without having to tightly integrate it," he said. "Not to say it's easy, but it's simplified by the business process platform and the NetWeaver concept."

In addition, vertical enhancements introduce industry-specific templates that make deployment easier, depending on how differentiated or intricate an organization's processes are.

"In some cases, I've heard they weren't nearly complete enough," Fontanella said. "But overall, it starts you at a much higher level."

The enhancements should prove compelling for companies that have already committed to SAP, but also to smaller organizations considering it.

"With what SAP is going to be rolling out over the next two to four years, it's going to appeal to both current customers who want a migration path -- many want a technology vision and SAP is giving it to them -- and on other side, as SAP moves down market with All in One," Fontanella said. "It helps on both sides. We're not going to see a whole lot of $100 million SAP implementations. That market is pretty well saturated."

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