How SAP is adapting to digital transformation

by | 5 Jul 2020

In 1979 the company SAP launched their first ERP to the market, SAP R/2. But it was not until they launched the SAP R/3 in the 1990s that their success skyrocketed. They became the indisputable leader in the ERP market since then. SAP R/3 was a revolutionary product, you can find more details about it in this post. But times change, it can happen that today you are the leader and tomorrow other companies revolutionize the market. We all remember Nokia as a leader in the mobile phone market and they disappeared after the smartphones were born. Technology advances by leaps and bounds. This is also true in the enterprise software market. Other companies have launched innovative products e.g. Salesforce commercializing the first cloud CRM as a SaaS (Software as a Service) with that amazing interface and the option to access it from mobile devices. SAP R/3’s popularity was being reduced because of it was considered a non-user friendly product. SAP realized that they needed to evolve and they started a very expensive strategy to improve their portfolio. On one hand they created some products in-house like SAP HANA (2011) and on the other hand, they acquired several competitors to combine their products with the ones created in-house by SAP. Some of the companies that SAP bought are Business Objects (in 2007), Sybase (in 2010), SuccessFactors (in 2012), Ariba (in 2012), Fieldglass (in 2014), Concur (in 2014), Gygia (in 2017), Coresystems (in 2018), CallidusCloud (in 2018) and Qualtrics (in 2019).

Let’s review some of the technological advantages that SAP has been adopting in the last years.

Cloud

On-premise ERP is slowly disappearing, now ERP vendors prefer selling their ERP application as a SaaS (Software as a Service). Despite SAP S/4HANA can be deployed on-premise, SAP is more interested in their customers moving to a SaaS contract model. They are delivering all the innovative updates first in the cloud and later for the on-premise customers. So, if customers want to use the most cutting-edge technology, they would need to move to the cloud (cloud-based solution). It is important not to mix the concept of Cloud installation with Cloud-based solution.

  • Cloud installation. This is an on-premise installation of the product in remote-located servers (Cloud). An on-premise application is a product for what you pay the license once and then you become the owner of the it, you could install it wherever you want. SAP has signed an alliance with Google to make their database SAP HANA available on some cloud server platforms (also called Hyperscalers). SAP HANA is now available on the three largest public Cloud platforms: Amazon Web Services (AWS), Google Cloud Platform and Microsoft Azure. This means that if the customer is interested, they can install the on-premise product on a cloud server platform. They would only need to hire the Infrastructure as a Service (IaaS) with one of the Hyperscalers.
  • Cloud-based solution. The vendor of the application takes care of the infrastructure, the installation and the product updates. The customer will just worry of paying a periodic subscription and use the software.

At this point, we need to point out that not everything is black or white, on-premise or cloud. SAP allows some Hybrid combinations for the implementation of their Core ERP SAP S/4HANA. On the image below you can see some details of each of the options. Below in blue letters you can see the name with what SAP is commercializing the product and above it some of the characteristics. If you want to go deeper into this topic, I recommend you this post in the SAP community.

Image: Different deployment options for SAP S/4HANA. Source: sapspot.com

Mobility

We live in the era of the mobile devices. Almost everyone uses tablets, smartphones or smartwatches. Can you imagine approving purchase orders from your phone or your tablet while you are not in the office? Now it is possible to run the business processes in SAP S/4HANA from a mobile device. This is specially valuable in the COVID-19 era. SAP has created Fiori UX to make this possible.

With SAP S/4HANA and Fiori, the employees have access to the ERP no matter where they are. A sales person can access the list of invoices for a customer or register a sales order from his mobile devices. There is no need to wait anymore until being in front of a computer to have the job done.

Image: Sample of the Fiori launchpad

Powerful Analytics

Another interesting feature that the SAP products are adopting is the real-time analysis. SAP HANA is a powerful database with a high performance. Products running on SAP HANA benefit from it.

The user can log in into SAP S/4HANA and find tiles with KPIs updated with information in real time. These tiles are analytical Fiori apps. The user can click on them to see more detailed information about the corresponding indicator. It is also possible to have hybrid transactional and analytical apps, that means analytics embedded in the screen of the transactional app. SAP S/4HANA provides a much richer analytical experience to much more users. From now on, nice reports are not only exclusive for the executive board. In addition, SAP is using AI (artificial intelligence) to include predictive analytics to these transactions to help the user to make decisions. SAP will be able to predict what is going to happen before it happens.

It is important to mention that there are Fiori apps with embedded analytics included in the standard product but also new custom ones can be created. If you want to go deeper in this topic, I recommend you this post in the SAP community.

Image: Fiori Launchpad with analytical Fiori apps tiles

Image: Sample of Analytical Fiori App

User Experience

In the last years, SAP has made a big improvement in the User Experience, moving from the traditional (and let’s be honest, ugly) SAP GUI to the new Fiori UX. When we talk about User Experience, we are not only talking about a nice and user-friendly interface (UI). The term User Experience also includes all the experience of the user interacting with the product or service. Some parameters that help to improve the experience are the number of clicks that the user needs to get a task done or the analytics embedded in the screens. SAP created the user experience called Fiori UX that uses the user interface technology SAPUI5.

In the field of user experience, SAP also delivered SAP screen Personas. SAP screen Personas is a tool to be used in the visualization layer to apply changes on top of the screens to simplify SAP S/4HANA or ECC screens in order to improve the usability.

Image: Sample of what can be done with SAP screen Personas

E-commerce

Who does not buy in the internet nowadays? The number of companies selling their products or services through a website, an app or a marketplace is growing. SAP is aware of this and because of this, they have included in their portfolio products like SAP Commerce Cloud and SAP Ariba, to ease their customers selling via internet. Those new products are perfectly integrated in the background with SAP S/4HANA. However you can buy them separately and integrate them with other Core ERP solutions.

I will soon publish another post about SAP products including Ariba and SAP Commerce Cloud. Don’t forget to subscribe to be notified when this happens.

Image: Sample of the Ariba Catalog

Intelligent Technologies

SAP Leonardo is SAP’s approach for innovation. SAP Leonardo integrates future facing technologies and capabilities into the SAP Cloud Platform. SAP Leonardo uses the technologies like:

  • IoT (Internet of Things). Sensors and devices connected and providing useful information to the ERP. This functionality can help to diagnose issues before they even happen and take action in advance. A sensor can send a signal for instance when a device is running out of battery to take the corresponding actions in advance. Additionally, SAP also integrates with Azure IoT, you can find more information in the video of this link.
  • AI (Artificial Intelligence). AI combines machine learning, data intelligence and big data to analyze and classify automatically huge amount of data to find patterns and predict future outcomes. With AI, SAP can find trends or cause-effect relationships based on the data stored in the system. Machine learning will automatically create algorithms to predict the future based on the current data. This is one of the key selling points of HANA; most of the organizational data exist in one place. Therefore, a significant amount of the effort required to pull data from multiple business systems and databases to extract, transform and Load (ETL) for training a machine learning model is reduced.
  • Blockchain to strengthen the security of the information transmitted electronically, building trusted transactions between parties.

Software Development Kit (SDK)

The big technological companies like Google or Apple provide platforms to support developers. This enables developers to build better solutions which in turn benefits the big technological companies. SAP appears to be moving towards this trend.

Unlike in the past, SAP is now making it easier for developers by supporting them with new platforms for each of different technologies: ABAP, Data Hub, iOS, UI5…. If you are a developer and want to learn how to build apps that can be integrated with SAP, you can find all the information here. SAP provides there the knowledge and the tools to build applications and offers the option to test them in with simpler versions of their products.

For those who build something cool and want to commercialize it through the SAP App Center, they would first need to certify it first with the SAP ICC (SAP Integration and Certification Center). Below you can see a video of SAP explaining how this process works.

Remark: I initially put the original video from the ICC website of SAP. But because it is broken now, I replace it by this one in youtube (it is the same that was in the SAP website, slightly modified)

About the author:

Cristina Gil Gallo

Cristina Gil Gallo

Cristina specializes in SAP SD consulting holding a certification in S/4 HANA Sales On Premise. She started her career in SAP in 2005. She is particularly interested in international projects. She holds a BSc in Industrial Engenieering from the Universidad Politécnica de Valencia.
ReadCristina's Full Bio

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About the author:

Cristina Gil Gallo

Cristina Gil Gallo

Cristina specializes in SAP SD consulting holding a certification in S/4 HANA Sales On Premise. She started her career in SAP in 2005. She is particularly interested in international projects. She holds a BSc in Industrial Engenieering from the Universidad Politécnica de Valencia.
ReadCristina's Full Bio

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