Last year, BMW CEO Oliver Zipse foretold the future of SAP—and it was all about wildly reimagined business models, co-innovation with customers, and modern vertical-industry solutions.
And data.
Lots and lots of data.
“He said, ‘Christian, you are sitting on such a big treasure—you have all the data on BMW from all of our suppliers!’ ” said SAP CEO Christian Klein in recalling the conversation with BMW CEO Zipse.
Tipping point
That anecdote captures the incredibly important tipping point at which SAP finds itself here in early 2021:
- while it is still the world’s leading supplier of ERP systems that run massive swaths of the global economy, ERP has become essential but not sufficient for the customer-centric world of digital business;
- corporate CEOs have begun looking to SAP to not only automate and streamline the present but indeed to help them reimagine and recreate the future;
- the tumultuous global economy, and the need for businesses to be able to move in lockstep with their customers, is forging unprecedented changes in how huge industrial value chains work; and
- amid all that upheaval, CEOs are discovering that the data cranked our 24/7 by those hundreds of thousands of SAP ERP systems around the world is rapidly becoming some of the most valuable—and most transformative—raw material on Earth.
(SAP is #5 on my weekly Cloud Wars Top 10 rankings, and you can get the full story on the company in an in-depth analysis we published last month called SAP’s Huge Bet on Industry Cloud Could Be Game-Changer Against Oracle, Salesforce.)
Klein shared that momentous conversation during a Zoom call we had in late December as part of Cloud Wars’ ongoing CEO Cloud Outlook 2021 series (links to more installments in that series are at the end of this article).
Sitting on a gold mine
And Zipse’s comment about the gold mine on which SAP is perched frames perfectly not only the massive opportunity within SAP’s reach but also the additional work the company needs to achieve to turn that potential into a reality.
Here’s how Klein described the speed at which this very large and complex “business network” came together—and how what is now a collaborative effort among German companies in a single industry could become a global model across multiple industries.
“This [BMW] meeting was in June and then we played a little bit the digital connector in the middle,” Klein said on our December Zoom call.
Siemens, Bosch, ZF ‘all in’
“So I reached out to Siemens, I reached out to other automotive suppliers like ZF, like Bosch, and they were all in. They got the use cases, they saw that that’s a win-win.
“Then we also put it in the context of GAIA-X [the Euro-centric data infrastructure project], because this is highly sensitive data. They don’t want to share everything, but they will share certain data,” Klein said, adding that the German government enthusiastically supported the initiative.
“So we are really now looking forward to 2021 to make that work. And by the way, that will not stay a German thing—we are already in discussion with the European Union. There are a lot of suppliers who now want to join the party, and ultimately I really hope we can build a global network.
Extend to other industries
“And then, why not replicate that to other industries?”
In a September blog post about the automotive alliance, Klein described the massive changes this effort will precipitate:
The automotive industry is racing into a new world of mobility even as it continues with the traditional business model of designing, manufacturing, selling, servicing, and financing cars. Megatrends — including connectivity, autonomous driving, shared mobility, and electrification — are shaping the industry and the world of mobility in real time.
We see rigid automotive assembly lines turning into flexible, highly automated modular manufacturing. Logistics is moving from point-to-point communication to network-based original equipment manufacturer (OEM) and supplier collaboration, and business models are changing from classical direct vehicle sales to subscription-based or pay-per-use models.
And so the ramifications of the digital revolution are clear: even as current products continue to be conceived and built, a parallel world of new ideas, new partnerships, new data exchanges, new approaches, new business models, new manufacturing capabilities, new levels of personalization, and new revenue models is arising alongside the old.
Wildly different environment
In this wildly different new environment, it’s inconceivable that the enterprise applications of the past could keep up with these strikingly fluid, fast-changing and data-driven requirements.
For SAP, that means two things must occur in parallel to mirror the changes outlined above from Klein’s blog post:
- SAP must continue to enhance its S/4HANA suite of solutions and complete its ongoing work on a digital platform with a single data model orchestrating all of SAP’s applications and related technologies; and,
- simultaneously, SAP must unleash new industry-specific solutions that not only interconnect seamlessly with those LOB apps but that also make it easy and appealing and highly productive for customers to co-innovate with SAP.
“Today a lot of enterprises have never digitized their supply chain,” Klein said. “They never digitized their data streams also towards the consumer.
Executing in real time
“And now with the network, you realize this has completely changed the game because now you can manage all of these dependencies real time. You can get better outcomes with regard to productivity, and lower costs.”
As a result, businesses gain the ability to accelerate their operations and get closer to the breakthrough point of being able to move at the speed of their customers.
“So that is game-changing. Because today, you’re often running your enterprise in a very process-by-process, one-step-by-one-step way, but suddenly you can really be managing the company real time.”
And not just in real time, although that is extremely important—but also with the full and active co-innovation particip