A New Business Blueprint Stars at SAPPHIRE '05

SAP trumpeted some new applications, partnerships, and business plans at SAPHHIRE '05 in Boston this week. During his keynote address at the company's annual customer conference, CEO Henning Kagermann also applauded SAP's longtime and new customers for trying what he called the next big thing, enterprise services architecture (ESA), powered by SAP's NetWeaver platform. Technology titans from more than 25 industries are partnering to deliver what SAP considers its blueprint for a business-driven approach to services oriented architecture (SOA).

"Looking ahead five years, winning companies are the ones who will have the fastest business innovation," Kagermann said. "IT cannot be viewed as a cost center. It has to be viewed as a strategic lever for business." According to Kagermann, on average at least 30 percent of a company's innovation comes from IT, but that could be as high as 80 percent in certain verticals.

Kagermann cited the recent Microsoft/SAP Mendocino announcement as an example of bridging solutions for the benefit of all involved. Using Mendocino employees essentially can work in the environment they prefer (using Outlook or SAP), but get the benefits of both applications.

Cisco, Intel, and Microsoft will license ESA to provide enterprise services-ready solutions to improve Web services by providing enhanced flexibility, greater speed, lower costs, and diminished risks. Basically, Kagermann said, "it's about plug-and-play on a business level. Recombine existing, proven stuff into something new--in such a network, there's positive competition. Partners in the network adopt one another, and raise the bar."

Still, according to Kagermann, one company can't be the best at everything. That's why most of the innovations that will be shared on this business process platform will come from outside of SAP. "We'll try to manage the flow of innovations, and when something is seen as a best practice, we'll make that available in the platform." That concept of customer-inspired innovation is at the heart of the company's upcoming version of mySAP CRM (slated to ship in October 2005), which will include operational enhancements and embedded analytics for financial services, telecommunications, and the public sector.

SAP hopes its latest vertical applications will cater to businesses growing demands. "Under an SOA you don't have to take everything in total," says Jeff Roster, vice president of global industries for retail at Gartner. "Nobody's going to tear everything out." Home Depot, for example, hadn't invested in the store before using SAP, according to Roster, and now the home improvement giant has made significant advances in its checkout department. It's also looking to reach out to customers outside the store. It may be a model for retailers to follow, in Roster's view, because of its push toward packaged software.

The idea of integrating SAP's proven practice with individual companies' innovations is in line with Kagermann's theory. "This is not like a tsunami where you have to rip everything out," he said. "We'll deliver you the next big thing at a pace you can manage in your company. We kept the integrity of the organization so you don't lose anything, you gain."

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