SAP supply chain summit: Are customers ready for the cloud?

SAP recently held its Supply Chain Summit at its US headquarters. The event was very well attended with over 200 attendees from 97 unique companies. Day one started off with deep dives in various areas including: Supply network...


SAP recently held its Supply Chain Summit at its US headquarters. The event was very well attended with over 200 attendees from 97 unique companies.

Day one started off with deep dives in various areas including:

  • Supply network collaboration
  • Next generation S&OP on HANA
  • Extended warehouse management
  • Transportation management
  • Enterprise inventory optimisation

Attending the SAP Sales and Operations Planning (S&OP) on High-Performance Analytic Appliance (HANA) workshop provided an opportunity (three hours worth) to speak to multiple customers.

After asking a few of the customers their readiness regarding using S&OP in the cloud, the various responses were surprising, particularly given the direction SAP is taking, building the product directly in the cloud.

  • "I'd like to but our company isn't ready for it"
  • "Security is too big of a concern"
  • "Not yet"

The S&OP on HANA product itself, with general availability (GA) slated for sometime during 2Q of CY12, looks promising. It is not a replacement for the Advanced Planning and Optimisation (APO) tool but it is a way to reach out to executives, planners, marketing and sales to get these constituents involved in the planning process at a higher level.

S&OP on HANA pushes out data through StreamWork, SAP's web-based collaboration portal, and uses a purpose-built Excel interface where users can run real-time planning simulations. The tool can bring in information from any back-end system including ERP, CRM, APO and flat files, and then via role-based excel templates users can run different scenarios and discuss results and issues in real-time directly in the tool via StreamWork.

Day two provided some answers. Hans Thalbauer, SVP Line of Business Solutions, Supply Chain and R&D for SAP, kicked off the session with his key note covering:

  • SAP's five elements of the "new" supply chain: integrated S&OP, manufacturing network planning, collaborative response management, demand management and supply chain execution
  • Business and IT trends: cloud, big data, TCO, mobility and investment security
  • SAP's roadmap for customers: more innovation, less disruption, long-term predictability

He went on to specifically ask for direct feedback from customers if solutions such as S&OP in the cloud are too leading edge for what is needed today. Is an on-premise solution or a private cloud option more comfortable for client needs today? SAP obviously listen to their customers and understand their hesitations.

IDC, as discussed in prior reports, feels technology is moving in a similar direction as SAP obviously does - focusing a majority of our research on the cloud, big data, social business and mobility. And customers are starting to think about these technologies as well: some are already deeply invested, while others remain more hesitant.

However, one wouldn't sit through a three hour deep dive on S&OP on HANA unless there was some level of interest in moving certain supply chain applications to the cloud in the future, no matter the hesitation currently.

Further discussions from day two helped to solidify that customers are in fact thinking about these technologies but many have not yet made the leap. It is the eternal chicken and egg problem. Do you build the product for the customer or wait for the customer to ask for it? IDC sees the trends converging, from both the customer and vendor side. SAP has begun to build the foundation for what customers will inevitably - en masse - start asking for.

Many vendors, not just SAP, offering cloud-based solutions, have a singular hurdle to overcome - security concerns on the part of the customer. Once the security issue can be reasonably minimized in the mind of the customer, the barrier to entry for cloud-based applications may be significantly lowered, particularly for those supply chain applications that hold more sensitive and timely company information.

Customers also need to realise though that these technologies can change the way business is done - increasing collaboration, speed, and efficiencies; whether on-premise, or not, security will always be a concern, be it paper or digital bytes. The technologies are available and vendors are making them customer-ready - now customers need to make the leap.

By Catherine White

"Recommended For You"

News analysis: SAP Business Suite on HANA O2 cloud-based supply chain slashes inventory levels