ORLANDO, Fla. -- SAP CEO Christian Klein outlined three major challenges in the SAP Sapphire 2022 opening keynote address -- and how SAP technology can help overcome them.
The top challenge is the speed of change in business today, followed by supply chain disruption and, finally, sustainability, Klein said at SAP's customer- and partner-oriented conference, which returned to a live format in Orlando, after two years as a virtual event. Sapphire's in-person venue hosted about 5,000 attendees, with additional attendees tuning in virtually.
SAP also unveiled a flurry of product updates and partnership intended to help address these three main business challenges.
Klein said companies must fundamentally transform the way they run to deal with industry changes that are happening faster than ever. To be successful, companies will also need to transform the company's DNA and culture, which is "the most difficult part of any transformation, especially when your existing business model is still financially successful and people tend to be risk- and change-averse," he said.
SAP's answer to this is Rise with SAP, the initiative it launched in 2021 and dubbed business transformation as a service. Rise with SAP was designed to enable companies to move to a cloud infrastructure centered on the digital core of S/4HANA Cloud.
"A true business transformation will not happen just with a technical IT migration to the cloud," Klein said. "Rise takes you on a business transformation journey, regardless of industry or company size, existing or new SAP customer. The transformation journey will be tailored exactly to customers' needs."
Critical components of Rise with SAP that enable transformation are SAP Signavio, a process management and data mining platform that SAP acquired in 2021, and the SAP Business Technology Platform (BTP), a development platform that enables businesses to extend and integrate SAP applications.
A year after it launched, 2,000 customers have selected Rise with SAP, more than 60% of them new to SAP, Klein said. SAP is partnering with companies including Microsoft, Accenture, HCL Technologies and Wipro to provide Rise with SAP services, and at Sapphire, SAP announced that global business management consulting firm McKinsey will now partner on Rise services.
Supply chains need transparency, resilience
Supply chains today need to be made more transparent, resilient and agile throughout the entire chain, Klein said. The SAP Business Network, which integrates the SAP Ariba Network, SAP Logistics Business Network and SAP Asset Intelligence Network provides this for millions of businesses in 190 countries.
"We are building the LinkedIn of the B2B world," he said. "The SAP Business Network gives end-to-end transparency across the supply chain, connecting you with suppliers, manufacturers, logistics providers."
In order to provide more supply chain visibility in manufacturing operations and logistics, SAP announced a partnership with Apple to provide supply chain-related apps for iOS devices.
Two apps are now available -- SAP Warehouse Operator for iOS, which uses AI-enhanced barcode scanning and indoor location functions connecting with S/4HANA, to enable warehouse pick-and-pack functions on iOS devices, and SAP Direct Distribution, an app that integrates camera and location management to enable paperless delivery for drivers.
"These apps are available for iOS today, with more apps in development," said Julia White, SAP chief marketing and solutions officer.
Sustainability, profitability can go together
On sustainability, SAP aims to help companies ensure that sustainability and profitability are not exclusive, Klein said.
To enable this, SAP is offering a "green ledger" functionality in S/4HANA that can account for carbon production in the same way companies account for financials. Other SAP products are integral in helping companies measure and report on sustainability business drivers, Klein said. These include SAP Concur for tracking the carbon footprint of business travel; SAP SuccessFactors for environmental, social and corporate governance; the SAP Business Network to track data across supply chains; and SAP Sustainability Control Tower to aggregate sustainability data from both SAP and non-SAP systems.
SAP has brought all of its sustainability applications into a single cloud offering, SAP Cloud for Sustainable Enterprises.
"Transparency allows businesses to take action because you can only act on what you can measure," Klein said.
Customers react to Klein's message
The challenges Klein highlighted resonated with attendees.
David Costar, CIO of Wolfspeed, a manufacturer of silicon carbon products in Durham, N.C., was collecting a wealth of information on SAP products and services. Wolfspeed has recently undergone its own business and technical transformation to SAP S/4HANA Cloud from on-premises Oracle ERP systems.
These were highly customized, to the point where the systems became very inefficient at times, making the standardization that S/4HANA Cloud provides more attractive, Costar said.
Costar is also looking at how the SAP Business Network can help with Wolfspeed's supply chain.
"SAP is predominantly the platform of our target industries and customers, and we believe that over time we're going to benefit from being part of the Business Network, so I liked what I heard," he said. "There are a few things that I'm keen to learn more about, particularly around logistics, warehouse management, the iOS applications, as well as the analytic solutions that they're coming to market with."
However, Costar said he’s wary of any message that business transformation as a service is simple. Wolfspeed's transformation was complex and required serious efforts on all fronts of the business.
Dan CostarCIO, Wolfspeed
"All the great talk, the acronyms, the buzzwords and the marketing material has a shelf-life -- what doesn't have a shelf-life is those in the company that are actually having to sustain and live with the results," he said. "When I hear business transformation as a service, I'm not sold yet, because business transformation isn't led by a service provider, it's led by the company."
Sustainability was a topic that intrigued Jamie Lee, CIO at Ecobat, a firm in Irving, Texas, that provides recycling for lead acid and other battery types.
SAP sustainability products may help Ecobat enable better circular economy processes, according to Lee. However, Ecobat must complete a transformation from SAP ECC to S/4HANA to take advantage of them. Ecobat was the first company to sign on as a Rise with SAP customer and expects to go live with S/4HANA soon.
"I like the prospect of the sustainability tools in S/4HANA, but we have to land the core system then build on top of it," Lee said. "We'll need to investigate BTP and SAP Sustainability Control Tower further, and we need to get IoT going, especially when you're tracking measures that lead to sustainability reporting. Our chief sustainability officer will be interested in seeing those dashboards and metrics."
Klein is 'spot on'
The focus on sustainability feels more organic this year than two years ago, said analyst Jon Reed, co-founder of Diginomica, an enterprise computing industry analysis firm.
The war in Ukraine and supply chain disruptions have made issues around fossil fuel dependence and sustainability more real from a practical perspective, as well as an ethical one, Reed said.
SAP has made progress with its sustainability products, but the information about how available they are and who is using them is not always specific, he said. For example, it's not clear if the sustainability products can benefit SAP's large customer base that remains on legacy on-premises systems.
"What sustainability support does SAP give to customers on older releases that aren't running S/4HANA Cloud," Reed said. "Adding the green general ledger is great, but I seriously doubt that ECC customers are going to see it, so the specifics on some of this are short."
Klein's message on all three challenges was "spot on," according to Mickey North Rizza, group vice president for enterprise software at IDC.
Although it may take a while for many SAP customers to make the business transformation to S/4HANA, most are going to make the journey, she said.
"Customers know they're moving to a digital world, and they're using [Rise with SAP] to make the move," Rizza said. "But they need to understand it a bit more, so they're taking time to understand it. SAP has spent the last three years doing nothing but redesigning business processes, recognizing that it's about changing technology to cover the business processes, so the employees have a better data set to look at and make better decisions."
However, SAP's claim that 60% of Rise customers are net-new says that Rise is about more than just transitioning on-premises customers to the cloud.
"Companies are investing in it because they see the potential," she said. "Existing on-premises customers may be looking at a hybrid mix, with some customers staying on ECC until they get the rest of their digital transformation done. Then they're going to flip [to S/4HANA]."
Jim O'Donnell is a TechTarget news writer who covers ERP and other enterprise applications for SearchSAP and SearchERP.