This week’s keynote for SAP’s SAPPHIRE conference was intended as a teaser for several ensuing weeks of content, an embarrassment of riches that will be hard for any single individual to navigate successfully. So with all due respect to the many initiatives being touted in the coming sessions, here’s a quick viewpoint on what I think will be the most important part of SAPPHIRE: Business Networks. What follows here is a preview of the main challenges that I think SAP has to overcome in order to make good on the promise of what is genuinely a potential paradigm shift in enterprise software and the global economy.
The onus on SAP will be to get this right as quickly and as comprehensively as possible. SAP has been talking about Business Networks for a while, and based on the SAPPHIRE keynote presentation, it seems like 2021 will be the year things start in earnest. Here’s three main things I’m going to be looking for regarding Business Networks as SAPPHIRE unfolds over the coming weeks.
On-boarding a critical mass of suppliers. SAP is planning on offering free onboarding for the first 100 partners for its early adopters. This begs two questions: what’s so complex about onboarding that it’s offered as an incentive; and what will the role of Ariba be in this process? I think I know the answer to the first question: there’s going to be a lot of plumbing needed to enable the full panoply of functionality possible in SAP’s vision. A business network makes the most sense as a many-to-many hub for myriad types of interactions that underlie the customer and partner lifecycle, and that means enabling a vast array of interaction and document types – with their data and metadata – to be exchanged easily, accurately, and in real-time. Interoperability will be the key to SAP’s initiative, and that means supporting a level of integration across vast oceans of different industries, geographies, and business practices – and non-SAP software. A business network has to be a veritable Tower of Babel, only one that succeeds in reaching its lofty goals instead of being cast down by an angry God. So, be on the lookout for more details on how this will happen. Integration is a big theme at SAPPHIRE, and this challenge is a major reason why.
Ariba’s role is more complex and problematic. With a network of over 4 million companies already using Ariba as its base, SAP is touting Ariba’s new UX as a sign that they know how to reach a potential partner network of millions of companies, but that remains to be seen. As someone who has been using the new UX for several months, I can testify that it has some serious flaws. Ariba has always been best for large companies with a dedicated procurement persona that can navigate its UX, but for small companies and more casual users this experience is simply not good enough. I keep hoping SAP will see that if Ariba is the initial experience then it has to be completely reimagined into something users love to interact with. Right now if you’re not an experienced procurement pro it’s more of a system you deal with because you have to, not because you want to. No business network can succeed without a critical mass of second and third tier suppliers, and they need to be able to approach this new opportunity without UX barriers. The new/old guy in charge of this initiative, John Wookey, knows what a good UX looks like, I’m hoping he’ll spend some time talking to smaller suppliers and get their requirements down pat. I’m looking for some some revelations in this regard over the next couple of weeks.
The business case for smaller suppliers. Those of us old enough to remember the first attempts at business networks during the dotcom error know that second and third tier suppliers have a lot of risks involved in being part of a business network. Covisint was an attempt to create a business network for automotive suppliers, and it quickly became obvious that the game was rigged against the smaller suppliers who were asked to offer an unprecedented amount of transparency to the network in exchange for…. getting squeezed even further by the OEMs that dominated Covisint. Needless to say it was dead on arrival, and while the brand exists today, the initial vision died a well-deserved death. It doesn’t have to be this way: A business network can be a great place for a small supplier to find new customers and markets and showcase the kind of quality of product and service that make them stand out in a crowded field, if it’s done right. Considering the new dynamics at work in the emerging post-pandemic economy, this is truly the moment for a network that can connect global businesses in the kind of collective community network envisioned by SAP Business Networks boss Paige Cox. This win/win opportunity has to be protected against the dangers of creating another “open market” that’s rigged for the top of the food chain. It’s going to take more than technology to do this: Indeed, pulling this off will be a form of innovation – a structural as opposed to product-based innovation – that will be responsible as much as any other component for the Business Network’s success. Hopefully we’ll hear a lot more about how smaller suppliers are protected – SAP’s inability to create a concrete and comprehensive place for smaller, boutique systems integrators in its RISE initiative and the continued fever dream of using the current UX of Ariba as the onboarding tool for Business Networks makes me worried that the plight of the small and mid-sized company is lost in the warm embrace of large enterprises and partners.
Selling a concept that has no buying center. What was always so easy and intuitive about enterprise software was there was a neat formula for finding buyers and influencers. Each major category – ERP, CRM, SCM, HRMS – had a unique central data element – a ledger, a BOM, an order, a customer, an employee – that was “owned” by a particular type of buyer. CRM has the VP of sales, HR has the CRHO, supply chain has its VP, etc. etc. Even if the sale started with the CIO, each enterprise software silo vendor could appeal directly to its buying center, and a narrow but effective business case could be made.
There is no such buying center for a Business Network. This indeed is where the new CMO and solutions head, Julia White, will face one of her biggest challenges. A network that is all things to all internal LOBs can become a very hard concept to pitch. SAP’s new initiative has to pass muster with a pretty broad range of influencers: the top C-level execs, plus legal, plus the major heads of the different lines of business. The latter are often entrenched in their own LOB-specific solutions and many of those are not only from an SAP competitor but were chosen precisely because that particular buying center hated SAP: SAP’s on-prem CRM and HR offerings, and its old planning engine, APO, were not exactly loved by many of the LOB execs who had it foisted on them by their SAP-loving CIOs. That non-love has created a huge opportunity for vendors like Workday, Salesforce, Logility, Kinaxis and others to step in and fill the void. SAP will need to not only overcome these biases but figure out how to make integration and interoperability with these non-SAP systems look easy.
This “who is the buyer” problem is the biggest challenge of all. Business networks may make intuitive sense and the potential efficiencies and productivity gains are literally game-changing if they can be realized correctly. But these advantages defy the elevator-pitch challenge once you try to sketch out the big picture – cuz it’s a REALLY big picture, bigger than anything the enterprise software market has had to sell since the internet and e-commerce.
One of my favorite aphorisms is more at play here than in most cases: the easiest thing to sell in enterprise software is the tool or service that lets the user do what they’ve always done, only faster/better/cheaper. And the hardest thing to do is sell something the user has never done before. Business networks fit both categories simultaneously: the transactions that are improved in a business network are largely transactions every business does every day, but the full range of business to business interactions enabled by a business network have never been assembled and made to interact across a many-to-many network before. That single point of interaction for so many different lines of business makes this a really tough sell in the absence of a vice president of Business Networks who can consolidate internal demand, translate it to the capabilities of a business network, and buy accordingly. I don’t expect that SAP’s plans to make this happen is something that will be fully formed by the end of SAPPHIRE, but I’m definitely eager to hear how they plan to do it.
One final card that SAP, and White, is holding: SAP’s deepening industry-specific functionality. That’s one more area I’m watching closely in the coming weeks of SAPPHIRE. Classic ERP is commoditizing more rapidly than ever – more so in a business network world – and the onus on companies like SAP is to continue to deliver innovation and differentiation on top of core ERP. Industry-specific functionality, aided by a healthy partner ecosystem, will make the value of the individual industry networks stand out in a market that’s overcrowded with “industry clouds.” Being able to tell the industry-specific advantage that can accrue within the context of SAP’s nascent Business Networks strategy is going to a big help. And another challenge to squeeze into a concise and cogent elevator pitch for an increasingly broad audience of influencers.
It’s not simple, but the things that really change the game never are. I’ll be back with a report on how well the Business Network story unfolded when SAPPHIRE is over.
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