Surveying The Landscape

As outlined within this issue's Readers' Choice rankings, SAP's leadership position in many of the categories profiled provides it with a unique role within the consumer goods (CG) market. This month, CGTsat down with Ted Combs, Vice President, Consumer Sector, SAP Americas, to get his thoughts on the challenges that the industry faces; the ERP versus best-of-breed debate; and solutions for the SMB market.

 

 

Combs: The tough fundamental challenges of the CG industry have put tremendous pressure on IT strategies and the software industry. The result is greater investment scrutiny, greater outsourcing of IT and shared services, consolidation of instances and the general endorsement of suite solutions on a common platform. Companies simply can't afford to maintain a complex IT environment where resources are tied up maintaining and interfacing disparate systems. IT resources need to drive innovation that supports the business and this has raised the bar for the software industry.

 

We have also seen a polarization of providers where, in one camp, only three very large global software vendors remain in a position to address challenges holistically and globally. The other camp consists of the smaller software vendors that recognize the situation and are offering niche solutions to help address the fundamental industry challenges. In a sense, the smaller players have become even more specialized and I think this is also why the platform discussion becomes so important.

 

The landscape and fundamental challenges continue to force the larger vendors to develop new capabilities, and look at either acquiring select companies or partnering with smaller niche vendors.

 

 

Combs: We're on a mission to make all of our customers best-run businesses. For CG companies, we believe that means helping them discover, manage and leverage consumer insights, with an integrated solution that enables the entire enterprise to act on them quickly.

 

Our strategy in the CG market is to continue to support our 3,800 plus customers with enhancements to existing solutions, while we develop new solutions, embrace new partners and further penetrate the small and medium size markets.

 

We have an amazing number of success stories around the world among our installed base, and we are capturing them and bringing them forward to share best practices and realized value among customers and prospects. Our solution areas span the entire enterprise and beyond, so you will see us continue to extend our footprint in our installed base as we leverage these success stories across customers.

 

One thing I would mention is that we are very focused on the standards and data sync work in the industry. We are confident that they will unleash amazing capabilities and we have an obligation to be one of the major enablers for that happening. It's interesting to note that one of the major challenges facing data sync right now is data accuracy. In my mind this really validates our stated position that companies should adopt a master data management strategy, which can, in addition to many other things, help companies ensure data accuracy prior to syncing.

 

Another area we are focused on is that of convergence among manufacturers, distributors and retailers. The lines are becoming more blurred with greater numbers of CG companies now possessing retail operations and more retailers offering private labels. SAP has a large customer base of CG companies, distributors and retail customers that are demanding solutions for these parts of their business. We are also working on ways to connect our existing solutions for these industries.

 

 

Combs: ERP is still critically important and going forward it needs to be service enabled. With the delivery of mySAP ERP 2005 this past summer, we provided our customers and partners with the first service-enabled suite in the industry, well ahead of the competition. This latest release is based on the SAP NetWeaver platform and already contains hundreds of enterprise services.

 

Going forward, we will continue to add functional enhancements and services by delivering what we call enhancement packages. These will be made available about twice per year, and customers will not be required to upgrade to a new release to receive the benefits. Customers are already gleaning the benefits of greater innovation and lower TCO.

 

Regarding "best-of-breed," I always cringe when the term is used because most people mistakenly assume that a "best-of-breed" or "point" solution (as I like to call them) is necessarily better in its limited scope than a larger integrated suite solution. This is often not the case and I think CGT's annual rankings have historically proven that.

 

In terms of an approach, we firmly believe that firms should consider ERP and master data management first as foundational elements and then build upon them with integrated solutions that address strategic and differentiating processes such as innovation, sales and marketing, demand-driven supply networks and analytics.

 

 

Combs: While SAP has a very comprehensive suite of leading solutions, we are selectively partnering with endorsed business solutions that fill niche requirements and pass rigorous quality and integration testing.

 

These arrangements go well beyond being certified or even powered by SAP NetWeaver. A good example is SmartOps. They are a niche vendor that specializes in enterprise inventory optimization. They enhance our offering and play an important role in helping companies incrementally achieve a demand-driven supply network. There are other types of partnerships that should also be mentioned such as Duet software, which was SAP and Microsoft's first jointly designed and developed solution that links the information worker with the enterprise worker.We also have a terrific partnership and offering with Adobe.

 

 

Combs: It's interesting because medium and small size enterprises have most of the same challenges as large companies. They have similar suppliers, channels, customers, etc., but I like to say that technology can really level the playing field.

 

SMBs actually have an inherent advantage because of their size. It's easier for them to affect change management, adopt best practices and be more nimble. On the other hand, they do not have the resources of larger companies and are often more risk averse.

 

One of the reasons SAP has been so successful with SMB companies is that we have captured industry best practices from thousands of previous implementations and worked hard to offer affordable pre-configured clients and packaged solutions that cost less and mitigate risk.

 

Myths and prevailing attitudes are sometimes difficult to overcome, but the evidence is in regarding ERP for midsize organizations. These companies should not think an ERP system is available only to large organizations or that it requires a huge IT staff. CG