SAP CEO charts course from on-site to insight

NEW ORLEANS — SAP’s chief executive singled out one of his largest Canadian customers Wednesday as the kind of organization poised to take advantage of a product strategy unveiled at the software firm’s user conference this week.

Speaking

to the SAPPHIRE 2004 keynote audience, SAP CEO Henning Kagermann included Canada Post on a list of enterprise organizations that are already lowering their costs of doing business through its application suite. Two years ago Canada Post began using mySAP CRM, for example, and on Thursday the Crown corporation will be on hand to discuss why it launched an SAP Event Manager to track the movement of all parcels and ad-mail, including the transmission of 1.5 million records a day to SAP’s Business Information Warehouse. Kagermann said Canada Post has lowered costs by about 13 per cent through various SAP projects.

Organizations like Canada Post are trying to minimize disruptions or mistakes in their operations, like losing a piece of mail. This has sparked a shift in enterprise thinking, Kagermann said, to what he described as “exception management.” Instead of merely using SAP enterprise resource planning systems to track transactions, the company is evolving its products into a model where data collection is automated and users are sent alerts when a problem — an exception — occurs. The idea, according to Kagermann, is to present data in better context with insight that will allow users to execute an immediate action plan to resolve problems and make their operations more efficient.

“Once you know what to do, you can’t make phone calls and then take action the next day,” he said. “That’s not real-time business.”

SAP’s message has resonated with customers like Procter & Gamble, one of several organizations discussing IT projects in the SAPPHIRE exhibit hall. Jake Barr, P&G’s associate director of global product supply, said the firm is on a mission to move away from supplying retailers based on historical forecasts and instead manufacture and distribute product based on up-to-the-minute data on what is selling on a daily basis. This is a huge transition for P&G, Barr said, and will involve closer integration with the 30,000 to 50,000 suppliers that depend on its supplier portal. The custom SAP solution under development, called Time Phased Integrated Planning, will use the “responsive replenishment” capability introduced in mySAP SCM (supply chain management) earlier this year.

Barr said most of P&G’s sales are based on whether a consumer finds a product on a retailer’s shelf or whether they like the product once they’ve used it. The majority of these sales are not based on day-to-day purchasing but occur around “events” or peak periods that are hard to predict and where demand can spike sharply. Being able to change over production to a product in greater demand is as valuable to P&G as it would be to introduce another brand, Barr said, or about US$1 billion.

“Our network was not well integrated,” said Barr. “I had information on all our product points, but the information was not synchronized, to say the least.”

Other enterprises, like Johnson & Johnson Vision Care Inc., said they are using SAP products to streamline order entry, manufacturing and distribution as they expand their product line. J&J Vision Care project director Larry Kuhbander said the company is in the midst of a global rollout of SAP R/3, mySAP CRM and other tools that will reach Canada by August. The catalyst, he said, was a company strategy to introduce one new product every six months.

“With the kind of growth we had projected, we knew (our legacy systems) simply would not work,” he said. The company started out with a vanilla implementation of SAP’s products but has since worked with the software firm to create a customized order-entry interface.

Hagermann said SAP would put the expertise gained from its customer success stories into enterprise services software, which he described as a combination of Web services and its NetWeaver middleware that will make it easier to create applications to improve business processes. SAP will create a repository of enterprise services scenarios its NetWeaver customers can study by 2006, he said. In time, those enterprise services will be rolled out for active use.

“You’ll be able to do it your way and at your speed,” he said. “But the time to get ready for that is now.”

Kagermann also announced an agreement between SAP and Microsoft that will see tighter integration between NetWeaver and Windows .Net and the ability for Visual Studio developers to create .Net extensions to SAP software. In a videotaped speech broadcast Wednesday morning, Microsoft chief software architect Bill Gates said two-thirds of all SAP implementations run on Windows.

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