Every one of the dimensions mentioned before are tightly intertwined, as you must have understood by now. Platforming the suite through SOA evolution provides the way for the key processes to evolve more rapidly, and for additional functionality to be built more rapidly as composites. Simplification of deployment will cause massive adoption, providing a better platform for developers. the more functionality we get in the form of simple to adopt solutions – will cause more companies to go back to acquiring and deploying innovative processes for growth.
If flat world was the big wave of the last 5 years – shifting costs of operation away from high cost and into low cost – then the next wave of innovation will come in the form of automation. In a sense, what I’m saying is that some thing is actually cheaper than off-shore low cost operations – no-shoring. You can see it in many industries, when you want to beat cheap labor you automate production, and the same is bound to happen in the IT industry. I do not predict an end to the off-shoring movement, quite the contrary, it is here to stay and will continue to grow strong. There will be a synthesis between the two movements as certain tasks will get automated, or enabled through smarter tools and improved packaged solutions. As we move up the downward escalator (as Geoff Moore describes in Dealing with Darwin) the old non-valued parts of enterprise software landscape context will be designed out, and new parts will enable faster operation and innovation.
That’s where the eco system comes into play – what the open platform enables is the next generation of edge-processes. By simplifying consumption and freeing innovation budgets the eco system will flourish again with new products that can be deployed much faster across the enterprise. The core solution platform with the strongest catalog of Eco-system solution always wins. Ask Microsoft if you don’t believe me, that’s how they wrote the Windows story. To a certain degree, if SAP holds the source of axis for the box, the Eco-system players are the ones holding the outer vertex of the box, and pulling on it outwards – expanding the volume and value of the eco-system.
How far is this vision from reality? well, you can easily measure. Check to see how many suite cores are actively deployed at accounts (last I counted they are adding thousands of ERP installations every year). Check to see how much of the system is covered through enterprise services and how many NetWeaver installs are going live (about 500 a month, right now), and check how simple it is to get a full suite up and running (my goal was to do it in under 7 days). Finally, check how many eco-system solutions are made available by partners of SAP, and how many of them had a valuable exit, selling to SAP or even going public.
The combination of SOA, SaaS (whether on premise or off premise), new hardware (cloud architecture) and interdependent eco-system of innovation is the foundation of next generation of enterprise, or as I called it Enterprise 3G (E3G). Hasso discussed some of the characteristics in his keynote that opened sapphire Atlanta, If you read through the last five posts (sorry for going long on you – but you always know you’re going to get that long when you come to my keynotes) – you can get the blueprint for how I see SAP and the industry going forward. I hope I end up correct. I hope SAP still wins at the end – for the sake of our customers.
Shai
Shai, I'd like to suggest you some interesting resources on robotics, automation and alternative energy:
Robotic Nation Evidence
http://roboticnation.blogspot.com/
AltEng
http://alteng.blogspot.com/
Posted by: Dimitar Vesselinov | April 29, 2007 at 12:21 PM
Shai,
I want to comment on your second paragraph discussing off-shore and Automation and would love to receive your opinion.
I think that Automation as the next wave of off-shore presents only one half of Automation value.
Replacing some off-shore operations with Automation can reduce the cost of operations in the Context of the business (the activities that are not creating competitive advantage to the business, but can not be retired), and the cost that is saved can be turned back to Core (activities that create competitive advantage). In this way, Automation contributes to Innovation indirectly.
But Automation can also contribute directly to the Core.
Let's say I have a few book stores that serve 1,000 customers a month and have the costs of salaries, rent, etc – this is a small business and most of my competitors do not sell via the web. Now, let's say that I am going to transform most of the activity into e-commerce store. On the Context side, I can reduce costs of salaries, rent etc., but here is the interesting thing, Automation enables me now to serve practically infinite number of customers rather than 1,000 a month because of physical limitations of the "old" store. That becomes a Core rather than just Context; I am not only reducing the cost of non-differentiating activities, but also create competitive advantage.
(Of course, be careful with Automation. I work for a CRM company and we've connected one our customers' web site to its CRM solution. Since then he has about 100 daily "leads" looking to sell him expensive watches and cheap pills…)
As the most important things for organizations is to grow rapidly, Automation as a contributor the Core is important at least as Automation of Context, replacing off-shore.
I would love to hear your opinion.
Posted by: Ori Matalon | May 03, 2007 at 01:33 AM
Shai,
it seems to me that your argumentation is to much focussed on the supply side. Customer value is however strongly depending on the (smart) use of the functionalities and features provided. Therefore the notion of Continuous Improvement is an important one. Over time, simplicity, consistency and effectiveness can be strongly increased but my personal experience is that most companies do not create an environment which fosters CI in ERP applications. The incentives for the CIO and the management are rather to keep the system closed in order to avoid potential risks (and additional work). On the user side, only a few experts have the curiosity, drive and will to further explore the large potential. As a consequence, initially expected benefits can often not be achieved.
How can we improve this and will SOA help or hinder?
Posted by: Urs Fischer | May 12, 2007 at 02:03 AM