This quote reportedly attributed to Leonardo da Vinci actually tells us a lot more about the amount of effort involved in delivering a simple experience to users than we probably realise.
In fact simple interactions, particularly with systems can rapidly become complex in their nature quite simply through variability.
Interestingly we see that complexity can arise even when simple components and simple interactions are combined in various combinations and permutations. We often see this at Winshuttle when we see how a seemingly simple process that one thinks can be easily improved through a form becomes extraordinarily complex when all the variations in process attempt to be incorporated. Automating finance processes in SAP in particular then become more easily attainable with Excel than with a web form.
Run SAP simpler
SAP’s apparent new mantra of making interaction with their leading ERP ‘Simple’ presents an interesting opportunity for Finance professionals to rethink the way that they work with the SAP ERP in the finance context but the question will be whether this simplicity can really be as digestible, effective and appropriate as diverse businesses require.
On face value, financial accounting is nothing more than debits and credits but any finance professional will tell you that the way you present those debits and credits ultimately determines how financial accounts are interpreted and relied upon for current and future decisions. The level of detailing also helps in arriving at more qualified conclusions.
A particular problem with working with the current model of SAP Finance Solutions is performance of the accounting system. Performance is often variable relative to the levels of automation, integration and transaction volumes but the biggest challenge seems to be the way the SAP financial system has been engineered and is used relative to contemporary expectations. Synchronization with a reporting system itself may also take many hours, hours that are particularly precious at period close.
Many companies complain the periodic processing is still heavily dependent on manual processing of certain transactions particularly when systems are not fully unified and while this could be addressed with systematic automation there are many variants in use cases that don’t justify systematic automation because of relatively low value or low volume of transaction volumes.
Those that have been using SAP financials for a good number of years know that the core SAP financial tables (excluding the CO tables) of BSEG and BKPF can contain very large volumes of data and that efforts to try and accelerate the ways in which reports are delivered can be very time consuming and not easy to iterate for accelerated period close. Reports are long running, resource intensive and problematic.
SAP’s promise of SAP Simple Finance suggests that a simple finance document can be returned to in the data processing model without the need to have diversified views of the same data.
Some of the legacy constraints of deficient technologies inherent to recording financial transactions in multiple tables in a relational database have been the reason for this slowness and will now be avoided with Simple Finance.
Simplification with fewer tables
Of course, simplifying the experience for those who use the data comes at a price. There are prerequisites and among these it involves a wholesale rip and replace of the underlying infrastructure like switching to HANA as a database and applying Enhancement Pack7 (Ehp7).
SAP has engineered an application layer that has more technical complexity in order to support an enhanced on-the-fly reporting experience. In order to get to a single version of the truth the ultimate objective for financial accounting is to logically connect FI line items contained in BSEG to the controlling line items in COEP to create single document views.
Focusing on the postings into financial and management accounting in the controlling part of SAP is important because the costs and revenue postings determine the value of individual transactions in any given accounting data recording system. In the past companies would work with just summary information in order to cope with the transaction volumes but you lose some of the advantages of granularity through this approach and detract from good analytics and address some of the data redundancy issues associated with SAP data in the FI-CO modules.
The new approach will harmonize internal and external reporting which should alleviate some of the problems associated with data intensive processing and analytics. While this will not necessarily be interesting to all companies this will accelerate reconciliation and tighten the period close activities for many. Four main tables will be the end result, document headers and line items. What used to be considered tables will now be handled with Core Data Service (CDS) views leveraging HANA. Those who have highly customized financials will need to take careful consideration of this if SAP Simple Finance is on their radar as an objective. Reporting will be faster, particularly for insurance and banking institutions.
If da Vinci’s statement is true then, SAP’s new financials model really will bring sophistication at least for those focused on proper accounting and controlling but it will have achieved it only through an extraordinary amount of re-engineering at the application and platform logic level.
For consultants and developers this new approach will require reeducation and the understanding that they will need to move to account based CO-PA to reap the best advantages of the new design.
SAP and ASUG’s annual love fest is over now though undoubtedly the blogs, press releases and twittersphere will continue to trail with summaries and tweets and of course I do look forward to some of the show floor footage appearing on Youtube.
As with all shows of this nature it seems that the conclusions on success have mixed views from different spheres. As an employee of Winshuttle I was fortunate to be able to attend and participate in some of those conversations with partners, SAP employees and customers.
2014 from my vantage point has to have been the most confusing year imaginable for delegates to SapphireNow. In the past three of four years there has been some confusion but this year seems to have taken the cake.
In prior years we would have conversations with BusinessOne customers and sadly inform them that we had nothing to help them with their challenges in the SAP space.
Those focused purely on enterprise reporting didn’t seem to grasp the nuance between tactical and strategic reporting and so were left with their BOBJ, BI/BW or Crystal Reports stuff.
The Successfactors set had their own set of challenges just getting core ERP to talk to SF in a synchronous, seamless and reliable way without having to make gigantic investments and we didn’t really have much to say to them either.
This year many people came up saying, “we’re running HANA” and we want to see how you can help us with HANA data and Excel.
When you probed them further on this, it seemed they were somewhat committed to using HANA as a platform – but their core back office operational processes were still happening elsewhere, often not even in SAP ERP.
What they were looking for, was a way to feed HANA with data from disparate sources like Excel without having to dive into developing static interfaces for every data source and without having to work with text files .
The elephant in the room
Just as for 2013, 2014 SapphireNow was about HANA and the Cloud and SAP’s big play to be a major Cloud player.
However when you scrape aside all the fluffy marketing stuff, my sense is that at the core the fundamental problems still remain. There is an elephant in the room and marketing and to some extent engineering aren’t sure where to start with dealing with it. How can any SAP ERP customer really leverage this new stuff in a really meaningful way with what they are using?
For many, the central nervous system is core ERP and with the exception of a few newcomers to SAP, this remains an on premise behemoth probably running on a database other than HANA – it seems then that it is almost impossible to shift without a major reinvestment. Such a reinvestment has many aspects including consulting services around data migration, buying new hardware, rejigging application logic and in some instances complete business process reengineering.
What I heard from attendees was that moving from an existing installation to a ‘better one’ that reaps all the benefits of HANA and Fiori with mobility and analytics, they may as well treat their existing SAP installation as a ‘legacy’ system and consider the shift as a full blown SAP implementation project anew.
Getting funding for SAP renewal initiatives, even in a business climate that seems fairly buoyant, strikes me as a hard sell to the board. Particularly since it is likely the board understood that they invested in SAP in the first place to be a scalable flexible platform for years to come.
Feeding the beast
While the declaration is now that new face-paint like Fiori is available at no extra cost to existing application licensed users it seems that for many delegates this was a bit of a “huh?”. In part because there are some critical application and BASIS layer prerequisites and on the other hand, because Fiori doesn’t yet cover all the scenarios that a business might want to beautify or simplify -so frustrations with initial low adoption rates may continue for some time to come, but more importantly, how this relates to everything else may not be very obvious.
For executive management it will certainly hold some appeal but for the backoffice it will likely be as successful (useful) as Personas, ESS, MSS, the NWBC and Portal transactions. The backoffice is data-centric – Fiori and usability approaches are about finessing the user experience to make things intuitive and easy to navigate and use not about feeding the ERP beast.
Fiori is more contemporary, more consumable and more UX-centric but to be a broadly usable reality there needs to be a catch up in the infrastructure space. The real question will be whether new revenue generating or cost reducing initiatives will be viewed as more valuable investment forums for IT spend than an investment in making SAP more accessible and consumable to business leaders.
All Your Base Are Belong to Us
The SAP portfolio of product offerings in 2014 is substantial but the problem is that while a lot of ground is covered, not many of the solutions play nicely with one another.
For the red headed step children that form part of the SAP product family, Fiori is not really that interesting – except perhaps for SuccessFactors and some aspects of the analytics space (alternative ways to access BI/BW/BOBJ data) though this will undoubtedly all change in the future – this seems in part due to the continued poor integration and unification of the disparate technologies.
Given all the other mobility offerings out there it is difficult to understand which ones will be retained and developed, continue to be supported, or killed off altogether by SAP.
With so many different kinds of customers with different interests in the fold, so to speak, SAP has become the IBM of the new millennium with a burgeoning portfolio of disparate offerings that cover a broad swathe of industry segments and functionality - a portfolio of solutions that is even larger when seen with funding by SAP Ventures.
John Appleby actually gave a pretty good summary of the current play in his assessment of the implications of CTO Vishal Sikka’s departure for SAP AG and its focus and innovation on SAP’s SCN in May 2014.
It is hardly surprising then that partners and customers alike struggle to sift through one another’s’ exact position in order to find common ground – I for one know that getting to a mutual understanding of need and solution and clarity in understanding is becoming increasingly difficult.
Traveling abroad brings with it a series of experiences that can be both frustrating and surprising. This weekend past I had the opportunity to visit one of the lands of the Vikings, Norway. Although I only stayed in Oslo I did have the opportunity to travel on the three principal local public transport systems, buses, trams and the metro.
Just as in other large metropolitan cities the Ruter # as it is known coordinates, orders and markets public transport in Oslo and Akershus. All services are performed by various operating companies that work by contract for Ruter and by NSB with local trains – all within the same ticket and price system.
This consistency in the ticket and price system is great! From an end user experience perspective it works for the most part but for out-of-towners there can be some challenges. The first of these is that the buses come in a variety of colours. Red and neon green and bicolored red and yellow ones. The red ones are local buses, criss-crossing Oslo and providing links to all areas not served by one of the other forms of transport.
The green buses are regional buses, travelling further afield and generally starting/finishing from Oslo bus terminal. An important distinction to note is on the green regional buses you must enter at the front and show your ticket, stating if you will be travelling further than the city limits.
On the red local buses you can enter using any door and need only scan your ticket if you need to validate your period pass or pay for a single journey. So here we hit the first inconsistency. If you don’t know this, you could have an embarrassing time.
Like many of the transit systems these days, the Ruter has upgraded from the old paper ticket to the impulskort which contains an RFID loop. Tagging cards is cheap enough these days that this is the best way to provide you with a semi-durable ticket. Another issue that arises with the impulskort is that on some buses the LCD display houses the reader and on others the reader is housed in a scanning pad.
For those not familiar with both technology environments this too can be embarrassing or downright awkward and can compound delays on getting on the bus.
Much has already been said in the past regarding the UI issues associated with working ERP’s and a new generation of applications is being churned out in the form of FIORI applications that essentially enable business users to leverage the same functionality on a mobile device or in a browser that historically has been largely only available via the SAP GUI, the NWBC or the SAP Portal.
This is mostly telling us that legacy methods are acknowledged as less than ideal and there is an expectation that something fresher and more contemporary should be available for use and here’s where the rub sets in.
This is not to say that those old paper tickets didn’t get the job done, just that they were vulnerable to forgery and inappropriate reuse, inflexible and not very useful for statistical reporting. In many respects these same deficiencies in old paper tickets are the same for modern day systems.
We want more control, more flexibility and better reporting however the way that we make all of those mechanisms possible and the way we facilitate those functions must still be inherently usable.
This is a balance that is not easy to find – I refer to the overly complex solutions as solutions that get you stuck in a deadwood forest. If you fail to address the concerns of an aging UI though, you land in a wasteland like ‘death valley’ where systems don’t keep up with the complexity and demands of business and processes.
There is a clear path, a clear path for automation in the absence of UI redesign, not necessarily one that is always obvious – a path that requires understanding the dimensions and maturity of people, process and technology but also the context in which your business processes function.
For finance operations using SAP this means leveraging that tenured or immature skillset of the people along with the most commonly used tools like workflow and Microsoft Excel and Web forms. Products like those from Winshuttle can support you in this. Most particularly it means endorsing the position that your SAP ERP is your system of record – a hungry and demanding system with high expectations in terms of data inputs.
Much has been made of the expectations of the millennial workforce and of course they will be the knowledge workers of tomorrow – they will expect better systems than those of the past and they will want high performance, a slick UI and useful and responsive reporting. This can only be achieved by re-architecting the user experience and undoubtedly FIORI is on that path.
In parallel we have to think of all the other aspects of working with systems, the need to move away from manual data entry and closer to integrated systems. This is a hard expectation to meet when there’s a counter-pull suggesting that best-in-class solutions are more effective and less costly.
In the evaluation of an approach to finding the clear path you need to have vision and an idea of the lie of land as it is today but you also have to have some degree of faith that there is no single solution that likely fits all needs.
Challenge your assumptions regarding the solutions that you think are most appropriate, see what your competitors and peers are doing and don’t be shy to take on something new especially if it is low risk.
I just returned from the SAP Insider Financials 2014 in Orlando and apart from attending a number of SAP customers speaking sessions I also attended several sessions conducted by SAP. Part of the agenda for these sessions was to encourage SAP customers to evaluate the NewGL.
I had previously taken a look at Johannes Le Roux’s slideshare deck on Migration to the New GL and noticed on slide 16 that he described that the Migration to the New GL would have reporting gaps that could be addressed by Excel based reporting tools like E-Server and Spreadsheet server.
I guess in my mind the question was, is that a practical way to address the reporting challenge and should companies consider converting historical data or is that seen as impractical and risky? Additionally, what are businesses really trying to report?
In a follow on dialog with Le Roux he indicated that history migration is not an option so you will need some type of database to do comparison reporting – BW, HANA etc. He felt unsure that Microsoft Excel would work unless you download all the history and current data to a central server datamart.
I also know that in discussions with Winshuttlecustomers, a good number have already made the move to NewGL but a great many are also still using Classic and have no upcoming plans to switch for this and other reasons.
That said, a lot of the impetus behind evaluating the NewGL is being driven around the convergence of accounting standards, in particular the adoption of IFRS over GAAP or local GAAP or in parallel.
The push to the NewGL
The adoption of IFRS requires impacted enterprises to report under IFRS and local Generally Accepted Accounting Principles (GAAP) in parallel for a period of at least one year before the final change-over date.
This requires multi-GAAP accounting and reporting capabilities in the finance systems which can be a challenge with Classic GL.
Embedding IFRS changes into the ERP is the preferred option in the long term and there are alternative approaches that involve managing IFRS changes outside the ERP system but these would often be considered less acceptable from an audit standpoint.
An alternative to changing the SAP system and adopting the NEW-GL is to post local GAAP adjustment to an IFRS configured system. This approach helps adoption by making top side adjustments and is potentially cheaper and faster to implement than the other two possible options for SAP systems as no software upgrade is required.
The problem with this approach would be the impact on the GL close process timing. There is extensive manual compilation outside the SAP application to determine journal entries. There would be a need for controls to pass audits and customization of the SAP system in order to create and feed data at an appropriately accurate and granular level. This is one of the reasons that external reconciliation and period-close solutions like Trintech and Blackline are so popular.
This approach further entails a high cost in sustainment of reporting and reconciliation – so, retaining Classic GL is quick to implement but difficult to sustain in the long term as it is mostly manual and impacts close processes and reconciliations.
From 2005 onwards, consolidated financial statements of listed European companies have had to comply with IFRS (IAS). Many German companies began adopting those standards in the 1990s, on a voluntary basis, because of their need to access international capital funding. Spanish companies, by contrast, are not permitted to adopt IFRS before 2005. So for some companies at least, the matter is a moot point but for the remainder, plans will need to be put in place to get ready for a move at a fiscal year end.
What’s in a name?
The NewGL is also known as FlexGL, New-GL and Flex-GL. The official name of the parallel Lodger is the SAP General Ledger and it enables combining Classic, Profit Center and Special Purpose Ledgers into a new environment.
Several sessions at the Financials show specifically targeted conversations around the NewGL but also made mention of the up and coming Smart Accounting that is to be offered with HANA.
On HANA the new accounting model will be referred to as Smart Accounting or Smart Financials though the final descriptor is not yet set. On HANA the promise is lightning fast continuous reconciliation.
You can read more on this by checking out this supplementary content:
A few events this week triggered some thoughts about where HANA and in-memory computing should be considered in the context of your overall SAP ERP landscape.
As many will know, SAP is officially positioning itself as a premier cloud provider and this is achieved in a number of ways both through the cloud based product offerings that include Ariba, SAP Business By Design (BYD) , HANA in the cloud, SuccessFactors and other products in the SAP cloud portfolio.
SAP AG’s CEO, Jim Hagemann Snabe, spoke at Credit Suisse’s 2013 Annual Technology Conference this week and claimed that the cloud makes SAP more agile and able to compete with small companies and startups. This is not to say that SAP turns its back on on premise enterprise customers, they will always exist. Rather that SAP sees the cloud as offering 100% recurring revenue as opposed to what they refer to as the “traditional business model” which yields only 22% recurring revenue. For SAP ‘the Cloud’ is therefore a big roll of the dice but also, where SAP sees the biggest opportunities.
Surprisingly, at Winshuttle we see new installations of SAP continue to pop up on the radar. This is surprising, because best of breed software vendors try constantly to convince the market that ERP is dead, so those claims continue to be undermined by business decisions. Perhaps more surprising is the fact that these new adopters of ERP run the full gamut of sizes of organizations and industries.
For these new adopters of SAP it makes sense to go straight to HANA as the platform and possibly even ERP on the cloud. HANA as the underlying database makes sense principally because SAP and SAP BASIS administrators have always hated Oracle, SQLServer and other database administrators playing around with the underlying database at the RDBMS level. The preferred way to administer the database has always been through the BASIS layer.
With SAP having engineered and essentially ‘owning’ the database component, everything now falls to BASIS administration and Operating System administrators with the DBA being essentially being made redundant. So if you’re implementing SAP for the first time, HANA is likely to be your first choice for database platform. A difficult position to dispute when big guns like Gartner even position SAP as a Market Leader in Operational Database Management Systems.
Perhaps more significant is also the fact that HANA itself doesn’t require SAP’s ERP to be present, to be useful. Many of SAP’s stories old and new, for HANA revolve around applicability even in the absence of ERP – particularly data coming from things like SCADA systems and potentially the ‘internet of things’ apart from traditional business transactional data commonly found in ERP.
SAP is making big noise about big data and the pertinence of HANA and the SAP analytics tools that can be connected to HANA. So much so, that there is a great deal of thought leadership being driven out of SAP by folks like David Ginsberg – SAP’s Chief Data Scientist and Shekhar Iyer, Global VP of Business Intelligence and Predictive Analytics – who not only promote HANA but also SAP analytics services and the emergent role of the Data Scientist. One of the biggest areas of special interest in this space is predictive analytics.
While the legacy on premise customers contemplate where HANA fits into their technology mix, I’d encourage them to give serious consideration to the fact that HANA is accessible in several different ways both as SaaS and on premise as an appliance and theoretically on generic hardware. As Eby-Brown so eloquently described in their ‘Journey with HANA’ webinar this week, they got to demonstrate that certain ERP processes could be executed faster on HANA but more importantly, that they could execute some functions that previously had been impossible due to the nature of their data. SAP even offers an Amazon cloud instance that can be ‘played with’ to test.
So, for those still skeptical about the relevance, consider loading data from well, pretty much any system that has large tracts of data and from that, determine whether HANA isn’t perhaps a better performing alternative to your existing BI/BW or DataMart environment. It is hard to argue against the potential when market leaders like SAS have officially bought into HANA as being a credible alternative platform for the data repository.
If my crystal ball skills are any good, 2014 will see more migrations and implementations of HANA and furthermore more evaluation of HANA for the predictive analytics modeling aspect of business intelligence particularly as a Database as a Service (DBaaS) thereby minimizing business’ need to stand up new on premise infrastructure to support fast large scale analytics. The fundamental question is going to be whether it is practically possible to populate these cloud based databases with the piles of data that business to date, have hosted in-house.
Roughly a year ago I commented on the fact that ERP solutions run the risk of being implemented and run in relative isolation to the larger requirements of the business – I described ERP as being an island – it is a phenomenon that continues even with new implementations today.The causes are numerous, from costs of integration to flaws in the implementation methodology and overall philosophy – probably the worst is when the ERP implementation is considered an IT project.
As a consequence, folks like the sales team, engineering and yes even accounting, land up investing in supplementary technologies that help them simply get their jobs done. It could be argued that if you look at offerings from companies like SalesForce.com, IBM’s Maximo, WorkForce.com and others, the only reason that they exist is that the core ERP system either lacks functionality or usability.
SAP doesn’t work the way I need it to
Arguing that SAP lacks functionality is a hard one to swallow by virtue of the fact that SAP has such a large customer base and in such a dizzying array of industry segments. However it would be true to say that it lacks certain ways of working that are perhaps more attuned to the way that salespeople, maintenance engineers and human resources specialists would like to work. Any organization that has committed to ERP has to maximize the value that ERP potentially represents. This means you may have to consider spending more money on more things…
In my organization – Winshuttle- we have similar challenges. We have an accounting system which integrates with our customer sales system and for a while we used the service aspect of this system but to use it more effectively we found that customization was an inevitable activity that we would have to undertake.
In an ideal world with deep pockets and unconstrained time-lines we would likely always choose best in class to achieve our objectives but since that cannot be our reality we have to pragmatically look to what we can afford. Microsoft Excel gets many organizations through some significant hurdles around operational efficiency without making too many compromises in efficiency.
Excel and SAP don’t really play nicely together
The problem is that natively, SAP and Excel don’t really play nicely together and if they do, it isn’t a consistent experience.
In every organization that I have worked, Excel continued to be the mainstay that business users defaulted to when they needed to collate, track or present certain kinds of monetary or statistical information. Even in the marketing organization, loading up leads from trade events usually comes through via a workbook or spreadsheet. Excel is ubiquitous – trying to deny the relevance of Excel or pretending that you can live without it or something like it, is a fool’s errand and trying to eliminate use of it is pointless if you are not offering meaningful and appropriate alternatives.
MS Office is a PET
Microsoft office itself is a PET, after-all it allows you to create documents in a relatively consistent format, without having to suffer the need to rely on the clatter of typewriter iron with sheaves of crisp white cartridge and shimmering carbon paper. Indeed MS Office is even pitched as well aligned with six sigma and you can learn how to align your MS Office utilization with this operational improvement and effectiveness philosophy in mind. For some amusing anecdotes, tips and comments on MS Office and using it efficiently and effectively take a read of Annik Stahl, the Crabby Office Lady columnist’s 10 years worth of posts.
Business intelligence tools like BI Excellence come with an integrated ability to export to Microsoft Excel and there is an increasing number of other business intelligence technologies on offer in the market that support loading data into your core system of record from formats that avoid the need to use the traditional transaction entry screens or developing costly application interfaces – things like FIORI and SAP Screen Personas. The way you allow users to use Microsoft Office in the workplace together with your ERP is the most important thing. Managing risk, ensuring compliance and streamlining operational use.
If you had any doubts about the usability and optimized effective use of your ERP system today, be aware that all is not lost. You do have the opportunity to improve things, all that you need to remember is that despite spending hundreds of thousands or even millions of dollars on its implementation – there are still some missing components in the landscape. The components that you are missing primarily focus on making people, not technology, more efficient when working with ERP.
When these behemoths like SAP were originally conceived, the technology was expensive and people were relatively cheap – today that is not as true and out-of-the-box efficiency tools don’t generally come bundled with the solution – you have to invest in them. If you don’t invest in PETs you will be investing in customization.
Probably the most significant comment that you will hear, will be the commentary that the producst are a mish-mash of technologies without any specific cohesiveness and without a particularly consistent set of underlying technologies or a consistent user experience. In some respects that is true but in other respects that is quite untrue. Consider an early post made on SCN back in 2004 by Karin Schattka in which she plausibly demonstrated the apparent mish-mash of technologies even in use at that time, being credibly rendered either in the NetWeaver Portal or subsequently in the NWBC.
Of particular importance would probably be the fact that the portfolio of acquired technologies has the most acute differences of all the products in the SAP portfolio but even that is only a half truth – many have ABAP as a core underpinning technology or at least connect with ABAP systems using conventional methods or PI/XI interfaces and now even Gateway can be used. The real challenges is that different user needs need to be serviced by different technologies and approaches and innovation doesn’t have to be purely homed in the world of ABAP. For hard core ABAP developers that is preferable, and from an operations perspective, avoiding an army of disparate skillsets is good for keeping the IT headcount numbers down. But it seems SAP has a plan for changing and improving all that.
One could easily critique the differences between ERP, CRM, APO and SRM but at least at their core they have some fundamental design aspects that still remain somewhat aligned with the original concept of the R/3 Business Suite and the subsequent versions but products like B1 for the SMB market, Ariba, SuccessFactors, ByDesign, MDM, StreamWorks, Syclo, Sybase and the BusinessObjects BI portfolio are so wildly different from the original concept that one wonders at why they were ever acquired to be part of the total portfolio offering.
5 Core focus Areas
Just as an industrial giant like BMW manufacturer could produce, motorcycles, automobiles, pick up trucks, good trucks, buses and aeroplane engines, so too, a software company can have a portfolio of products that are not necessarily all fully integrated and not necessarily all complementary – some products will be built for specific segments without synergies with others. Having a spread of technologies moves that business closer to being a one stop shop for all technologies that a business given might need.
SAP today very clearly goes after five areas, the classic Business Applications, Databases and pure technology solutions, Analytics, the Cloud and Mobile.
All areas overlap in some respects but for newcomers to the vendor the main draw is often the business applications for which SAP is the most renowned. Of late much has been made in the press of the in-memory computing option of SAP HANA as an alternative database to contenders like the Oracle and Microsoft SQLServer RDBMS but in the less publicized circles of Human Capital Management and Human Resources, SAP made big waves with the acquisition of SuccessFactors.
My recent visit to Budapest to the Deloitte Shared Services Conference courtesy of Winshuttle involved a number of conversations with leaders in the HCM space for multinationals and when questioned on whether they had SuccessFactors in play or were planning to implement, many of the responses were a ‘no’ and a ‘we’re going to wait and see’ – when I probed them further it seems that the integration aspects were still the area that they were the most uncertain about. In-Memory computing didn’t come up though it is probably in there somewhere. Consider why, and you’ll understand, that business users, who were the primary attendees at the conference, don’t care about the underlying machinery, they care about the comfort of the ride.
Those that had implemented SAP’s Business Applications HR modules for example didn’t see any changes coming that would be of particular concern and of course those who had implemented the original version of SAP’s performance management module were generally unimpressed but the SuccessFactors acquisition presented a whole raft of new opportunities that were constantly under consideration but not yet decided upon, there was no compelling event as yet that was forcing their hand. Does that mean that they’re holding back on SAP investment? Quite the contrary, they’re exploring additional avenues that may or may not involve expanding existing uses or adoption of different SAP products.
In selecting any technology it seems that enterprises look at a number of variables among them:
- The business need
- What the market is offering
- The reputation of the vendor
- The cohesiveness of the vendor’s product portfolio
- What peers are doing
Although the last point is often claimed to be a non-criteria, we know from past experience that demonstrating that a competitor or seeing our competitors with a particular technology spawns envy and as a consequence observing and identifying what peers and competitors are doing and investing in, is part of the evaluation criteria. Many companies it seems, are seriously looking at HANA as an under-pinning technology so that they can run their systems cheaper, deal with one vendor (choke one throat) and improve ERP and analytics performance, if its on the cloud, great, but in all likelihood a hybrid approach of mixed cloud and on premise technologies will do.
The first three variables in the list speak for themselves and of course SAP has a strong brand and reputation In the market but the cohesiveness is where things seems to unravel a little. Analyst Elizabeth Hedstrom Henlin of TBR wrote some time back that “SAP is in a strong position across core and new addressable markets.” The portfolio address diverse customer needs and are backed by some proof points in support of integration. Henlin also said she see SAP’s mobile division as being the heart of SAP’s growth to date, with the acquisitions of Syclo and Sybase serving as the core of an applications-led, horizontal approach to mobility that touches and integrates SAP’s diverse portfolio and go-to-market strategy. So back then, in 2012 at least, it seems mobile was the flavor of the day – logically that won’t have changed, even if you change core underlying technology like the database, even if you push infrastructure to the cloud, even if you add analytics… you need a user experience and in all likelihood, mobile needs to be part of that, so there is some clear logic to having a mobility offering that works seamlessly with all of the others.
Herding the developer cats – Vishal Sikka is the man !
As recently as July again Henlin stated that SAP’s alignment of development entirely under Vishal Sikka brought the promise of increased speed within the expansion and strategic growth of the product portfolio and ongoing restructuring of SAP’s product teams to integrate on- and off-premises resources was the critical asset for SAP to sustain growth into 2014. So what did that all mean? Consolidation?
Just like every technology company, SAP’s engineering teams suffer from that bipolarity associated with wanting to work on the cool stuff but also needing to fix and maintain old stuff. The latter is the uncool but necessary stuff but this doesn’t appear to be part of Sikka’s portfolio right now. It is important to mention sustainment though, after-all the maintenance revenue stream that pays for the fixing of old stuff and that is a large chunk of change in SAP’s annual coffer collections.
Sikka’s realigning of SAP’s R&D functions are likely all focused on the new hip stuff, but there’s a need for oversight on the sustainment too, so in all likelihood there’s an element of dominion in his role there too.
Let’s look at another couple of pups in the litter.
When we then look at Enrico Camerinelli’s comments on Ariba this seems to align with the above but he does suggest that SAP’s acquisition of Ariba was purely about driving existing shareholder value. Ariba’s pre acquisition shareholders enjoyed a one-off premium of nearly 20% over the company’s share value when the company was acquired by SAP and SAP secured a specialized and highly populated B2B network into which it was able to expand its market reach. He feels then, that there isn’t really a commitment to facilitating any kind of integrated B2B financial supply chain and his comments are based on SAP’s inability to articulate a clear strategy on how it intends to leverage the Ariba acquisition for financial services.
HANA on the other hand continues to be where the big focus will continue to be and the remaining products in the portfolio will be offered but given less consideration in the media and show-and-tells; Greg Chase commented this week how more than a third of the offerings, a stunning 263 items at the upcoming SAP Teched Las Vegas in the US are HANA related – a big focus on Analytics, Big Data and In-Memory Computing. Only 5 mention Ariba and 23 SuccessFactors.
KXEN doesn’t feature at all but this is hardly suprising given that the acquisition is only recent news. KXEN technology at least has pertinence in the analytics, bigdata and HANA play.
With SAP’s portfolio continuing to grow one can only wonder at the spectacles that Sikka will be able to pull out of the proverbial magician’s hat as he continues to remould R&D at SAP, perhaps these puppies aren’t as ugly as you think and what we have is the establishment of a hunting pack positioning itself for presenting businesses with a new perspective on how business can buy and use SAP and enterprise technology to be successful.
Apart from the large presence of Deloitte consultants and partners, there were of course many companies represented and many of them spoke about the ways in which their individual businesses were transforming their business operations through the use of Shared Services models, Business Process Outsourcing or the implementation of the concept of Global Business Services.
I had a chance to have a number of conversations with company representatives and consultants alike but I also had the chance to talk to a couple of vendors and representatives of development agencies and discovered some interesting facts that I thought I would share.
The top of my mind was the revelation from MIDAS that the greater Manchester area is home to more than 7 million people within in an hour’s commute and over 30 shared service centres are located in the area, among them Aegis, Sodexo, RBS, BUPA and Worldpay.
SAP customers located in the area include Northern Rail, Smith & Nephew, Kellogg Company , HJ Heinz, AstraZeneca, Premier Foods, Japan Tobacco and of course Sodexo as well as a number of consulting groups.
Another important conversation that I had was with a couple of the vendors supporting SAP Finance groups focused on the Record-To-Report process with a particular concern with accelerating the period close, improving it and accelerating it. Verifying the accuracy of the financial close process and ensuring the integrity of financial statements are two important corporate challenges and they are best addressed with automation as an aid.
I have long been an advocate of trying to encourage organizations to automate as much of the finance process as possible. Of course in mature organizations that are heavily regulated or have a great deal of external accountability there is often a considerable amount of automation either with tight integration via configuration of the SAP modules or through the building of interfaces between various systems.
In the SAP ecosystem several key players provide keenly positioned solutions to business to more effectively close the manual entry gap and among these are Runbook, Chesapeake, Trintech and Blackline all of whom were at the conference. Comparisons between the three of them can be challenging, each brings different strengths that may be important to different organizations with different levels of finance automation maturity.
Trintech for example offers an integrated solution beginning at the reconciliations, continuing through the close, risk management, compliance, and financial reporting with flexibility for current practices, including configurable templates, workflow, and task management. There is some degree of standard and ad hoc reporting capability also. In the financial governance software market, the competitive landscape varies by product line. There is no competitor that Trintech compete with across all product lines although primarily they compete with Chesapeake Systems, BlackLine Systems for Reconciliations, Paisley Consulting and Open Pages in the Sarbanes-Oxley compliance market and MedAssets in the healthcare market.
Blackline is a well established SAP Partner and runs with the tagline ‘No More Bullsheet’ it positions itself with the basic premise that you shouldn’t be using spreadsheets as part of your reconciliation and close process. Their subscription based offering provides workflow, reconciliation review and approval, task lists used for both close and preparation and delivery of schedules to stakeholders like auditors who can download the analyses directly through their own account on the system, as well as other functions.
Runbook provides workflow to try and minimize the dependence on spreadsheets, emails and phone calls, arguing that the use of mixed tools to close the period make your financial close more frustrating and more expensive than it actually should be. Leading with SMARTClose for reconciliation it is described as flexible, intuitive and powerful in that it allows businesses to take their existing process and apply best practices and reusable templates to transform their close process.
Chesapeake System Solutions offers T-Recs for easing the financial close process by way of a rule-driven solution, similar in some respects to the other offerings.T-Recs claims to be able to reconcile any account based on customer-identified definitions of data characteristics, business processes, and data display templates.
Not all have strengths in all geographies and accordingly have different market stories. Pretty much all of them have a smattering of customers in the FTSE 1000 and NYSE 1000, however unlike vendors in the OCR and scanning solutions space, the principal positioning of these companies is try to cut down on umnanaged objects in the reconciliation process.
There have been many cries over the years to get business to move away from Excel and yet it remains the dominant product of choice for the majority of bookkeepers and accountants. Despite its many weaknesses, it remains the most flexible choice especially for businesses that are not shy abouit spending yet more on their SAP environment or cannot justify expenditure on additional products with very specific functionality. So Excel often becomes the default ‘only choice’.
The issue revolves largely around unmanaged spreadsheets and building and using good spreadsheet designs. Proper consideration given to a well design spreadsheet with good, robust integration with the backend ERP system and a governance wrapper can effectively achieve the same objectives.
As one Finance expert on Linkedin wrote, Accountants are like rock candy : “The bottom line is that if you cut an accountant in half, they have EXCEL written through the middle. That has remained a constant for years, and is unlikely to change, so maybe the focus should be on how tho build great spreadsheets, rather than killing Excel…”
So my thoughts return again to my sponsors at the event and the fact that for more than ten years now, Winshuttlehas been advocating Excel as the environment that much of businesses continue to rely on.
It is something that is unlikely to go away any time soon, and something, that even with the implementation of one or more of the technology solutions described above, will continue to be in active use. Leveraging robust ECM solutions like SharePoint together with SAP give you the best of both worlds. The tight integration of Excel and SharePoint give you heaps of additional meta data that enable you to leverage the sourcing documents natively. Something that you often lose when using an island system like a pure reconciliation solution. Yes, the latter may be best of breed or best in class, but does it actually offer you flexibility to address what you consider to be uniquely differentiating aspects of your business? Don’t automatically assume that Excel is bad, bad, bad, it has its place and you can make it more robust and dependable.
The trick, as with anything, is getting the balance right, between appropriate and proper use of tools to automate and smooth operational processes.
The launch of Fiori and Screen Personas by SAP represent an interesting commentary on how customers use SAP and how SAP is actively pursuing initiatives to improve the user experience. For many years SAP has been a much maligned product from a user experience perspective. This is hardly a surprise given the complexity and functionality that the leading ERP product affords a dizzying array of industry segments. Fiori and Screen Personas could be easily thought of as alternatives to one another but in reality they tackle different aspects of accessibility and usability. It is easy to consider this as “lipstick on the proverbial pig” but when you consider the strategy and the actual application, the products actually provide much more.
A prerequisite for Fiori is the presence of the Netweaver Gateway. The applications are priced per user for the bundle with some prerequisite licensing requirements.
Screen Personas tackle a different problem, namely the complexity of the existing SAP UI. Here, a number of different third party products, custom development and customization have developed over the years to simplify the overall user experience of core SAP functionality. Products like GUIXT on the SAP GUI client and Winshuttle for Microsoft Excel made large inroads in reducing the number of fields that a user needed to touch in order to complete a transaction in SAP however with Screen Personas the approach enables the implementation of group and user specific focused user-experience management in a centralized way that leverages existing organizational and security models in SAP.
SAP positions Sscreen Personas as “Personalization without Programming”. Using a simple drag and drop approach to screen design, users can modify many common SAP GUI screens to make them more usable and visually appealing. Prior to this product being made available, custom development or a third party product would have been the only choice available to simplify the user experience. Users leverage Screen Personas through the internet browser or NWBC. SAP Screen Personas works on most standard SAP GUI Dynpro screens but does not work for WebDynpro applications such as SAP SRM or the SAP CRM Web Client User.
Prerequisites are SAP Innovation Kernel, Release 7.21 and at present only English and German only are supported. Personas is licensed on a per-user basis. Users are defined as anyone that uses a modified screen and licenses. There is no developer license for people that build Personas screens. This is included in the license. Authorizations are handled in the backend and all authorization steps happen the same way whether you use Personas, the SAP WebGUI, or the SAP GUI.
SAP recently announced that it would entertain involvement in its PartnerEdge program from partners who previously had never been involved in the SAP space. This apparent ‘new’ offering through their website differs from other partner programs in the past in that it is promoting very specific capabilities namely “help create and monetize innovative, specific applications in the mobile, cloud, database or high-performance in-memory areas” It is clear from this statement that the targets are Mobile, Cloud and HANA.
While historically a on-premise software technology provider, SAP itself has produced a number of mobile applications for free and for a variety of uses from Business Objects to Order Status Inquiries from ERP. Downloading the applications themselves is probably fairly straightforward but getting them to talk to your back end systems is another matter; you have to navigate the complex world of SAP security authorization, externally facing ERP systems etc.
Against the backdrop of more recent announcements regarding SAP system vulnerabilities it is likely then that newcomers and business adoption levels will likely be low.
The SAP application landscape, like those of many enterprise back office behemoth systems suffer from a kind of innovation stalemate. When the business commits resources to enabling certain functionality then the likelihood of success is higher than if individuals try to create a groundswell of interest in functionality by leveraging peripheral or micro apps like many of these mobile applications to address certain edge case business scenarios.
It will be interesting to see whether opening the proverbial floodgates to innovation partners with little or no prior experience with working with SAP and SAP systems will in fact make a difference. The landscape is complex, the technology quirky and old fashioned in some respects and yet the business dependence on all of these, immense.
The opportunities for those innovators who manage to crack the nut of addressing a real business need cost effectively and at the same time keeping IT and the Auditors at bay will be tremendous.