SAP Watch

Jul 8 2009   12:52PM GMT

Is there innovation in SAP’s SCM software strategy?

CourtneyBjorlin Courtney Bjorlin Profile: CourtneyBjorlin

“SAP’s Supply Chain Management Strategy and Offerings,” the topic of a recent report by Gartner Research’s Andrew White, brought to mind a question that was batted around the blogosphere last month.

Can the big vendors drive software innovation?

For its part, SAP has a strong supply chain management vision, White said. Partnering with supply chain management vendors like i2 early on and jumping on the RFID trend have proved beneficial.

Plus, SAP sells some innovative, out-of-the-box supply chain management products, White said. Take, for instance, SAP’s supply network collaboration software. It’s completely independent of the ERP backbone — it has its own database. It grew out of procurement capabilities and acts as a hub for manufacturers to communicate better with suppliers. Customers are using it to better coordinate sales, supply and even to integrate different ERP systems.

But for a company that bleeds supply chain management, can SAP’s software really be considered innovative?

“SAP has provided some innovation in places. Customers are working closely with SAP to bring that to market,” White said. “But the reality is, look at the entire suite, because there are different levels of maturity and adoption. It’s not going to be out-of-the-box.”

When it comes to SAP’s supply chain management, supply chain complexity and process innovation isn’t universally supported across the suite, White said. Best-of-breed vendors continue to tackle important areas SAP hasn’t touched. One such area is business-to-business.  E2Open, Ariba and Wesupply are a few of the vendors making marks here.

“That’s the next phase of supply chain, as more and more apps go outside of the firewall,” White said.

It’s those best-of-breed vendors that will continue to drive innovation, argues AMR’s enterprise applications guru Bruce Richardson, who sparked one of the innovation debates in his First Thing Monday blog. He said:

“Call me cynical, but I believe today’s large vendors are more interested in commoditization than innovation. Ideally, they want to be able to sell a generic version that will appeal to customers across dozens of verticals, hundreds of countries, and tens of thousands of customers. For them, true breakthrough innovation doesn’t scale.”

“The real software innovation will continue to come from smaller vendors. And they will continue to be attractive acquisition targets for the Goliaths.”

Can SAP drive innovation in its supply chain management software? Or is the SCM market ripe for ERP-like consolidation?

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