This week, SAP is taking advantage of a supply chain focused conference sponsored by the SAP Insider publication to unveil the vendor’s new application, SAP Sales and Operations Planning (S&OP) Powered by HANA. Supply Chain Matters had the opportunity to be briefed on this new application in early February, and while the application has some long-term potential, the initial release may have been rushed to market.
This much anticipated application has been in the development pipeline for well over a year, and SAP has not helped its customers to overcome confusion as to SAP support for a company’s S&OP process. Another composite application supporting S&OP was already made available to customers which does not have anything near the potential of the HANA powered application. Customers had to do their homework to figure out what the SAP long-term S&OP support plan may have been.
SAP HANA is marketed as the next wave of in-memory computing technology and represents an information appliance strategy where all key data is readily available on a HANA platform, avoiding the need to tap the SAP Business Suite applications for needed access to supply chain related information. Supply chain IT teams should view HANA applications as an alternative to the classical Business Warehouse (BW) form of storing key planning and decision-support data. Supply Chain Matters has previously shared our belief on the market game changing potential for HANA based applications, but that from the mission critical supply chain and supplier relationship lens, HANA is yet to be tested.
This latest S&OP support application was designed to incorporate analysis of product demand forecasting, consensus demand planning, material and capacity restraints, revenue and profitability analysis, inventory target setting, and other analysis related to support of the S&OP process. The application however does not currently incorporate SAP’s inventory optimization extension application nor does it seem to incorporate inputs from the Response Management Powered by IKON application. On the positive side, the application makes extensive use of dash boarding to visually represent data and also incorporates use of Streamworks for support the social aspect needs of the S&OP process, namely the constant sharing of data.
Supply Chain Matters was unable to secure a demo of the application actually in-use and thus we cannot currently comment on the overall ease-of-use of this application.
This latest S&OP support application had its pilot release in November of 2011 but was targeted to a select group of pilot customers. The go-to-market release occurs this quarter, but again with limited availability to a designated controlled group of customers. The release includes limited use of planned functionality, and no optimization routines, just heuristics. There are also no feeds from SAP Supply Network Collaboration included in this release. Unilever has been identified as a current pilot customer.
Another consideration for evaluation teams is the fact that this application is current only offered as an on-demand SaaS based platform. We believe that this was a purposeful decision by SAP to insure the overall performance of HANA based applications. While many of SAP’s HANA based composite applications released to-date have been much hyped, very little have involved mission critical process support such as S&OP. It remains to be seen whether customers will embrace a public hosted platform or instead require SAP to provide a private cloud option. For its part, SAP is assuring customers that its HANA hosting process will not be multi-tenant and will involve secure lines. To date there is but one hosting center located in the U.S., with another planned later for Europe.
The pricing of this application is still a work-in-progress and will be predicated on subscription based model pegged to the size or scope of the S&OP process. Also unclear is how many different SAP licenses will be required to actually support the application. Supply Chain Matters is of the view that this application could, in the end, be rather expensive.
For all of the observations noted above, we believe that SAP has rushed this application to market, probably to either satisfy internal product management or attract early adoption lighthouse customers to gain experience with the application. Since much of the promising features are a work-in-progress it may behoove SAP supply chain customers to take a wait and see approach to this application or if under time constraints, explore best-of breed S&OP process support options.
Bob Ferrari
©2012 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.
Bob, thanks for reporting on this, and we encourage more folllowup on this topic. We are keenly interested if SAP’s solution ultimately generates interest. It just is so logical- all the finance, marketing, orders, sales and supply chain info are in one system for Leadership reporting. Understandably, needs could vary by industry vertical.
We wonder if SAP’s S&OP solution would add value to our IBP process once we implement SAP worldwide in our company, or whether other existing IBP/S&OP solutions are a better way to go.
Hi Jay,
Thanks for sharing your comments.
The dilemma you describe is a very common one for existing SAP customers. While HANA based applications have the potential to be game-changing, it appears that more work is required. Other considerations certainly include applicability to certain industry process needs, which can only be gained by additional customer implementations and use. That is especially pertinent to the pharmaceutical industry.
That stated, each company will have to make their own determination in terms of timing and cost considerations.
We at Supply Chain Matters will continue to ping SAP for more data points and customer references.
Bob Ferrari
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