SAP conducted its annual Sapphire NOW users conference in the U.S. and utilized this customer forum to once again communicate significant changes and implications concerning future direction. The prime theme that SAP management delivered to customers was the SAP Run Simple message, which for many day-to-day users of SAP, is a message that is received with some cynicism. None the less, the implications are rather profound and real. Supply Chain Matters penned a prior commentary regarding the implications of SAP’s new strategies focused on integrated business planning that has since received significant reader and social media activity.
Among the keynotes delivered at Sapphire was the often anticipated talk by Hasso Plattner, one of the original founders of the company and existing Chairperson of the company’s Supervisory Board. While Hasso’s annual talks to SAP customers tend to sometimes be academic and lengthy, they often contain candor and important insights regarding SAP direction or missteps in the market. This year was no exception.
One of the most significant messages delivered by Hasso was that enterprise software running on-premise is going to the cloud, no matter what. That is why SAP’s new strategic emphasis is now all about reengineering for “the cloud.” The message from Hasso was that it is no longer a matter of if but rather a matter of time. That alone is a significant message coming from SAP’s founder and most influential investor. He further indicated that four years ago, SAP leadership was initially very apprehensive regarding the challenge to change 400 million lines of code within its ERP backbone system, but has now come to the conclusion that it would have no choice but to do so. Software that was designed many years ago under different assumptions related to business processes and existing technology at the time, now has to better match the realities of today’s new business and technology paradigms. Hasso’s drumbeat message remains: “simplicity beats complexity”.
A very significant implication of SAP’s ongoing re-engineering towards leveraging HANA and the cloud is the goal to eliminate “aggregates” within its internal system’s functions. Aggregates are when the system calculates for instance, gross margin, income statements or a supply chain planning optimization. Long-time SAP APO user teams can best relate to this concept by considering APO’s in-memory or former “live cache” design concept, where all planning related transactional and master data is drawn into the planning engine to formulate optimized supply chain plans.
Instead, the new HANA based cloud or on-premise technology will store all of SAP transactional data in memory (column-store) and will respond to information needs and reporting requirements by assembling models and algorithms on top of transactional data. The implication is a system with a far smaller footprint that users will eventually have the infinite freedom to re-arrange information hierarchy’s on-the-fly in a matter of a few seconds. By Hasso’s description, that opens opportunities for the system to perform all functions via models and algorithms and the ability to perform more predictive and simulation based analysis capabilities based on system-wide data.
Other significant implications will be the even more critical importance to accurate master data, internal skills in modeling and simulation of supply chain related data and the ability of supply chain planning and fulfillment teams to perform multitudes of what-if or target supply chain goal fulfillment analysis.
Of course, this broad and sweeping scope of SAP focused change is going to take additional time, perhaps years in scope. There will be critical decisions that customers will need to make over that time period. At Sapphire, SAP further communicated its increased dependence on select key partners to assist both SAP and its existing customers to more quickly and successfully navigate this ongoing and significant transition.
Existing SAP customers need to seriously think about the implications of this shift in technology direction, especially as it relates to supporting today’s and tomorrow’s broader and more complex supply chain management needs. While complexity and frustration may rule today’s mindsets, start seriously thinking about what these new changes imply for integrated supply chain and business planning support needs under the SAP HANA enabled banner. Such changes involve a changing mindset, new and different skill needs as well as a reliance on a trusted external consulting and support partner.
It is no secret that SAP APO, while designed as a bullet-proof supply chain planning system built around SAP master and transactional data, is somewhat difficult and inflexible in its ability to provide a means to support rapidly changing supply chain business processes or to support a new data paradigm where the majority of supply chain related data exists in an external demand or supply network. In a prior Supply Chain Matters posting, we noted that the structural design rigor and tight internal system linkages has led to many work arounds, including spreadsheets and supplemental systems. In many cases, the full potential of supply chain optimization, such as optimized supply planning is avoided because of the complexity and lack of understanding of innards of SAP APO. However, those teams that have taken the dedicated time and patience to learn and understand such innards with supplemental tools have managed to leverage APO functionality and subsequent benefits.
As noted in prior commentaries, as SAP continues to build out its described muscle platform, organizations need to focus efforts on the further mastering of broad-based supply chain planning and fulfillment process modeling, optimization, simulation and master data management capabilities. There are available tools and knowledgeable partners who can help you to re-focus your current efforts and direction and better respond to line of business needs, customer fulfillment or product management requirements, while helping to facilitate the skills and new capabilities roadmap that prepares for what will come in the new world of SAP.
Key SAP strategic partners such as Intrigo Systems, are not only focused on SAP APO, but the broader SAP Supply Chain Management, both today, and in the realities of the SAP HANA enabled environment. The Intrigo Systems Optek tool suite consists of modules that have been designed to place the planner more in control of the process while making SAP APO functionally more effective today, and in the future capabilities of SAP Supply Chain Management.
Bob Ferrari
© 2014 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.
Disclosure; Intrigo Systems is a current client of the Ferrari Consulting and Research Group.
Hi Bob,
I have been a SAP SCM-APO Consultant for 14 Years (2000-2013) and
SAP ERP for 17 years and have experienced the “Innards” of APO.
I am also Trained 400+ in my Life on APO over 2 week hands-on
courses in the areas of Advanced Demand and Supply Planning,
Production Planning and Global ATP. Apologize for the long reply,
but hope you read it anyway. Here are 7 reasons to what
I think has made APO complex and hard and I don’t see it
becoming simpler by using ‘Lite’ SCM tools …
1. APO is very tightly integrated with the SAP ERP (ECC) by design
and correctly so. But to know the innards of APO, often you first
have to be ERP experienced (PP, SD) to become aware of the
shortfalls of Planning tool in SAP ERP for Business to implement
the advanced Planning tools in APO well.
(I realize even APO has shortfalls – but the master data for just
this itself is quite complex, and also needed).
To become a APO Consultant means first having Domain Experience,
then a SAP ERP consultant in any 1 module and then comes APO and
just by ‘elapsed time’ this True APO Consultant experience comes
later in Life of a Consultant after many years in Domain and then
SAP. Due to this the Availability of Consultants/Resources
available in the world itself are very very small despite the
population and often even they know APO in 2 Modules,
but APO has more than 7 itself with Spare Parts … etc. each
being a Separate SAP Course. The SAP Education Training cost is
itself a Inhibitor to get Fully Trained and Experienced in APO.
For some APO Modules like PP the domain required is Manufacturing,
but for gATP and DP it is Sales, and so it becomes very Rare to
truly find a Multi-APO module experienced consultant as well as a
Planner for a Business. So just to become a Good APO Consultant
– a lot of time elapses in life and by even half that time often
people move to a Project Manager, Team Leader or such
Managerial Roles making the SAP APO Consultant dead.
Even their Bosses expect them to “Sell” more APO Projects, do
Sales over the focus of Training others, so Consultant dies.
I repeat – just by the advent of elapsed time in life –
SAP APO consultants step up to Managerial Roles in life so that
they can also earn more money for dependents and also to
step up to Managerial Roles. The Experience itself makes the
APO consultant position unviable and where you cannot find
experienced APO consultants to guide you – that technology
inevitably becomes Complex for Planners and Business to consume.
And those who remain in Technology – find it easier to develop
and Sell a Mobile App. !
2. I already said – the SAP APO area is so large – each Module is
a world in itself and expects Pre-requisite ECC module experience
(e.g : APO-PPDS requires ECC-PP experience, APO-gATP & APO-DP
requires ECC-SD experience … etc.). Very very few people get so
many SAP Trainings (huge cost) and then later Project Experiences
in their Life. In the functionalities I’ve understood of APO –
I don’t see how APO can be made more Simpler, because even with
Newer Tools (e.g : Optek) a Planner would first be expected to
Implement and Know APO Tools, some ERP Transactions and then the
Newer Tools. The same issue of lack of Consultant resources is
also reflected in Planners having insufficient experience on SAP
SCM tools so even companies find it difficult to get Planners with
the full breath of APO training and full breath of APO experience.
Many SAP APO Consultants either have only DP or SNP or PPDS or
only GATP module experience (also because of different domains
required for these). I feel SAP needs to treat each APO module as
a Separate SAP Module and Track and needs to make APO Module
Trainings Cheaper to be able to impart Training in more APO Modules.
This I can say having Trained myself on multiple
APO Modules – DP, CIF, SNP, PPDS, GATP … etc.
3. Often then Planners find it easier to use Simple Heuristics
versus trying to understand the SNP or PPDS Optimizer whose
results are often hard to understand due to the nature of LP Maths
behind it that most common Business people will find it impossible
to comprehend. Same is the case of Advanced Statistical
Forecasting Models. And if Planners / Business cannot understand
or explain the results of Planning, inevitably they shift back to
doing that ‘simpler’ planning in Excel / Spreadsheets with simpler
averaged calculations. Demand Planning (beyond Stat. Forecasting)
Improvements for the Business has always been a very tough thing
to do with most DP Projects and Promotional Plans failing and the
Dynamically Evolving Businesses (Digitization, Internet) and if
Demand Plans are wrong, then all Supply Plans tend to be
Inaccurate and merely seen as a ‘Theoretical Plan’ that can change
anytime – so CEOs and Sales force and SCM teams focus on Sales and
Supply Execution rather than “Plans”. So SCM Planning is not
seen as important. This perception won’t change.
4. SAP themselves have now launched HANA for faster Planning in
APO and now FIORI Apps and HANA Live Analytics with Smart Business
Cockpits that aim to empower the SCM KPIs on any Mobile Device and
working from anywhere. SAP has also launched SAP S&OP tool that
can do overall Demand and Supply Planning balancing but again it
will work well only when done above SAP ERP base and then APO
multiple module (DP, SNP) and also SAP BPC implementations.
This will indeed make the SAP S&OP and SCM-APO tools give a Lot of
Useful Information for a SCM Business Planner and No doubt now with
the HANA columnar database APO will be far more faster but the base
required for this – multiple APO Modules, and BPC above ECC is
not implemented in Place often at many Customers. So SAP is now
selling RDS Solutions in SAP SCM to go live on these faster
… but the end suites to implement it all to make the wonderful
integration work and with the Custom Developments for Complex
Business Needs will take longer. The ERP will no doubt become more
Complex even with Cloud unless highly simplistic Assumptions to
take a Fixed-Scope, Fixed-Price short timeline are done to go live
on APO modules not implemented for many customers. I have not yet
seen Customers Compromising on Lack of Complex Functionalities –
after all SAP is configurable – which is what made it complex.
But I do think the Ready-to-consume SCM Analytics on HANA with
FIORI will make the usability of SAP and APO more simpler than
today, however Customers have to Implement the
base APO Modules first without a shred of doubt.
5. Rather than Implement so much of APO Modules (DP, SNP, PPDS,
GATP) – which will take many years, Customers nowadays are
contemplating and many ruling smaller SCM Apps over the so called
‘complex’ APO – also because of the 1st Issue above wherein
getting a Fairly Experienced SAP SCM-APO Consultant with full
breath of experience and likewise for Companies to employ
Planners with multi-module SAP APO experience with SAP ECC
transactional knowhow. At the same time SAP is changing their
SCM architecture with HANA – maybe for better – but for existing
APO Customers – a Path to Upgrade and move to the new Architecture
will require Projects and often due to the Changing Dynamics of
any Business – focus & Funding on Supply Chain Projects is lesser
than Customer facing, Sales and CRM Projects. So SCM Projects
cannot be Prioritized due to limited Funding available from the
CEO perspective. I am seeing many SAP ERP Customers choosing to
sway away from SCM-APO and choose smaller SCM Tools that are
Cheaper. I think SAP should re-look at their Cloud Model Pricing
for SAP SCM-APO and SCM S&OP Apps. to be able to Compete with
these Smaller but slowly getting more Popular SCM tools. Just
like SAP was forced to re-invent their ERP and BUsiness Suite
(CRM, SCM & APO, SRM) for Cloud – they need to change their
Pricing for Cloud Customers for APO to compete with
smaller SCM COTS Tools out there.
6. Like many ‘Lite’ tools – APO also has functionality Gaps –
apart from some Gaps in Process Industry that has been pointed out
earlier in this Blog – I have seen for the Variant Configuration
& MTO Industry, requires Huge number of Custom Developments
and Custom ABAP Coding. I don’t understand how SAP RDS Solutions
will make it any easier or even how less Complex tools will solve the
Problems. I don’t see Complexity going away until Business
decides to and SAP decides to make commonly needed Functionalities
in SCM-APO by Industry available as part of Standard package.
If the ‘Lite’ tools do come with functionality to analyze the APO
Optimzer Planning results faster – then that is definitely needed
– but it cannot be a replacement for the Base APO Planning
and optimization engine itself that must be in Place.
Even for SAP S&OP on HANA. That is the issue that the base
APO Modules are not all Implemented. Using the SAP RDS may help in
getting Customers up faster on APO Modules but with very
limited customization due to Fixed-scope of RDS.
I realize even APO has shortfalls – but the master data for
just this itself is quite complex and split between ERP and APO,
but needed in order for APO to suit multiple configurations and
business needs in different industries.
Not Rocket Science – but still complex.
7. You know for Freshers to come to world of SAP – they need to
get Trained in SAP ECC, then Multiple Modules of APO and then the
most current SCM tools on HANA technology, SCM Analytics on HANA
before they can really Implement APO for a Customer – we need a
Plan to train more SCM/IT Educated freshers to be groomed as SAP
SCM Consultants … heck at the moment – it’s easier to Develop a
Mobile App. and become a Mobility and Cloud Consultant !!!
And these days – it pays more too … to be part of the Cloud and
Mobile Development and Digitization technologies that promise to
make your Data available anytime, anywhere and fast to give joy
to Customer. So the base of APO is needed.
SUMMARY :-
===========
Having said all this – I think the Complexity of SCM
tools will no go away anytime soon, and the Promise of Smaller SCM
Tools will always appear more appealing than APO that promise to
Implement it Faster and much Cheaper as well as it has become very
very difficult for Businesses to find APO consultants and
APO experienced SCM Planners in Business likewise. The Businesses
who implement ‘Lite’ SCM tools will realize later – the base and
complex functionality in back is also needed. I had looked at
different SCM tools and often I found it difficult to find a
differentiator in terms of the Promised functionalities – until
you get into the details of each SCM Tool – which is almost
Impossible task to do. But for SAP customers – SAP SCM-APO tool
and SCM Analytic Mobile Apps on top of it would be best to
implement. This is my own Opinion from my 23+ Yrs Experience.
Moving it to the Cloud can also make the Solution Cheaper – but
needs decreased Complexity support from Business – not sure
when that will happen. Using HANA would definitely make it faster.
To change from Complex to Simple means attacking this Problem from
Multiple fronts – not only making Business needs simpler, but also
including a Plan to Train Resources at lesser cost – as quite
simply it is the increased Availability of APO Consultants that
will only make SCM Planning less complex – as those best trained
for the tools can only make the Tool Simpler for the Business to
Consume and see the End Results of Planning Simulations without
having to Learn the Complexity of the Tools. There is a Huge
Shortage of Good SAP SCM-APO Consultants in the Market today due
to Issue (1) described above. I think Shortage of SCM Consultants
is there for most other Tools too.
Hello Ambrish,
On behalf of Supply Chain Matters, I want to thank you for this very insightful sharing of observations related to SAP APO. It is always good to hear from those with lots of experience in the application.
A couple of thoughts to share from my perspective:
Regarding 1): The observations you made regarding a typical career progression for an experienced SAP APO professional is a valid one. It would seem to me that organizations need to have more active training and career progression plans. Even if the APO specialist is promoted to a new and much deserved broader position, it seems to me that a formal mentorship program that helps springboard the skills of a new consultant wouls go a long way.
Regarding 2): You observations regarding the need for very deep and extensive experience in both SAP ERP and APO would seem to also support the notion that having an external experienced SAP partner that provides such skills and can accomplish knowledge transfer would be a benefit.
Regarding 3): I also mentioned this in the commentary. It is unfortunate that most APO teams cannot gain the benefits of optimization because of complexity and lack of understanding to the results. That should be a clear message to SAP in its development plans to make advanced integrated business planning more simple for the user community.
Regarding 4): Thanks for sharing your perceptions of HANA Live Analytics and FIORI. I’m sure our reader community will benefit from this and I trust that SAP will acknowledge such feedback.
Your comments outlined in notes 5) 6) and 7) were very helpful and I trust our readers will also benefit from them.
Regarding the Summary statements regarding APO, again I sincerely trust that SAP development teams take the time to absorb your comments and observations and come up with much simpler but powerful technology in the next iterations of integrated business planning.
Bottom-line, at least from this author’s perspective, is that SAP and its Users Groups across the globe need to continue to focus on programs that insure adequate training, compensation and organizational recognition for talented SAP focused supply chain planners.
A final note for our readers- keep the feedback comments coming. This is a positive and beneficial for all of the SAP Supply Chain Management focused community.
Bob Ferrari