The following guest perspective, about the modular innovation model behind SAP’s expanding app marketplace for industry-specific solutions, was authored by Kai Finck, SVP & Head of Industry Cloud at SAP.
As senior vice president and head of SAP’s Industry Cloud program, I’m often called upon to discuss and detail this expanding app marketplace, co-created by SAP and its global partner network. Designed around specific industries, Industry Cloud solutions are growth-oriented in nature, addressing next practices and allowing companies to create tailor-made solutions compatible with their current systems.
Recently, I was thinking about how to make Industry Cloud more tangible to a wider audience. Usually, my work involves speaking with groups that possess extensive industry knowledge and in-depth technical skills related to this program, but the concepts that drive Industry Cloud can be understood more broadly. Here, I'm going to break down the rationale for Industry Cloud.
A Complex Process with Many Moving Parts
Consider a bicycle. You start with a stable frame—without that, the bike won't hold up, and its moving parts won't work together. Then, you need the wheels to cycle forward. The bicycle’s chain is connected to cogs on its pedals and the rear wheel. By pedaling, you move the chain, which moves the rear wheel—and the entire bike. The chain and the cogs are key; they need care and regular maintenance for a smooth ride. To turn left or right, you turn handlebars, connected to the front wheel.
There are many types of bicycles: mountain bikes, city bikes, folding bikes. All are available in varied sizes and colors to fit any specifications. Every few years, an innovation emerges that changes the way we all ride bikes—like e-bikes, for example. Software systems also need to be highly interconnected and well-oiled to run smoothly and provide customers with value. In addition, different solutions or services must include or integrate the structures that customers both need and have in place, to effectively collect and store their data across all lines of business.
SAP has a long history of serving customers in different industries, optimizing their core businesses by finding the right solutions and tailoring these solutions. You can compare this to the kinds of bicycles that exist. A 25-year-old woman in a big city needs a different bike for her commute than a 50-year-old man touring the mountains.
Aware of the range of solutions customers require, SAP and its partner ecosystem collaborate to extend its core ERP with modular solutions that address the specific needs of industry customers. These building blocks are designed to help customers take a more incremental, agile approach to digital transformation and on-going innovation.
What Is Industry Cloud?
Industry Cloud, in short, is the open innovation space where SAP, its ecosystem partners, and its customers leverage SAP Business Technology Platform (BTP) to address business challenges. Think of the “digital core” as a stable bicycle frame, around which you can add moving parts to accelerate the overall business.
Around a continuously evolving digital core, SAP and its partners build industry-specific capabilities via cloud-native apps, connecting them with SAP BTP. The digital core supports customers by keeping their core infrastructure clean and easy to maintain, letting customers modify other applications and technologies to their particular business and industry-specific requirements.
Co-innovation is key to SAP’s business strategy, allowing the company to collaborate with partners to co-create solutions that align with best practices and allow customers to run mission-critical and administrative processes more effectively across all industries. Opportunity maps help SAP decide which solutions will be created by SAP and which will be created by partners. All solutions are mapped out in SAP Solution Manager to support customers when deciding which solutions best fit their needs.
The Industry Cloud portfolio, featuring 370+ industry cloud solutions, focuses on innovative and transformative applications that help customers run their businesses. SAP currently supports 26 industries with SAP and partner solutions; around 80 percent of the applications in the SAP Industry Cloud come from partners, giving customers the depth and breadth of resources required to remain at the forefront of innovation for their industries. A wide selection of business processes is built into SAP Industry Cloud solutions, informed by overarching best practices for digital transformation in addition to specific industry functions.
Future-Proofing Business Models
By using SAP Industry Cloud, SAP’s customers can benefit from modular solutions and introduce innovation step-by-step. This modular consumption model is supported by an Industry Cloud Enterprise Agreement, which enables the customers to consume several Industry Cloud solutions to tailor SAP solutions to their company. SAP offers the latest technological advancements–including AI–to enrich industry-specific business processes and empower customers to both navigate their cloud journeys and steer their businesses with agility.
In combination with RISE with SAP, GROW with SAP, and SAP S/4HANA, Industry Cloud is a strong differentiator in the market, driving customers’ digital transformations with an industry business focus. You can think of RISE, GROW, and S/4HANA as electric bike batteries that give customers a further performance boost, lifting data into the cloud and structuring it there. RISE and GROW also give customers access to future innovations that no one else will be able to consume, such as AI services within Industry Cloud solutions. This helps customers go much further, faster.
SAP enables companies to future-proof their business models by establishing and supporting internal processes, as well as by replacing legacy systems with modern cloud applications. The leading companies of tomorrow will be digitally connected with standardized data models in the cloud. And Industry Cloud solutions provide the point of differentiation customers need to remain competitive in their industries and beyond.
With the digital core, SAP BTP, and Industry Cloud working in tandem, we believe that businesses will have all the parts they need to cycle forward–no matter the terrain.
Kai Finck is SVP and Head of Industry Cloud at SAP.