At the end of last year, SAP announced the addition of three new industries to its industry cloud. This offering, which fits in alongside the SAP Intelligent Suite in the SAP Intelligent Enterprise and integrates with all the applications in that suite, offers SAP customers hyper-specific solutions for industries that will assist them in further expanding their business processes. Many of the solutions are developed by SAP partners using the SAP Cloud Platform.
To date, SAP has announced seven industries that are currently live in its industry cloud: automotive, consumer products, engineering and construction operations, industrial machinery and components, professional services, retail, and utilities. Moving forward, the industry cloud is going to be integral to SAP S/4HANA and encouraging customers to implement the ERP solution.
ASUG recently spoke with Peter Maier, president of industries and customer advisory at SAP, about SAP’s industry cloud. He discussed how SAP's industry cloud benefits customers, how it is making use of intelligent technologies like ML and AI, and what customers can expect to come in 2021.
ASUG: Tell us about your current role at SAP and how your background has helped you in working with SAP’s industry cloud.
Peter: I am the president of industries and customer advisory at SAP, a role that was created a year ago to bring together the presales, value advisory, and industries teams. In this role, I am responsible for the SAP business with our customers in their industries, along with making SAP and partner products relevant to them. The customer advisory group showcases SAP solutions and consults SAP customers on realizing the business value generated by the SAP portfolio. I joined SAP in 1991 as a consultant for the chemical industry. In 1995 I assumed responsibility for global business development for the oil and gas industry. Then I had various roles within the industries organization—from general manager of the energy and natural resources industries to president of SAP Industries. Starting three years ago, I began driving a worldwide initiative to simplify our road maps and support our customers in their digital transformation journeys. The industries team’s knowledge and road maps task forces helped me get both the expertise and strategy to launch SAP’s industry cloud.
ASUG: Can you provide a high-level overview of the industry cloud, why it was developed, and how it benefits both customers and partners?
Peter: The design of SAP’s industry cloud reflects our customers’ core business needs within their respective industries. It enables us to establish a set of solutions and business processes relevant to each industry running on the SAP Cloud Platform. The solutions extend the support for end-to-end processes with the SAP Intelligent Suite, providing a comprehensive business and technology platform for our customers.
Each solution within SAP’s industry cloud portfolio is industry-specific and involves key business operations, such as material management, supply chains, and finance or asset management. More specifically, SAP customers can develop or adopt new solutions for common functions, such as currency conversion, subscription management, billing, and other services that create a simple and unified user experience.
We developed this industry cloud portfolio because customers across every industry were feeling a sense of urgency as new market pressures and digital technologies changed the way companies do business. We created an open platform that empowers our customers to build and adopt vertical innovations as part of their IT landscape. In essence, SAP’s industry cloud gives our customers the tools they need to modernize and customize their business operations.
ASUG: The platform has been touted as the innovation space for SAP customers and partners to build solutions and applications that will complement the SAP Intelligent Suite using the SAP Business Technology Platform. Can you walk us through specific use cases of how that’s been done, how open source plays a role, and what the feedback has been thus far?
Peter: The SAP Business Technology Platform is the foundation of the industry cloud. Our open business and technology platform has an open-API framework that provides access to key entities of the SAP Intelligent Suite, unlocking operational and business data to support better decision-making and drive greater efficiencies. SAP customers have noted that the industry cloud gives them the opportunity to modularize their future enterprise architecture.
One company that has already leveraged SAP’s industry cloud is Honeywell Forge, which teamed up with SAP to create a joint cloud-based solution based on Honeywell Forge’s enterprise performance management offering and the SAP Cloud Platform. By providing real-time access to key metrics and performance indicators, the joint solution available through SAP Cloud for Real Estate helps building owners optimize their operations to achieve aggressive energy savings targets and substantially reduce maintenance hours.
ASUG: What are some of the main benefits of SAP’s industry cloud?
Peter: In the past year, we have passed some significant milestones as we work with customers to support resilient and transparent business operations. A lot of the resiliency and flexibility with SAP’s industry cloud stems from the ability to leverage best practices and solutions from other industries, all with the goal of enhancing business operations. Rapid innovation can be fueled by borrowing these best practices and applying them to existing industry cloud solutions—or by creating solutions using ML, analytics, and business networks.
The advantage of SAP’s industry cloud approach is that it provides a space for trial and error. All digital technologies of the SAP Business Technology Platform are available—including Internet of Things (IoT), AI, ML, and blockchain—to drive innovation at the vertical edge. Companies can apply these tools to experiment with new ideas that may likely fail or perhaps prompt an industry-changing breakthrough.
ASUG: How has the industry cloud concept evolved since SAP first began to talk about it, and what lies ahead on the road map? What should customers and partners expect in 2021 and beyond?
Peter: It’s true that we’ve been talking about the industry cloud on a regular basis since 2014.
At the time, we named our industries organization “industry cloud,” to signify our transition to the cloud. We wanted to guide our customers on their cloud journey, and it also was a change for us.
Today, cloud solutions are the normal way of thinking and operating. So, “industry cloud” has a very different meaning now: it’s the innovation space for SAP and our partners to develop new solutions for the core business of our customers. The industry cloud solutions are offered as a software service, including the relevant integration and configuration content to extend the SAP Intelligent Suite and business networks. In 2021 and beyond, we and our partners will expand the portfolio of industry cloud solutions for many industries.
ASUG: How does the industry cloud make use of technology like AI, ML, and IoT? What other intelligent technologies will be integrated within the solutions?
Peter: Through SAP’s industry cloud, customers have instant access to a broad range of business and technology innovations that streamline the development of solutions. From simple business tools such as currency or unit conversion to leading AI and ML libraries, these innovations can make business processes smarter and more efficient.
With AI and ML libraries, solution designers can create convenient, yet exciting, user experiences that span across multiple industry cloud solutions, the SAP Intelligent Suite, and business networks. Beyond intelligent technologies, customers have full access to the rest of the SAP Business Technology Platform portfolio, which includes data management, analytics, and application development. All of these powerful capabilities make up the foundation of SAP’s industry cloud and ultimately enable the development of end-to-end business processes.
ASUG: How does the SAP Industry 4.Now strategy align with the industry cloud?
Peter: Industry 4.Now is crucial to our overall industry cloud strategy. Many industries have been seeking greater coordination between the shop floor and the top floor. With Industry 4.Now and the industry cloud, SAP customers can transform their manufacturing operations, leading to more intelligent factories and assets that will provide faster and more accurate insights for end users and decision-makers.
For industries that are reliant on manufacturing, Industry 4.Now will help connect production to overall business processes defined by the industry cloud. The parallel initiatives will have a direct impact on the manufacturers of vehicles, industrial machinery, or buildings. These solutions are all about our individualized approach to every customer and industry.
ASUG: What are some of the lessons learned from 2020 that will affect the future road map of SAP’s industry cloud?
Peter: SAP made a company commitment at our Q3 earnings call to give our customers choice. As our CEO Christian Klein shared with ASUG CEO Geoff Scott during their virtual conversation in November, many of our customers, such as those in the automotive or the chemicals industry, are facing process complexity. Many of these companies are using multiple ERP systems within their company and it’s completely unrealistic to believe that they will go straight to the public cloud. We can take them to the cloud and then, as Klein said, “step-by-step, based on your business priorities, we are transforming your processes, order-to-cash, procure-to-pay…it's depending on your business priorities and on our next-generation business technology platform where you now ﬁnd the data models and the business services you need.”
The key lesson from 2020 is that we at SAP are meeting our customers where they are, understanding the market realities they are facing as businesses, and enabling them to overcome these challenges. For example, in spend management—Procure-to-Pay in our portfolio—customers like Woolworth are depending on this solution because they have to ﬁgure out which suppliers can still deliver during COVID-19. As Klein mentioned, “we infuse AI into this process to reduce the transactional workload to enable customers, and of course our end users, to do more value-adding tasks while automating the transactional activities in this process. We gain productivity of 40% compared to the way we run procure-to-pay before in our old systems, in our old legacy landscapes.”
ASUG: What would you like ASUG members to know about SAP’s industry cloud?
Peter: Industries have always been our strong suit. We have spent a lot of time with customers and partners to understand and address industry requirements. To help them run their value chains end-to-end, our customers want SAP software and technology to drive more vertical, industry-specific processes in the cloud with seamless integration into the backbone—which in many cases are in core SAP applications.
SAP’s industry cloud delivers innovative, vertical solutions from SAP and our partners to transform business and drive sustainable growth. These solutions are built on the SAP Business Technology Platform with an open-API framework, open-process model, open-domain model, and business services. This helps ensure interoperability, rapid deployment, and integration with the SAP Intelligent Suite. AI, ML, IoT, and other advanced technologies from our platform are available to developers to accelerate innovation and deliver greater business value.
Our industry cloud solutions engage a broad range of partners to create solutions that complement and build on our deep expertise in end-to-end processes across industries. Because in our digital age, no company alone will be able to tackle the challenges and changes of today. It’s all about partnering and teaming up on a global scale. We will include traditional partners, in addition to startups, universities, and more. Joint planning means customers get the widest range of solutions available to support their unique industry requirements.
Continue the conversation about SAP Industry 4.Now with the Executive Exchange Virtual Roundtable: Experience SAP Industry 4.Now for Process Industry on Feb. 4, 1 p.m. ET/12 p.m. CT. ASUG is also starting 2021 off with a variety of Think Tanks and interest group events. Check out the full schedule to register.