IT departments in organisations with a large investment in traditional ERP have faced a growing challenge over the past decade. They have increasingly struggled to meet the rapidly changing needs of their lines of business, such as the sales and marketing department or HR department, and this is no more apparent than in enterprises running on SAP.
Often requirements outside of the core finance and operations solution have been met by a hodge-podge of software packages, or not met at all, and more often than not these business units are now turning to the cloud.
The growth of cloud-based Software as a Service (SaaS) in the first decade of the 21st century was largely driven by Customer Relationship Management solutions and to a lesser extent Human Capital Management. Sales and marketing departments bought SaaS products from emerging vendors such as Salesforce to meet their immediate needs and HR organisations turned to best of breed cloud vendors to help them recruit, train and manage the performance of the organisation’s employees.
Thanks to the cloud, business units were free to select solutions that were far more user friendly than the traditional enterprise software packages. Even more attractive was the subscription licensing model, one of the defining features of SaaS, which allowed HR and sales and marketing departments to pay for the solutions out of their operational budgets. The speed that the software could be deployed, with no additional infrastructure or ongoing technical support, meant the decision could be driven by the business users, to the extent that today business processes and budget plans are often designed by lines of business with cloud computing in mind.
Many IT organisations, however, discovered that public cloud service providers (CSPs) could not meet the security requirements, integrate with enterprise management, or guarantee availability necessary to host critical applications.
Tension between the IT department and, in particular, the sales and marketing organisation as a result of this trend is hardly surprising. After all the head of marketing or sales director has no interest in the technical matters that occupy most of the IT department’s time. They see the potential of SaaS solutions to meet their needs – from giving them more visibility of their sales team’s activities, conversion rates and pipeline with leads and opportunity management, to understanding social sentiment. They are focused on ensuring sales, marketing and service teams are all aligned to convert a lead to a customer and a customer to a delighted promoter. Their only interest in IT is in how it can provide flexibility, speed up innovation and enable deeper customer engagement. Thanks to SaaS they are able to move forward with their plans without involving IT in the decision-making and deployment.
But leaving the IT department out of the loop makes it harder to realise the organisational benefits of a well-thought out IT strategy – the fact that large organisations often have multiple business units running the same Saas solution, all purchased independently from each other is evidence of this fragmented purchasing.
And more crucially there is an organisation-wide impact when it becomes necessary to integrate the disparate SaaS solutions into the wider SAP landscape. Problems with the software – problems that could have been avoided had those with the necessary IT experience and expertise been involved in the decision – invariably become the IT department’s problems to solve.
In the worst case scenario, IT and the lines of business operate as silos impacting on the entire organisation’s bottom line with, for example, pieces of the customer journey scattered across multiple systems, just waiting to be used in an uninspired marketing campaign or to be squandered as the crucial piece of information is never seen by the right sales rep at the right time, all because IT and sales and marketing are not on speaking terms.
This tension between IT and the organisational lines of business has the potential to become a real business risk in the future if, as IDC predicted in their 2013 report, 60 percent of new IT investment will be driven by the line-of-business, and if by 2017 Chief Marketing Officers will out-spend CIO’s on IT, which is what Gartner predicted recently.
In the case of sales and marketing software, SAP does have world leading and comprehensive on-premise Customer Relationship Management solutions, and in many cases a heavy duty solution such as SAP CRM 7.0 will be the right answer. As an on premise system, SAP CRM offers multi-channel capabilities and greater control on adapting the solution to unique business needs, and in some cases can even be economical for large enterprises. But when the key drivers are speed of deployment, user adoption and cost, the traditional on-premise model does not stack up.
This has left IT professionals in an SAP environment with a conundrum as they had no cloud option that they could be confident would integrate with their SAP environment – at least without major cost and headaches – or provide the vendor certainty and security that they required.
With the release of the SAP Cloud for Customer suite of products, SAP companies now get the best of both worlds – a simple to use, cloud-based Software as a Service solution aimed at sales people and service agents with out of the box integration for SAP ERP.
In releasing a cloud-based solution that augments, not replaces, the onpremise investment, SAP is responding to one of the most significant trends in enterprise software, the hybrid model where core functions are still handled by the traditional ERP and additional functionality is added with cloud solutions to suit the end user requirements.
As opposed to what happened in the previous decade, selecting cloud solutions can now be a strategic decision, combining internal and external services, usually from a combination of internal and public clouds, in support of a business outcome with investments planned and co-ordinated between the IT organisation and the lines of business.
IT organisations are becoming the broker to a set of IT services that are hosted partially internally and partially externally — hybrid IT architecture. By being the intermediary of IT services, IT organisations can offer internal customers the price, capacity and speed of provisioning of the external cloud while maintaining the security and governance the company requires, and reducing IT service costs.
In acquiring cloud companies such as SuccessFactors and building its own cloud solutions, SAP supported this new paradigm in a number of important ways. First and foremost, SAP’s focus on offering reliable and cost-effective integration options gives the IT department certainty they can integrate the solution into the wider environment – whether SAP or third party solutions, on premise or in the cloud.
SAP cloud integration strategy has three central pillars:
A new cloud-based integration technology. SAP HANA Cloud Integration (HCI). SAP HANA Cloud Integration (HCI) is a new holistic cloud-based integration technology both process and data integration capabilities on a multi-tenant cloud infrastructure. This technology supports integration of SAP cloud applications to not only SAP but other third-party applications/data sources – both on-premise and cloud. Customers don’t need to procure additional hardware, integration middleware or monitoring for the underlying integration technology. On this technology, customers can extend standard integration content provided by SAP as well as build new custom content.
Pre-packaged integrations (iFlows). To make it more affordable, faster and easier for customers to realize these hybrid landscapes, SAP has invested in hundreds of functionally rich integration flows across their cloud solutions to other SAP and third-party solutions, through upgrades and other product releases. These integrations, if done as custom developments, are time consuming and costly. The prepackaged integrations are supported through upgrades and product releases by SAP.
For scenarios involving SAP-to-SAP integration, pre-packaged integration content including integration flows, mappings and data service definitions is provided to speed up the time to value.
For example with SAP Cloud for Customer, a package enables business process to be integrated with SAP ERP, including master data such as accounts, contacts, products. Also included is transaction data such as Opportunities to Quote Requests and Opportunities to Sales Orders. The prerequisite for this integration is SAP ECC 6.0 SP18. SAP customers and partners are able to extend these integration scenarios and create new/custom integration content with SAP HANA Cloud Integration technology.
Open APIs and deployment choice for customers. SAP cloud solutions offers a set of business scenarios that cover some of the most common business processes as well as the work centers and user roles involved. Some of these scenarios also provide the capabilities for remote communication to business partners (business-to-business (B2B) communication) or other applications running on different systems (application-to-application (A2A) communication). Communication configuration, which used to be a major hurdle in implementation projects, is simplified and mostly automated. By creating a communication arrangement in the Application and User Management work center, key users without developer skills can easily enable the system for remote communication.
If you need an integration scenario that is not available in the standard delivery, you can build your own scenario using the existing SAP Web services. If the available Web services are not sufficient, an SAP partner such as Soltius can use the SAP Cloud Applications Studio to create a new Web service. With this new Web service you can then develop the required integration scenario.
With technologies and strategies such as this, SAP is bridging the gap between the IT department and lines of business. Instead of IT being forced to fight a losing battle to control and maintain their organisation’s landscape, they can act as the business’s trusted advisor providing solutions that deliver business value while protecting the integrity and intent of the company’s IT strategy. And the business units can benefit from IT’s expertise in selecting the best solutions for the right cost while opening up new opportunities leverage data across the enterprise in a fully integrated environment.