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Making Sense of Value Scenarios: Lessons from Sapphire 2009 Print E-mail
jonerp_full_logo.PNGMaking Sense of Value Scenarios:
Lessons from Sapphire 2009

by Jon Reed
Unabridged Edition, Never Before Released

Sapphire 2009 put SAP in a tricky spot. On the heels of the general release of Business Suite 7 (BS7), arguably the most visionary software release SAP has ever issued, customers wanted answers. They came to ASUG/Sapphire 2009 in search of immediate benefits they could bring back to their projects. The general availability of BS7 didn't qualify as such for most who attended.

That's why we heard a lot more about "Best-Run Now" during the Sapphire keynotes than we heard about "Value Scenarios," which are, by comparison, a more forward-thinking concept, involving a sophisticated use of the SAP Business Suite. Value Scenarios were widely discussed on the blogosphere after the Business Suite 7.0 announcement in New York City in February of 2009 (an event I attended). The most common reaction to these so-called "Value Scenarios" was confusion or buzzword withdrawal.

One of my objectives at Sapphire 2009 was to dig deeper into Value Scenarios and see if there was some meat on the bone. My goal at these events is to get a generous helping of what customers are concerned about now, but also to understand where SAP is headed. Whenever possible for SAP customers, aligning short-term priorities with SAP's longer-term direction is ideal. This is not always an easy task.

So on May 11, 2009, I gathered with some fellow "BPX Geeks," SAP customers and partners, for a pre-conference ASUG session on Business Suite Value Scenarios and Business Process Management (BPM). Some of the leaders within SAP in these product areas were presenters that day, and I have embedded several slides from our sessions into this piece. In this article, I'll present what SAP is up to with Value Scenarios, hopefully showing why those inside SAP see this as a fundamental shift in how they will design and deliver enterprise applications. I will also try to hold Value Scenarios to the "relevance test," showing how this concept fits in with other phrases du jour like "Best-Run Now" and "NetWeaver BPM."

1. What is "Best-Run Now"?

Just when I thought I had a handle on Value Scenarios, I ran into some fresh marketing jargon at Sapphire: "Best-Run Now." Several people asked me how the Best-Run Now offerings fit into Value Scenarios, so there's confusion here. First announced in November 2008, "Best-Run Now" is a collection of SAP solution offerings that are intended to help customers optimize their operations and address pending business needs. These are, in essence, pre-configured "point solutions" that are (hopefully) able to address an immediate pain point in a plug and play manner. In some cases, Best-Run Now solutions have been developed in conjunction with third party software partners, so you will see them mentioned on SAP's EcoHub. Examples of Best-Run Now solutions include Fleet Management, Inventory Management, and Liquidity Management. "Best-Run Now" solutions are available across the SAP product line, and in many cases include pre-established tools users are likely already familiar with. For example, the Business Warehouse Accelerator (BWA), which is an integral part of the performance capabilities of the much-publicized SAP BusinessObjects Explorer product, is also considered a "Best-Run Now" product in the IT area. (Note that if you go to EcoHub.sap.com and search on "Best-Run Now," you can see all the Best-Run Now solutions).

Contrasting Best-Run Now with Value Scenarios can be done with a restaurant analogy: Best-Run Now packages are the happy hour hors d'oeuvre at the bar, whereas Value Scenarios are the main course that takes a bit more time on the grill. Since those at Sapphire 2009 were in a quick fix mood, Best-Run Now was intended to serve as that app (pun intended), giving projects some momentum when resources are at their tightest. Value Scenarios, on the other hand, are intended to be implemented as part of an overall BPM strategy. By contrast, Best-Run Now has no prerequisites from a methodology standpoint (though there may be pricing and/or technical hurdles to evaluate). Sure, SAP is hoping that customers make choices about Best-Run Now that fit into a well-thought approach to "process-driven ERP," but sometimes a quick fix is just that, and process change will have to wait.

2. So What is BPM?

So what is BPM in an SAP context? BPM means two related things in the SAP world: first, it's an SAP-recommended project methodology, and second, it's a distinct product offering, NetWeaver BPM, which is also now in general release as of Sapphire 2009. To understand Value Scenarios, we need to understand these two uses of BPM. BPM as an SAP Methodology is intended to serve as an enhancement to the traditional ASAP Methodology, which did not adequately take process improvement into account. BPM is high on the agenda of CIOs in 2009, though how BPM (Business Process Management) is defined still varies significantly from company to company.

As a methodology, BPM is about tackling SAP in a process-driven manner. Internally within SAP, this is seen as a major shift from the classic "silo-based" approach to ERP, where we talked about "modules" like FI/CO, SD, or PM. The process-oriented approach to ERP is not about modules but end-to-end processes, some of which extend to customers and suppliers. As of BS7, this is not just flowery talk. SAP has stored business process content within Solution Manager in the Business Process Repository that can be accessed and implemented in project settings (last I heard, there were several hundred such processes in the repository, with more to follow). The BPM methodology fits into the Value Scenarios discussion in this manner: SAP intends for companies to use process-driven BPM approach to take advantage of the Value Scenarios functionality.

NetWeaver BPM as a product is also related to the Value Scenarios discussion. The NetWeaver BPM tool is a visual modeling environment, designed to be intuitive to the business user, that allows "Process Experts" and SAP Enterprise Architects to model SAP processes, modify those processes as needed by leveraging enterprise services, and import those processes back into SAP via the "executable code" that NetWeaver BPM creates. If this sounds a little like science fiction, then you won't be surprised to hear that BPM's product code name, still often used, is "Galaxy." If this stuff takes hold, it will be an interesting new ERP world. Netweaver BPM will be a key part of SAP's new recommendation for competitive differentiation: "compose" services on top of the NetWeaver platform, rather than differentiate by altering SAP source code. SAP has started calling these "own practices," as distinct from the "best practices" delivered via Value Scenarios.

Now that NetWeaver BPM is in general release, we'll hear more about what it is capable of (and what its limitations are). I expect that 2010 will be a more important year for this product than 2009. Because in 2010, we will see much tighter integration between NetWeaver BPM and Solution Manager, ultimately allowing SAP users to import business processes from Solution Manager, alter them in BPM, and export them back into Solution Manager for use in live SAP environments. We'll see if SAP can deliver on this, but it will be a story to watch in 2010. (If you're looking for more on how SAP sees NetWeaver BPM as a tool for differentiation, my article on "The High Stakes of NetWeaver BPM" for PAC's "Feeding the SAP Ecosystem" blog might be helpful).

So in its new vision of competitive differentiation, SAP sees customers "composing" on top of the ERP suite using NetWeaver BPM and SOA approaches. Of course, SAP would say that you should only focus on a small percentage of competitive processes with this "service composition" approach. The figure varies - during the Bill McDermott/Jim Snabe keynote, I heard "less than 10 percent." Ann Rosenberg, BTC Global Practice Ownership for Business Process Management and co-author of the book Business Process Management: The SAP Roadmap, often says that of a company's processes, twenty percent are automated, and of that twenty percent that are automated, twenty percent of those are typically key to competitive advantage and thus candidates for service composition.

That means there is still the rest of the automated (and semi-automated) processes within a business to contend with. And that's exactly where Value Scenarios comes in. Value Scenarios are designed to turn core ERP functions into optimized processes that don't bog a company down in siloed approaches.

3. Defining Value Scenarios - What Are We Really Talking About?

With that context in mind, what are Business Suite Value Scenarios?

Let's start with SAP's definition they used in the overview of the pre-conference session. It's a little wordy, but it's a start: "The SAP Solution Management Organization is following a business-process modeling approach to define, configure, validate, and ship an extensive library of extended processes...Organized by theme, these extended processes - or "value scenarios" - are designed to leverage information from across the SAP Business Suite to engage multiple roles and lines of business into cross-functional processes."

So what are these so-called "themes?" As it turns out there are eight current themes in the SAP offering: "High Performing Assets," "Operational Excellence," Product and Service Leadership," "Responsive Supply Networks," "Superior Customer Value," "Financial Excellence," "Best People and Talent," and "Strategic IT." As you see the themes displayed in Figure 1, keep in mind that SAP intends these themes to be comprehensive: in other words, all aspects of SAP's functionality - meaning every business practice within an enterprise likely flows into one of these themes.

Presenter Robb Bush of SAP Labs even went so far as to challenge the audience to name a process of some kind that didn't fit into one (or more) of these eight themes. (Note that Strategic IT is "grayed out" in the graphic because SAP has yet to add Value Scenario content to BS7 around this theme.)

valuescenariosfigure1.jpg


Figure 1: Overview of SAP's Eight Process "Themes"
(graphic reprinted by permission of SAP AG)

Within each of these eight themes, SAP has been actively developing "Value Scenarios," sometimes in conjunction with third party partners, that are intended to help companies quickly apply "best practices" of pre-configured process content for their industry. For an illustration of how Value Scenarios fit into a theme, check out Figure 2.

valuescenariosfigure2.jpg

Figure 2: "Product and Service Leadership" Theme and Value Scenarios
(graphic reprinted by permission of SAP AG)

Figure 2 shows three Value Scenarios that have been developed within the "Product and Service Leadership" theme: "Continuous Product and Service Innovation," "Integrated Product Development," and "Embedded Product Compliance." This graphic illustrates how SAP is developing Value Scenarios within the framework of the themes that have been identified.

The "industries" column in Figure 2 designates which industries these "Product and Service Leadership" Value Scenarios currently apply to. There is some tension, in my opinion, in the Value Scenarios concept between shipping viable cross-industry functionality and ensuring that the Value Scenarios are appropriate for a particular industry's nuances. In the years to come, we can expect SAP to diversify these Value Scenarios further by industry, allowing users in different industries to access pre-built content designed to address their industry's circumstance. For now, there are some tricky aspects around the industry-readiness of Value Scenarios.

Historically, SAP has required companies to confirm to standard SAP configurations (which could be altered to a certain degree). Beyond that point, companies had to alter source code to get the functionality they wanted. The expense, support and upgrade hassles around custom coding resulted in a liability to the customer. Customers were presented with an unsavory dilemma: "standard" SAP was way too vanilla, whereas custom development had its own set of headaches.

With Value Scenarios and SOA/BPM, SAP presents a new value proposition:

1.Provide rich business processes that go beyond "standard" functionality, presenting as much pre-configured content as possible.

2. Standardize releases (and data structures!) between Business Suite releases and make it possible to incorporate new functionality on a selective basis via Enhancement Packages.

3. Service-enable the Business Suite to make it possible for users to extend ERP functionality "into the cloud" by plugging in relevant third party solutions or custom-built services. Service composition is enabled via the Enterprise Services Repository, the Composition Environment, NetWeaver BPM, and other tools. (Note: the new SaaS apps that John Wookie's team is developing fit into this "plug in" category also.)

4. Manage this functionality within Solution Manager, activating the Value Scenarios or business content relevant for your project.

5. This entire process is guided by the SAP BPM methodology, an enhanced version of the project-tested ASAP methodology.

Of course, like any proposition, this is SAP's view of how to realize the value of its software. Customers are going to put these five points through the ringer, and then we'll see.

It's pretty much impossible to render this new value proposition in one graphic, but SAP gave it a shot. Figure 3 shows the Business Suite 7's key functions and illustrates how the conventional suite apps (ERP, PLM, SRM, etc) fit into this new (wank phrase warning) "value framework." Note that in Figure 3, the "The Pre-Integrated Industry Specific Processes" box on the left refers to the Value Scenarios.

valuescenariosfigure3.jpg

 Figure 3: Business Suite 7 Features and Benefits
 (graphic reprinted by permission of SAP AG)

(If you can't read every word on this slide, don't worry - if you attend future SAP events in person or virtually you will run into this slide again...I'll replace this with a cleaner version soon).

There is some confusion around how much of these BS7 Value Scenarios are truly pre-configured and how much configuration needs to be done by customers. Some of that will depend on the degree to which a customer's processes deviate from "out of the box." One reliable source gave an estimate of "70 percent pre-configured" and "30 percent configurable." The point here is that SAP wants these Value Scenarios to give much richer value to SAP users than the standard SAP configurations of the R/3 era. (If you're looking for more background on the general capabilities of Business Suite 7 and my reactions to the initial BS7 product announcement, check out "Business Suite 7: What SAP Customers Need to Know" in the April/May 2009 edition of ERPtips.)

4. The Future of Value Scenarios - Goodbye to Functional Silos and Three Letter Acronyms

If/when Value Scenarios come to fruition, we're could be saying "so long" to some very familiar terms in the SAP landscape, such as FI/CO or CRM. Yes, we may still use three letter acronyms like CRM and SCM for some time to come, but the functionality delivered in Business Suite 7 will be aligned into process-oriented themes rather than "application upgrades."

To some degree, SAP now has the competitive luxury to step away from these acronyms a bit. Back in 2000-2002, it was imperative for SAP to develop a competitive CRM offering to combat Siebel's market surge. Now, there are few standalone players in CRM to be concerned with. Yes, a new CRM threat now comes from the "Software as a Service" front; SAP has a window of time to figure out how to offer "on demand" CRM that is fully integrated with the back office in a way that the best-of-breed SaaS providers can't deliver. (SAP has had an on demand CRM product for a few years, but the real skirmishes with SaaS players around depth of functionality and integration are just beginning).

Look for SAP to continue to pay lots of attention to three letter acronyms like CRM when it comes to SaaS, but internally, we'll see much more emphasis on following a "closed loop" process through all application areas. We'll hear more about "order to cash," for example, and a lot less about "Sales and Distribution." This "beyond-silos" approach prompted one SAP expert to say to me, in no uncertain terms, "The silo-functional SAP consultant is screwed."

Ann Rosenberg said to the audience at one point, "The time of the SD/MM or FI/CO consultant is over." She told us that within three years, all SAP "application consultants" will have been through SAP's Business Process Expert (BPX) curriculum. Today's "application consultant" is tomorrow's "process consultant," SAP's acknowledgement that this new process flow is going to change not only ERP, but the SAP skills requirements of those professionals who work with these processes.

For those who think that these requirements are still in the distance, I was told by a Capgemini manager that a customer recently told him, "Don't find me an SD consultant, find me an order to cash consultant." The Capgemini manager told him this was easier said than done. Finding a good SD consultant is doable, finding an SAP consultant expert in order to cash - not an easy task. I wrote more on the SAP skills side of this discussion in a recent blog entry.

5. Value Scenarios on SAP.com - The Future is Hidden in Plain Sight

During Sapphire, I sent out the following Tweet to my JonERP.com Twitter Feed: "SAP Value Scenarios - here to stay because of SAP board level buy-in." No, we didn't hear the "Value Scenarios" come out of Bill McDermott's mouth more than once during the conference, but Value Scenarios do have top-level buy in. Whenever I see SAP initiatives driven from the top, I make a note of it, as these are usually the initiatives with real staying power.

If that's not enough evidence that Value Scenarios are here to stay, I recently figured out that Value Scenarios are already "hidden in plain sight" on the SAP.com home page. If you click on the "Solutions" option on the SAP.com home page, and then go into the "Executive" view, what you see on that page is a pretty close correlation to the "themes" SAP has used to develop Value Scenarios. For example, if you click on the "Human Resources Tab," you will arrive at the "Best People and Talent" page, which is the exact wording of the theme in Figure 1 of this article. On that "Best People and Talent Page", you will see a mention of Value Scenarios on that page, with links to four areas of workforce optimization. So even if SAP is not pushing the phrase "Value Scenarios" in its keynotes, it's clear from the "Executive View" of its home page that SAP intends to market these scenarios on a board-to-board level.

But to gain traction, Value Scenarios also need to make more sense on the brass tacks level that project managers live in. To aid in this journey to the practical, one SAP SOA consultant told me that he'd like to see SAP translate Value Scenarios into roadmaps that allow SAP customers to see the type of pre-configured content delivered in each Value Scenario, not unlike what SAP has done with the "Solution Maps" it has used for core ERP functionality. These maps should also be tied back into Solution Manager for ease of deployment.

6. New Approaches Require New Skills

With all the technical challenges SAP faces making this vision of "innovation without disruption" a true day-to-day reality, an even tougher challenge is the organizational change required to achieve a process-driven enterprise. On this front, Ann Rosenberg deserves some credit. On several occasions, I have heard her speak honestly about the cultural changes SAP itself has struggled with in terms of adopting a "process mindset." It would be refreshing to hear Executive Board members speak of these struggles with the same frankness she does.

The dual challenge of assembling the skills needed to "compose" on top of the Business Suite, combined with realizing a process approach to the Business Suite itself, is not something the average organization can accomplish overnight, or even in a year. No matter which ERP software a company is running, it is not easy to move from "transactional ERP" to this more fluid approach to roles and workflows. Organization change management is just the beginning. There are other prerequisites.

Ann Rosenberg is also straightforward when it comes to the prerequisites needed to achieve BPM in an SAP context, including the right BPM framework, the right people, the right metrics, and the right leadership. Without these, such projects will not succeed. Of course, we can add technical and application prerequisites to this serious list, such as ERP 6.0 and NetWeaver 7.x.

So if it's such a hassle to get there, why bother? What's so special about a "process-driven" approach anyway? I was reminded of this question during a recent webinar I attended on "The Next Generation of CRM" with Jujhar Singh, SVP CRM Product Management at SAP. During the webinar, Singh broke it down simply: the end state of a process-driven approach is simply a responsive, real-time connection between your supply and demand. No longer obscured by silos, companies that successfully organize their transactions by process should have a better chance of avoiding the pitfalls of excess inventory on the one hand, and poor anticipation of customer demand on the other.

As Singh put it, "It's about creating customer value and providing a positive customer experience. This requires a business process design across and beyond the entire organization, effectively synchronizing the front and back offices and efficiently matching supply to demand. Often companies take a siloed approach to automating parts of the business without taking a holistic look at the end to end processes. This leads to many disconnected touch points across the enterprise, which leads to extremely inefficient processes. Salespeople start promising dates to customers which cannot be met. Partners start selling products which may be discontinued. As a result, customer service suffers."

Conclusion

Whenever geeks gather, in my case BPX geeks, we are right to be wary. We use the term "geek" to designate folks who may be a bit over-indulgent in their interests, perhaps lacking the practical orientation necessary to translate ideas to the profitability test. I think that's why so many SAP customers are still wary of Value Scenarios. Yes, SAP has big plans for Value Scenarios, but right now, the buy-in is primarily at the visionary level, not the practical level where Best-Run Now is getting the bulk of the promotion.

But the tech world is full of geeky ideas that have more than lived up to their promise, like the smart phones that have become a major influence on enterprise UIs. It would be a mistake to take a "wait and see" attitude towards Value Scenarios. A better approach is to grasp them now, and reckon with the BPM methodology (and BPX skill set) that drives it all. Then, when a company green lights a short-term project, perhaps by implementing a "Best-Run Now" solution or installing a cloud-based application, it can be done in the informed context of where SAP is headed.

As I left the conference, it was clear that SAP has a lot of work to do defining Value Scenarios and how they are relevant to customers who are distracted by much more pressing dilemmas. Still, I think we make a mistake by getting too caught up in keynote sizzle. I've said it before: I believe a lot more is ultimately riding on the success of NetWeaver BPM than the BusinessObjects Explorer app that got all the attention in the keynotes this year. We do ourselves a disservice when we read only the headlines or eat only the hors d'oeuvre. There's something more coming, and while the visionaries are not always right, their ambition is not to be underestimated.

Site Editor's note: this article will appear in a modified format in the June/July 2009 edition of ERPtips, formerly SAPtips.

Jon Reed, JonERP.com. Jon Reed is an independent SAP analyst who writes on SAP consulting trends. He is the President of JonERP.com, an interactive Web site that features Jon's SAP Career Blog and his podcasts for SAP professionals. Jon has been publishing SAP career and market analysis for more than a decade, and he is the author of the SAP Consultant Handbook. From 2003 to 2006, Jon was the Managing Editor of SAPtips. Recently, Jon was named a "PAC Fellow" to formalize his contributions to PAC's SAP Services Research Program, and he is a frequent blogger on PAC's "Feeding the SAP Ecosystem" blog. Jon serves as an SAP Mentor, a highly selective program which recognizes those individuals who are making an outstanding contribution to the SAP community.

 

 

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