Mine is bigger than yours. Who cares, I say?
This week, SAP announced the intention to build business communities to drive improved outcomes. I say, “About time.” However, when I get into the substance of the release, “I say not so fast.” The focus is on combining the Ariba Networks, the SAP Logistics Business Network, and the SAP Asset Intelligence Network. SAP’s argument is that the solution benefits 5.5 million organizations. The problem is fundamental: SAP builds enterprise solutions, but the organization lacks the understanding of how to develop and deliver networks. I watched the announcement in disbelief that SAP could be so out of touch with market requirements.
SAP, the market share leader for supply chain management, lags the industry in delivering decision support and network capabilities for supply chain leaders. Based on the Supply Chains to Admire analysis, companies focusing on IT standardization of ERP-centric platforms, score lower on growth than peer groups. The focus on supply-centric, transactional flows reduces supply chain effectiveness. While all companies need effective systems for transactional efficiency and accuracy, it is not sufficient. ERP is not the proper backbone for either a network-based solution or outside-in processes.
So, you might say, Lora, “What are the right criteria to evaluate network providers?” Followed by the question of, “Where are we on the building of networks?” And, ” If SAP is serious, what should the development team at SAP be doing?” Here I share my insights from facilitating a cross-functional group of business and technology leaders over the past five years in the Network of Networks forum. Based on research and ongoing dialogue, I evaluate network architectures based on five criteria:
- Interoperability Across Networks. One of the issues with the current market is the lack of interoperability between networks. Each solution is self-serving. There is no good way for a business leader to move information across Ariba, Elemica, GT Nexus, E2open, and Transporeon. The connectors do not exist. Ariba is the least cooperative of all networks studied.
- Multi-tier Process Canonicals. While EDI VANS moved data from an organization to another organization, and many would call them networks, EDI is not bi-directional. The EDI Vans lack multi-tier process canonical (agreed multi-party definitions). In contrast, multi-tier value network solutions like GT Nexus, Elemica, and Nulogy not only connect data but move the data through multi-party processes. We cannot confuse data sharing with the process definition. The consolidation of VANs and venture capitalists’ investment into multi-tier value networks slowed innovation and introduced risk into the market. (SAP Ariba started as an indirect procurement network and lagged the market in developing multi-tier process definition.)
- Authoritative Identifiers and Use of Standards. The goals of multi-tier networks are many–track and trace, fair labor, collaborative logistics–but they all require the use of authoritative identifiers and standards adoption. Companies serious about building networks eagerly build ISO-8000 compliance on legal identities and GS1 compliance on items and locations. After two decades, adoption is low. (Only 22% of PPE was GS1 compliant at the start of the pandemic.)
- Ease of Onboarding. In an ideal world, onboarding would be single sign-on across all networks. Today, onboarding takes three-to-six weeks, and each network does it differently. Ariba’s process is onerous.
- Value Network Focus. Today’s networks are piece parts. No network crosses over the source, make, deliver processes. Additionally, networks tend to be more “industry-focused” than value-network in focus. For example, Elemica is focused on the chemical and rubber markets but does not manage upstream (consumer products/food & beverage) or downstream flows (oil/gas). In addition, Nulogy does an excellent job of managing outsourced manufacturing for consumer products, but not bi-directional sourcing or logistics flows. Continuing the argument, E2open’s sweet spot controls the flows of direct inbound materials for high-tech while GT Nexus is more focused on ocean freight management.
My take? 72% of renewable resources lie outside of the enterprise. If we are to get serious on the management of corporate social responsibility and the circular economy, we need to design multi-tier networks across industries and enable bi-directional orchestration across source, make and deliver.
The supply chain is serious business. Climate change and social responsibility need real solutions. We need more from SAP than a well-written press release. No company in the industry is better at writing software code than SAP when they are clear on the requirements. I understand that SAP is still digesting the acquisition of Ariba, and it is hard to drive change in a large organization. However, the solution is not Ariba, plus business portals. Sadly, there is no good answer for business leaders.
Webinar Next Week
The Supply Chains to Admire webinar is on June 16th at 11:00 EST. At the webinar, gain insights to the winners and the industry trends. I hope to see you there!
In addition, Project Zebra–an open-source initiative to define outside-in planning processes–starts the testing phase of two of eighteen capabilities next week. We share the work through youtube.
Preparing for the Supply Chain Insights Global Summit
The Supply Chain Insights Global Summit is happening on September 7th-9th in Franklin, TN.
We are taking the risk that everyone can get COVID shots to enable an in-person event in September. We will also have a virtual feed hosted by Supply Chain Now for those unable to travel. The goal of the conference is to Imagine the Supply Chain of 2030.
In preparation, I am handpicking the speakers and finishing up the Supply Chains to Admire analysis for 2021. If you have a story you would like to share at the conference; please drop me an email at [email protected] Mark your calendars to join us to think differently and Imagine the Supply Chain of the Future.
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