Kagermann Lays Out SAP Evolution

The SAP CEO says the company's ESA road map is on track, and that the next step is to turn NetWeaver into a business process platform.

BOSTON—SAP AG CEO Henning Kagermann challenged IT managers to lead innovation at their companies while promising them that SAP, the top seller of business applications software worldwide, has the technology road map to support their efforts.

Kagermann, speaking at SAPs Sapphire user conference here Wednesday morning, said IT generated 50 percent of innovation at most companies and that technology such as SAPs NetWeaver and the business process platform that it is evolving into are key to driving that innovation.

"We made a bold move when we announced SAP NetWeaver [in 2003]," Kagermann said. "We decided to bring service-oriented architectures to the next level with our Enterprise Services Architecture. We promised to take significant costs out of running the show and freeing investment up to innovate in IT in business.

"Growth in uncertain times means we cannot rely on traditional baked-in hardware business processes. We need flexibility."

So far, its mission accomplished, according to Kagermann. The companys MySAP ERP suite was its first product released on NetWeaver last year.

"Weve turned something people view as a commodity into a strategic application," Kagermann said. "In 2005, were halfway through the journey and ESA is here to stay."

/zimages/5/28571.gifClick here to read more about SAPs ESA program.

The next step, Kagermann said, is to turn NetWeaver from a "compositional" platform into a business process platform.

"IT cannot be viewed as a cost center; it has to be viewed as a strategic lever for business. Thats what we want to show," Kagermann said.

Business applications will give way to "plug-and-play" networks of application services that companies of all sizes will be able to plug into, he said.

"It doesnt matter what size the company is, you play a role in the network," he said. "If you can easily plug your business processes into the new network, you are competitive—youre not dependent anymore."

Kagermann said SAP would allow other business application vendors, including competitors, to plug into its business process network, describing this as "positive competition" and "co-evolution" that would foster innovation.

"You cannot have hardware processes; you need software processes," Kagermann said. "You take the hard-coded logic out and bridge the gap between the business model and software—thats what were doing."

Cooperation among vendors, such as SAPs recently announced Mendocino project that integrates SAPs business applications with Microsoft Corp.s Office applications, will allow business users to make decisions "in context," Kagermann said.

"[Users] can work in an environment that is best for themselves without having a big disconnect," he said. "This will revolutionize the way information workers work in the future and help us to combine ... unstructured activities with structured pieces in the SAP system."

Business users would get better information to make decisions and gain a better understanding of the role of IT in delivering that information, Kagermann explained.

"We went to the next step and decided to combine both the capabilities of NetWeaver as a composition platform with the capabilities of SAP applications into one business process platform.

"For the first time were delivering on closed-loop business," Kagermann said.

Kagermann said SAP will ship all of its products, including CRM (customer relationship management), on NetWeaver by the end of this year. The new business process platform will be available by next year; MySAP applications—targeted to the midmarket— will be the first to be released on the platform.

"It will be kind of a suite in a box for the midsize market," Kagermann said.

By 2007 all SAP products will be available on the new business process platform, completing SAPs ESA road map.

"Whatever size company you are, you can be assured we will deliver a solution according to your needs," Kagermann said. "Well build large ecosystems around the platform and accelerate business innovation.

"We will deliver on this promise."

The reality for customers may still be long, complicated projects though. Bob DeRodes, vice president and CIO of The Home Depot Inc., who joined Kagermann on stage as part of a customer panel, said his company sees its "Digitizing the Depot" business process project using SAPs technology as an eight-to-10-year project.

"Were looking for the SAP organization to help us fuel that transformation," DeRodes said.

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