New Orleans—Executive board member Shai Agassi used his keynote address at SAPs Sapphire user conference here to review where the company has been over the past three years and to show how those efforts will lead it—and its customers—into the next 15 years.
Agassi said SAP AG will use Web services as a cornerstone to build a service-oriented architecture (SOA)—and will hope that the two-thirds of its 20,000 customers still on its older R/3 enterprise resource planning (ERP) system will come along for the ride.
The SOA, branded Enterprise Services Architecture by SAP last year, will be enabled by the companys integration stack, NetWeaver.
But Web services arent the whole story, Agassi said.
“Everything that is new solves every single problem,” Agassi, an executive board member with SAP, said at the Sapphire conference. “A year ago, [the thought was] that Web services would solve everything. We truly believe its here to stay, but its just the foundation.”
Saying Web services provide flexibility but are not enough on their own, Agassi said a services-based platform is required that can handle all of the components Web services deliver.
Moving to an SOA will bring a new wave of innovation along with new processes that SAP couldnt touch on in the past because the technology was not in place, Agassi said.
Agassi, who is based in Palo Alto, Calif., did not suggest that SAP would build all of the new processes. He said he believes thousands of companies will take part in new development efforts that spring from SOAs.
Flexibility in Planning
But very few companies will be able to provide complete solutions to handle all of the components on a single platform, he said.
“I predict a handful of players will be able to provide an aggregated solution that comes from thousands of vendors revolving around a single platform,” Agassi said. “We believe in this so much, we bet our company on that model.”
The platform, of course, is NetWeaver.
In terms of business issues, process execution time is no longer a concern for NetWeaver, Agassi said, adding that the focus has shifted to shortening the time to change management and change processes.
“It now takes 18 to 24 months to execute on a [IT] plan,” he said. “In that time, you can go out of business. What you need here is not outsourcing your CIO—that doesnt provide much flexibility. You need more flexibility.”
The core issue with enjoying more flexibility—and moving to a services-based architecture—is just that: Users dont want their core applications to change. Agassi said he asked CIOs how often they wanted their core applications altered, and the answer was, “Once or twice every decade.”
When he asked the CIOs how often they wanted to innovate or introduce new technologies, the answer was, “About every quarter.”
“This is a survival question, not a cost-cutting question,” Agassi said. “What did we do about it? We built an enterprise services architecture.”
Companies can innovate on top of their core applications through the addition of Composite Applications, or xApps, he said.
Agassi predicted there would be 2,000 composite applications introduced from partners in this decade.
The hitch for customers not wanting to move forward with SAPs vision is rising operating costs, according to Agassi.
“If you dont do these things, make the change, the cost of operation goes higher and higher and higher,” he said. “What were talking about is significant cost reduction in operating costs.”
While Agassi told customers that developing their own SOAs would not happen overnight, he said the move would serve them well in the future.
“What were asking you to do is really think big. Plan ahead. If youre a CEO, suspend disbelief. Figure out the No. 1 process you want to fix, and do that,” Agassi said. “[Our] technology platform and business objects key to running a business are the best way for you to sustain your ability to innovate in a sustainable cost structure that will take you into the next decade.”