Ten months after launching its Industry Cloud, SAP has dramatically ratcheted up its vertical-market vision by launching an “industry network” that will create open “data ecosystems” targeted at all stakeholders along the industry value chain.
The move comes as Salesforce is expected to disclose its own industry-wide approach, and it’s highly likely that Google Cloud, Oracle, Microsoft and other major players in the booming industry-cloud sector will soon follow suit.
On my weekly Cloud Wars Top 10 rankings, SAP is #5, Salesforce is #4, Google Cloud is #3, Oracle is #6, and Microsoft is #1. We will see where those companies line up on my new Industry Cloud Top 10 rankings when that list makes its debut next week.
In a recent conversation, SAP Industries president Peter Maier and global vice president of SAP automotive industry Hagen Heubach outlined the company’s industry-network plans and offered a significant detail on progress to date with two massive undertakings: the global vaccination initiative centered within the Life Sciences industry, and the automotive-industry network that Heubach is helping to create.
I’ll offer more detail in a future article, but wanted to share in this piece some highlights of SAP’s vision for industry networks, why SAP believes they will generate huge value for stakeholders in each industry and how this new effort blends with SAP’s ambitious Industry Cloud plans.
“I can tell you we are in full execution mode,” said the effusive Maier on a recent call. “I’m an absolute believer that industry networks will be the absolutely key differentiator moving forward for companies to improve their bottom line, their top line, and their new green [sustainability] line.”
Heubach also described the potential of these industry networks in ambitious terms. He said, “For the automotive industry, I can clearly say this is a once-in-a-lifetime chance” to completely reshape how one of the world’s largest and most-dynamic industries operates.
The key to achieving that breakthrough, according to both executives, is the carefully orchestrated creation and orchestration of several key elements across all industry stakeholders:
- a unified commitment to sharing data to create the desired “data ecoysystem”;
- a willingness to adopt open technology platforms supported by multiple providers;
- a sense of trust that sensitive inventory and pricing data will not be used simply to pound on suppliers for lower prices; and
- a commitment to evolving toward an entirely new set of optimized processes that put the customer at the center of the entire industrywide network.
In addition, Maier spelled out several key attributes that these “digital industry networks” can then offer to stakeholders:
- making value chains more resilient by offering greater visibility in the supply chain and greater predictability in the demand chain;
- accelerating product innovation lifecycles via better collaboration and trust;
- enabling and ensuring greater levels of enterprise compliance and sustainability; and
- lowering costs, accelerating operations, and creating superior customer experiences.
As an example, Maier cited the extraordinary achievements within the life-sciences industry to create, test and distribute vaccines for COVID-19 in an astonishingly short period of time.
“The producers and manufacturers, at every step of the way, have had to be incredibly flexible for production, distribution, packaging, quality management, transportation, logistics, communication and more,” he said.
In turn, those rigors required a “super-agile infrastructure” that was in place from SAP due to the advocacy of pharmaceutical leader Roche, which helped drive an industry consortium supported by SAP.
Within the automotive sector, Heubach said, the various players up and down the value chain—from some of the world’s leading car companies to small and mid-sized OEMs and service providers—are realizing that they can achieve much more together than they can if they continue to operate in their data silos.
“About 18 months ago, we realized on concert with the big automotive OEMs and suppliers that the opportunity for significant cost savings and other improvements lies not only inside the company. For the last 10 years, digitalization and everything the industry’s been doing around Industry 4.0 was all focused inside a company: the shop floor, intra-logistics chains, etc.,” Heubach said.
“But now we are all agreed that if we’re going to survive, we must create a single data ecosystem” in which everyone shares data in a way that is “secure, neutral and interoperable,” Heubach said.
That level of commitment in life sciences, automotive, and other industries has inspired SAP to include its Industry Cloud in much broader and aggressive efforts that span entire sectors, Maier said.
“I think industry networks are the next big thing,” Maier said in his concluding remarks to the conversation he, Heubach and I had.
“To play, you have to understand the end-to-end processes along the entire value chain and across industry boundaries. And SAP is a super-strong player that can combine the platform, the industry-cloud applications, and now the network.”
Disclosure: at the time of this writing, SAP, Google Cloud and Oracle were among the many clients of Cloud Wars Media LLC and/or Evans Strategic Communications LLC.
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