Unlocking Innovation

Mark FrearBusiness Development Director,

SAP NetWeaver®SAP Australia and New Zealand

Agenda

• Give you some context and research findings around innovation

• Describe how SAP is innovating itself to meet customer needs

• Look at some case studies• Conclude

Innovation:From the Latin, innovare, meaning to renew

– The process of making changes to something established by introducing something new.

Inertia:From the Latin, iners, meaning idleness

- In physics, the resistance of a body to any alteration in its state of motion

Innovation leads to brand recognition, cash and profit

MAKE IT STRATEGIC TO DELIVER PROFITABLE, SUSTAINABLE GROWTH.

INNOVATION HAPPENS EVERYWHERE

Globalization

! Right sourcing! “Out-tasking”! Eco-system control

New Process Models

! Shared-services! Virtual teaming! Collaboration

Industry Consolidation

! International M&A! More regulations! New process standards

Innovation helps us fight the challenges we all face from…

82% of executives in all sectors expect business to be demand – rather than supply-driven

54% of executives see adapting models as more critical than new product / service development

What is the greater source of Competitive Advantage in 2010

Firms’ ability to evolve business models will become a key source of competitive advantage.

Total US Europe Asia

46%53%

47%44%

54%47%

53%56%

New products & services New business models

Source: Economist Intelligence Unit Survey – 4000 questioned Senior Executives

Business in 2010 Study

Market TrendsInnovation is the Next Big Challenge 1

Innovation Requires Orchestration from the Top 2

Source: 1 Bain & Company: Management Tools & Trends, 2005 – Trend Analysis Highlights

Source: 2 IBM GBS: Expanding the Innovation Horizon: The Global CEO Study 2006

I.T. is Coming of Age 1

Business Model Innovation Matters 2

External Collaboration is Indispensable 2

Minutes

Hours

Weeks

Months

1960s 1990s 2000s1940s1920s1900s 1980s

Days

Years

Processexecutiontime

BusinessProcessChange

ProductLifecycle

The next frontier: reducing “time to change”

Source: Gartner

The flow of continuous innovation is a process itself

Inve

ntio

nZo

neDeployment

ZoneO

ptimization

Zone

HandoffHandoff

IT should support innovation in different ways

Other processes needed because you are in business

Processes which deliver competitive advantage

Focus for IT is to create differentiation

•Flexibility and agility•Scalability•Visibility

Focus for IT to deliver productivity or efficiency in the business:

•Consistency•Standardised•Efficient•Best practices

CORE CONTEXT

Courtesy to G. Moore’s “Living on the fault line”

IT-POWERED BUSINESS INNOVATION

SAP: A CASE STUDY

FUNCTIONAL AREAINDUSTRIES

21%

22%

16%

19%

23%

13%

SAP#1

SAP#1

SAP#1

SAP#1

SAP#1

SAP#1FI

HR

SCM

CRM

SRM

PLM

CP / Retail

Discrete

Process

Fin.Services

Services

SAP#1

SAP#1

SAP#1

SAP#1

SAP#1

16%

27%

19%

20%

20%

19%Public

SAP#1

Market share data 2004 based on license revenues /preliminarySources: SAP Analysis 2005, based on preliminary data

SAP’s Process knowledge is extensive in any dimension

SAP is transforming to the next generation I.T. provider

Industrialization of the software industry

•Speed: Shorter time to volume•Efficiency: Systematic re-use across solutions•Quality: Unprecedented level of quality and scalability

ERP SCM CRM …

All-in-One New Solutions …

69% of the partsare the same

>50% of the processesare the same

‘‘A decade ago, SAP improved the way businesses operate. Now the company wants to change the entire software industry.

““We could have sat We could have sat back & waited for back & waited for the storm to pass, the storm to pass, but it never will,but it never will,””says Shai Agassi. says Shai Agassi. ““Instead, we Instead, we decided to lead it.decided to lead it.””’’Business Week, July 11, 2005

Executing on SAP’s Enterprise SOA strategy will change SAPand shape our industry

This is not (just) about winning market share, it is aboutaccelerating innovation and energizing industry growth

worldwide

We will define and establish undisputed leadershipin the emerging market for business process platform solutions,

accelerate business innovation powered by ITfor firms and industries worldwide

and thus contribute to economic development on a grand scale.

SAP’s mission statement

Co-Opetition

Trusted Ecosystem of Partners

Platform

Two aspects to deliver IT powered innovation..

Deliver “IT-Powered Business Innovation” for CustomersDifferentiate from competition through business innovationBoost productivity through best industry practicesEnsure business integrity and compliance

Business Process Platform

– Enterprise SOA– Enterprise services– Composite applications

– Alliance of leading vendors– Many ISVs– Collaborative innovation

SAP BasisSAP Basis

SAP NetWeaver®Application and IntegrationPlatform

SAP NetWeaver®Application and IntegrationPlatform

Business Process PlatformApplication, Integration and CompositionPlatform

Business Process PlatformApplication, Integration and CompositionPlatform

R/3R/3

SAP R/3Standardized business processesClient-ServerDistributed Processing

Business SuiteExtendibility through SAP NetWeaverAdaptive, end to end, streamlined processesERP II

1992 …. 2003

CRM ERP SRMEvolution

Business Process Platform

SOA platformComposition frameworkCommon business servicesGovernance

Enterprise ServicesEnterprise Services

2004 20062005

Evolution

We are moving from older technologies to Enterprise SOA

Process flexibility in today’s value networks

CONTINUOUS

IMPROVEMENT

COLLABORATIO

N

EVENT-DRIV

ENCONFI

GURABILIT

YEXTERNAL

INFO

INTEGRATIO

N

FLEXIB

ILIT

Y

SourceSource

Manu-factureManu-facture

SupplierIdent.

SupplierIdent. AssembleAssemble InvoiceInvoice

iSourceSource

DeliverDeliver

SERVICE P

ROVIDER

INTEGRATIO

N

OUT-TASKIN

G

Sell

Flexible innovation on top of a stable platform

Flexibility and extensibility

Model-driven solution building and adaptation

Reliable executionControlled process executionHigh ScalabilityHigh QualityMaintain Integrity of dataBreadth of functionalityFlexibly deployableCentralized maintenance

i

Business Process Platform

OtherApps

OtherPlatforms

OtherBusinesses

IndustryStandards

Application Components

CRM ERP SCM …Enterprise

ServiceRepository

300+ EnterpriseServices Stored in 1unified repository

Business Process Platform

myS

AP

200

5

OtherApps

OtherPlatforms

OtherBusinesses

IndustryStandards

SAP Partner CustomxApps

Application Components

mySAP ERP 2005 – The 1st services-enabled ERP

xAppsxApps

CRM ERP SCM …EnterpriseService

Repository

Portal Devices Office RFIDRendering

Bringing innovation to all sizes of companies

SAP Business One

Source: IDC Customer Segmentation Analysis; SAP Analysis

55.4 million firms

1.2 million firms

~20,000firms

~64,000 firms

mySAP All-in-One

mySAP ERP

IT-POWERED BUSINESS INNOVATION

CUSTOMER CASE STUDIES

• FACC is a privately held company with 922 employees

“Fischer Advanced Composites upgraded to mySAP ERP in forty five days. It could have not be accomplished without support from SAP.” Michael Dolejsi, Project Manager, FACC

Technical upgrade from SAP R/3 4.6C to mySAP ERP 2005 in 45 days

Consolidated server environment - reduced cost of IT

Full scope – sales, purchasing, corporate services, financials

Finance, sales, purchasing… upgraded in 45 days

$£ ¥€

mySAP ERP delivers a solid business platform

Bringing Innovation to all sizes of companies

SAP Business One

Source: IDC Customer Segmentation Analysis; SAP Analysis

55.4 million firms

1.2 million firms

~20,000firms

~64,000 firms

mySAP All-in-One

mySAP ERP

Qualified mySAP All-in-One is at the core of the portfolio

Edelweiss implemented mySAP ERP in 40 Days from scratch

Edelweiss is a subsidiary of UBS Swiss Bank that specializes in professional facilities management. That established itself as a legal entity on January 1, 2006

Edelweiss needed a system aided facilities management and ERP solution in order to meet legal and operational requirements following a spin-off from UBS.

New customer – needed ERP solution in 40 days

450 Users, 380 Mobile Users for Service Management

Needed integration to mobile asset management and CRM $£ ¥€

Full scope ERP – financials, human capital management, real estate, business intelligence

Using best practices speeds up implementation by 30%

SAP® Best Practices in New Zealand

SAP® Best Practices in New Zealand

SAP Safe Passage program allows anyone to move forward

PeopleSoft

JD Edwards

Siebel

might not always be supported

Migrate to a viable, long-term vendor with the SAP Safe Passage program:

SAP solutionsMaintenance services at reduced costInvestment protection Clear road map for implementation and migration.

License mySAP, and receive credit on existing PeopleSoft, JD Edwards or Siebel investments. License mySAP, and receive credit on existing PeopleSoft, JD Edwards or Siebel investments.

IT can address all processes with one platform

Other processes needed because you are in business

Processes which deliver competitive advantage

Focus for IT is to create differentiation

•Flexibility and agility•Scalability•Visibility

Focus for IT to deliver productivity or efficiency in the business:

•Consistency•Standardised•Efficient•Best practices

CORE CONTEXT

Courtesy to G. Moore’s “Living on the fault line”

10%Build

Hom

eG

rown

60%Buy

Services from SAP and ISVs

CR

M

ERP

…

60%Buy

Packaged Application

40%BuildCustom Code

CR

M

ERP

…

Hom

eG

rown

30%Compose

Composing new processes from lego blocksIn

the

pas

tT

oday

IT strategy (optimize)

Business strategy

Createorder

Checkinventory

Shipping BillingAccounting

Create Order recordSend a confirmation to the customerAdd the order to the production plan

BusinessLevel

ITImplementation

Enterprise Services

Web Services

Enterprise Services are defined at the business level. IT can decide how to supply the need ie "strategic decoupling"

IT strategy (optimize)

Business strategy

Createorder

Checkinventory

Shipping BillingAccounting

Delete Order recordSend a confirmation to the customerRemove the order from production plan

Enterprise Services are defined with consensus from customers, partners, ISVs and SAP

BusinessLevel

ITImplementation

ES described by customers, SAP and ecosystem – Open approach

Web Services delivered by SAP, ISVs and custom development

– Open approach

1,300+ ISV Products “Powered by NetWeaver”

18 Industry Titans are“Enterprise Services Ready”

5 Industry Value Networksare kicked off

10,000+in ANZ500,000 SDN Members WW

1Enterprise ServicesRepository

SAP has remade itself as the industry's honest broker. Rather than locking customers into its own products, SAP offers tools that tie competing packages into a seamless whole.

January 10th, 2005

“

CONCLUSION

Conclusion• Talked about the context of innovation

– Responding to challenges– It needs systematic focus and execution

• Case studies– SAP is transforming the way IT will be delivered– Adoption is much quicker than you think

• The IT ecosystem is at the heart of this