SAP-Centric EAM and Supply Chain Event Reveals SAP’s Biggest Challenges and Opportunities are Ahead Among Manufacturers and Asset-Intensive Industries [MondayMusings]

SAP-CENTRIC EAM 2018, Austin TXThe 14th annual SAP-Centric EAM (enterprise asset management) event was held in Austin, Texas the week of March 26. This is the second year SAP elected to roll its supply chain event into the event that’s produced by ASUG and Eventful Group, and supported by SAP. The combined EAM/supply chain event resulted in a much more diverse set of attendees, an expanded program that reflected the interests of a much broader portion of people from corporate functions in business, and attracted a larger set of SAP partners and third-party solution providers than past events. The Americas’ SAP Users Group (ASUG) drives the program content as well. The event has a very high percentage of SAP user-delivered content, blended with a mix of SAP strategic leadership vision delivery as well as product roadmap previews and technical user group lab environment workshops and roundtables. This event exposes SAP's greatest strengths and the significant challenges it faces going forward in the SAP user community.

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SAP Users Represent a Considerable Market

The event attracts primarily asset-intensive, manufacturing and supply chain driven SAP users and is a great cross-section of the SAP installed base. From defense forces (the Royal Canadian Navy provided a keynote), to municipalities, to mining, and oil and gas, asset-intensive industries were represented. Manufacturers in discrete, process and batch manufacturing were present in force as well. There is no denying that SAP is present in a significant percentage of these industries today. This large and diverse user base represents a tremendous asset to SAP. SAP’s supply chain and maintenance-focused solutions represent a wealth of products, of which most companies have only a subset, giving SAP a substantial cross-sell opportunity. A fair number of sessions at the event focused on apprising the users on SAP’s wide product portfolio. For instance, there was a session on SAP’s new product, SAP Predictive Engineering, an outgrowth of SAP’s acquisition of Fedem Technology. Finite Element Analysis (FEA) is a powerful tool for predicting failures of structural components. SAP can now offer this Cloud-based FEA capability to its many existing Plant Maintenance Module (PM) users and new customers looking at S4/HANA MM, SAP’s new maintenance management solution. This is but one example of Leonardo portfolio solutions that should appeal to existing SAP customers and companies with other EAM/asset performance management (APM) products.

There is also the upgrade opportunity market for SAP. A majority of SAP’s core ERP/EAM users are still on the on-premise ERP Central Component (ECC) versions of the products. Moving those clients to the S/4HANA platform, either on-premise or the Cloud version, represents a large opportunity for the vendor.

SAP Users Also Represent its Biggest Challenge

BEACON_DXFramework_linkSAP also used the event to expose the user community to the range of Leonardo applications and to point out how S/4HANA and its SAP Fiori user interface improves the user experience. The company also emphasized how it is using the S/4HANA Cloud version to roll out incremental and continuous improvements and enhancements. It was in all of those sessions that LNS identified what we think is SAP’s biggest challenge going forward — getting users to understand what Digital Transformation really means. In the “futures” sessions LNS attended there was a consistent theme to the questions posed by users to SAP product owners. Whether it was about the Fiori UX, the ability to deploy incrementally in the Cloud or many of the Leonardo applications, most of the questions were about the ability to salvage all the workarounds and the users had implemented to adapt SAP to their existing way of doing business. The focus was on how the users can leverage better user experience, enhanced functionality, and easier support to do things the way they have always been done, rather than using the SAP technology to set course for Digital Transformation. Vale, a global mining company presented on the use of SAP’s Design Thinking process to transform their procurement processes, but LNS sees the education hurdle as the one SAP needs to focus on.

The Key Takeaway

In manufacturing and asset-intensive industries SAP has much to offer functionally and with a platform that will enable users to pursue Digital Transformation. However, its existing user community needs a lot more encouragement and help in understanding the why and how of Digital Transformation. SAP’s portfolio has filled out to meet the needs of almost any company pursuing Operational Excellence in manufacturing and asset-intensive industries. Its challenge is that its greatest asset, the huge installed base, needs SAP to provide incentives and guidance on how to transform their businesses. The “Digital” part of the equation SAP is fully capable of delivering but the vendor needs to start evangelizing the “Transformation” part better. The good news for users though, is that SAP can help them if they only open themselves up to the opportunity, something a lot of SAP users have been reluctant to do so far. SAP recognizes that APM is evolving and that the Industrie 4.0 thinking applies elsewhere, referring to Asset 4.0 and Infrastructure 4.0, which aligns with the LNS APM 4.0 model. The next couple of years should be exciting for existing SAP users as well as companies just coming into the SAP fold. Since General Motors killed the Oldsmobile family I’ll borrow their old slogan – "With S/4HANAand SAP Leonardo, it’s not your father's SAP anymore."

Roadmap for Digital Transformation in the Power Generation Industry

All entries in this Industrial Transformation blog represent the opinions of the authors based on their industry experience and their view of the information collected using the methods described in our Research Integrity. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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