Innovation and Business Network Transformation

At its Sapphire user conference, SAP talks about how companies eventually must build differentiation around their business networks.

By Jennifer Zaino, bITa Planet, April 24, 2007

Integration is the byword for the next generation business. Process integration, partner integration, acquisition integration, all must come together in the service of business network transformation.

“It’s clear that business networks are now the primary source for new differentiation.” That was the message from SAP CEO Henning Kagermann in his keynote Tuesday morning at SAP’s Sapphire event in Atlanta.

(Source: CIO Weblog)

The mechanics behind that include service-enabling the SAP Business Suite on a business process platform; enabling the fast model-driven creation of composite applications via SAP Netweaver CE (a subset of the Netweaver platform); and by next year offering every six-months enhancement packages from which users can optionally activate content, functional enhancements, new enterprise services, new user interface improvements, and new lightweight composite applications.

The goal, Kagermann says, is to help customers innovate faster while avoiding lengthy, risky and expensive upgrades.

Agility and Speed

“Our product enables business network transformation, so we must innovate across all industries and players of all sizes,” he said. “Innovation for industries will mainly be driven through composites — that’s how we’ll bring the next business practices to market without disrupting the core. If it becomes a best practice we’ll consolidate it to the core.”

Two trends are driving companies to business network transformation, according to Kagermann: the pace of business change and increasing commoditization.

A new acquisition takes place every 20 minutes, he said, and the time to integrate systems is shortening. Meanwhile, a new product hits the market every 3.5 minutes, ripe for copycatting, and leading companies to try to move up the value chain by collaborating more closely with business partners to deliver seamless service bundles to clients.

“Whatever strategy you follow is about agility, speed, and acting fast,” he says. Business network transformation must meet enterprise SOA, in order to quickly make the connections and reconnections companies need as businesses combine or customer demand shifts.

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